Buenaventura Announces Second Quarter and Six Month 2017 Results

Compañia de Minas Buenaventura S.A.A. (“Buenaventura” or “the Company”) (NYSE:BVN; Lima Stock Exchange:BUE.LM), Peru’s largest publicly-traded precious metals mining company, today announced results for the second quarter (2Q17) and six-month (6M17) period ended June 30, 2017. All figures have been prepared in accordance with IFRS (International Financial Reporting Standards) on a non-GAAP basis and are stated in U.S. dollars (US$).

Second Quarter 2017 Highlights:

• In 2Q17, EBITDA from direct operations was US$56.5 million; a 48% decrease compared to US$108.3 million reported in 2Q16. 2Q17 Adjusted EBITDA (including associated companies) reached US$ 110.2 million; a 40% decrease compared to US$ 183.6 million in 2Q16.
• Total attributable production in 2Q17 was 145k gold ounces and 6.7 million silver ounces, compared to 153k gold ounces and 6.0 million silver ounces in 2Q16.
• Production remained in line with the annual budget at most of the Company’s mines.
• Tambomayo showed a steady improvement in the ramp up process.
• El Brocal reported its third consecutive quarter of positive operating performance and financial results despite challenges at the mill engine (20x30)
• At Cerro Verde, the syndicated loan has been refinanced with subsequent repayment of the shareholder´s loan.

Financial Highlights (in millions of US$, except EPS figures):

(*) as of June 30, 2017 Buenaventura had a weighted average number of shares outstanding of 253,986,867.

Operating Revenues

During 2Q17, net sales were US$252.1 million; a 10% decrease compared to US$279.4 million reported in 2Q16. This result was primarily due to a decrease in silver prices as well as to a lower volume of gold sold.

Royalty income decreased 21%; from US$5.9 million in 2Q16 to US$4.6 million in 2Q17 due to a 21% sequential decrease in revenues at Yanacocha.

Production and Operating Costs

In 2Q17, Buenaventura’s gold equity production from direct operations was 79,330; a 7% decrease (84,997 gold ounces) as compared to 2Q16. In 2Q17, gold production including associated companies was 144,804 ounces; a 5% decrease as compared to the same period in 2016. This decline is due to a decrease in production at La Zanja, Coimolache and Yanacocha mines; these three mines are located in northern Peru and were affected by heavy rains associated with the Coastal El Niño. This was partially offset by initial contribution by Tambomayo in the amount of 12,454 gold ounces. Silver and lead equity production increased during 2Q17 compared to 2Q16 primarily due to increased production at Uchucchacua (10% QoQ) and El Brocal (103% QoQ).

Buenaventura´s 6M17 gold equity production from direct operations decreased by 14% compared to the figure reported in 6M16. Silver equity production from direct operations in 6M17 was 4% higher compared to 6M16, this was mainly due to higher production coming from the Uchuchacua (3%) and El Brocal (101%) mines. Buenaventura´s zinc equity production increased 11% in 6M17 compared to 6M16. This increase is explained by higher production from the Uchuchacua (34%) and El Brocal (23%) mines.

Orcopampa (100% owned by Buenaventura)

Gold production at Orcopampa in 2Q17 was in line with 2Q16. Cost Applicable to Sales (CAS) in 2Q17 increased 9%, to 768 US$/Oz, compared to 704 US$/Oz in 2Q16, mainly due to a power transformer failure which temporarily impacted power supply, requiring a thermoelectric generator (TEG), also resulting in extraordinary expenses (fuel consumption and special services) which will be partially offset by insurance compensation.

Gold production guidance for 2017 is 190k – 200k ounces.

Uchucchacua (100% owned by Buenaventura)*

Silver production in 2Q17 increased 10% quarter on quarter, due to a 16% sequential increase in ore treated (see Appendix 2). Cost Applicable to Sales (CAS) in 2Q17 (10.66 US$/Oz) increased 4% compared to 2Q16 (11.11 US$/Oz), mainly due to a decrease commercial deductions and an increase in by-product contribution increase volume of lead & zinc sold.

Silver production guidance for 2017 is 17.0 million – 18.0 million ounces; this represents a 1.0 million ounce increase to the initial guidance.

*Includes a pilot production of 82,525 Ag Oz, 82 Zn MT and 71 Pb MT from Uchucchacua´s material treated at Mallay´s processing plant.

Mallay (100% owned by Buenaventura)

Mallay silver, lead and zinc production were lower in 2Q17 in order to accommodate the pilot production of Uchucchacua´s ore.

Silver production guidance for 2017 from Mallay´s mining operation is 1.0 million – 1.3 million ounces to permit the treatment of Uchucchacua´s ore (more value).

Julcani (100% owned by Buenaventura)

Silver production in 2Q17 was 23% lower than the production reported in 2Q16; primarily due to a decrease in ore treated (12% QoQ) and lower ore grades (13% QoQ). Cost Applicable to Sales (CAS) in 2Q17 (17.85 US$/Oz) was 57% higher than 2Q16 (11.40 US$/Oz), primarily explained by lower productivity due to the change in the mining procedures for enhanced safety, resulting in an increase in mining support expenses. This temporary issue will be addressed through high grade production and controlled volumes for the subsequent quarters.

Silver production guidance for 2017 is 2.6 million – 2.8 million ounces.

La Zanja (53.06% owned by Buenaventura)

Gold production in 2Q17 decreased by 13% quarter on quarter, but remains in line with the mine production plan. Cost Applicable to Sales (CAS) in 2Q17 (802 US$/Oz) increased by 25% compared to 2Q16 (533 US$/Oz), mainly due to i) increased reagent consumption (associated with higher volumes of water treated due to heavy rains associated with the Coastal El Niño), ii) a 32% sequential decrease in ounces sold and iii) lower ore grades.

Gold production guidance for 2017 is 115k – 125k ounces.

Tantahuatay (40.10% owned by Buenaventura)

Gold production in 2Q17 decreased 14% quarter on quarter, but remains in line with the mine production plan of a strong 2H17 with higher grades coming from Cienaga Norte. Cost Applicable to Sales (CAS) in 2Q17 was in line with the figure reported in 2Q16.

Gold production guidance for 2017 is 145k – 155k ounces

El Brocal (61.32% owned by Buenaventura)

Copper production in 2Q17 decreased 12% compared to 2Q16 mainly due to a decrease of ore treated and lower ore grades. In 2Q17 zinc production decreased 11% compared to 2Q16 mainly due to less ore treated and lower ore grades.

In 2Q17, zinc Cost Applicable to Sales (CAS) increased 9% quarter on quarter, mainly due to higher commercial deductions triggered by a 28% sequential increase in zinc prices which triggered the treatment charge (TC) escalator. Copper CAS in 2Q17 was in line with the figure reported in 2Q16.

Zinc production guidance for 2017 is 50k – 60k MT, while copper production guidance for 2017 is 55k – 65k MT.

Among the Company’s achievements at El Brocal, it’s important to note an improved metallurgical performance which resulted in: a) a 90% increase (QoQ) in the silver recovery rate in the lead concentrate, with a 27% sequential reduction of the silver recovery rate from the zinc concentrate (better silver payments); b) a 5% sequential increase in the lead recovery from the lead concentrate; and c) 5% sequential increase in the copper recovery rate from the copper concentrate.

General and Administrative Expenses

2Q17 General and Administrative expenses were US$18.3 million; an 8% year-on-year decrease, from US$19.8 million in 2Q16, primarily due to savings in administrative expenses resulting from initial synergies between Buenaventura and El Brocal which will end next year.

Exploration in Non-Operating Areas

2Q17 Exploration costs in Non-Operating Areas were US$5.5 million compared with US$5.0 million in 2Q16. During the period, Buenaventura primarily focused its exploration efforts on the Marcapunta Norte (US$0.81 million) and San Gabriel projects (US$0.36 million).

Share in Associated Companies

During 2Q17, Buenaventura’s share in associated companies was US$44.9 million, compared to US$28.4 million reported in 2Q16, comprised of:

YANACOCHA

At Yanacocha (43.65% owned by Buenaventura), 2Q17 gold production was 120,856 ounces (52,754 ounces attributable to Buenaventura); a 22% decrease as compared to the 155,524 ounces (67,886 ounces attributable to Buenaventura) produced in 2Q16.

Gold production guidance at Yanacocha for 2017 is 530k – 560k ounces.

In 2Q17, Yanacocha reported a net loss of US$62.2 million, compared to a net loss of US$3.5 million reported in 2Q16.

CAS in 2Q17 was US$1,129/oz; a 43% increase as compared to the US$790/oz reported in 2Q16 mainly due to higher mining cost per ton, milling cost per ton and leaching cost.

The Quecher Main project engineering (oxide deposit) is the process of being developed, a decision to progress is expected in 2H17. In the case of Yanacocha Sulfides, technical and economic viability studies have been progressing, with an updated report expected in 2H17.

Capital expenditures at Yanacocha were US$10.9 million in 2Q17.

CERRO VERDE

At Cerro Verde (19.58% owned by Buenaventura), 2Q17 copper production was 118,071 MT (23,118 MT attributable to Buenaventura), a 6% decrease compared to 2Q16 (126,143 MT and 24,699 MT attributable to Buenaventura).

During 2Q17, Cerro Verde reported a net income of US$104.1 million compared to net income of US$80.8 million in 2Q16. This increase was primarily due to a higher realized price (US$2.62/Lb in 2Q17 compared to US$2.15/Lb in 2Q16).

Capital expenditures at Cerro Verde were US$37.8 million in 2Q17.

Copper production guidance at Cerro Verde for 2017 is 500k MT – 550k MT.

COIMOLACHE (Tantahuatay operation)

At Coimolache (40.10% owned by Buenaventura), 2Q17 attributable contribution to net income was US$3.7 million (US$5.7 million in 2Q16).

Project Development and Exploration

The Tambomayo Ramp up Process (100% ownership)

• 2Q17 results:
  • Gold ounces: 12,454
  • Silver ounces 295,379
  • CAS: 723 US$/Oz Au
• Full capacity expected by 3Q17.
• 2017 Production Guidance of 60k – 90k Au Oz.

The San Gabriel Project (100% ownership)

• Geomechanical studies in progress to complete:
  • Mining method and rock support analysis
  • Metallurgical test to optimize processing plant design and recovery rate

Company Description

Compañía de Minas Buenaventura S.A.A. is Peru’s largest, publicly traded, precious metals company and a major holder of mining rights in Peru. The Company is engaged in the mining, processing, development and exploration of gold and silver and other metals via wholly owned mines as well as through its participation in joint exploration projects.

Buenaventura currently operates several mines in Peru (Orcopampa*, Uchucchacua*, Mallay*, Julcani*, El Brocal, La Zanja and Coimolache and is developing the Tambomayo project.

The Company owns 43.65% of Minera Yanacocha S.R.L (a partnership with Newmont Mining Corp.), an important precious metal producer; 19.58% of Sociedad Minera Cerro Verde, an important Peruvian copper producer.

For a printed version of the Company’s 2016 Form 20-F, please contact the investor relations contacts on page 1 of this report, or download the PDF format file from the Company’s web site at www.buenaventura.com.

(*) Operations wholly owned by Buenaventura

Note on Forward-Looking Statements

This press release may contain forward-looking information (as defined in the U.S. Private Securities Litigation Reform Act of 1995) that involve risks and uncertainties, including those concerning the Company’s, Yanacocha’s and Cerro Verde’s costs and expenses, results of exploration, the continued improving efficiency of operations, prevailing market prices of gold, silver, copper and other metals mined, the success of joint ventures, estimates of future explorations, development and production, subsidiaries’ plans for capital expenditures, estimates of reserves and Peruvian political, economic, social and legal developments. These forward-looking statements reflect the Company’s view with respect to the Company’s, Yanacocha’s and Cerro Verde’s future financial performance. Actual results could differ materially from those projected in the forward-looking statements as a result of a variety of factors discussed elsewhere in this Press Release.

**Tables to follow**

APPENDIX 1

APPENDIX 2

APPENDIX 3: EBITDA Reconciliation (in thousand US$)

Note:

EBITDA (Buenaventura Direct Operations) consists of earnings before net interest, taxes, depreciation and amortization, share in associated companies, net, loss on currency exchange difference, other, net, provision for workers’ profit sharing and provision for long-term officers’ compensation.

EBITDA (including associated companies) consists of EBITDA (Buenaventura Direct Operations), plus (1) Buenaventura’s equity share of EBITDA (Yanacocha) (2) Buenaventura’s equity share of EBITDA (Cerro Verde), plus (3) Buenaventura’s equity share of EBITDA (Coimolache). All EBITDA mentioned were similarly calculated using financial information provided to Buenaventura by the associated companies.

Buenaventura presents EBITDA (Buenaventura Direct Operations) and EBITDA (including affiliates) to provide further information with respect to its operating performance and the operating performance of its equity investees, the affiliates. EBITDA (Buenaventura Direct Operations) and EBITDA (including affiliates) are not a measure of financial performance under IFRS, and may not be comparable to similarly titled measures of other companies. You should not consider EBITDA (Buenaventura Direct Operations) and EBITDA (including affiliates) as alternatives to operating income or net income determined in accordance with IFRS, as an indicator of Buenaventura’s, affiliates operating performance, or as an alternative to cash flows from operating activities, determined in accordance with IFRS, as an indicator of cash flows or as a measure of liquidity.

APPENDIX 4: COST APPLICABLE TO SALES RECONCILIATION

Reconciliation of Costs Applicable to Sales and Cost Applicable to Sales per Unit Sold

Cost applicable to sales consists of cost of sales, excluding depreciation and amortization, plus selling expenses. Cost applicable to sales per unit sold for each mine consists of cost applicable to sales for a particular metal produced at a given mine divided by the volume of such metal produced at such mine in the specified period. We note that cost applicable to sales is not directly comparable to the cash operating cost figures disclosed in previously furnished earnings releases.

Cost applicable to sales and Cost applicable to sales per unit of mineral sold are not measures of financial performance under IFRS, and may not be comparable to similarly titled measures of other companies. We consider Cost applicable to sales and Cost applicable to sales per unit of mineral sold to be key measures in managing and evaluating our operating performance. These measures are widely reported in the precious metals industry as a benchmark for performance, but do not have standardized meanings. You should not consider Cost applicable to sales or Cost applicable to sales per unit of mineral sold as alternatives to cost of sales determined in accordance with IFRS, as indicators of our operating performance. Cost applicable to sales and Cost applicable to sales per unit of mineral sold are calculated without adjusting for by-product revenue amounts.

The tables below set forth (i) a reconciliation of consolidated Cost of sales, excluding depreciation and amortization to consolidated Cost applicable to sales, (ii) reconciliations of the components of Cost applicable to sales (by mine and mineral) to the corresponding consolidated line items set forth on our consolidated statements of profit or loss for the three and nine months ended September 30, 2015 and 2016, and (iii) reconciliations of Cost of sales, excluding depreciation and amortization to Cost applicable to sales for each of our mining units. The amounts set forth in Cost applicable to sales and Cost applicable to sales per unit sold for each mine and mineral indicated in the tables below can be reconciled to the amounts set forth on our consolidated statements of profit or loss for the three and nine months ended September 30, 2015 and 2016 by reference to the reconciliations of Cost of sales, excluding depreciation and amortization (by mine and mineral), Selling Expenses (by mine and metal) expenses and Exploration in units in operations (by mine and mineral) to consolidated Cost of sales, excluding depreciation and amortization, consolidated Selling Expenses and consolidated Exploration in units in operations expenses, respectively, set forth below.