Investment Rating - Industry rating: Recommended [8] Core Insights - In H2 2025, the company's gold production decreased by 9% year-on-year to 22.522 tons, primarily due to lower recovery rates and operational issues at Hidden Valley, along with supply shortages caused by an uncontrollable event affecting cyanide supply in South Africa [1][3] - Despite these challenges, the company is expected to meet its annual guidance targets [1] - The average gold price received increased by 40% year-on-year to $3,421 per ounce, contributing to a revenue increase of 24% to $2.457 billion [2][3] - The company's all-in sustaining costs (AISC) decreased by 25% year-on-year to $2,115 per ounce, while total costs (AIC) fell by 30% to $2,354 per ounce [2][4] Production and Cost Summary - H2 2025 gold cash costs were $1,764 per ounce, down 25% year-on-year [2] - The company's operating costs rose by 10% year-on-year to $1.257 billion [4] - Production profit for H2 2025 was $1.2 billion, reflecting a 43% increase year-on-year [5] - Capital expenditures for H2 2025 increased by 34% year-on-year to $352 million [6] Fiscal Year 2026 Guidance - The gold production guidance for FY 2026 remains unchanged at 1.4 million to 1.5 million ounces [7] - The AISC guidance for FY 2026 is also maintained at R1,150,000 to R1,220,000 per kilogram [7]

Investment Rating - The report recommends a "Buy" rating for the industry, indicating a positive outlook for the sector's performance relative to the benchmark index [5]. Core Insights - The silver equivalent production for Q4 2025 increased by 77% year-on-year to 4,165,334 ounces (129.56 tons), with a quarterly increase of 8% [1]. - The total silver production for 2025 reached 15,435,506 ounces (480.10 tons), marking an 84% increase compared to the previous year, primarily driven by the integration of the Los Gatos project and production growth from the San Dimas and La Encantada projects [1]. - The company expects silver production guidance for 2026 to be between 13 million and 14.4 million ounces (404-448 tons), alongside gold production guidance of 116,000 to 129,000 ounces (3.61-4.01 tons) [2]. Production and Operational Summary - In Q4 2025, the company processed 1,058,276 tons of ore, a 42% increase year-on-year, with total silver equivalent ounces produced reaching 7,845,686, a 37% increase [7]. - The company plans to invest between $213 million and $236 million in capital expenditures for 2026, with $58 million to $66 million allocated for sustaining activities and $154 million to $171 million for expansion projects [4][6]. Cost Guidance - The expected all-in sustaining cost (AISC) for 2026 is projected to be between $26.15 and $27.91 per payable silver equivalent ounce, with cash costs estimated at $18.64 to $19.62 per ounce [3][9]. - The report indicates that despite strong silver production and higher silver prices improving overall economic efficiency, the lower silver equivalent conversion rate results in higher reported costs per ounce [3]. Future Production Plans - The company aims to enhance processing capacity at the Santa Elena plant to 3,500 tons per day and increase the Los Gatos mine's processing capacity to 4,000 tons per day, aligning with its long-term growth strategy [6]. - Ongoing exploration and early-stage development projects at Navidad and Santo Niño are also part of the strategic initiatives to support future growth [6].

Financial Data and Key Metrics Changes - EBITDA for Q2 2025 was $130 million, up from $107 million in Q2 2024, indicating a year-over-year increase of approximately 21.5% [6] - Net income for Q2 2025 reached $91 million, compared to $71 million in Q2 2024, reflecting a year-over-year increase of about 28.2% [7] - Cash position at the end of Q2 2025 was $589 million, with total debt of $860 million, resulting in a leverage ratio of 0.56 times [9] Business Line Data and Key Metrics Changes - Silver production in Q2 2025 was 3.6 million ounces, down 11% from 4 million ounces in Q2 2024, primarily due to lower production at Jumpac, Tambomayo, and Huican [7] - Copper production increased by 28% year-over-year, attributed to halted operations at El Brocal in 2024 affecting copper ore processing [7] - Gold production decreased to 27,345 ounces from 33,119 ounces in Q2 2024, mainly due to reduced output at Tambomayo and Orcopampa, partially offset by increases at La Sanja and El Brocal [8] Market Data and Key Metrics Changes - The company initiated the sale of part of the Cerro Verde copper concentrate, selling approximately 20,000 metric tons by the end of Q2 2025, with a total of 40,000 metric tons expected for the full year [8] - Cerro Verde announced a new dividend distribution of $59 million on July 24, corresponding to Buenaventura's equity share, contributing to a total of $108 million in dividends [9] Company Strategy and Development Direction - The company is committed to stable and continuous production of flagship assets, with ongoing optimization efforts to increase throughput [14] - Continuous exploration is emphasized as part of the company's strategy to extend the life of its mining assets [15] - The San Gabriel project achieved 88% overall completion by Q2 2025, with expectations to commence ramp-up in Q3 2025 and produce the first gold bar in Q4 2025, subject to timely permit approvals [12][15] Management Comments on Operating Environment and Future Outlook - Management expressed confidence in obtaining necessary permits for the San Gabriel project, with no anticipated risks regarding the permit for production commencement [20] - The company plans to maintain financial stability and has redeemed the remaining 2026 notes, indicating a focus on managing debt levels [15] - The ramp-up of production at San Gabriel is expected to take all of 2026, with stabilization projected between 100,000 and 120,000 ounces [22] Other Important Information - Total CapEx for Q2 2025 was $107 million, with $82 million allocated to the San Gabriel project [9] - The all-in sustaining costs for copper increased by 63% year-over-year, primarily driven by lower byproduct credits [10] Q&A Session Summary Question: Can you provide more details on the pending permits for San Gabriel? - Management indicated that they have invited authorities to visit the plant in September and do not foresee risks in obtaining the necessary permits [20] Question: What is the expected CapEx for the second half of 2025? - Total CapEx for San Gabriel is expected to remain between $720 million and $750 million, with approximately $130 million to $160 million disbursed in the second half of 2025 [22][23] Question: What is the status of silver production at Uchucchacua? - Management noted a decrease in silver grades due to a shift towards polymetallic stops, with plans to monitor and potentially resume mining in the bottom part of the mine by Q4 2025 [36][37] Question: How is the commercialization of Cerro Verde concentrate impacting overall costs? - The company has started selling 40,000 tons of copper concentrates from Cerro Verde, which is expected to improve terms and overall margins [42][43] Question: What is the timeline for the Trepiche project? - The environmental impact study is on track for approval by the end of the year, with the feasibility study expected to be completed by mid-2026 [55][57] Question: What is the definition of commercial production for San Gabriel? - Commercial production is defined as producing two gold bars over 20 continuous days at 65% capacity [64][70]