Good day, ladies and gentlemen. Welcome to the Compañía de Minas Buenaventura Fourth Quarter and Full Year 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode, and please note that today's call is being recorded. At this time, I'd like to introduce your host for today's call, Mr. Gabriel Salas, Investor Relations. Mr. Salas, you may begin.
Good morning, everyone, and thank you for joining us today to discuss our fourth quarter and full year 2021 results. Today's discussion will be led by Mr. Leandro Garcia, Chief Executive Officer. Also joining our call today and available for your questions are Mr. Daniel Dominguez, Chief Financial Officer, Mr. Juan Carlos Ortiz, Vice President of Operations, Mr. Aldo Massa, Vice President of Business Development and Commercial, Mr. Alejandro Hermoza, Vice President of Sustainability, Mr. Renzo Macher, Projects Manager, Mr. Juan Carlos Salazar, Geology and Explorations Manager, Mr. Roque Benavides, our Chairman, and Mr. Raul Benavides, Director. This conference call will include forward-looking statements, which are subject to various risks and uncertainties that could cause our actual results to differ materially from these statements. Any such statements should be considered in conjunction with cautionary statements within our earnings release and risk factor discussions.
I encourage you to read the full disclosure concerning forward-looking statements within the press release we filed on February 25, 2022. In addition, it is important to note that these statements include expectations and assumptions which will be shared related to the impact of COVID-19 pandemic. As seen on slide two, our forward-looking statement also provides information on risk factors, including the effects related to COVID-19 that could affect our financial results. In particular, there is continued uncertainty about the duration and contemplated impact of COVID-19 pandemic. This means Buenaventura's results could change at any time and impact of COVID-19 on the company's business results and outlook is the best estimate based on the information available of today's date. At this time, let me now turn the call over to Mr. Leandro Garcia, Chief Executive Officer. Leandro, please go ahead.
Thank you, Gabriel. Good morning to all, and thank you for attending this conference call. Before we start this presentation, we would like to wish you, your family and friends health and well-being at this time. We are pleased to present the results for Fourth Quarter and Full Year 2021 from Compañía de Minas Buenaventura. We have prepared a PowerPoint presentation which is available in our webpage. Before we go further, please take a moment to review the cautionary statement shown on slide two. Please consider the disclosure related to the COVID-19 pandemic. Moving on to slide three, highlights were as follows: Fourth quarter 2021, EBITDA from direct operations reached $62.8 million compared to $59.1 million reported in fourth quarter 2020.
Full year 2021, EBITDA from direct operations reached $204.4 million, a 39% increase compared to $147.4 million for the full year 2020. Fourth quarter 2021 EBITDA, including associate companies, reached $210.2 million compared to $171.7 million in fourth quarter 2020. Full year 2021 EBITDA, including associates, reached $719 million, a significant increase as compared to $403 million for the full year 2020. Aligned with the company's strategy to focus primarily on exploration, fourth quarter 2021 exploration at operating units increased to $15.5 million compared to $12 million in fourth quarter 2020. Full year 2021 exploration at operating units increased to $56.4 million compared to $28 million in last year.
Fourth quarter 2021 capital expenditures were $32.2 million compared to $38 million for the same period in 2020. Full year 2021 capital expenditures reached $90.7 million compared to $73.2 million in full year 2020. The full year 2021 capital expenditure, mainly driven by growth CapEx at San Gabriel, $13.9 million, sustaining CapEx of Yumpag, $10.2 million, and El Brocal, $19.5 million. Cost applicable to sales for the full year 2021 reflect a $67.7 million impact due to COVID-19 related expenses compared to the $30.5 million reported in 2020.
Buenaventura plans to significantly reduce these expenses by updating its COVID-19 protocols aligned with increase of vaccinated workforce. Buenaventura's cash position reached $377 million as of December 31, 2021, reflecting $137 million in dividends received from Cerro Verde in full year 2021. Moving on to slide four. Aligned with Buenaventura's commitment with its shareholder, the board has proposed a dividend payment of $0.073 per share. The company expects a total CapEx between $190 million-$210 million during 2022. The sustaining CapEx will reach between $90 million-$100 million, and the growth CapEx, mainly driven by San Gabriel, will be around $100 million and $110 million. The company's portfolio of greenfield projects continue progressing well during the quarter.
San Gabriel project concluded the prior consultation processes in both direct and indirect influence communities. Construction permits expected by Q2 2022, followed by the full funding decision. Yumpag project, which will add close to 30 million ounces of silver to Uchucchacua life of mine, keeps progressing according to the plan with the EIA, Environmental Impact Assessment, and detailed engineering for construction firm. Exploration of Tomasa vein continues with positive results, which will contribute another 30 million ounces of silver to the reserve. This will allow the company to increase silver production beginning of 2024 on top of Uchucchacua once the latter resumes operations. Buenaventura sold its total stake in Yanacocha for $300 million and contingent payments of up to $200 $100 million tied to future increases in metal prices.
Newmont transferred its ownership interest in the La Zanja joint venture to Buenaventura in exchange for royalties on any future production, and also contributed with $45 million to cover future closure costs. The net proceeds of the Yanacocha sale, in combination with the dividends received from Cerro Verde during the fourth quarter 2021, will allow Buenaventura to fully pre-pay the $275 million of the syndicate loan and partially fund the San Gabriel project. This decision is aligned with Buenaventura's commitment to deleverage the company and improve its balance sheet. Buenaventura finished the ESG materiality assessment as a roadmap to its sustainability strategy. During 2022, Buenaventura will focus on measuring KPIs such as carbon emissions, water footprint, human rights due diligence, among others. Moving on to slide five, ESG corporate strategy.
During 2021, with the help of our stakeholders, we completed the materiality matrix shown in this presentation. This enables Buenaventura to focus on those items which are identified as high, as highly material. The results and action plan is shown in the next slide. Moving on to slide six. Here you can find some key indicators regarding our ESG strategy. For example, on the environmental pillar, Buenaventura is committed to a responsible water management, achieving a 98% of recirculation at our open pit operations and 83% at our underground operations. Also, in 2021, we have used 74% of renewable energy, primarily from our hydroelectric plant. This year, we will focus on measuring our carbon footprint. Regarding the social pillar, as we have always mentioned, taking care of our workers' health is our top priority, and we will continue working on this.
We have achieved a 92% fulfillment of social commitments. We have leveraged over $10 million on infrastructure projects that directly benefit the communities we develop. Finally, regarding the governance pillar, we will focus on optimizing the EBITDA and the construction of our San Gabriel and Yumpag projects, which are key value generators. Moving on to slide seven, financial highlights. Total revenues during the fourth quarter were $253 million, which is 7% higher in comparison to the fourth quarter of 2020. In 2021, total revenues increased to $901 million compared to 2020, where total revenues were $677 million.
As we mentioned before, our EBITDA from direct operations for 2021 increased to $204 million, in comparison to $147 million during 2020. Also, our EBITDA, including associated companies for 2021, reached $719 million , in comparison to $403 million during 2020. The CapEx decreased to $32 million in the fourth quarter of 2021 compared to $38 million in 2020. In 2021, CapEx reached $91 million, a 24% increase in comparison to 2020. As you can appreciate on the graph shown in this slide, we are returning to pre-pandemic levels and even achieving greater results than 2019. Moving on to slide eight and nine, attributable production.
Total gold attributable production in the fourth quarter of 2021 was 59,000 ounces, which is 15% higher than the figure reported on the same quarter of the previous year. In 2021, total gold attributable production was 198,000 ounces, higher than the same period in 2020. Silver attributable production for this quarter was 2.5 million ounces, which shows a decrease of 27% compared to the figure reported on the fourth quarter of 2020. This is a direct result of the suspension of operations at Uchucchacua. However, during 2021, silver attributable production was 13 million ounces, 13% higher than production in 2020, mainly driven by a higher silver production at El Brocal.
In the fourth quarter of 2021, 9,000 metric tons of zinc were produced, a significant decrease compared to the fourth quarter in 2020. In 2021, zinc production decreased to 41,000 metric tons, 6% lower than the same period in 2020. In the case of lead, equity production was 5,000 metric tons in the fourth quarter of 2021, which is 32% lower in comparison to the fourth quarter of 2020. In 2021, lead production increased to approximately 21,000 metric tons in comparison to the 24,000 metric tons in 2020. Finally, our copper attributable production for the fourth quarter of the year was 28,000 metric tons. During 2021, copper attributable production was 102,000 metric tons, an 11% increase compared to the same period of 2020.
Moving on to slide ten, all-in sustaining costs are costs applicable to sales. The all-in sustaining cost from our direct operations in 2020 increased by 8% to $1,406 per ounce of gold. The costs applicable to sales for 2021 were as follows: For gold, $1,206 per ounce, which is 10% higher than a year ago. For silver, $18.81 per ounce, which is 3% higher than a year ago. For lead, $1,483 per metric ton, which is 26% higher than a year ago. For copper, $6,584 per metric ton, which is 28% higher in comparison to a year ago.
Finally, in the case of zinc, the cost applicable to sales was $2,274 per metric ton, which is 18% higher than a year ago. As we mentioned before, cost applicable to sales has been impacted by approximately $67.7 million of expenses related to COVID-19. Moving on to slide 11, pipeline of projects. Here, we are presenting in one snapshot the current development level for each one of our projects. Moving on to slide 12, San Gabriel. We are glad to announce that we finished the prior consultation in both communities and expect construction permit by the end of 2Q 2022, followed by the full funding decision. We are working with Ausenco to finish the construction management agreement by the end of Q1 2022. Moving on to slide 13, Trapiche.
We have completed one of two environmental impact assessment workshops in the field, and we are missing one to be held by the end of the first quarter of 2022. The cooperation agreements with four out of five communities are on its final stages. We finished the update report on power line, land access with power results. Moving on to slide 14, San Gabriel project. The homologation board approved the viability stage. Finished in 2021 in-pit drilling program confirming high-grade zone. Thank you for your attention. I will hand the call back to the operator to open the line for questions. Operator, please go ahead.
Ladies and gentlemen, at this time, we will begin today's question-and-answer session. To ask a question, you may press star and then one using a touch-tone telephone. To withdraw your questions, you may press star and two. If you are using a speakerphone, we do ask that you please pick up the handset before pressing the keys to ensure the best sound quality. Once again, that is star and then one to ask a question. We'll pause momentarily to assemble the roster. Our first question today comes from Carlos de Alba from Morgan Stanley. Please go ahead with your question.
Good morning, everyone. Thank you very much. A few questions, if I may. First is, could you comment on the budget for exploration on both operating and non-operating units for 2022? Clearly we saw a step up in those in the last quarter for sure. Wondering if you can comment for the outlook, the guidance for 2022. And also, given the comment that you made on COVID-19 related expenses that increased significantly last year versus 2019 and 2020, how much do you think you can reduce those in 2022?
If I may, just on the dividend from Cerro Verde, obviously very nice payment for you guys and for all shareholders. What do you see going forward? I mean, is this current level of dividend from Cerro Verde something that we can finally see on a recurring basis? My last question, I'm sorry to load you up with all of them, is can you confirm if the syndicated loan has already been paid? Just wanna make sure that we model that properly. If not, when do you expect that will be paid? Thank you.
Thank you, Carlos, for your question. I will answer you the last two questions, and then I'm going to pass the microphone to Daniela and Juan Carlos Salazar. In the case of Cerro Verde dividends, there are not a final figure that we are going to receive this year. But the company, Freeport has all the desire and expect to give more dividends this year in the way that, and aligned also with the cash that they are generating every month. As soon as we know, we should inform to the market. The last question about the syndicate. The syndicate is not canceled up to date.
We are expecting to be canceled in March, the first days of March. That's our quick view of that. I'll let Juan Carlos Salazar to talk about the budget of exploration for 2022. Please, Juan Carlos, go ahead.
Thank you. Thank you, Leandro. Yes, our budget has increased especially for these new projects we are now drilling, especially the Tomasa project. We have increased our drilling in that area. Also we increased our drilling in El Brocal, especially in the open pit. We had new areas, the Tatiana sector, and also we have additional drilling in the south part of the open pit. We increased our budget in that regard.
Once again, if you-
Sorry, Leandro, yes. To give some figures. Explorations for operating areas would be in the order of $50 million-$60 million. For explorations in non-operating sites, greenfield, we are talking about between $10 million and $15 million. All of these are going to our OpEx and is within the EBITDA that we announce normally. Another additional piece of information, Carlos, is that with this payment of the syndicated loan in March, we will be reducing our leverage ratio. We estimate a leverage ratio by the end of the year of around 2.5x without considering any effect of Cerro Verde's dividends.
Once again, if you would like to ask a question, please press star and then one. To withdraw your questions, you may press star and two. Our next question comes from Bastien Maire from LarrainVial. Please go ahead with your question.
Hi, guys. Thanks for the call. Just two follow-up questions. First, as you said, probably you will paying the bank syndicate on the first day of March. Have you already received the payment from the sale of Yanacocha's stake? The second one, if you can please repeat the amount that you are expecting to invest on drilling on brownfield projects, because I didn't get it right. Thanks.
Thank you for your question. Yes, for your first question with Yanacocha already paid, we have already received all the payment the same day that we have the final signature. In the brownfield, Daniel?
The explorations within our mining sites are in the order of $50 million-$60 million. For the greenfield exploration projects, we are expecting between $10 million and $15 million.
Okay. Perfect. If I may, one last question. In viewing the market, how do you see prices for this year? What are your expectations, especially for zinc and for the precious metals, right? What is your, like, your base case scenario and what do you expect if you expect these prices to remain at healthy levels? Or if you can give me more color about that's great.
Difficult question. However, we can comment about the prices that we have used for our budget. Maybe Daniel can give us some color of the prices. Maybe Aldo can comment about what our thinkings of prices are for the following years. Please, Daniel.
Yes, Leandro. For our budget, we have been very conservative and considered $22.5 for silver, $1,700 for gold, $9,400 per ton for copper. Well, for zinc, also $3,200 per ton.
Thank you. Hello, Aldo Massa here. Comment on prices for the future, for this year. I really think in precious metal really depend on the geopolitical situation, what is gonna happen with the war that is already taking place. If it continue or escalate, probably the gold and the silver is going to be higher. Talking about copper right now, it's almost $10,000 per metric ton. It's a very good price. All the analysts are thinking that maybe in the next two years, the copper price will be a little bit lower because there will be more production. There will be some project that is coming ahead and maybe there will be a little surplus in the market.
In 2024,2025, probably will be a huge deficit in the market and that the copper price is going to be up again. Talking about zinc, the zinc is very high right now, is $3,650 per metric ton. Most of the analysts and traders are thinking that maybe the zinc is going to be up and probably reach $4,000 per metric ton because of the higher energy prices in Europe. This will not be maintaining in the future. Probably it's gonna reach 4,000, but the next year will be between $3,000 and $3,500. The lead will usually follow the zinc.
Right now it's also in a very good price. It's $2,400 right now almost. This is our idea for prices. As Daniel mentioned, we're very conservative with the prices, but we really hope that the prices will maintain at those levels for the future. Thanks.
Thank you, Aldo.
Once again.
Thank you.
Once again, if you would like to ask a question, please press star and then one. We do ask that you please limit yourselves to a single question. Please note that if you do have a follow-up, you can rejoin the question queue. Once again, that is star and then one to ask a question. Our next question comes from Tanya Jakusconek from Scotiabank. Please go ahead with your question.
Yes. Good morning. My questions have to do with the Uchucchacua mine. I just wanted to get an understanding of what's happening at Uchucchacua, in terms of, you know, your focus is drilling and trying to identify, you know, stopes and other for 2022. I kind of wanted to understand sort of your planning on this asset and when we can bring it up. I wanted to get an update on San Gabriel, what's happening there, and if you are seeing CapEx increases because of inflationary pressures. Thank you.
Hi, Tanya. Thank you for your question. The first part, I will give the microphone to Juan Carlos Ortiz, and then Renzo should answer the question about regarding San Gabriel. Thank you, Tanya, again.
Thank you, Leandro. Thank you, Tanya, for the question about the Uchucchacua. Just to make a follow-up to the last time we have this conference call, we started demobilization of the contractors in the Uchucchacua mine. We finished that demobilization by November. In December, we resumed development. These developments are for drilling station to reach drilling stations underground. This drifting is being done with Buenaventura resources, equipment, and personnel. We only have contractors for drilling, for diamond drilling. The rate of development that we have right now with our own resources is about 300 m per month, but we are ramping up, bringing more equipment and training our own people from other areas to go underground. We expect to reach about 300 m per month in April to May.
At this phase, we expect to complete a diamond drilling program for about 80 km in the year and about 7,000 m of development in the underground mine. We are not taking into consideration in this figure the rehabilitation of old mining tunnels in which we go back for drilling again to get a drilling station ready for exploration program. What we plan to do first is we have a new interpretation of the geology of Chacua based on some characteristics of certain horizons of the limestone that in the past give access or give a lot of ore bodies with high grade and large volumes.
The main focus of exploration and development to do this exploration is to chase those ore bodies in the Estandarte decline that we have in the eastern side of the mine. Basically, we are doing that. At the same time, of course, we are reviewing all the information that we have, the historical information of the mine, and try to put the new bodies together to see what are the best opportunities and synergies that we can build up with the old stocks that have mine infrastructure and the newer bodies that are pretty much in the range of 300 m-500 m from our existing mining, underground mining facilities.
Pretty much the idea is that in 2022, we get all this information together, we update our mine sequence plan and probably come out with a plan to resume operations in the second half of 2023 or early 2024 with a more competitive and stable production unit.
Am I understanding that this mine could come up into production in the second half of 2023, or is it more 2024? I just had a bit of static on the phone.
Yes, it's in that range. We expect to resume as soon as possible. That will be the second half of 2023. It's depending on the information that we gather with exploration.
Okay. Thank you for that. Just on San Gabriel, if I can just get an update. I did read in the release that you have done your public hearings with the communities and that, you know, we could start construction as soon as we get permission to do so. Maybe just talk about the timeline and any capital inflation you're seeing.
Of course, Tanya. You know, Renzo will give you more color about San Gabriel.
Sure. Thanks for the question. We keep advancing in the conversation with the community and the authorities. We're still aiming at sustaining our projection that we will start construction after the rainy season, that is, in the first part of the second quarter. In regards to your question about increasing CapEx, the number that is in our 370-430 already includes some escalation costs because of last year. We're confirming that range.
What escalation cost did you include in that number?
Because the number we present the last year was a number from 2019, and we are confirming it to 2020 since we moved it. We didn't start construction as expected in 2021, I'm sorry. We're moving into 2022. There's some escalation on the cost of equipment and such.
Okay. I'll come back with more. Thank you.
Our next question comes from Mauricio Fernandini from Credicorp Capital. Please go ahead with your question.
Thank you. Good morning, everyone, and thanks for the presentation. I would like to know more about the shift to copper at El Brocal, and I don't know if you could elaborate more on that one. Basically, it caught my attention that there was a significant fall in ore treated at Tajo Narte copper and silver zone. I want to know why this happened and how should we expect ore treated and production at Tajo Norte, both copper and silver and polymetallic, to move on the following quarters.
Thank you, Mauricio. Juan Carlos Ortiz will give you the correct answer for your question.
Thank you, Mauricio, for the question. As we commented to the market, the Tajo Norte is progressing to the south. By doing so, we are moving away from the polymetallic ore into the copper ore. That's the same ore body that we are mining underground, so we are getting closer to the underground mine. That's the reason during the year 2021, we have lower zinc and lead production compared to the previous year, 2020, and an increase in the copper production. It's getting more copper from the open pit and gradually less zinc and lead. The silver comes along with this transition area. It's a very high-grade spots that we have, some high-grade silver nuggets that we have in the, in this transition area.
We take advantage of that in our model. In our geological model, we're kind of conservative because that's the way to do the model. That reason we could beat the guidance on silver production. Probably this year we will continue mining the same area, so we have some opportunities to overdo our silver production as well. It's always we publish our conservative figures and quarter- by- quarter we will see what's a positive or not reconciliation that we have from our geological model. It's part of the life of mine that we have in open pit. There is no big surprise. There is no problems from the production point of view.
Okay. Thank you very much.
Our next question is a follow-up from Carlos de Alba from Morgan Stanley. Please go ahead with your follow-up. Mr. de Alba, is it possible your phone is on mute?
Yeah. Sorry about that. Yes. Thank you. Several additional points, if I may. On the San Gabriel, just to confirm, when do you expect construction may start, and then when do you expect production or first metal to come on to be produced, if everything goes well? The other questions I have is you can comment on COVID-19 expenses in 2022. You know, if there is a range of a number that you can provide. And then finally, what would be the strategy in Trapiche? You're still probably looking at doing a joint venture there.
At what stage or at what point do you think that would be more optimal for you to actively try to find a partner? What would be the earliest that Trapiche could start, in your view, if everything goes according to plan?
Thank you, Carlos, for your question. Yes, sorry for the COVID-19 information for 2022. The budget for this year is between $14 million and $15 million. That is the budget we are expecting for COVID-19 expenses. In terms of San Gabriel construction we expect to begin, as Renzo told us before, in the second quarter of this year, as soon as possible. Commercial production is around 2025. There are three years of construction. That is the commercial production. In the case of Trapiche, we have not make a decision already.
Of course, there is the sentiment in the group management to look for a joint venture or someone to come collaborate with us in the developing of Trapiche. In terms of dates, maybe Renzo can give us the current dates that we are managing. Please, Renzo.
Yes. For Trapiche, we are in our last year of feasibility. If everything goes as planned, we should start the construction phase in the year 2024, second part of 2024, and it will last three years.
Thank you very much.
Our next question is also a follow-up from Tanya Jakusconek from Scotiabank. Please go ahead with your follow-up.
Great. Thank you. I did want to come back to San Gabriel, and just wanted to understand you provided us production and the capital and EBITDA numbers. You know, just wanted to know if you have, you know, what you think the costs operating costs are going to be at that asset. You know, given inflationary pressures, just wondering what you are projecting for operating costs for San Gabriel and also operating costs for 2022 for the overall company.
Thank you, Tanya. We can begin with San Gabriel, please. Renzo.
Yes. In operating costs for San Gabriel, I think our all-in sustaining cost is around $1,400 per ounce. That's kind of what we are projecting. I think I didn't get your question correctly the first time. We have been working over the whole 2021 quoting the equipment and quoting the main services that we're gonna be hiring. We have some savings in there that cover for the CapEx increases due to inflation and escalation costs. That's why we are maintaining the same range of CapEx.
Yeah, I just was wondering on what you're seeing in terms of inflationary pressures. Is it like 10%? Is it 5%? Like, what are you seeing in costs and capital?
Yes. I think we are in the inflation. Inflation was 20% in the cost of equipment. Yes. That's what we have been seeing during this quoting process.
Okay. Maybe Daniel can give us an update on just overall, what should we be thinking about costs for 2022, in your, you know, in your portfolio of assets?
Yes, Tanya. Thanks for your question. If we talk about gold, we can say that Orcopampa will be producing at a cost applicable to sales of between $1,100-$1,200 per ounce. In the case of Tambomayo, it would be close to $1,000 per ounce. In the case of La Zanja, close to $1,400. Uchucchacua, of course, will not be producing. Julcani will be producing at a cost applicable to sales of around $12-$13 per ounce. El Brocal for copper will be producing at between $6,000-$6500.
$6,000-$6,500 at El Brocal.
Yes, for copper.
Okay. No, that's very helpful. Thank you so much for that, and have a great day, everyone.
Thank you, Tanya.
Thank you, Tanya.
Ladies and gentlemen, that will conclude today's question and answer portion of today's conference call. I would like to turn it back over to Mr. Garcia for any closing remarks.
Thank you. Thank you for attending this conference. Before we finish today, thank you another time for make the time to be with us, and have a wonderful day for you and your family. Thank you.
Ladies and gentlemen, that concludes Buenaventura's Fourth Quarter and Full Year 2021 Results Conference Call. We would like to thank you again for your participation. You may now disconnect your lines.