Well, good morning, everyone, and welcome to Buenaventura's Investor Day. Thank you for joining us today. To access today's presentation materials, in-person attendants can scan the QR code on their tables or on the back of their badges. Webcast participants can access the material through the Resources tab on the webcast platforms. Webcast participants can submit questions at any time during the presentation by typing questions into Ask Question box directly on the presentation. To ask questions live via audio, click the Web Phone button on the dial telephone number displayed on your screen. Follow the operational instructions to join the questions queue. Before we begin, I would like to cover a few important items. Please know that today's presentation includes forward-looking statements and based on management current views and assumptions.
While we believe these assumptions, expectations, and projections are reasonable in view of the current materials, you are cautioned not to put undue reliance on any of these forward-looking statements. Today's presentation will be led by Mr. Leandro García, Chief Executive Officer, by Mr. Daniel Domínguez, Chief Financial Officer, and by Mr. Juan Carlos Ortiz, Vice President of Operations. Also joining us and available for your questions is Mr. Roque Benavides, our Chairman, and our senior management team. Let me now turn the presentation to Mr. Leandro García.
Good morning to all, and thank you for being with us today. Before we start, I want to thank the presence of some of our board of directors that with his experience, knowledge, and the advice, we can manage our company in the daily basis. Another thing I want to say thank you for former executives that are with us. Your loyalty, your legacy is very important for us. Carlos, César, Alex, José, and Ceci. Thank you for being with us today. Today is an important date for our company. Yesterday, we celebrated 30 years of being Buenaventura listed in the New York Stock Exchange. This story began in 1996, being the first Latin American mining company to be listed in the New York Stock Exchange. Thank you for our ambassador of the union. Carlos, thank you. Mr. Carlos Pareja, thank you very much for being with us today.
Before we begin, I want to highlight some of the drivers that are addressing our development as a company. First, we are in a middle of the transformation of Buenaventura. We are exposed to gold, silver, and copper. The second driver of our growth is our experience in 70 years in exploration. This proven ability to find our own future mines. We have long-life access with our, w e have long-life upside for our current operations. We just need to unlock the value, and during this presentation, we are present what are the plans for those assets. Additionally, we have two copper big projects, Coimolache and Trapiche. Our strong financial performance in the last year, we are just prepared to reach $1 billion of EBITDA. And a strong balance sheet and a disciplined capital allocation will allow us to increase our production and to develop more of our company.
Talking about the exposure of Buenaventura, this market, we know the importance to have exposure to three metals. Gold, that will be a value store for much time, and the current situation of the market is important to have gold. Silver, we have the exposure, the same exposure like precious metals, but in the daily basis, we are seeing the presentation and how industrialization in silver is growing up. Of course, copper means the security and energy industrialization. Today, we have participation in our production in revenues of gold of 19%, 44% is in silver, and 31% is in copper. But if you see the light green chart, you can see, considering our attributable revenue from Cerro Verde, that our revenue from copper gets to 48%. That is the evolution of our revenue percentage in the three metals we are exposed.
The investment in Buenaventura is not a single bet in one metal. You are exposed to three metals: copper, gold, and silver. Where does this growth will come? In the following years, we are going to be concentrated in the execution. Coimolache oxides to increase the life of mine until 2034 and try to connect to the big project we have in Coimolache. La Zanja oxides to increase also the production and to produce in La Zanja and in Alejandra. Of course, San Gabriel project that we are in the middle of the ramp-up. In the following five years, we are going to develop the Marcapunta project, the expansion, sorry, in El Brocal. That is the base of the throughput of copper of the company. Of course, we are going to continue growing and developing our mine, Uchucchacua and Yumpag.
In the next five years, coming in the long term, we continue working on our projects, Coimolache and Trapiche. That will be the basement of our production in copper. The second driver of our growth is our capacity to convert a discovery in resources in reserves in mine life, and the mine life in cash flow. During all the story of Buenaventura, we have done that. We have 70 years of experience on discovering our own mines. Buenaventura don't need to buy the future. Our future is in our own operations and in our own projects, in our own mines. We have done it many times. Chipmo converted Orcopampa on a flagship. Marcapunta gives the base of the production of copper of our company. San Gabriel, that was discovered by us, is our flagship for gold production.
Yumpag, that we discovered in 2014, today is in operation and give us a very big platform to produce our base of silver. The next in line will be the area surrounding our mine, Tambomayo. It's with Chaska and Mayra. We are sure that there will be a great operation there, and we can grow with the gold production. This looks like a reserve chart, but this is the story of Buenaventura, converting discoveries to resources to reserves to mine life, and mine life, as I told you, in cash flow. These are our flagships. El Brocal today has a life of mine of 18 years. Uchucchacua and Yumpag, seven years. San Gabriel, we begin with 16 years.
But we have information, and we have made a lot of work there, and we have inferred resources in the case of El Brocal for more than eight years, in the case of Uchucchacua and Yumpag, more than four, and San Gabriel, more than three. And we continue work on looking for more resources, and we get the efforts to make our operations stronger. Today, our consolidated reserves in copper are in 2.4 million tons of refined copper, gold at 3.2 million ounces, and silver, 162. In this chart, we are not considering the recent findings in the new area of Uchucchacua and Yumpag that are in the northeast, in areas that you are going to hear in the very close time. Chonta, Ariana, and of course, all the discovering our exploration department area is finding. And this is how we see our production for the next five years.
In copper, we are going to have a stable production of 58,000 tons of copper. In gold, we are planning to reach 210 ounces of silver. And in silver, we are planning to reach, in 2029, 20 million ounces of silver, and 22 million ounces of silver in year 2030. The following projects that we have talked about, Coimolache and Trapiche, will come after this. That are good news, because it's another phase of the growth of Buenaventura. Now, let me give the pass to Juan Carlos. Gracias.
Thank you, Leandro . Now we will go into further detail about how we're going to deliver this value to the company. We will cover four of our operations, El Brocal, Uchucchacua-Yumpag, San Gabriel, and Coimolache Gold, and then we will, at the end, discuss a little bit of the development of two copper projects that we have in our portfolio. In the case of El Brocal, this is the outprint, the outline of the volcano. That's where we have all the mineralization or the potential mineralization of copper in the district. In the last 20 years, we have been mining this green outline, and in the same footprint, pretty much in the same green area, we also have the next 20 years of production.
We are starting right now a very aggressive program of exploration of almost 6 km to make a go-around or turn around for the complete exploration of the whole district. So it's going to take at least five years to complete the exploration in this area, where we expect to have as many as much copper that we have in the last 40 years. So it's a very wide deposit, very big deposit, in which we are just scratching the surface as to know exactly what is the full potential that we have in here. Based on this exploration, is where we see that the mine could go even bigger.
We are running right now at about 13,000 tons per day, and we have a program to keep increasing the throughput of the processing plant up to 15,000 tons in year 2030, but also to keep growing up to full potential that is about 17,000 tons per day in year 2032. It is going to be the largest underground mine in Peru for large. This operation, it is going to have a steady growth in the next year, and as I mentioned before, based on exploration and all the resources that we are identifying in the district. Based on this growth, we have a planned production in here of copper in the order of 52,000-56,000 tons of copper per year, plus silver production, 1.5 million ounces as a byproduct of the copper production, and gold.
This operation has also the pressure for inflation on one side for the operating costs, like the cost of fuel, for example, and also the use of cement. In order to recover half of the deposit that was mined before, we need to use cemented backfill in order to recover the pillars. That is going to be also another inflationary pressure to our cost. In order to offset this inflationary pressure for cost, we have several actions in place. Number one, increase the throughput to dilute our fixed cost, but at the same time, we are changing our business model. In the past year, in the past 20 years, we have been operating the mine with a contractor. Right now, we are switching that model to a more balanced 50/50.
50% of the production and development will be done by ourselves with our own fleets and people, and 50%, particularly the exploration around the volcano, with a contractor, developing underground contractor. Also, that will give us some credits to reduce the costs and keep our production costs in line, declining line to be below $56-$57 per ton. But if we put the cost not only by ton, but by the fine copper we produce, we have a steady production in the order of $5,800-$5,900 per fine ton of copper. There is an advantage that we are foreseeing now in the future is that the arsenic content in our ore is declining. We have new area being discovered recently that have a lower arsenic content. Keep in mind that almost 1/3 of this figure is arsenic and bismuth penalties.
If we have less arsenic, we will have lower penalties in our production. It is also a good way to balance and keep not only a larger production in the future, but also with a very competitive cost in the region, being an underground mine. The growth in El Brocal is a success story. We started like 8,000 tons per day, 8,000 tons per day, like five, six years ago. Now we are almost 13,000 tons per day, and we will go to 17,000 tons per day in the next five years. We are growing based on exploration. The same story repeats in Uchucchacua and Yumpag. This is another of our flagships. We have Uchucchacua over here, Yumpag to the east. There is a gap in between of about 3 km or 4 km.
We have exploration in Uchucchacua going to the north, Lucrecia, to the west in Bonnie, and to the south. The same as in the case of El Brocal, we are running a very, very aggressive exploration program, not only inside the area that we already know in Uchucchacua, but also going beyond that. We have that commitment. We are putting a lot of effort and all the resources available to run farther to the north, 2 km to the east, and 2 km to the south. We are expanding the mine, not only deepening down, also to both boundaries that we have in Uchucchacua. Based on that, is that we feel confident to also make an expansion in Uchucchacua. We have here the throughput.
We are this year finishing with 2,100 tons per day, and next year we will achieve the target of 2,500 tons per day, polymetallic ore in Uchucchacua. In the case of Yumpag, it's important to mention that these two mines feed the same processing plant, so they are into a very strong synergy. In Yumpag, it's a very high-grade silver mine, beyond 18, 20 ounces per ton of silver, very high grade. We are also running exploration to the east, filling the gap in between Uchucchacua and Yumpag, and also developing exploration to the north, to the target Chonta. Chonta is a porphyry copper kind of skarn mixed together deposit, so a high potential target for our vicinity, not far from the processing plant, and also a lot of potential discoveries of high-grade silver in between.
Before we get to the copper, very likely we identify some other target we had some evidence in the surface. Based on this potential, we're also making a plan to expand the production of Yumpag. Right now, we are running at 1,200 tons per day, and we are applying for a permit to increase production up to 2,000 tons per day. We will obtain this permit early in 2029. 2029 will going to be the year we will start making the ramp-up between 1,200 tons per day up to 2,000 tons per day. 2030 is going to be the first full year of 2,000 tons per day production. If we translate that into silver production, in the case of Uchucchacua, only silver, it's not silver equivalent, it's just only silver, it's going to be around 2.5 million ounces of silver per year.
In the case of Yumpag, when we start the ramp-up and complete the ramp-up in 2030, it's going to be probably 12, 13 million ounces of silver per year, becoming one of the largest silver mines in the world. The grade of all these discoveries, all the evidence that we have so far, all the results and research that we do have at this time, keeps being a very high-grade deposit, bonanza-style deposit. If we put everything here as a unit cost, we are going to be in the area of $140 per ton. That's the efficiency that we can do as miners on the ground. If we put the cost expressed on C1 cash cost by ounce of silver produced, it's going to be around $12 - $15.
The increment that we see here is because in year 2025 and 2026, we have a very, very competitive treatment charge, like negative ones. Once we probably revert that situation in the future, becoming positive treatment charge back into normal in the market, this will affect also our costs. It is more a market condition here, but not necessarily a lack of efficiency in our operations. The increment here, it is something that we need to test year -by -year to see how the market is being more or not aggressive. But even though it is a very kind of low cost for the market of silver production. Again, we have an agenda of growth based on the exploration and the potential of the district that we have, becoming one of our key flagship for Buenaventura. In the case of San Gabriel, we are the latest stage of the commissioning.
We are starting the ramp-up production next year. Next year, we will process in the area of 600,000 tons of ore, 2028, 800,000 tons, and in year 2029, we will reach, will be the first year of full capacity, 3,000 tons per day, over 1 million tons processed in a year. Then we will keep that steady production for the next 14, 15 years. It is just two years more to complete the ramp-up, and then we have 15 years for a steady production at full capacity. The reason we have this ramp-up in production is showing here to explain what is the geometry that we have in our tailing dam. We use the dry stacking technology, so we dry the tailings, and after the tailings are dry, we spray the tailings in thin layers and compact with a roller.
In order to do that, we need to start from the bottom, and initially at the bottom, we have a very limited surface area, and the surface area is proportional of how many tons you can place in a year. So in year 2026, we have a small footprint. In 2027, we have a larger footprint, and by the end of 2028, we will have the area that we require for sustaining 1 million tons of production on a regular basis. So, different path here is explained by the geometry of the tailing reservoir, a dry stacking one, and once we reach the minimum area, we can continue with 1 million tons of production.
If we translate this 1 million tons of production into gold production, we have a steady growth also reaching 100,000- 110,000 ounces of gold per year, and we will have that steady production for the next 15, 14 years. Regarding operating costs, C1 cash costs for gold, we are in the area of $2,500 per ounce, and we are looking at the early stage of analysis, but we believe we have plenty of opportunities to reduce the costs, like reducing the amount of cement that we use in our operation, haulage distance, use of reagents, and another opportunity to even increase the throughput in the processing plant. So, that is going to be a very conservative approach at this stage, and probably next year we will have some positive news regarding the operating costs as well. The last asset that we have in gold is called Coimolache.
It's an open pit operation, oxides, and we are having a very steady production of about 100,000, between 80,000 - 100,000 ounces of gold per year. Very competitive gold price or very competitive gold cost in the area of $1,200-$1,300 per ounce of gold, very competitive. What is interesting in here is that due to the price that we have in the last two, three years, we revisited the material that we have in our low-grade stockpiles. This low-grade material that we mined 10 years ago become economical. Using that material, we put that into a test pad, and after that, we proved that the material can be treated and producing positive economical results. We add that to our mining plan. We extend the life of the mine as a gold producer for three more years. We will really be in 2033, 2035.
We will finish our production 2033, and we continue leaching the pad up to 2035. We have a steady production of a low-cost operation. The important thing in here is not only that we have this asset running for the next five, seven years, is that we have the transition from gold into copper. But before we jump into the copper project that we have in our portfolio, this chart that you see here from S&P shows in the green bars what is going to be the production of copper from concentrate and what the refining production in gray columns. You see that in some years, you have an outset, there is a lack of production from copper into concentrate, but you have more production for recycling as refined copper in gray. But in year 2032, 2031, we start looking that both markets get into deficit.
We expect that not only the copper price will keep in the same range that we have as today, $13,000 per ton, $14,000 per ton, but probably could go even higher. That's particularly the time in which we are going to be delivering our next two copper projects. One is called Coimolache Sulfides, with about 1.2 million tons of fine copper contained, with the expected life of mine beyond 15 years. That's the project that we are developing as of today. And Trapiche, that's about 1.4 million tons, only for the leachable part. We will go into that in a minute. That's going to be running also for about 18 years more. Going to Coimolache to put a little bit more color about this project.
In orange, you can see the profile of the distribution of oxides, gold-bearing ore that is leachable, and we have that on the top part of the open pit. Once we finish, this is the blue outline, it's going to be the profile of the open pit in year 2035. We will strip everything on top, and down below in green, we have the sulfide, the copper sulfide. In this particular case, it's not that we have a gold deposit and a copper deposit nearby, it's one underneath of the other. By doing the mining of the gold, we are stripping everything for opening the next phase of the development of this district, that's the copper phase. This part is a very large resource.
We are only developing the conceptual engineering for a fraction of that, almost a quarter of the whole deposit is being developed with this engineering. We need to look for further facilities like water, energy, and tailing reservoir in order to develop the full potential of the deposit. Only 25% is about 1.2 million, 1.3 million tons of copper contained. The deposit is way bigger, but we have some constraint. Developing that case of 1.2 million tons of copper, we completed this year the conceptual study and working now with drilling, in-field drilling, and a lot of activities further down to develop the pre-feasibility by 2029. We expect to complete that and to have the project ready for construction in 2034. At the time we are finishing the gold production, we will have the permits and the engineering, everything ready to start the construction of the copper phase.
In Trapiche, we already studied the project for the leachable part. That is shown here in light green, that is the leachable part of the deposit. The engineering is already completed. We already applied for the permit. We were granted the environmental license. We are applying now for the construction permit of that phase, the leachable part. Due to the market condition and due to the incentive that we have with the high copper price, we are looking also to integrate the next phase into the footprint. That is the primary ore, the primary sulfides. We would like not to have only a project for 17 years. We would like to have also a project for the next phase, another 20+ years . We have plenty of resource, as you saw here in the gray area, to expand the resource on sulfides.
The idea now is to be focused not only developing the leachable part, that is already done, it is also to integrate the next phase into one footprint, maybe by additional land, maybe to look for additional source of water and power, and have a larger footprint ready to have phase I and phase II fully accessible. That is the target that we have right now. We have a really emblematic, a very significant asset to be developed for Buenaventura for many, many years to go. Just as a wrap-up, we went through the presentation of the four main assets that we have as ongoing operation, El Brocal, Uchucchacua-Yumpag, San Gabriel, and Coimolache Gold, in which focus on exploration is allowing us to have a growth agenda in the coming five years.
In parallel, we have the portfolio of two copper projects, the phase of copper in Coimolache and the phase of sulfides in Trapiche to be added to our portfolio in the coming years. We are working in the short term and in medium term advice, to develop this full potential of our portfolio from an operational point of view. Now, I am going to hand it over to Daniel for the financial part.
Thank you, Juan Carlos. We're going to go through the financial information and the financial strategy of Buenaventura. These three last years have been very important and very positive for Buenaventura's growth. As you can see, our EBITDA has grown almost 8x since 2022. This is basically not only due to the higher prices, but also because of the higher production in silver and copper coming from Yumpag and El Brocal. As you can see, in year 2022, we had an EBITDA of 156 coming from direct operations. This excludes Cerro Verde and Coimolache. The contribution of our EBITDA in the total EBITDA, in the attributable EBITDA, was almost 30%. The other percentage was Cerro Verde. Now, in the last year, in the last 12 months, we had reported an EBITDA of $1.2 billion, and the contribution of Buenaventura's direct operations is around 60%.
As you can see, the weight of our direct operations has grown significantly in the portfolio. Cerro Verde continues being a very important contributor to our EBITDA. Our EBITDA has been growing, and it will continue growing in the following months, in the following years. For next year, we expect between $1.7 billion and $1.9 billion of revenues. You can see here a small decline, but this is basically because of the prices. As you can see, we are using the following prices. For gold, $3,800 per ounce. For silver, we're using $50 per ounce. For copper, we are using $13,000 per ton. Using this level of prices, which are lower than the ones we reported in year 2026, remember that we picked $5,000 for gold, we will report revenues next year around $1.7 billion and $1.9 billion.
This will be increasing significantly in the following years. In year 2028, we will have San Gabriel fully ramped up, so that will contribute with more gold sales. Alejandra from La Zanja will also start operations. Yumpag will go from 1.2 - 2,000 tons per day production, and increase, as Juan Carlos mentioned, it will increase our silver production, turning Yumpag Uchucchacua in one of the biggest silver mines in the world. For year 2030, we will continue growing by having El Brocal producing at a rate of 17,000 tons per day. Our EBITDA will be, of course, growing as well. As I mentioned, year 2027, as we are using more conservative prices, it seems to be a decline. If we use the same prices of this year, of course, the EBITDA should grow.
In the following years, we will reach more than $1.1 billion of EBITDA, with an EBITDA margin of close to 50%. This is our capital allocation strategy. We will focus our capital allocation in three pillars. First is sustaining and optimization of our operations. Second is return to our shareholders. Of course, growth. As you know, we have been accumulating a big amount of cash in our balance, and we will continue accumulating cash in the following years. So, we have five strategies in what we are going to use our cash. The first one is sustain and optimization of our operations. As Juan Carlos mentioned, we are going to invest a very strong amount of cash next year, sustaining CapEx, in order to grow in most of the mines that we operate. We will reinforce or strength our exploration activities.
Normally, we have been dispersing between $80 million and $90 million in explorations. This year and next year, we will increase our budget to $100 million and even further, basically $150 million, $160 million. Of course, rewards or returning cash to our shareholders is an important driver for our growth. We will continue progressing in our growth projects, Trapiche and Coimolache. We will save some money, some cash, to continue exploring and progressing in these two projects. Of course, we are always open to pursue or to look for any investment or any opportunity that we have outside Peru or even in Peru in another locations. As I mentioned, 2027 will be a very high intensive CapEx year. This year, 2026, we finished to build San Gabriel, so we had a growth CapEx of close to $160 million.
For next year, we also expect a high growth CapEx because we are dispersing, we are progressing in Trapiche's investment. We intend to purchase some lands to continue with the exploration and to assure the continuity of the components of the project. Our sustaining CapEx will also be higher than the previous years, $422 million, basically devoted to the following investments. In San Gabriel, we will continue with the tailing and water management, and also the ventilation inside the mine. In El Brocal, we will build the paste backfill plant, the site infrastructure, and the mine development to reach or to be in the path to reach the 17,000 tons per day throughput. In Uchucchacua and Yumpag, we will start the tailing dam expansion to assure the sustainability of the operation, and of course, site infrastructure and mine development.
As I mentioned, in Trapiche, our intention is to buy the lands that we need. Our dividend policy is not less than 20% of the net income from the previous year. In year 2024, we resumed our dividend policy, and we have been complying with it in the following years. Last year, we paid 40% of the net income, and when the cash flows and the prices accompany us, we will continue paying at least those amounts of dividends. We have a commitment with our shareholders, and we want them to be long-term shareholders. Finally, I will go through our free cash flow for the following years. This year, we will finish the year with more than $1 billion in cash. For 2027, as we consider a very high intensive year of CapEx, we will have negative free cash flow.
As I mentioned, this includes a very conservative deck of prices. We will end the year with around $800 million, $900 million of cash next year, and we will have, in 2028, a free cash flow of more than $400 million. This is basically due to a higher EBITDA, and we will be reducing our CapEx, basically the sustaining CapEx. In year 2029, our EBITDA will continue growing. We expect more than $1 billion of EBITDA. Basically, the sustaining CapEx will be $250 million, $270 million, and we will generate more than $650 million-$700 million of free cash flow. The same for year 2030. We expect more than $1 billion of EBITDA, basically sustaining CapEx of $250 million, $260 million. Every year, we are considering that Cerro Verde distributes to Buenaventura around $200 million.
This is very conservative because having these prices of copper in excess of $14,000 per ton, probably Cerro Verde will pay more dividends to Buenaventura as it did during this year. One important thing to mention is that in these free cash flows, we do not consider any dividends paid to shareholders. This is the cash that we would evaluate to distribute to shareholders. And now, Leandro will close the session.
Juan Carlos. Thank you, Daniel, for your presentation. And I would like you to recall this presentation with this slide. And we would like to highlight three things. Buenaventura gives you exposure to gold, silver, and copper. Second, explorations is the DNA of Buenaventura, and we are capable to construct our own discoveries. And third, our strong financial performance allow us to increase the growth, increase the value of your investment in Buenaventura. Thank you for your time, and we are prepared to your question, and we are happy to answer it. Thank you very much. [Foreign language] The rest of the team is available for your questions also.
First, we will start with the in-person questions. Carlos, please.
Yeah. Good morning. Thank you very much, Carlos de Alba, Morgan Stanley. Thank you for the presentation. Congratulations on all the progress that you have made. My first question is regarding the guidance, just looking very briefly at how it compares to consensus. It is below expectations in terms of production. So I wanted to understand the level of conservativism that maybe it is embedded in this guidance, in terms of particularly when the new projects, the new mines come into play and the growth in production starts to kick in. And just to understand how we should analyze the new forecast.
Thank you, Carlos. This is a conservative view of what we are foreseeing in the following years. It has to be with permitting and all the studies we have to develop before we increase the production. Maybe, Juan Carlos, you want to-
Yeah. Well, it's in line with Leandro saying. In order to deliver these two projects, like Coimolache, in the case of Trapiche, Coimolache, the first restriction is that we need to mine all the gold first. We cannot pass to mine the copper before we mine all the gold that is on top. We are going as fast as we can. But with the current prices, you have plenty of resources of gold available on the walls of the open pit and at the bottom of open pit, so we need to mine the whole gold, put everything out into the pads, and then we have all the copper available for production. But we have, it's really a brownfield project. It's not really complicated in the sense that we have already, we own the land, we have power, we have water.
We need to make some expansion on those facilities, but we do have the thing available so far. And we already know the communities around ourself. In the case of Trapiche, we can go faster in the sense that we can develop the leachable part of the deposit quickly, maybe three, four years down the road. But when we put into perspective, you see the section, when you see the leachable part and the sulfide, and the sulfide is really the larger part of the deposit, we believe is the best interest of shareholders to develop the whole potential of the Trapiche deposit. So now we are putting a lot of effort to develop the sulfide phase as well. The previous restriction that we have, not restriction, but limits in the cash available for developing one of these projects, one after the other.
Now you see the cash flow we're generating, it gives us more flexibility to say, "Okay, better to go for the big, large deposit instead to go in two steps." That's the reason we're taking a little bit more of time, maybe two, three more years down the road than previously anticipated.
One of the restrictions in Trapiche is that we need to buy the land, and that we are in the process. That is why Daniel explained that the process of purchasing the land will be, the effort will be in the following, in the next year.
If I may follow up on that, a couple of follow-ups. One is, what is the percentage of the land that you would like to, that you still need to acquire for Trapiche before you feel more comfortable that you achieve the footprint that is needed? In terms of the sequencing of the projects, do you see Coimolache Sulfides first and then Trapiche? Or how are you scheduling potentially these two projects? Very important, in Coimolache, you do not own 100%. Any expectations as to who will be the managing or the operator of the new phase? Thank you.
Well, we are developing the project. We expect to continue being the operator of Coimolache. In terms of percentage of land acquisitions, for Coimolache, for the first stage of Coimolache, we already own everything. We need to increase the property for the second and third stage for Coimolache. That means for the 40,000 tons per day daily, 40,000 more for the and the other stage that could be 80,000 tons. We need to buy that land for water, for water dam, and for the tailings dam. Today, we have enough space for the first stage. In terms of Trapiche, we need to buy the lands of Antabamba that is in the lower part of the area, and will allow us to unblock the potential of the primary sulfide.
Yeah. Well, maybe just to put some numbers. In Coimolache, probably less than 250 hectares for phase I and phase II and phase III. In the case of Trapiche, in the realm of 1,000 hectares, they have one single owner.
Yeah.
Perfect. Please.
Thank you. At Coimolache, how much waste are you going to process now with gold at, say, $4,100? What would the cost per ounce be? Obviously, the price is not $1,410, it is $4,400, or $4,100. Thank you.
We are going to be mining in the order of 14 million - 16 million tons of ore per year. We are going to be producing, based on that, with around 70% recovery on the pads, we are going to be producing in between 80,000 ounces - 100,000 ounces of gold per year, up to year 2034. Then we finish production, but in the leaching pad, we have some inventories that can be extracted in a couple of years, 2035, 2036. The average cost of production is going to be between $1,200 - $1,300 per ounce of gold.
How much?
$1,200.
$1,200 to $1,300?
$1,200 to $ 1,300.
80,000, is that all from waste or does that include underground?
No, it is only open pit. It is only open pit, and the stripping ratio is below one.
Below?
Below one. We have less waste than ore in the open pit.
How much of that might be waste that you rejected before?
No, it is about three years production, so it is going to be around between 50 million- 60 million tons of low-grade inventories that we are rehandling and putting back into production.
Less than 1 gram?
Yeah, way less than 1 gram. 0.35 grams per ton.
So, it was really 500,000- 600,000 ounces?
Yeah.
Roughly?
Yeah.
At $1,200 or $1,300?
Yes.
I think you can make money with that.
Yeah, we will.
Yeah. Thank you.
Thank you very much. I do not know if we have any in-person question. If not, we can move forward to a webcast presentation. The first questions come from Tanya Jakusconek from Scotiabank. "What pressures are you seeing in cost structure? Is inflation rate of 5% reasonable for 2027? What capital cost should we be thinking about Trapiche and Coimolache?
Well, basically, the inflation pressure that we are seeing is driven by the diesel prices and, of course, the labor. As we are having higher net profits, we have to pay more workers' profit sharing. Between 5% and 7% increase of the OpEx will be a good estimate.
Regarding the rates for Coimolache and Trapiche?
The internal?
The second question is, what capital cost should we be thinking about Trapiche and Coimolache at this moment?
Well, the IRR that we pursue in our projects is around 15%. If we buy money, the cost of capital, the cost of loans that we expect is around 6%.
Sure. The next question comes from Juraj Domic from LarrainVial. "Regarding upcoming projects like Trapiche, are you considering moving forward with a partner or internally?" My second question is, "What are your thoughts on recent announced MAPE law?
Well, in terms of looking for a partner, that decision will be made once we end the feasibility study for Trapiche. That will evaluate what to do with the continue investing. What is the second?
Regarding the MAPE law in Peru.
MAPE law.
MAPE law? Well, I think it's a great effort made by this administration. MAPE law. It's a good effort made by our Minister of Energy and Mines. I think it will be a big debate in the Congress. They put some order in how things are developing today, but there is some additional things that should be incorporated into the law.
Perfect. The last questions come from Edder Alonso Castro from Credicorp Capital. "How a strong El Niño could impact your plan for 2027 or even four quarter 2026? How prepared do you see the company for that event?" In addition, you mentioned M&A outside Peru as a potential alternative. Do you have a metal or preference?
Yeah. Let me first, a short answer. In terms of M&As, we are always open to any opportunity that we can capture value for the company. Especially, we could look any project in gold and in copper. In terms of El Niño, every year we have a summer plan, because in Peru, the rainy season begin in January. This year, we have begin that summer plan before the year. Normally, we begin it on October, and this year, we have begun on July, preparing to El Niño. Details, if you want to give some details of the-
Yeah. Just to give assurance that we are working hard on this. Every year, we have a rainy season plan to check our facilities and to test our capacities and train our people to the emergencies that might happen during the rainy season. This particular year, because we have all the information in advance of El Niño being very strong, we update our numbers. We rerun our models in order to accommodate a larger rainfall in our area. We have invested in the area of $50 million all over our facilities to increase pumping capacity, water treatment capacity, power supply for the pumps, rent additional pumps, in order to be prepared for a heavy rain during this incoming summer.
Please. Morgan Stanley.
Hi. Thank you for taking my questions. This is Enrique from Morgan Stanley. I just have two questions. Regarding the production growth that you showed for the next following years, I just want to understand what are the permits that you still need to get for those, and when do you expect to have those permits? Also, just on the free cash flow chart that showed us there was the CapEx plus closure. On those closures, are there any specific mines or assets that you're spending that closure amount that you won't expect to produce in the next couple of years? Thank you.
Well, in terms of permits, every year we have our strategic day, and we get together with all the areas to put in a special type of Gantt, what we need in permitting to develop and to finally have our output increased. We have environmental permits to come and operational permit to come. That is an effort that all the company is focused in order to have those permits in time to continue that production that we are mentioned there. In terms of the-
The mine closure.
The mine closure.
The mine closure expenses. This is basically the progressive mine closure expenses. There are no any big disbursements that we have to do in any single mine. This is a normal progressive expenses that we disburse every year, which are around $20 million-$30 million per year.
What is the percentage of your costs regarding diesel, and what would it affect from $6.50 - $4?
Diesel represents almost 5%-7% of the total OPEX. It has already increased more than 70%. The total effect, the total impact is around 5%-7% of the total OPEX. Basically, coming from open pit mines. They are intensive in diesel. The underground mines use less diesel.
Well, thank you very much. With that, we have concluded the Q&A session.
Thank you very much.