Buenaventura Announces Fourth Quarter and Twelve Month 2016 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 fourth quarter (4Q16) and twelve-month (FY16) periods ended December 31, 2016. 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$).

Fourth Quarter and Full Year 2016 Highlights:

• In 4Q16, EBITDA from direct operations was US$80.4 million compared to US$19.6 million reported in 4Q15. Adjusted EBITDA (including associated companies) increased 126% (US$ 176.8 million) in 4Q16, compared to the US$ 78.4 million in 4Q15.
• All in Sustaining Cost (AISC*) decreased 11% in 4Q16 (US$ 846/oz), compared to 4Q15 (US$ 953/oz).
• Full year 2016 attributable production was 627k gold ounces and 24.7 million silver ounces, compared to 745k gold ounces and 22.1 million silver ounces in 2015.
• Positive results in explorations, especially in the Orcopampa Mine (See appendix 4).
• Net income in 4Q16 was negative US$ 405.9 million mainly due to a US$422.5 million non-cash adjustments from Yanacocha (attributable to Buenaventura).
• Tambomayo produced its first doré bar in December 2016. Full plant capacity is expected by 2Q17.
• Buenaventura´s Net debt/EBITDA ratio has been reduced to 1.74x, in line with guidance.
• Important improvement at El Brocal. Good operating results.
• In line with Buenaventura´s dividend policy, a dividend payment of US$ 0.057 per share/ADS will be declared.

Operating Revenues

During 4Q16, net sales were US$281.3 million, a 23% increase compared to the US$227.9 million reported in 4Q15. This result was mainly explained by an increase in all metal prices as well as higher volume sales of copper, zinc and lead.

Royalty income decreased 19% from US$7.2 million in 4Q15 to US$5.8 million in 4Q16 as a result of lower revenues at Yanacocha (21% QoQ).

Net sales increased 16%, from US$897.1 million in FY15 to US$1,044.5 million in FY16. Royalty income for FY16 was US$24.3 million, 25% lower than US$32.4 million during FY15.

Production and Operating Costs

In 4Q16, Buenaventura’s gold equity production from direct operations was 68,268, 4% lower compared to the figure reported in 4Q15 (70,910 gold ounces). Gold production including associated companies in 4Q16 was 159,212 ounces, 13% lower than the amount reported in the same period 2015. This decline is explained by a decrease in production from Yanacocha. Zinc and Copper equity production were higher during 4Q16 compared to 4Q15 mainly as a result of higher production coming from El Brocal.

Buenaventura´s gold equity production from direct operations in FY16 was in line compared to the figure reported in FY15. Silver equity production from direct operations in FY16 was 11% higher compared to FY15, this was mainly due to higher production coming from the Uchuchacua (16% YoY) and Mallay (27% YoY) mines. Buenaventura´s Zinc equity production increased 18% in FY16 compared to FY15. This increment is explained by higher production from the Uchuchacua mine (27% YoY), Mallay mine (14% YoY) and El Brocal (8% YoY). Buenaventura´s copper production increased 65% in FY15 compared to FY15 due to higher production from El Brocal (53% YoY).

Gold production at Orcopampa decreased 5% in 4Q16 (compared to 4Q15) mainly due to lower ore treated and lower ore grade (see Appendix 2). Cost Applicable to Sales (CAS) in 4Q16 (772 US$/Oz) increased 13% compared to 4Q15 (682 US$/Oz), mainly due to lower volume sold (12% QoQ) and higher exploration efforts from the Pucara, Pucarina and Lucia areas.

Gold production guidance for 2017 is 180k – 190k ounces.

Silver production in 4Q16 was in line with the figure reported in 4Q15. In FY16, silver production increased 16% compared to FY15, mainly due to more ore treated (16% YoY) (see Appendix 2).

Cost Applicable to Sales (CAS) in 4Q16 decreased 10% compared to 4Q15, an improvement primarily explained by i) increasing efficiencies as a result of massive mining using the bench & fill method and ii) lower commercial deductions.

Silver production guidance for 2017 is 16.0 million – 17.0 million ounces.

Silver production in 4Q16 increased 5% compared to 4Q15, mainly due to more ore treated). In FY16, silver production increased 16% compared to FY15, explained by more ore treated (29% YoY) (see Appendix 2).

Cost Applicable to Sales (CAS) in 4Q16 was in line with the figure reported in 4Q15.

Silver production guidance for 2017 is 1.5 million – 1.7 million ounces.

Silver production in 4Q16 was 9% lower compared to 4Q15, mainly due to lower ore grades. FY16 production was 3,264,420 in line with FY15. Cost Applicable to Sales (CAS) in 4Q16 was 10% higher than 4Q15, primarily explained by lower volume sold.

Silver production guidance for 2017 is 3.0 million – 3.4 million ounces.

Gold production in 4Q16 decreased 13% compared to 4Q15. CAS in 4Q16 increased 41% compared to 3Q15, primarily due to i) less volume sold ii) more hauling expenses.

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

Gold production in 4Q16 decreased 16% compared to the figure reported in 4Q15. CAS in 4Q16 increased 38% compared to 4Q15 mainly due to lower volume sold and higher exploration expenses.

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

During 4Q16, copper production increased 51% compared to 4Q15 and 53% in FY16 compared to FY15 due to a higher ore volume treated and ore grade. In 4Q16 zinc production increased 25% compared to 4Q15 and 8% in FY16 compared to FY15 as a result of higher ore treated and ore grade.

In 4Q16, zinc Cost Applicable to sales (CAS) increased 28% compared to 4Q15 mainly due to lower silver by-product contribution and a higher stripping ratio (9.4 in 4Q16 compared to 4.5 in 4Q16). Copper CAS in 4Q16 decreased 20% compared to 4Q15 mainly explained by more volume sold due to better ore grades and better commercial terms.

Zinc production guidance for 2017 is 70k – 80k MT, while copper production guidance for 2017 is 55k – 65k MT.

General and Administrative Expenses

General and administrative expenses in 4Q16 were US$23.6 million, 8% lower compared to the US$25.6 million in 4Q15 mainly due to lower insurance expenses (65% QoQ). For FY16, the expense was US$81.7 million (US$84.4 million in FY15).

Exploration in Non-Operating Areas

Exploration costs in non-operating areas during 4Q16 were US$11.8 million compared with US$5.0 million in 4Q15. During the period, Buenaventura’s main exploration efforts were focused on the San Gabriel project (US$5.15 million), the Tambomayo project (US$2.30 million), and Marcapunta Norte (US$0.41 million). For FY16, the expense was US$26.6 million (US$30.6 million in FY15).

Share in Associated Companies

During 4Q16, Buenaventura’s share in associated companies was negative US$402.5 million, compared to negative US$235.0 million reported in 4Q15, composed by:

YANACOCHA

At Yanacocha (43.65% owned by Buenaventura), during 4Q16, gold production was 171,675 ounces, 19% lower than 4Q15 production (211,256 ounces). For FY16, gold production was 654,934 ounces, 29% lower than 917,690 ounces in FY15.

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

In 4Q16, Yanacocha reported a net loss of US$988.6 million, this includes a US$889.4 million non-cash impairment (US$ 388.2 million attributable to Buenaventura) and a US$ 78.5 million non-cash reclamation provision (US$ 34.3 million attributable to Buenaventura), compared to a net loss of US$547.4 million reported in 4Q15.

CAS in 4Q16 was US$829/oz, 11% higher than the US$747/oz reported in 4Q15 mainly due to lower volume sold (158,227 gold ounces in 4Q16 vs 216,733 gold ounces in 4Q15).

Quecher Main (oxide deposit) is expected to extend the life of the Yanacocha operation to 2025 with an average annual production of approximately 200,000 gold ounces per year between 2020 and 2025. The estimated CAPEX of the project is $275 and $325 million. A project decision is expected in 2H17.

Studies are in process for Yanacocha sulfides. The project added 2 million ounces to resources.

Capital expenditures at Yanacocha were US$20.4 million in 4Q16, while for FY16 total capital expenditures were US$83.1 million.

CERRO VERDE

At Cerro Verde (19.58% owned by Buenaventura), during 4Q16 copper production was 132,814 MT (26,005 MT attributable to Buenaventura), a 39% increase compared to 4Q15 (95,619 MT and 18,722 MT attributable to Buenaventura). For FY16, copper production was 502,495 MT (98,388 MT attributable to Buenaventura).

During 4Q16, Cerro Verde reported a net income of US$114.9 million compared to net loss of US$13.2 million in 4Q15. This increase was primarily due to: i) higher volumes sold and ii) higher realized price (US$2.72/Lb in 4Q16 compared to US$2.07/Lb). For FY16, net income was US$340.9 million (compared to US$33.8 million in FY15).

Capital expenditures at Cerro Verde were US$72.2 million in 4Q16, while for FY16 was US$421.6 million.

Syndicated Loan (US$1.8B): US$400 million have been prepaid. It is expected to be fully paid by 2018, depending on copper prices.

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

COIMOLACHE (Tantahuatay operation)

At Coimolache (40.10% owned by Buenaventura), attributable contribution to net income in 4Q16 was US$6.5 million (US$7.5 million in 4Q15). For FY16, the contribution was US$23.5 million, compared to US$16.6 million reported in FY15.

Project Development and Exploration

The Tambomayo Project (100% ownership)

• The first doré bar was produced in December 2016.
• Working on Ramp-up, full capacity expected by 2Q17.
• 2017 Production Guidance of 120 – 150 Au Oz.
• Total CAPEX: US$ 362 million.

The San Gabriel Project (100% ownership)

• Updating the economic model with 2016 exploration results.
• Approval of the Environmental Impact Assessment (EIA) expected by 1H17.
• Project decision for next stage is expected in 1H17.
• During 2H17 basic and detailed engineering will be delivered.

Other

During the February 28, 2017 Board meeting, the Directors passed the following resolution:

• To call for the Annual Shareholders Meeting to be held on March 28, with the following items to be proposed for approval:

a. Approval of the Annual Report as of December 31, 2016

b. Approval of the Financial Statements as of December 31, 2016

c. Appointment of Ernst and Young (Paredes, Zaldivar, Burga y Asociados) as External Auditors for fiscal year 2017.

d. Declaration of cash dividend of US$ 0.057 per share or ADS, payable on May 2, 2017.

e. Election of the new members of the board for the period 2017 – 2019.

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 Corporation), 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 2015 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.

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: PRELIMINARY PROVEN AND PROBABLE RESERVES

APPENDIX 5: 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.

Set forth below is a reconciliation of consolidated Cost of sales, excluding depreciation and amortization, to consolidated Cost applicable to sales: