BUENAVENTURA

November 22, 2011 DANIEL MORI: DMori@inteligogroup.com

Financial Results IIIQ11 Valuation

Net Result: USD 208.0m Target Price: USD 52.22
Last Price: USD 40.00
Estimate: USD 614.3m Rating: BUY+

Financial Results Review

• Net income reached $208.0m (EPS: $0.82, +19.5%) in P&L (US$m)
3 months ended 9 months ended
IIIQ11, in line with our estimate of $213.4m (EPS:
Sep-11 Var% Sep-11 Var%
$0.83). The accumulated net result reached $630.5m Sales 435.3 55.5% 1,154.3 63.3%
(+43.3%). Gross profit 269.3 80.5% 688.9 74.8%
Operating Expenses 59.1 94.2% 154.4 109.7%
• BVN’s revenues were boosted by higher prices across EBIT 210.2 77.0% 534.5 66.8%
all metals produced. Moreover, the increase in gold EBITDA 233.0 67.5% 602.3 60.9%
sales volume (+19.0%, ex Yanacocha) also benefited Net profit 208.0 19.5% 630.5 43.3%
the company’s sales, led by La Zanja’s and Tantahua- So urce: SM V

tay’s contributions. Among BVN’s other metals, copper

Selected Financial Indicators
outperformed in terms of production growth
3 months ended 9 months ended
(+177.0%), on the back of the higher output from El
Sep-11 Sep-10 Sep-11 Sep-10
Brocal. Gross Margin 61.9% 53.3% 59.7% 55.7%
Operating Margin 48.3% 42.4% 46.3% 45.3%
• COGS (+27.0%) increased due to the higher cash cost EBITDA Margin 53.5% 49.7% 52.2% 52.9%
at BVN controlled operations. In this sense, Orco- Net Margin 47.8% 62.2% 54.6% 62.3%
pampa’s cash cost reached $554/oz Au (+52.0%) due So urce: SM V

an increase in expenses from supplies and the mine’s

lower output. At Uchucchacua, cash cost reached Balance Sheet (US$m)
9 months ended
$16.58/oz Ag (+27.0%) due to higher commercial dis-
Sep-11 Sep-10
counts to payable silver content.
Assets 3,753.9 3,010.3
Net Cash (Net Debt) 449.3 481.6
• Yanacocha’s contribution to BVN climbed 28.0%, Financial Debt 104.3 42.5
reaching $79.8m, due to higher gold prices. On the Liabilities 503.1 369.5
other hand, Cerro Verde’s contribution declined 46.0% Equity 3,250.7 2,640.8
to $31.5m due to a high statistical base. So urce: SM V

• In terms of profitability, BVN’s net margin declined as BVN Sales

3 months ended
the lower contribution from Cerro Verde weighed on
Sep-11 Var%
the company’s bottom line. As a result, the company’s
Gold (oz ex Yanacocha) 135,144 19.0%
ROA delined to 22.2% despite the fact that the assets Gold (oz inc Yanacocha) 277,115 3.0%
turn over ratio (0.46x) climbed on the back of higher Silver (oz) 4,055,221 -4.0%
revenues, which outpaced the increase in assets. Lev- Copper (TM) 4,383 177.0%
erage remained stable at 1.15x. All in all, ROE stood So urce: SM V
at 25.6%.
Value Indicators
Effect on our Valuation Company P/E* P/S* P/BV EV/EBITDA*
BVN 12.7 7.0 3.3 12.4
Goldcorp 24.6 7.7 2.0 12.4
• We believe BVN’s performance in the coming quarters Gold Fields 17.7 2.5 2.2 6.1
will continue to benefit from the high precious metal Newmont 13.6 3.2 2.3 6.8
prices. Moreover, the contributions from La Zanja and Barrick Gold 11.3 3.6 2.2 7.7
Tantahuatay should offer support to gold production. Average 16.0 4.8 2.4 9.1
In the long term, large scale expansions at Yanacocha So urce: Bloo mberg, Inteligo * 12-M Trailing
(Minas Conga) and Cerro Verde (concentrator expan-
sion) should also underpin the company’s production.
In this context, we reaffirm our BVN’s fundamental
target price at $52.22/share. Given current market
prices, we keep unchanged our BUY+ rating.

Inteligo SAB
 EL BROCAL
November 22, 2011 DANIEL MORI: DMori@inteligogroup.com

DuPont Analysis
EBITDA 3 months ended 9 months ended
250,000 65% Sep-11 Sep-10 Sep-09 Sep-11 Sep-10 Sep-09
Asset Turnover 0.46 0.37 0.36 0.41 0.31 0.32
60%
200,000 Leverage 1.15 1.14 1.25 1.15 1.14 1.25
55% Net Margin 47.8% 62.2% 64.3% 54.6% 62.3% 61.7%

EBITDA Margin
Tax Burden 0.65 0.83 0.78 0.71 0.83 0.78
US$ (000)

150,000
50%
Interest Burden 1.53 1.77 2.34 1.65 1.65 1.84
45%
100,000 EBIT Margin 48.3% 42.4% 35.1% 46.3% 45.3% 43.4%
40% ROA 22.2% 23.1% 23.2% 22.4% 19.5% 20.0%
50,000
35% ROE 25.6% 26.4% 28.9% 25.9% 22.2% 24.9%
Source: SM V, Inteligo
- 30%
Dec-09

Dec-10
Jun-10

Jun-11
Mar-10

Mar-11
Sep-09

Sep-10

Sep-11

Source: SMV Leverage Indicators

3 months ended 9 months ended
Gold Sales oz Sep-11 Sep-10 Sep-11 Sep-10
160,000 Operating Lev. 1.4 2.2 1.1 1.4
140,000 Financial Lev. 0.3 0.4 0.6 0.8
Total Lev. (DTL) 0.4 0.8 0.7 1.1
120,000
Source: SM V, Inteligo
100,000
oz

80,000

60,000 Liquidity & Coverage Indicators

40,000 3 months ended 9 months ended
Sep-11 Sep-10 Sep-09 Sep-11 Sep-10 Sep-09
20,000
Cash ratio 1.9 2.9 2.8 1.9 8.9 2.8
-
Current ratio 3.4 4.1 0.0 3.4 4.1 0.0
Dec-09

Dec-10
Jun-10

Jun-11
Mar-10

Mar-11
Sep-09

Sep-10

Sep-11

Interest Coverage 96.2 70.3 21.5 83.4 54.5 20.7

Debt/EBITDA 0.1 0.1 0.6 0.0 0.0 0.2
Gold (oz direct oper)
Source: SM V, Inteligo
Source: BVN. Direct Operations

Revenues Breakdown
Sep-11 Key Performance Indicators
3 months ended 9 months ended
Sep-11 Sep-10 Sep-11 Sep-10
Copper,
Zinc, 8% Orcopampa Cash Cost (Au$/oz) 554 365 447 354
Lead, 4%
6% La Zanja Cash Cost (Au$/oz) 360 387 346 387
Tantahuatay Cash Cost (Au$/oz) 462 - 462 -
Gold, 48%
Uchucchacua Cash Cost (Ag$/oz) 16.58 13.08 16.34 11.83
Source: BVN

Silver, 33%

Source: BVN, Calculated at average prices. Diect Operations

Metal Prices Buenaventura 12-month performance

60.50 2,002.50 60.00 4,000
1,802.50
3,500
50.50 50.00
Volume (US$000)

1,602.50
3,000
1,402.50 40.00
40.50
2,500
Price ($)

1,202.50
Au $/oz
Ag $/oz

30.50 1,002.50 30.00 2,000

802.50 1,500
20.00
20.50
602.50 1,000
402.50 10.00
10.50 500
202.50
0.00 0
Nov-10

Jan-11

Jun-11
Feb-11

May-11
Apr-11

Oct-11
Aug-11

Sep-11

0.50 2.50
May-11
Mar-11

Jul-11

Sep-11

Nov-11
Jan-11

Silver Gold Volume Price

Source: Bloomberg

Inteligo SAB
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Inteligo SAB’s stock ratings are set on a twelve-month basis against relevant benchmarks. There are four stock
ratings: BUY +: Upside potential above the “normal” risk-adjusted return of the ISBVL; BUY: Upside potential above
the “normal” risk free rate for Peru; HOLD: Stock is expected to maintain investors capital relatively unchanged;
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Expected ReturnStockX<0% SELL

0%<Expected ReturnStockX<11% HOLD
11%<Expected BUY
ReturnStockX<21%
21%<Expected ReturnStockX BUY+

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