Compañía de Minas Buenaventura S.A.A. (NYSE:BVN) Q4 2023 Earnings Conference Call March 1, 2024 10:00 AM ET
Company Participants
Gabriel Salas – IR
Leandro Garcia – CEO
Juan Carlos Ortiz – VP, Operations
Daniel Dominguez – CFO
Roque Benavides – Chairman
Aldo Massa – VP, Business Development & Commercial
Renzo Macher – VP, Projects
Conference Call Participants
Cesar Perez-Novoa – BTG Pactual
Carlos De Alba – Morgan Stanley
Tanya Jakusconek – Scotiabank
Omar Avellaneda – Prima AFP
Operator
Good day, ladies and gentlemen. Welcome to the Compañía de Minas Buenaventura Fourth Quarter 2023 Earnings Results Conference Call. At this time, all participants are in a listen-only mode and please note that this call is being recorded.
I would now like to introduce your host for today’s call, Mr. Gabriel Salas, Investor Relations. Mr. Salas, you may begin.
Gabriel Salas
Good morning, everyone, and thank you for joining us today to discuss our fourth quarter 2023 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, Vice President of Projects; Mr. Juan Carlos Salazar, Vice President of Exploration; Mr. Roque Benavides, Chairman; and Mr. Raul Benavides, Director.
Before I hand our call over, let me first touch on a few items. On Buenaventura’s website, you will find our press release that was posted yesterday after the market closed. Please note that today’s remarks include forward-looking statements that are based on management’s current views and assumptions. While management believes that its assumptions, expectations and projections are reasonable in view of the currently available information, you are cautioned not to place undue reliance on these forward-looking statements. I encourage you to read the full disclosure concerning forward-looking statements within the earnings results press release issued on February 29, 2024.
Let me now turn the call to Mr. Leandro Garcia.
Leandro Garcia
Thank you, Gabriel. Good morning, and thank you for joining us today to discuss the quarterly results of the company. On Slide 2 is our cautionary statement, important information that I encourage you to read this. We assume that you have already read the full year 2023 results reported yesterday. Moving on the next slide. Our presentation will cover the five main topics shown on this agenda and will be followed by our Q&A session, where our team and myself will be happy to answer your questions.
Let’s begin with some overview of the key highlights of the 2023. Our EBITDA from direct operations for 2023 has increased 38% compared to the previous year. It is worth mentioning that the figures do not include the $300 million obtained last year from the sale of our stake in Yanacocha. Our cash position remains strong in the fourth quarter of last year due to a strong performance at El Brocal, resulting in a leverage rate of 2.05 times, the lowest in two years and within our target range. Full year 2023 net income was 33 million, negatively impacted by $113 million non-cash provision related to former SUNAT dispute.
Capital expenditures in 2023 totaled $239 million, including $94 million allocated to the San Gabriel Project. Additionally, Buenaventura made an extra investment of $33 million in advanced payments for the San Gabriel Project. When taking into account both aspects, the total disbursement for San Gabriel Project amounted to $127 million. We are pleased to share that our dividends received from Cerro Verde during the quarter have contributed up to $49 million, strengthening our overall financial performance. The company received a total of $147 million in dividends for the full year 2023.
Production from Yumpag’s pilot stope began in November 2023, producing 2.3 million ounces of silver by year-end. Yumpag continued processing ore from the pilot stope through January 2024, after which mineral processing was suspended until definitive operating permits are obtained, expected by the end of the first quarter of this year.
Yumpag is therefore expected to reinitiate mineral processing in the second quarter of this year. Record 2023 copper production resulted from successful migration to massive underground method, enabling El Brocal to ultimately achieve an average of 10,800 tons per day during the fourth quarter 2023, surpassing its targeted 10,000 tons per day underground mine exploration rate.
Our consolidated production of copper, silver and gold throughput 2023 has yielded in the following results: 58,000 tons of fine copper attributed to the exceptional production at El Brocal, meeting the upper range of the guidance; 9.2 million ounces of silver achieving the full year guidance, during the fourth quarter of 2023, Uchucchacua and Yumpag contributed with 2.6 million ounces; 155,000 ounces of gold with consistent production of Orcopampa. This production enabled us to surpass the upper range of the guidance.
Moving to our cost structure in Slide 5. Aligned with our strategy to increase our corporate exposure, we are showing the all-in sustaining cost figures as copper and gold equivalent. Here, you can see that our 2023 all-in sustaining costs have reduced by 8% and 27%, respectively, year-over-year. This reduction is primarily attributed to the copper production at El Brocal and silver production at Yumpag. However, it is important to mention that both figures are as consolidated basis and include 100% of Buenaventura’s La Zanja and El Brocal.
Moving on the cost applicable to sales strength. As you can see, prioritization of copper ore at El Brocal and the ramp-up in the underground mine is translating into a 10% cost reduction year-over-year. Silver CAS has decreased 3% year-over-year, primarily driven by lower cost during the fourth quarter of 2023 with the contribution of Uchucchacua and Yumpag silver ores. Gold CAS has remained relatively flat year-over-year despite the reserves depletion at La Zanja and lower production in Tambomayo.
On the next slide, we will be presenting the free cash flow generation. During 2023, we reduced our cash position by $34 million, primarily due to the intensive capital expenditure campaign, which includes San Gabriel. The EBITDA to free cash flow reconciliation is explained by the following breakdown of inflows and outflows. El Brocal, Orcopampa and Tambomayo have been the main contributors for the 2023 while La Zanja, Julcani and Uchucchacua had a negative EBITDA due to the lower production for the first two assets and care and maintenance at Uchucchacua for the first nine months.
However, we recorded a positive EBITDA for the fourth quarter of 2023, thanks to the resumption of Uchucchacua and the contribution of Yumpag. As we have mentioned before, Buenaventura is going through a growth phase with an extensive CapEx related to Yumpag and San Gabriel. This has been partly offset by the dividends received from Cerro Verde.
In the following slides, I would like to illustrate our main four flagships: first, Yumpag producing at full potential once the definite operating permits have been obtained expected by the end of the first quarter of 2024; second, El Brocal underground mine expansion at 12 tons per day in the following two years; third, San Gabriel ramp-up and the first gold bar during year 2025; and fourth, Cerro Verde dividend distribution for approximately between $120 million and $150 million in the following year.
As you can see, our collection of mines offer over 10 years of uninterrupted reserve and resource extraction. We have updated our resource and reserve values shown. In copper, we have 1.9 million tons of reserves, along with an additional 3.1 million tons of resources. In silver, we have and 128 million ounces of reserves with Yumpag making a significant contribution. Additionally, we have 199 million of resource. Lastly, in gold, we have 2.8 million ounces of reserves with San Gabriel being our primary future gold production source. Additionally, we have 3.5 million ounces of resources.
Moving forward to our 2024 guidance. As evident, the prioritization of copper ore at El Brocal and the ramp-up in the underground mine will enable us to maintain an annual copper production in 2024 between 55,000 tons and 60,000 tons per year. Silver production will see a 65% year-over-year increase primarily due to the contributions of Uchucchacua and Yumpag silver ounce. Gold production will decrease by 12% year-over-year, primarily due to the reduced contribution of Tambomayo gold ounces.
Lastly, it is also relevant that in 2024, we estimate executing between $300 million and $320 million of CapEx with approximately $220 million allocated to development of San Gabriel. The total CapEx estimate for the project are being reviewed due to some delays and escalation costs. We are continuously looking for optimization and efficiencies in the project to control the CapEx as much as possible.
Moving on to Slide 10. In the next year, Buenaventura will be focusing most of its efforts in San Gabriel Project because it will be a relevant contributor to the company’s value. It will add more than 14 years of life of mine to the company and another 14 years if we consider the reserves. On this slide, you can see the project’s progress quarter-by-quarter. In the upcoming quarters, we will complete the installation of the concrete plant and the construction of the campsite. On the next slide, we are showing the earth movement activities for the processing plant facility.
On Slide 11, you can see the progress of the construction until the end of the third quarter of 2023, while in Slide 12, we can see an update on the construction towards the end of the fourth quarter of 2023. By 2023 year-end, we have filled over 80,000 cubic meters of material and cut over 250,000 cubic meters.
On the next slide, we show a couple of other components of this project, along with the update as of the end of the fourth quarter of 2023. At the top, you can see the San Gabriel definite campsite with a 98% of progress and over 1,000 beds already installed. The photograph at the bottom show the progress of the main storage area, where we already have 40% of the equipment on site. 30% of the equipment have already arrived to Peru but are pending to be transported to the site.
Finally, I would like to finish the presentation with a couple of closing remarks. First, San Gabriel will allow us to stabilize our gold production at 130,000 to 150,000 ounces yearly in the midterm. We are on track as we aim for our first gold bar by the second half of 2025.
The ongoing success of Yumpag confirms its status as a world-class asset, marked by constantly high silver grades. As we have mentioned, the definite operating permits are expected by March 2024. El Brocal is strategically focusing on the copper underground mine, maximizing margins and gearing up for a robust ramp-up to 12,000 tons per day in the midterm. We are ensuring full funding for our growth projects and sustaining capital expense.
Thank you for your attention. I will hand the call back to the operator to open the line for questions. Operator, please go ahead.
Question-and-Answer Session
Operator
Thank you, sir. [Operator Instructions] And today’s first question, it comes from Cesar Perez-Novoa with BTG Pactual. Please go ahead.
Cesar Perez-Novoa
Yes. Good morning to everyone and congratulations for your results, by the way. So I have three questions, if I may. My first one relates to your material operational improvement in the final quarter of the year, which among several operational enhancements and, of course, Yumpag, led to an import rise in operating performance in the EBITDA. How should we think about costs in 2024? And would the EBITDA that was reported in the final quarter of the year be a new level going forward, of course, assuming stable prices? Could you comment on the sustainability on costs? That would be my first question.
The second one relates if there is any situation on any of your direct operations that will encounter some sort of maintenance downtime in 2024. If this would be the case, which quarter and for which operation? And finally, there is an article in media that recently resurfaced that says that Cerro Verde plans to execute a series of modifications in its production unit for an investment of around $646 million. If this would be the case, what will this specifically involve? And would this imply some expansion at the concentrator? If you could share some views on that and perhaps production guidance for Cerro Verde and CapEx, that would be extremely — I would be extremely thankful.
Leandro Garcia
Thank you, Cesar for your questions. Well, we foresee the cost to maintain in terms of copper and gold in line with 2023 last quarter’s cost. In terms of any situation that could affect our any of our units, we have to mention that in Coimolache, we are expecting a permit that will allow us to continue the works and piling in the pad. More details, maybe Daniel and Juan Carlos can give you more color to your question.
Juan Carlos Ortiz
Thank you, Leandro. This is Juan Carlos. Thank you, Cesar, for your question. Yes, as Leonardo was mentioning, regarding the costs, operating costs on copper and gold, we foresee kind of a stable cost from what we have reported in 2023 coming in line in 2024. In the case of silver, because now we have a full year with production in Uchucchacua mine and also in Yumpag, we foresee a reduction from what was in 2023.
Maybe the [indiscernible] of $19 per ounce of silver in 2023 probably coming down closer to $16 per ounce of silver in relative units. That is going to be along the year because we are ramping up production in Uchucchacua and we are stabilizing production specifically projects in operation in Yumpag. So it’s going to be a [indiscernible] in cost of these two units for silver production.
Regarding the potential downtime in any of the units, as a potential risk, so with a delay in the permits in Yumpag that we foresee for end of the first quarter but probably could make a week or two later, that’s an operational risk, hopefully not. And in the case of Coimolache, also expecting some permits in order to build the expansion of pads to continue with our leaching operations, so also depending on that.
Our guidance also includes the case that we are delaying this construction in Coimolache of the pads. So any advance or any speed-up of the project will be a net gain on the expected production against our guidance that was published a couple of weeks ago.
Cesar Perez-Novoa
Okay. Thank you.
Daniel Dominguez
Okay. Second to add to what Juan Carlos said, in the fourth quarter, Cesar, we had a very strong EBITDA. In the first quarter of this year, we will have Yumpag paralyzed for a couple of months. So this will impact the EBITDA of the quarter. However, for the full year, we expect a total EBITDA of around $220 million, $240 million.
Cesar Perez-Novoa
All right. Thank you, Daniel.
Operator
Thank you. And our next question today comes from Carlos De Alba with Morgan Stanley. Please go ahead.
Carlos de Alba
Yeah. Thank you very much. Good morning, everyone. Just maybe just a very quick follow-up to Cesar’s question and to your response on the EBITDA for the year, under what commodity prices, Daniel, are you forecasting this $200 million to $240 million?
Daniel Dominguez
Hi, Carlos. Thanks for your question. The prices that we are using to these estimates are for gold, $1,900; for copper, $8,500; and for silver, $23 per ounce.
Carlos de Alba
All right. Okay, Daniel. So the questions I have, one, I’ll just mention one at a time and then we can have a conversation. One is on the — can you maybe provide a little bit more color on what you did in the earnings release regarding the SUNAT situation, the tax dispute with the SUNAT? Basically, I understood you took $112 million — $113 million provision. It’s noncash because you already made that payment. But does this indicate that the likelihood of maybe winning the case has reduced? How do you see the perspective of your chances of eventually winning the case? Where are we in the legal process? And what comes ahead? What are the next steps?
Leandro Garcia
Thank you, Carlos, for your question. Actually, we have registered this provision because of the — based on the opinion of our lawyers, the probability to win in the case is lower than 50%. So we — accounting standard, we should register this write-off. The case is not dead. We continue a second phase that will be in the constitutional court. So in that stage, we expect to recover our position and the trial should go back to the Supreme Court. This is for only the — a part of all the trial of the process and means regarding the years ’09 and ’10. So there is a lot of time to expect. And we should — it’s an ongoing news.
Carlos de Alba
Okay. And so the next step is for you to file, I guess, an appeal on the — in the constitutional court, right? But would you have not done that? And if you haven’t, when do you plan to do this? And typically, is there any rule of thumb, any expectation as to how long the process at the constitutional court could last?
Daniel Dominguez
Carlos, we have already done this in December. And we are expecting in the following months to have an answer from the SUNAT.
Carlos de Alba
Okay. And then my next question is on Yumpag and the permits. You mentioned in the press release that you expect to receive them in the first quarter. How certain are you of this? Do you have any indication that it could — this potentially could be delayed into the second quarter or third quarter? Yes, how confident are you that Yumpag would start really ramping up again in the second quarter?
Leandro Garcia
Well, in terms of permits, that the country, the administration is trying to make efforts to give to all the administrators to have shorter times to run the permits. We are — in a daily basis, we have meetings with the organizations and the authorities to take all the questions that they have to allow us to have this to be granted of this permit as soon as possible. We are making all the efforts to have it before the year — the quarter end of this year. Probabilities, I cannot tell you. But be sure that we — this is one of the — our daily jobs that we have to do, our daily targets.
Carlos de Alba
Fair enough, Leandro. Just my last question for you, Leandro, or maybe, Roque or Raul, how do you envision this new phase of the company with a very relevant second large shareholder that now, my understanding is potentially could receive two seats in the Board of Directors? How do you — how does this change the company? How do you see the company going forward? And what do you expect in terms of this relationship with Antofagasta?
Leandro Garcia
Well, Carlos, as the management and all the corporate, we are very comfortable with the business plan and the strategy we have. Maybe we have not talked with Antofagasta yet. We just received the approval of the shareholders to increase the number of directors. So we will see. We will expect our first meeting. Maybe, Roque, if you want to add additional comment?
Roque Benavides
They are important shareholders, and we respect all shareholders. They suggested a couple of names. Mr. Iván Arriagada and Mr. Andrónico Luksic. And we are proposing those names to the Shareholders’ Meeting for approval. I look forward to an excellent relationship. I happen to know Mr. Andrónico Luksic, the Founder, many years ago. And I think the industry has a lot of respect for Antofagasta. So we hope to work together and in a very constructive way. There is nothing more than that.
Carlos de Alba
Thank you, Roque. Thank you, Leandro.
Operator
Thank you. [Operator Instructions] Today’s next audio question comes from Tanya Jakusconek with Scotiabank. Please go ahead.
Tanya Jakusconek
Great. Good morning, everyone and thank you so much for taking my questions. And Roque, if I can just follow up on the Antofagasta, it seems from your comments that you haven’t really sat down with them to see exactly what they want. I mean, we listened to their conference call in terms of what they mentioned. But I’m more interested in if you’ve been able to have conversations with them.
Roque Benavides
Well, we — their interest essentially, being a copper company, is in the Peruvian market and in the copper assets of Buenaventura. As you know, we have Trapiche and we have Coimolache, [indiscernible] La Zanja. Obviously, we have Brocal and we have an equity participation in Cerro Verde. So that is what they have told us that is their interest.
And they will participate as any other company — if they want to contribute to develop these projects that we have under development, they will have to participate as any other company as we are talking to people like Sumitomo or BHP in the case of Coimolache. But as shareholders, they will be part of our Board and they will contribute with their knowledge. And I think it is a plus for the company.
Tanya Jakusconek
So they were interested in sort of all of your copper assets. Because as you know, they’re mostly open pit miners. So they’re also interested in the underground operations. And are they interested in Trapiche maybe being — helping on the development like a BHP, like you mentioned? Would they be interested on being a partner on Trapiche?
Roque Benavides
Well, if they are interested, as any other company, we will open and they will have to sign DNA or I’m correct? Yes, NDA, an NDA. And yes, why not? Antofagasta is a first line company and they specialized in copper and, as you say, in open pit mine. So nothing extraordinary, Tanya, nothing extraordinary.
Tanya Jakusconek
Okay. No, I really, really appreciate that. Thank you so much Roque for that. Can I just ask maybe a couple of things on just some modeling questions from Daniel and then I want to come back to San Gabriel and Trapiche. Just on the modeling side, Daniel, should I be looking at your 2023 level for exploration, G&A and selling expenses and is that a similar level for 2024?
Daniel Dominguez
Yes, Tanya. For explorations, you should estimate around $45 million from brownfield explorations and an additional $10 million for greenfield. The D&A should be similar to the first to third quarter of this year. Remember that in the quarters three and four, we had an amortization of the deferred stripping asset at El Brocal. So if you want to model, you should take the D&A similar to the first two quarters of the year.
Tanya Jakusconek
Okay. No, that’s very helpful. Thank you so much for that. That’s helpful. And then can I come back and ask about some of the asset sales? When we were at the Investor Day, and congratulations on selling one little asset in the quarter, we talked about selling some of the assets to help fund the balance sheet on top of the Cerro Verde dividends that we’re receiving. Where are we on the Yanacocha royalty sale? I know we had talked about it at the Investor Day, there were 13 potential buyers. Can you just talk about where you see asset sales in Q1?
Leandro Garcia
Yes, Aldo, please go ahead.
Aldo Massa
Okay. Thank you, Leandro. Yes, Tanya. We’re still in the process of selling the royalty. We have received five nonbinding offers, February 15. The idea is to elect the one who pass the ROFR of Newmont and maybe make a potential visit to Yanacocha on March — at the end of March. And finally, the idea is to receive the binding offers on April 15 and then choose one and go ahead.
Tanya Jakusconek
Okay. So it seems as though Newmont is not involved. It’s just other players besides Newmont and you would like to finalize by April 15.
Aldo Massa
Yeah. This is the idea.
Tanya Jakusconek
Okay. And then I’d like to come just to San Gabriel, if I could. I just wanted to understand, I see the picture of the camp, 1,000 beds. So is the camp done? And what are the critical items for 2024? And then at the Investor Day, we were also told that we would be getting updated capital and operating costs. Can you remind me whether that’s coming?
Leandro Garcia
Yes, Daniel. I turn the microphone to Renzo, our Vice President of Projects.
Renzo Macher
Hi, Tanya. The campsite is — we have 1,000 beds ready. And besides those beds, we already have another 1,000 beds in the vicinity of the project. So that will not be a problem. What you see in the picture is finalizing sidewalks and finalizing the power — emergency power plant at the site, those little things that are missing. The main contractor for steel piping and mechanical will arrive in the next month. So we’re going to have everything done by that date.
In the second part of your question about what should we expect in 2024? Well, the first concrete pour should be in the second quarter and then power line construction should start as well in the second quarter of this year. In the third quarter, we think we’re going to be starting with electrical and signal contractor and finally finishing the year with a very good advance with the water dam before the rainy season starts. And I think your last question was about the updated CapEx. As Leandro was saying, we are currently working on that. In the next quarter, we’re going to be giving the definite estimate numbers.
Tanya Jakusconek
Okay. So when you report your Q1, so sometime in April, the end of April maybe, we will be getting an updated CapEx? And what about the operating cost?
Renzo Macher
The OpEx, we are going to be finishing in the third quarter of this year, towards the end of…
Tanya Jakusconek
At the end of Q3?
Renzo Macher
Yes.
Leandro Garcia
The update in CapEx should be for the conference call of the second quarter.
Tanya Jakusconek
Conference call of Q2, so it’s going to be sometime in July.
Leandro Garcia
Yes.
Tanya Jakusconek
CapEx in July and then OpEx in Q3, so October?
Leandro Garcia
Yes.
Tanya Jakusconek
Okay. Thank you so much for that, so we’ll look forward to getting those. Because those numbers, as you know, are quite stale. They’ve been there for a long, long time. And then my final question, if I can, is just on Trapiche. I’m just wanting to know if you started the public assembly — sorry, are they still going to be starting in Q2? And is the feasibility still on track to the end of 2026?
Renzo Macher
So yes, we — our environmental impact assessment was submitted and public assemblies should happen in April — in the April [indiscernible]. And yes, we’re still on track for a feasibility study towards 2026. [Multiple Speakers] Go ahead.
Tanya Jakusconek
Yeah. And would it be fair to assume that once you have the feasibility study in hand, that is when you are going to be looking for a joint venture partner?
Aldo Massa
Yes, Tanya. This is the idea. As soon as we have the feasibility study done, the idea is to choose for a partner or look for a partner.
Tanya Jakusconek
Okay. Thank you so much for taking all my questions. I could go on all day, but let me pass it on to somebody else. I really appreciate it.
Operator
Thank you. And our next question today comes from Omar Avellaneda with Prima AFP. Please go ahead.
Omar Avellaneda
Good morning to all. Thanks for the call. I have a couple of questions. I guess, I missed a little part of the call, so maybe you have answered this. But I would like to know what is it needed to have a fully operational Yumpag since the second quarter of 2024? And my second question and last one is regarding Cerro Verde. What is your expectations on CapEx for this unit on a [indiscernible] basis for the next three years? Thank you.
Leandro Garcia
Thank you, Omar. Thank you for your participation. In terms of Yumpag, fully operations, we expect to begin in the second quarter of this year. We are just waiting for the operational permit that allow us to resume the operations in Yumpag. In the case of Cerro Verde, we have reviewed the figures budgeted for this year. And the CapEx today that is approved and planned is around $300 million, in line with the CapEx that we have been used to in the last couple of years. That is the CapEx we know today. The other projects are in the evaluation, I hope — I think.
Omar Avellaneda
Okay. So just to add an additional question, this news that we saw in Gestión related to the $600 million of CapEx in Cerro Verde does not change any at all of your views regarding dividends coming from these units, right?
Leandro Garcia
Well, as I told you, Omar, that news that are appearing in Gestión, it’s currently in evaluation, right? The plan today from the figures that we have is that the CapEx for this year is $300 million. We should have more information in the following meetings with them.
Omar Avellaneda
Okay, perfect. And if I may, one additional question. This $600 million CapEx is not only for just one year. I guess, it could be for a couple of years, three years. It’s not going to be disbursed in one year only, right?
Leandro Garcia
Yeah, it is a kind of — it’s a permit, it’s an IPS (ph). And this IPS is not for one year only.
Omar Avellaneda
Okay. Perfect. Thank you very much. Congratulations on the results.
Leandro Garcia
Thank you, Omar.
Operator
Thank you. Ladies and gentlemen, with that, we will be concluding today’s audio question-and-answer session. I would like to turn the floor back over to Gabriel Salas, Investor Relations Officer, for any webcast questions.
Gabriel Salas
Thank you, operator. The first two questions come from Isabella Pacheco from Bank of America. How do you see net leverage in 2024? What was the main factor contributing to a positive EBITDA in fourth quarter 2023?
Leandro Garcia
So maybe Daniel can help us with that question?
Daniel Dominguez
Yes, Leandro. In terms of the net leverage, we ended this 2023 with 2 times net debt over EBITDA. As we mentioned before, we count with a facility of different — with different banks of $200 million of revolving facilities that we will use when we need the cash to fund San Gabriel in the short term. Probably, we will be using around $150 million from these facilities. And this will — as a consequence of this, the leverage ratio should come up to around 3x, which will be the maximum that we expect by the end of this year.
The second question regarding the EBITDA of the fourth quarter, there were basically three factors. One is the sale of Contacto, contributed with around $38 million of — in the EBITDA. The second factor was the stronger production and volume sold from El Brocal and finally the restarting operations at Uchucchacua and Yumpag that contributed with around 2.8 million ounces of silver to our P&L.
Gabriel Salas
Thanks, Daniel. The next question comes from Orlando Barriga from CrediCorp Capital. How much of Yumpag’s costs were classified as CapEx during the fourth quarter 2023?
Leandro Garcia
Daniel?
Daniel Dominguez
Yes. There were $10 million of development costs that were not inputted to the cost of sales because we count with an exploration permit. So the number for the following years to be amortized is $10 million.
Gabriel Salas
Thanks, Daniel. At this time, there are no further questions. I would like to turn the call over to the operator.
Operator
Thank you. That concludes the question-and-answer session of today’s conference call. I would like to turn it back over to management for closing remarks.
Leandro Garcia
Thank you, operator. Before we finish today’s conference call, I would like to thank you very much for making the time to join us, and have a — again, you have a great day today. Thank you very much.
Operator
Thank you. Ladies and gentlemen, that concludes Buenaventura’s fourth quarter 2023 earnings results conference call. We would like to thank you again for your participation. You may now disconnect, and have a wonderful day.
