Buenaventura’s San Gabriel Ramp-Up Hits a New Bottleneck: Organic Matter and a Flotation Circuit
Strong Q2 earnings and Cerro Verde dividends, but the market's focus is on the path to 85% gold recovery at the flagship mine.
BVN · Earnings Call · 2026-07-31
A Strong Quarter, but All Eyes on San Gabriel
Buenaventura delivered another quarter of robust financials: total revenues up 43% year-over-year to $529 million, EBITDA from direct operations up 113% to $277 million, and net income of $261 million — a 165% increase. The balance sheet remains a fortress, with management noting “we closed the quarter with $759 million in cash and $69.002 million in total debt, maintaining a net cash position of approximately $67 million” — Leandro Luis Martin Garcia Raggio, Chief Executive Officer · 2026-07-31. The cash flow is also being boosted by Cerro Verde dividends: “we expect between $350 million to $380 million of total dividends for this year” — Daniel Dominguez Vera, Chief Financial Officer · 2026-07-31, with $274 million already received year-to-date. That's a meaningful upgrade from the ~$200 million guided last quarter, and it gives the company ample dry powder for its growth portfolio.
The Recovery Equation: Organic Matter and a New Flotation Circuit
The real story is the path to steady state at San Gabriel. The mine started commercial sales in Q2, but gold recovery is being capped by a mineralogical surprise: organic matter in the ore is acting as a preg-robbing pre. Juan Carlos Ortiz explained: "We have some preg-robbing coal in the ore... we need to add additional reagents new reagents that we do not have in Peru." “We have some preg-robbing coal in the ore... we need to add additional reagents new reagents that we do not have in Peru.” — Juan Carlos Ortiz Zevallos, Unknown · 2026-07-31 The company is bringing in those reagents in August to test at industrial scale, but the full fix will require a new flotation circuit to strip the coal and refractory sulfides. The plan is to hit 70% gold recovery by the end of 2026, then move closer to the budgeted 85% by the end of 2027, with the flotation circuit costing around $15 million and adding only $1–2 per ton in OpEx. It's another operational milestone that will define the ramp-up narrative, but the CapEx is modest.
Efficiency at Yumpag and El Nino Preparations
Beyond San Gabriel, the company is executing operational levers across the portfolio. Yumpag's throughput increase from 1,000 to 1,200 tons per day, combined with the connection to the national grid, is expected to cut operating costs by 15–17% by Q4. That's a meaningful improvement for a key silver producer. Separately, the company is preparing for a potential strong El Nino, which is a new theme this quarter in the company's keyword trajectory. “We already put a committee in each of the mines... we authorized an increase in CapEx of about $12 million” — Juan Carlos Ortiz Zevallos, Unknown · 2026-07-31, said Juan Carlos Ortiz, adding that they expect heavy rainfall to start in December. The el niño preparation is also a global keyword in the same period, appearing in other sectors, which suggests a broader supply-side concern for miners in the region.
Portfolio-wise, the Julcani sale decision is expected this quarter, and Trapiche is being re-evaluated given the high copper price environment — all signs that management is actively rotating capital.
Riding the Commodity Wave
Buenaventura is a clear beneficiary of the current precious- and base-metals supercycle. With Cerro Verde dividends flowing strongly, a fortress balance sheet, and an unhedged strategy, the company is positioned to convert higher prices into shareholder returns. The San Gabriel recovery issues are a reminder that ramp-ups are never linear, but the company's disciplined approach — incremental CapEx, targeted reagent changes, and a staged flotation solution — suggests the market should focus on the long-term outcome rather than the quarterly noise. As one analyst noted, the key is “70% gold recovery by the end of 26” — Juan Carlos Ortiz Zevallos, Unknown · 2026-07-31, and the market will be watching for that milestone closely.
The combination of operational efficiency gains, positive macro tailwinds, and a clear strategic path makes this a name to watch, even if the shares have already had a strong run.