Trekor Metals Limited Common Shares

Good morning. My name is Ina, and I will be your conference operator today. At this time, I would like to welcome everyone to the SECO's first quarter earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session, and if you would like to ask a question during this time, simply press star, then the number one on your telephone keypad. If you would like to withdraw your question, please press star, then the number two. Thank you. Mr. Burgos, you may begin your conference.

Thank you, Ina. Welcome, everyone, and thank you for joining TSECO's first quarter 2024 results conference call. The news release and regulatory filing announcing our financial and operational results was issued yesterday after market closed and is available on our website at tesecomines.com and on CDAR+. I am joined today in Vancouver by TSECO's President and CEO, Stuart MacDonald, TSECO's Chief Financial Officer, Bryce Hamming, and our COO, Richard Trombley. As usual, before we get into opening remarks by management, I would like to remind our listeners that our comments and answers to your questions will contain forward-looking information. This information by its nature is subject to risks and uncertainties that may cause the stated outcome to differ materially from the actual outcome. For further information on these risks and uncertainties, I encourage you to read the cautionary note that accompanies our first quarter UDNA and the related news release, as well as the risk factors particular to our company. I would also like to point out that we will use various non-GAAP measures during the call. You can find explanations and reconciliations regarding these measures in the related news release. And finally, all dollar amounts we will discuss today are in Canadian dollars unless otherwise specified. Following opening remarks, we'll open the phone lines to analysts and investors for questions. I will now turn the call over to Stuart for his remarks.

Thank you, Brian, and welcome, everyone. Thanks for joining us today for our quarterly conference call. As usual, I'll start with a brief overview of the quarter, and then I'll turn it over to Bryce for some more detailed commentary on our financials. It's obviously been a very busy few months for us here with construction activity ramping up at Florence. The buyout of our JV partners at Gibraltar and also our recent bond refi. But before we get into that, let's start with our brief comments on Gibraltar operations. And the mine has been running smoothly and our production results are generally on plan for the first quarter. Gibraltar produced 30 million pounds of copper and 250,000 pounds of molybdenum. Grade for the quarter was 0.24%, which is right around where we expect to average for the year. As we've previously talked about, one of our two concentrators was shut down for a planned major maintenance in January. The mill was down for about 12 days, but actually since it's come back online, our total mill throughput has been very strong, averaging just over 90,000 tons a day, which is 6% over nameplate capacity. Copper recoveries for the quarter averaged 79%, slightly lower than planned on higher throughput and also milling of some partially oxidized In terms of costs, our total site costs were consistent with the prior quarter with Q4 last year. But lower copper production and a lower capital strip allocation had an impact on our unit costs. And our source E1 operating costs came in at $2.46 per pound for this quarter. That's U.S. dollars. With a realized sales price of $3.89 per pound, we were able to generate $50 million of adjusted EBITDA and $60 million of operating cash flow. So overall, strong financial results, and Bryce will provide some further detail on that in a minute. Looking ahead to the next few months, we have a pit transition underway. The Gibraltar pit was the main source of ore in the first quarter, and the Connectra pit supplied about 25% of the mill feed. By mid-year, the Connectra pit will become the primary pit, and to facilitate that transition, we're getting ready to move the in-pit crusher this quarter. Our contractor, Takraf, has begun mobilizing their equipment to site ahead of the move. Mill number one will be down for a few weeks and we'll take advantage of that downtime to complete some other proactive maintenance in the mill. Mill number two will continue operating normally during that time and mining activity will also continue as normal during that down. The operation remains on track to achieve annual production guides of 115 million pounds of copper. At the end of the first quarter, we closed the acquisition of the remaining 12.5% interest in Gibraltar. So the second quarter will be our first full period of 100% ownership. This is a great transaction for us. It provides immediate cash flow and a deferred payment structure that preserves our liquidity for Florence development over the next two years. As part of the deal, we also got back the 30% life of mine offtake contract that was held by our JV partners, DOA and Furukawa. Those additional uptake rights have come to us at a time where smelter treatment and refining costs are near record lows, and we've been able to take advantage of that by selling additional spot shipments in the second half of this year at negative TCs. So that's a premium. In other words, Teseco is being paid by traders to take the concentrate, which is something I've never seen before, and I don't think we've ever had that in 20 years of operating Gibraltar. But it certainly shows us the value of clean concentrate in the current market. And comparing this to our previous benchmark contract, cost savings in the second half of 2024 are about 10 million. We've also marketed recently significant additional tons for 2025 and 2026, and that material has also been sold at negative TCs. So it's clear that the traders do not see the copper concentrate shortages ending anytime soon. The market for refined copper is also strong, and as we've seen, the big price move up since quarter end, up to the 450 a pound range. That's about 60 cents higher than our realized price in Q1. So it's a great time to be bringing on additional production, which is exactly what we're doing at Florence here in the next 18 months. Initial construction activities and well field development at Florence have been running smoothly. We have three drills operating, with the fourth to be mobilized in May. Today, 10 new wells have been drilled in line with our planned timing. Earthworks and site prep for the plant and other surface infrastructure has also been a key focus. And last week, we had the first concrete pour in the planned area. In the first quarter, we spent $18 million US on construction of the commercial production facility out of the original estimate of $232 million from our technical report last year. That spending will continue to ramp up in the coming months as we get into full construction of the SXEW plan. As noted in our MD&A, we also had 15 million US of other CAPEX at Florence, which includes final deliveries of long lead equipment that was ordered in 2022, and also the costs to construct an additional evaporation pond, which was previously planned for year two of operations, but we decided to bring that work forward to give us additional flexibility on site water management. Overall, we're very pleased with the progress on Florence. Recruiting is going well. The site operating team continues to prepare for initial well field operations and copper production late next year. We've completed a number of key financings in recent months, and we consider the Florence project to now be fully funded. The remaining project costs can be funded by our available liquidity. through the remaining installments coming from Mitsui and, of course, cash flow from Gibraltar. Our hedging program has also been extended recently to secure a minimum copper price of $4 a pound for 2025. And that gives us additional protection through the Florence construction period as well. Last but not least, I wanted to make a few comments on our bond refinancing that was just completed in April. We're very happy with the result and believe it was a significant de-risking event for the company. It was something we wanted to complete this year and bond market conditions were such that it made sense to move forward with the refinancing immediately following the announcement of our Gibraltar transaction. Upsizing the senior notes from $400 million to $500 million provides additional proceeds that can replace more costly bank debt alternatives at Florence. And pushing out the maturity date from early 2026 out to 2030 gives us plenty of time to generate cash flow from Florence and Gibraltar so we can look to deliver our balance sheet in the future. And with that, I'll pass the call over to Bryce.