Antofagasta plc

Hello and welcome to Antifragasta's 2024 Half Year Results Call. We will start today's session with a short introduction from Antifragasta to be followed by a question and answer session. If you have a question, we ask that you please use the raise hand function at the bottom of your Zoom screen. If you have joined us via telephone, please press star 9 to raise your hand and star 6 to unmute. Once your name has been announced, you may unmute and ask a question. Please stay muted when not asking a question. You may also type a written question anytime in the Q&A box at the bottom of your screen. I will now hand you over to Rosario Orchard, Director of Antofagasta's London office, to introduce today's speakers.

Good morning, good afternoon, everybody. Welcome to our half-year call for 2024. I'm here today with our Chief Executive, Iván Arriaga, our CFO, Mauricio Ortiz, and our Vice President of Sustainability, Alejandra Vial. In terms of process today, Iván will start with a short introduction, and then we'll move straight into Q&A, and we'll aim to wrap up in one hour. Iván, over to you.

Thank you, Rosario, and welcome everybody to the call and for taking the time to discuss Antofagasta's half-year results. I know you will have seen the details that we published this morning, but I would like to highlight as a way of introduction a few key points. Firstly, I would say that we have delivered another positive set of financial results. Revenue is up 2%, EBITDA is up 5%, and most importantly, cash flow is up 15%. We think copper plays a vital role in the transition to clean energy, and with the supply of demand expected to lag rising demand over the next decade. We have made this year investments which we will continue to undertake as we go through this investment phase and which should allow us essentially to increase production by close to 35% or get closer to 900,000 tons per year of production. I would also highlight that our projects are advancing well. They remain on track and CAPEX is unchanged. These are brownfield expansions, and we know that brownfield expansions carry certain benefits from the point of view of lower execution risk, lower time to production, and typically lower construction costs. With respect to production, we remain on track to meet our guidance, although, as we previously had announced, we expect production to be at the lower end of the range that we had initially shared with you. And you will also note that today we have announced an interim dividend, which represents 35% of earnings, which is in line with our policy. so having said that as introductory remarks we will now open up the session for questions and answers and therefore I welcome the first question

Gentlemen, we will now begin our Q&A session. If you have a question, we ask that you please use the raise hand function at the bottom of your Zoom screen. Once your name has been announced, you can ask a question. If you want to withdraw your question, please lower your hand using the raise hand function in the Zoom app. If you have called in on a phone, please press star nine to raise your hand and star six to unmute and mute. You may also submit written questions in the Q&A chat function at the bottom of your webinar screen. The first question is from Jason Fairclough at Bank of America. Please unmute yourself and begin with your question.

Okay. Oksana. Buenos dias. Thanks, folks. Good to see everybody. Look, two questions for me. First, I just wanted to ask a fairly simple one about water. You know, we've been impacted by water the last couple of years. Now you're ramping up the desalination plant. Where are we with water today? Is your business being impacted at all by water, or is this completely fixed? So that's the first question. Second question, I did just want to compliment you on the bubble chart on page 21. I feel like it's 2006 again, so that's great. And it's really great to see the growth potential in the business. So I guess my question, Ivan, is when do you start talking even, you know, hypothetically about some of these longer data growth options and what might be involved in bringing those online?

Yeah. Thank you, Jason. So let me start by water. I think we had displayed a water strategy for Lopelambic, which includes the commissioning and ramp-up of the existing desalination plant, which is actually now fully running at operational capacity. So we're able basically to produce at an instantaneous level the 400 litres per second. And therefore, from that point of view, we are basically independent of the water that accumulates because of rain. And I think that's the first step in our water strategy. We're also undertaking now the expansion to the diesel plant, which will essentially take our water facility to 800 liters per second when that is finished towards the end of 2026 and that will mean that we will then release the extraction of continental water and at that stage almost 90 to 95 percent of the water that we use be either a circulated water or sea water so that's essentially the plan and at this stage With the water plant running at design, and I must say that the ramp has been quite successful and we're very pleased with where we are, we're independent of rain water in Pelambres. So water has not been a limiting or restrictive factor in the course of this first half, as it was, as you pointed out, for the last few years. Now, with respect to the growth pipeline, I think, you know, we're pleased to see that we've got some opportunities that we're working on. And our strategy is essentially based on us being able to develop, firstly, our brownfield projects, both the Centinela Second Concentrator and the Palambres infrastructure replacement that we're undertaking now. And I think that will essentially allow us to get closer to the 900,000 tons. And our strategy is very much focused on that. Now, beyond that, what we show in the chart is the extension of the mine life at Palambres. And I think this is extremely important because it essentially allows us to monetize a very significant resource space that today is limited because of the permit that we have for tailings. So that will essentially allow Pelambis to extend its mine life beyond 2035. and continue operating at current or expanded rates. And therefore, you know, the value impact, you know, for us is quite significant. Now, when are we going to be talking more about that project? I think we expect to file the environmental impact assessment to be able to extend the mine life on 2035 towards the end of this year. So actually we've been working on this project for quite some time. We're ready with the permit for it to be filed. And we expect that permit will probably take between two and three years to be granted. And after that, then we would be able to start planning for what that extension might need in terms of construction work and other sort of ancillary activities. So it's quite, you know, imminent and it's quite, you know, close now with respect to the other projects that you would see there i think we've got uh some which are in exploration phases like cachorro and sierra we've talked about them in the past we've actually included around a billion tons of mineral resource when you add those two in our declaration and and actually what we're moving now in the case of cachorro is to finish a scoping study. And we're now doing actually a more exploration, reconnaissance exploration, and we're doing a pre-feasibility, starting a pre-feasibility. So I think that's something that you'll also hear more about. And the other one that we have there is, you know, the potential to extend the life at Saldívar, which I would like to mention. And I think that is dependent, obviously, on us being able to get the permit extension now in May. But we've got a long-term plan there, which will have us mining until 2050, if that is successful. So we've got several projects which we control that we can – essentially developed to be able to continue to grow our production or sustain our production levels. And I think that's good. And we continue to do exploration. We believe that exploration is important. And we have activities now mostly in Peru and Chile. And we continue to think that that will provide further opportunities into our pipeline.

And sorry, Ivan, just to be clear, things like Kachoro, Zaldivar, primary sulfides, that is not in the near-term growth plan, right? So near-term growth of 30%, 35%, that's independence of those new projects. Thank you very much. Yeah. Thanks, Jason.

The next question is from Yanis Masvulas at Morgan Stanley. Please unmute yourself and begin with your question. Yanis, please unmute yourself and begin with your question.

Great. Can you hear me? Yes, we can hear you. Perfect. Perfect. Hello. Thank you very much for the presentation. A few questions from my side. The first one on the guidance for 2024, which requires a large step up in H2 of as much as 25% versus the second quarter production run rate can you provide some color on how you get there as recoveries of the sentinella concentrates are only expected to improve from q4 this year and los pelambres might see a slow this talking of material given the pipeline capacity bottleneck The second question is on the Los Pelambres Phase 2 expansion. You indicated a preliminary capex figure of $2 billion. I think previously you were talking something closer to $1 billion. What explains the increase and how much of the $2 billion relates to the increased desalination footprint? And lastly, if I may, there is a comment on the financial results around a new declaration of severe drought conditions at Los Palambres, impacting the water redistribution agreement that you have in place. How does that impact your operations into the second half of the year, if at all? And I'll stop here. Thank you.

Thanks, Ioannis. Okay, for those questions. So on guidance for 2024, They do include, as you've mentioned, a step up in production in half two, which is explained essentially by expected higher grade at Sentinella. So that's an important drive of the increase in production. During the first half, we did go through a zone of, I would say, very low grade at Sentinella and lower grade at Pelambres. And we expect to see that reverse in the second half. and and also in the second half we do expect to see drawdown from the inventory and and even though we've indicated that that might take two or three quarters uh which would essentially put some of that into uh next year um we we think uh you know that will also help to achieve our guidance number for uh for this year and um and therefore those are the factors which are at play so essentially higher grade at sentinella destocking of material that we produced uh and that is uh essentially accumulated at the landers um with respect to uh your second question regarding the los belambres phase two I would say that we had provided an estimate of capital expenditure for this project back in 2000, I think it was 2014, so that's 10 years ago. So this is an updated figure. And I would like, first of all, to point out that the scope of this project involves essentially extending the life of Pelambres beyond 2035 so capital expenditure for this space is situated around the 2030s not earlier than that and we are undertaking several studies with options being looked at and what the two billion dollar involved is essentially extending the mine life for another 15 years until 2050 and increasing the milling capacity, so therefore adding another ball mill, and this is an option, you know, being studied today, and also an increase in the water footprint. Now, desalination water supply footprint, and that is important because what we expect, according to the studies that we've made, is that when we extend the mine life and we're well into that extension beyond 2035, you know, things like the rate of evaporation of water at the tailings. And also the fact that we have another, you know, or extra milling capacity will require some extra water to what we've planned in this phase without the calamitous extension. So what's involved in the 2 billion is all that optionality. So the option to eventually increase milling capacity and also the initial water footprint requirements, which are likely to be back-ended in the life extension of Pelambres because as I say they take account of the added capacity but also the higher evaporation rates as the tailings footprint increases so that's basically what's in it and obviously because the prior number was provided in 2014 there's inflation element so this has been 10 years seeing that was provided so there's both an inflation element and second also the options which are the development options which are included in the scope of the 2 billion are slightly different as we've also included some expansion to the water footprint. And going on to your third question about the water redistribution agreement. So we have essentially an agreement with the water authority and the, you know, the community whereby, you know, we have a mechanism operating, which is called the water redistribution agreement. And because there is drought, uh that requires a special decree which is now in place that has been uh granted and therefore there are some administrative uh permits of uh i would say uh second uh uh level order of uh of relevance which uh need to be in place are those are being uh sorted out now so because we have uh in in the short term the combination of the water availability through the desalination plant. We expect that any sort of restriction associated to this water redistribution agreement being put in place because of these administrative conditions is short-lived and therefore will not have any impact on water availability for us in the second half.

Very clear. Thank you very much. Thank you.

The next question is from Daniel Major at UBS. Please unmute yourself and begin with your question.

Hello, can you hear me okay? Yeah. Great, thanks. So a couple of questions. First one, just clarifying on from Janice's question around the project pipeline to some degree. Page 21, you've got the Centinella Phase 2 and then the Los Palambras Growth Enablers and then the Los Palambras Expansion Phase 2. Can you just clarify which ones of those projects are needed to get to the ambition of 900? Do you need the Los Palambras Phase 2 or is it just the first two at the front end of the

double charts it's the front end so what we need basically or are contemplating there is the uh current expansion of palambres which has now been completed plus the replacement of the sort of uh infrastructure which is being built now through the project that we or the projects that we have in construction both the replacement of the concentrate pipeline and the expansion of the water system so that's in construction now and in the case of sentinella the second concentrate so the what's behind the 900 000 is completing those phases of growth at the lamps not the life extension and in the case of sentinella doing the second concentrator and also it assumes the continuity in the operation of saldiva okay thanks so yeah so the two billion you referenced and discussed in the previous question

a sort of long-dated capex is not needed to be deployed to get to the 900. That's right. Yeah. Okay, thanks.

And the 2 billion, as I said, the 2 billion, it's involved really in the sort of extension of the mine life of Calambria, which is beyond 2035. Now, obviously, we would need to do some work around the 2030s, but it's associated to that project, which is outside the sort of 900,000 number.

Very clear. Thanks. And then the second question is on the cost guidance that you provided an update with with the production release last month. Because I think when you set the guidance earlier in the year, it was with quite conservative FX and gold price assumptions. Yet it was still increased somewhat. I understand the volume increase. because you expect it to be to the low end of guidance. But can you give us some commentary on the inflationary impacts? Clearly, if you're using spot parameters now, there's some underlying inflation still in there. So any sort of moving parts there? And if you can, at this stage, any indication on how the trajectory of unit costs should look into 2025?

Yeah, so I'll pass it on to Mauricio, but maybe just a couple of things. One is, yeah, we do expect the second half costs to come down as a result of higher production. So there's a fixed cost dilution associated to the higher production figure. And the fact that we've guided to 170 is associated to the fact that we expect to be in the lower range. So production is a very significant element in play here. What we've seen in terms of local inflation, just to give some color to that, is that local inflation is running slightly higher than you know we had sort of had anticipated or the macro consensus was at the time expectations is that it's probably going to end up close to four percent and we had assumed a rate of around three percent so that's also a factor in costs but Mauricio you may want to expand further on this part

Well, maybe just to start in building on what you just said on local inflation, that is something that we have seen offset by the weaker Chilean peso, and that is also an important factor in our projection of 170 going forward. And along with the higher production in the second half, weaker Chilean peso than what we forecast at the beginning of the year, and a stronger gold price. I believe with these three elements, we can build and be confident in a 170 as a full year guidance in terms of net cash costs.

Okay. And can you at this stage give us any directional sort of view on costs into 2025 unit costs?

Well, you know, Dan, that we just provide guidance later in the year regarding our features for next year. But I would say that with Pelambres running at full capacity, it's additional milling capacity on the diesel plant. So leaving out of the table any water restriction. And with Centinela entering in a high oil grade phases, we have positive drivers for next year.

Very clear. Thank you. I'll go back in the queue.

This question is from Efrem Ravi at Citigroup. Please unmute yourself and begin with your question.

Hi, can you hear me?

Yes, you can hear well.

Hi, thanks. Just two questions. Firstly, I was trying to reconcile the year-on-year cost move of, you know, those about 45 cents per pound lower or higher cost due to throughput costs. And then, you know, the efficiency improvement, the competitiveness program, which had a $34 million improvement. I just want to know of the competitiveness program, the throughput above design capacity, how much of that is structural and how much of that is generally that your throughput levels are going to be higher versus a very low base from last year? And secondly, just a quick sort of update if you can give on what your initial discussions with Buena Ventura now that you've got seats on the board is in terms of corporation prospects and should we expect anything big in the next one or two years from that?

Okay. So on the throughput, I think – Essentially what you see there when you compare year and year, it's moving to essentially run at design capacity because there's been no limitation on the water availability in the first half. And there was some of that in the prior half in 2023. Having said that, the good news is that we have recovered that. And secondly, that our plans are running well. I mean, if you look at Sentinella, We had lower throughput because the ore was harder, but in fact, you know, it's been running with a good runtime. And when the ore has been, as it was in 2023, we were hitting rates above 105,000 ton a day. And in the case of Pelambres, We now have another milling line, and therefore, we're able to get as high as 210,000 ton a day, and those plants are running very, very well. So, we're happy with where throughput is, and we think that that will provide some extra upside as we look into the future, you know, production. But when you look at the bars, as you were pointing out, it's mostly comparing that performance against a lower performance than design because of the water limitations in the prior year. Now, with respect to we've As we discussed before, I think this has been, Peru is a jurisdiction that we like. We've got an exploration team there. And the move to acquire, you know, close to 19 or 20% of Buenaventura's ownership has been, you know, in line with that strategy, in line with that plan. We saw this as an opportunity from a valuation point of view. If you look at the portfolio, you know, it includes a share in Cerro Verde and other assets which are mostly producing which is good news today because of the gold price, but which have the potential to convert to copper. And since then, essentially, we've got two seats in the board. We are working, you know, I would say very cooperatively with other board members and the management at Buena Ventura to understand the portfolio and the potential, the plans that they have, and therefore are in that phase. So, you know, very pleased where things are heading today. and going in terms of, you know, the level of collaboration that we're seeing. And I'm sure that will lead to some, you know, a better understanding of what the opportunities in the portfolio of Buena Ventura might be to continue to develop that. But at this stage, you know, we're glad with where we are collaborating and understanding the potential.

Thank you. I'll go back to the Q&A.

The next question is from Marina Calero at RBC Capital Markets. Please unmute yourself and begin with your question.

Hi, good afternoon. Can you hear me?

Yes, we can hear you well, Marina.

Perfect. I have two questions. The first one is on your call savings program. It looks like you have already achieved 65% of your target year-to-date. Do you see potential to exceed that target? And then the second one on your phase two expansion of Dos Palandres. Will that $2 billion investment meet your internal hurdle rates at current copper prices? Thank you.

Yeah, so I will start with the second and then I'll let Mauricio pick up the one in cost. I think it's probably one of the best investments that we may have at hand because it essentially allows us to extend the mine life at Pelambres against the case of stopping production in 2035. So we essentially get the full benefit of being able to continue producing uh from an aura body which is phenomenal and which is you know uh world class so we think that the phase two belambres is It's a very key project in the sense that it will drive significant value increase to the group, as I say, because otherwise, you know, we're faced with stopping production at Palambres in 2035, which would be the sort of mine life today based on the permit availability. So this is a very key project, you know, for the company and for the group. it would allow us to monetize those very significant existing uh reserves that we have at the lambres beyond the current permits and the investments involved um as i said before some of them are optional we've included in the 2 billion the option to expand the milling capacity So that will only be undertaking if we're thinking at that stage it's a good opportunity for the company to increase throughput and therefore production. And in the case of the increased water footprint, that's essentially during the life of the extended Pelambres. So that will happen between 2035 and 2050, and therefore progressively. And it essentially allows operations to continue throughout that extended period. So we think these are expected to be very high return and high yield investments for the company and provide a great opportunity to be able to monetize uh the rich base of resources that we have at calamaris which are amongst you know the best uh in in the world so having said that i'll pass on to mauricio to address your question on the cost saving programs and what we have achieved and the potential for uh for that well thank you well first of all marina let me you say a few words about the competitiveness program which is main target is to

look for structural improvement and savings. So, the basis of this program are combining innovation and operational excellence. So, as Ivan described, we are, for example, running beyond our design capacity some of the facilities. I would like to expand a bit, for example, what we are doing in Antucolla. In Antucolla, the design capacity was in the space of 30 million tons per year. And now we are running in the space of 32 million tons per year. So that is part of the thing that we are doing. Particularly this year, we fronted loaded the program. That's explained why we are slightly ahead of 50% of the total figure. I will expect that in the second half, we are going to keep running Antucoia, for example, beyond design capacity and keep collecting the savings associated to lower unit consumption. For example, the ones that we obtain with explosive and optimizing diesel consumption on our operations. But the bulk of the savings from the second half will come from an initiative that we call productivity improvements related to our contractor workforce. So To wrap up, I will expect that we are very well placed to achieve our 200 million saving targets for this year on the basis of structural savings and improvement. And we are focusing, finishing this year and entering the next one, and optimize the time and tools and the productivity of our contractors at the mine sites.

That's very clear. Thank you. The next question is from Ioannis Mastoulas at Morgan Stanley. Please unmute yourself and begin with your question.

Hello, can you hear me okay?

Yes, we can, Ioannis.

Excellent, thank you. Thanks for taking the follow-up. Just a couple from my side. The first, going back to sentinella concentrates, so you experienced high levels of clay and fines in ore process, which impacted recoveries. And what I was hoping to clarify is whether this is one-off in nature or whether it could be a recurring theme in the coming years for this operation. In other words, is a historical average recovery of 85% a good guide for the years to come, or shall we make it something a bit lower? And then the second question on depreciation, which saw a fairly big step up of 27% year over year. You clearly articulated the reasons on the results today. What shall we expect for the full year? Because that's going to be relevant for PPS and dividend expectations. Thank you.

Yeah. Okay, so on the first one, Yeah, as you've pointed out, and we did sort of highlight that in the production report, yes, we have extracted ore and are mining in a zone that's got more clay and fine content than, you know, the average for that zone or face of the pit that we would expect. And therefore, that has impacted recoveries. I think, you know, we had initially an impact which has now been moderated, you know, As, you know, time has passed and we continue to feed the zoar, we're able to optimize the plant. So we're probably in levels of recovery today, which are hitting, you know, the sort of close to 80% again. Now, going forward, I would say that we, you know, we're essentially expecting that in some areas we may well find this type of clay and fine, but that we're able to essentially update and recalibrate our geometrical model in a way that we will be able to blend that ore and therefore have a minimum impact or no impact on our recoveries. So I would say that assuming recoveries in the range of sort of the 85%, as has been in the past, would be appropriate on the basis, as I say, that anticipating this condition or this attribute, we're able to blend the ore such it doesn't have the same impact in the performance of the plant. And with respect to depreciation, I'll pass it on to Mauricio.

Thank you, Ivan. Well, hi, Ioannis. As you know, depreciation is a function of our asset base, of our operational asset base. And in comparison with the first half of last year, we have a different asset base as we already ramp up and we have fully operational the desalinization plant and the additional milling capacity at Los Pelagos. So that explains basically the additional depreciation in comparison with the first half of last year. Tackling your question regarding how we can expect for the full year, I would expect that having these new facilities fully operational during the first half, especially the diesel plant, and most of the first half with the additional milling capacity depreciation, we are going to have roughly a flat depreciation in the second half in comparison with the first half.

That's great. Thanks so much. Thanks again. Thank you.

A reminder, if you would like to ask a question, please use the raise hand feature. Once you've been invited to ask your question, please unmute and ask your question. I will now hand over to Rob Simmons for the written questions. Rob, please go ahead.

Thank you kindly. We have two written questions so far. The first one is from Wood Mackenzie. and the question is relating to the water sale at Centinella that we announced earlier in the year. The question is as follows. How will this deal affect your cash costs, and what are the terms for the transfer stage of the deal? We assume Antofagasta will have to buy back water infrastructure at some point in the future. Thank you.

Okay, so... I will, on the cost side and cash flow, I will pass it on to Mauricio. But this, we think this is an important transaction as part of the funding for the Sentinela second concentrator. Because in line with what we had planned, this essentially allows us to release cash from and recycle capital. that can help us to or assist in the financing plan for the expansion. And I think it's been a transaction that has been successfully completed according to what we had planned and in terms which are created for the company. Now, the scheme involves essentially something similar to a lease arrangement. And therefore, there is a provision for buyback at the end of the contract period, as has been implied in the question. And also we have several provisions in the contract that allow us to de-risk the water supply, both in terms of how we monitor maintenance and the potential rights that we have also to action what is required for the pipeline to operate uh in a reliable way we we are happy with where things are heading uh with the consortium and they are tasked not only to run the existing system which is now being transferred to them and we are in the period of transitioning that with a joint operation for a short period of time but also they've been tasked with expanding the system so the structure the purpose the strategic intent behind this transaction has been accomplished. And I'll ask Mauricio to be more specific about the cost and cash flow impacts. Mauricio.

Well, thank you. And as you said, this is a transaction that involves the existing infrastructure, which is basically a cash inflow of $600 million. and also offload some CAPEX related to the Sentinella second concentrator project in the space of 380 million. So that is the cash inflow. In terms of the competitiveness of the water supply, I would say that we have reached a good agreement with the acquiring consortium. We will maintain a competitive unit price for water supply in the space of $4 per cubic meter. That is a competitive amount in the northern area of Chile. And that will translate essentially in terms of net cash cost in the space of CLI to five cents per pound. So for a company that will be operating fully on seawater, and once we have the second concentrator operating aiming and moving toward the first quartile, the increase is reasonable related to secure the water supply for Centinella requirements for its expansion and existing operations.

Thank you, Mauricio. Rob, we're back to you with the second question.

Very good, thank you. We have the second question, which relates to our investment might affect our debt going forward. Thank you.

So, okay, so I assume, so is it general? Yeah, so we, well, we've, I think we've laid out clearly what our investments plan are and how they're centered around the expansion of the second concentrator at Sentinella and the sort of replacement and expansion infrastructure at the Lambres. And we think that we have a plan accordingly that we have the balance sheet to be able to fund, you know, those expansions. We, in the case of the Centinela Second Concentrator, have secured a combination of project financing for 2.5 billion with shareholder funding from, you know, for the balance. including, you know, the recycling of capital associated to the DOT or the water system. And therefore, you know, the project is, from that point of view, funded at the asset level, at Centinela level, with that combination, and that is already in place. And in the case of the expansions at Pelambres, we've done there the first phase, which involved the diesel plant that's already built, are undertaking this replacement infrastructure. And essentially, Pelambres has a strong balance sheet and cash flow generation to be able to fund these projects. these investments. We undertake these investments, just as a reminder, following our capital allocation. And therefore, one of the conditions in the capital allocation is to retain our strong balance sheet, even through these phases of growth. And therefore, the funding and the financing associated is based on that premise as well. So we think that we have the strength in our balance sheet to be able to undertake these investments. And as I say, you know, in the case of Sentinella, which is the biggest one, the financing plan is already in place with commitments being, I mean, having been closed and we're now actually going down from the funding as we continue to invest and progress construction. So within the capabilities of the company. I don't know, Maurice, if you want to add anything to that.

No, maybe just to wrap up, to say that additional debt is part of the options, as you said, but we have a strong cash generation in our operating companies, especially in those that are growing, Centinella and Pelambres. And through the capital allocation framework, we are fully committed to maintain a strong balance sheet and attractive returns to our shareholders, even during this growth period. And just to wrap that is an option that we are proud of being open our access to DCM markets a few years ago. And we are very pleased with the reaction and the feedback we received from the investor every time that we tap the market. So it's an open alternative, but we have the benefit of having a strong generation units within our portfolio. And as you said, we may use the balance sheet, but always maintaining our commitment with a strong balance sheet translated as an investment credit rating.

Thank you. Rob, over to you in case there are more questions.

The next question is from Edward Goldsmith at Deutsche Bank. Please unmute yourself and begin with your question.

Hi, Ivan and Richard. Thank you for taking the questions. Two from my side. Firstly, just going back to costs, we've seen cash costs at Amscoir and Zeldiva increase significantly in recent years, particularly compared to Lost Plan, Res and Centinella. How entrenched are the cost increases at these smaller scale operations? And then the second question is on the Twin Metals Minnesota project. Where does this stand currently and what's the potential alternatives that you could advance whilst the litigation takes place? Thank you.

Yeah. Okay. On the Costa and Tupoy and Saldívar, I mean, these are smaller operations and they're also hydro and therefore they're typically higher, you know, in the cost curve. by the very nature of, you know, the activities involved in producing copper there compared to sentinella concentrates and telambres. And therefore, I think that the cost, you know, reality reflects that. Now, we are achieving, I would say, very good operational results at Antucoia, and now also we've seen improvements in the use of the plant at Saldívar and therefore I think we're achieving higher levels of efficiency there so we expect that that combined with the cost improvement program should see us enhance you know the cost position and achieve higher productivity these operations especially Antucolla as Mauricio mentioned is running you know quite well But, you know, there is obviously the limitation that these are higher cost operations. Some of the increase in the past had to do with high prices for acid. You know, they use acid in leaching and therefore some of that has reversed. And that's why, you know, we've seen some cost improvements there. But I think the scope for efficiency continues to the extent that we're able to run, you plans more efficiently and some of that we're seeing very clearly at Antucolla and we will continue to move in that direction. There's no reason to expect, therefore, any structural cost deterioration in both Antucolla and Saldívar, but on the other hand, to the contrary, we expect that we will continue to make improvements there in how we run these facilities and that should translate into better costs. Regarding twin metals, I mean, there we've got basically two situations. I mean, some of the leases are being litigated, and therefore we have a process, you know, in the courts in the U.S. to be able to get them back. These were not renewed as we think we have an automatic right for renewal, and therefore we are expecting, therefore, to progress the case, you know, in the tribunals. Now, there are some other issues. leases which are essentially private and state-owned and these are what we call the sort of bridge lake properties which are south of maturity which is you know the property that's been litigated and we think that we can sequence a project starting with these uh mineralization and that would be therefore the sequence that we think that we can accommodate to be able to expedite the development of twin metals i mean we still think you know it's it's a long-dated option in the sense that you know this uh will take uh you know time to uh to to fully permit but we think that this sequence provides a advantage by means of not having uh uh you know federal leases involved so that's the situation in twin metals

The next question is from Jason Fairclough from Bank of America. Please unmute yourself and begin with your question.

Hi, folks. Just back with a follow-up question. I guess two related questions here, Yvonne. I guess the first question is any thoughts on Argentina as a potential destination to invest? And then the other thing is with all the M&A going on in the sector, there's lots of discussion about – I think Duncan's word for it is adjacencies, i.e. when you have one ore body which is next to another ore body, there's an opportunity for synergies. So I'm just showing you a little picture here. I'm sure you've seen this one before. So if you look in the top left, you can see here Los Palambras. And if I look in the bottom right, and it's really not that far, there's something called El Pachon, which has been around for quite a while. What do you think?

Look, I think a little bit. First, Argentina, I think, you know, great place and there's a lot of good change that seems to be happening from a business environment point of view in Argentina. So, you know, we look with a lot of interest and monitor what's happening there. I think obviously for big mining investments, you know, these changes need to settle and be considered permanent to be able to undertake uh you know investments which carry more risks uh and therefore you know our focus regionally tends to be more in Chile and uh and in in Peru so but we watch that with interest now you've got the picture there of uh of uh yeah we we we've certainly known about this uh site and mineralization for for a long time uh you know we are focused on developing Palambres, I would say, and its infrastructure to be able to achieve this extended mine life. And we think there's huge value to be obtained by doing that. Now, obviously, we would look at opportunities if they exist, but we're basing our strategy of developing Palambres uh on the basis of you know what we owned and have and have uh today so so that's the plan now and and obviously if opportunities arise you know we will uh continue to uh to look into those but uh nothing concrete at this stage and uh sorry go ahead no no

I was going to say, just as a follow-up, how do we think about this idea of accessing Argentine resources through Chile? Because it just seems like the logistics are a lot better to go that way than all the way over to the other coast. But I think historically there just hasn't been so much of a relationship to allow that to happen.

Yeah, and I think that's what we're seeing improving. So I would say certainly that seems to be in a better foot today. I agree. I mean, some of these ore bodies, which are in the Andes, in the Argentinian Andes, will find it much more optimal to be able to undertake its logistics through the Chilean side. And I would say in some of them, that will be probably more of an even existential issue from an economic point of view. And therefore, the site that you mentioned, for example, I think it's got that very issue. And therefore, you know, there is a bilateral treaty between Chile and Argentina to be able to regulate how this would operate, but it has not been put in practice. uh before and therefore you know it's a good framework you know we know it and it does you know provide some opportunities so i think the legal setup seems to be there and if the political will from the governments uh remains present i think this may uh mean that that may be uh possible to use uh but but i agree with you that for many of these deposits the logistics are you know much more optimal if things are moved through chile and and that would have to be part of the plan no question okay thanks appreciate the color yeah thank you there are no further questions i'll therefore hand back to evan for closing comments okay well thank you very much to to everybody and uh i hope you this has been informative I would also like to say again that we've got Alejandra Vial here with us. She's the Vice President of Sustainability. And I'm sure you'll have a chance to meet with her directly as we sort of progress, you know, in other meetings, either in person or via video. So welcome to Alejandra. Thank you all. And I will see you soon. Goodbye.