Genesis Energy, L.P. Common Units

Greetings and welcome to Genesis Energy third quarter 2022 earnings conference call. At this time, all participants are on a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Mr. Dwayne Marley, Vice President of Investor Relations. Thank you. You may begin.

Good morning. Welcome to the 2022 third quarter conference call for Genesis Energy. Genesis Energy has four business segments. The offshore pipeline transportation segment is engaged in providing the critical infrastructure to move oil produced from the long-lived world-class reservoirs from the deepwater Gulf of Mexico to onshore refining centers. The sodium minerals and sulfur services segment includes Trona and Trona-based exploring, mining, processing, producing, marketing, and selling activities as well as the processing of sour gas streams to remove sulfur at refining operations. The onshore facilities and transportation segment is engaged in the transportation, handling, blending, storage, and supply of energy products including crude oil and refined products. The marine transportation segment is engaged in the maritime transportation of primarily refined petroleum products. Genesis's operations are primarily located in Wyoming, the Gulf Coast states, and the Gulf of Mexico. During this conference call, management may be making forward-looking statements within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934. The law provides safe harbor protection to encourage companies to provide forward-looking information. Genesis intends to avail itself of those safe harbor provisions and directs you to its most recently filed and future filings with the Securities Exchange Commission. We also encourage you to visit our website at genesisenergy.com, where a copy of the press release we issued today is located. The press release also presents a reconciliation of non-GAAP financial measures to the most comparable GAAP financial measures. At this time, I would like to introduce Grant Sims, CEO of Genesis Energy LP. Mr. Sims will be joined by Bob Deer, Chief Financial Officer, and Ryan Sims, Senior Vice President, Finance and Corporate Development.

Thanks, Dwayne. Good morning to everyone, and thanks for listening in. The third quarter was once again a great quarter for Genesis as our market-leading businesses exceeded the upper end of our internal expectations. The fundamentals and macro conditions for our business segments remain strong and continue to provide the foundation for strong financial results and continuing improvement to our balance sheet over the coming periods. Our quarterly results were driven by a combination of strong operating performance across all of our business segments, steadily increasing volumes in our offshore segment, and strong SODASH prices in all of our markets, especially in our export markets. Based on our financial performance over the first three quarters and our expectations for the remainder of the year, we are today once again raising our full-year guidance for adjusted EBITDA to a range of $700 to $710 million for 2022, which includes approximately $41 million of non-recurring benefits we received in the second and third quarters. Said another way, our revised 2022 guidance range at its midpoint would suggest a normalized adjusted EBITDA of approximately $665 million, which is over 15% higher than the midpoint of our original 2022 guidance range of $565 to $585 million. Importantly, we expect to exit 2022 with a leverage ratio, as calculated by our senior secured lenders, at or below 4.25 times, which, as I've said before, is the only relevant leverage covenant anywhere in our capital structure. As we look ahead to 2023, despite any potential recession-related risk that might be on the horizon for the broader economy, we remain confident that market dynamics in each of our respective businesses businesses remains such that we do not believe we will see a meaningful impact to our expected earnings capability in 2023. This belief is supported by visible and growing volumes out of the Gulf of Mexico, specifically from a full year of Kings Key and the portfolio of six or so infield workover and subsea tiebacks we referenced last quarter, along with new volumes from Argos in the coming months. None of this visible volume growth will be impacted by an economic slowdown or fluctuation in oil prices, given the capital intensity and fixed-cost economics of the deepwater Gulf of Mexico. Furthermore, we believe the structural tightness in the sodash market will continue to support sodash prices in 2023, even if all or parts of the world start to see any slowdown in economic activity. These elevated sodash prices combined with approximately 700,000 tons of incremental sodash production we expect to have online from our Granger facility, will also provide for increased financial contribution in 2023. Assuming steady performance from our other business segments, we do not see any reasonably likely scenario where we do not generate adjusted EBITDA next year in the mid-700s. Accordingly, we would otherwise expect to deliver more than 10% sequential growth from 2022 to 2023 from our base businesses. We would also expect to exit 2023 with a leverage ratio, again as calculated by our senior secured lenders, below four times. We believe this performance, combined with a clear line of sight to generate increasing amounts of free cash flow in the years ahead, from additional offshore volume growth and a full year of SODASH volumes from Grainger will provide us with increased flexibility to address any near-term maturities in our capital structure under virtually any operating financial and economic environment. Now I'll touch briefly on our individual business segments. As we mentioned in our earnings release, our offshore pipeline transportation segment again exceeded our expectations. During the quarter, we saw volumes from Murphy's Kings Key development continue to ramp ahead of our internal expectations, and according to Murphy's latest public disclosure, Kings Key is currently producing volumes in excess of 90,000 barrels of oil equivalent per day from only five of the seven original wells. They're expected to bring online both the sixth and seventh wells in the near future and are continuing to work on increasing the capacity of Kings Key wells beyond the original design capacity of 85,000 barrels of oil and 100 million cubic feet of gas per day over the remainder of the year. We remain encouraged with Murphy's operating performance and believe we will see strong volumes from Kings Key through the remainder of this year and into 2023, as well as for years and years to come. Furthermore, we benefited from a full quarter's performance from the two-well subsea spruance development, which continues to exceed our and the operator's pre-drill expectations. We also saw two of the previously discussed new infill subsea wells that were planned for the back half of 2022 come online during the quarter. We expect the remaining four of these wells to be placed online between now and the end of the year. Each of these wells required zero capital to connect and represent close to 10,000 barrels of oil per day on average of additional production that will flow first through a 100% Genesis-owned lateral prior to transportation to shore through either of our 64% owned and operated Poseidon or CHOPS pipeline systems. Based on public disclosures from the working interest owners in Argos, the operator of the field is continuing to work through commissioning items, which will delay startup until 2023. Nonetheless, the 14 wells pre-drilled and completed at the Mad Dog II field, once it does start, we expect volumes to ramp to its nameplate capacity of 140,000 barrels of oil per day over the subsequent nine to 12 months after first production. This seems reasonable to us as Kings Key went from zero to exceeding design capacity and less than six months from only five wells. The anticipated volumes from the Argos Floating Production Facility should provide a steady bridge to the incremental 160,000 barrels of oil per day we expect in late 2024 and early 2025 from our recently contracted developments, Shenandoah and Salamanca. We also remain in active discussions with the operators of multiple infilled subsea and or secondary recovery development opportunities representing upwards of 200,000 barrels of oil per day in the aggregate that can turn to production over the next two to four years, all of which have been identified but not yet fully sanctioned by the operators and producers involved. Based on the current activity levels and the number of projects with first production on the horizon, combined with the new increasing list of drilling prospects near our existing infrastructure, It is clear to us that no broader economic slowdown or short-term fluctuations in commodity prices will have a significant impact on the pace of development in the Gulf of Mexico for the foreseeable future. This is especially true in light of the Deepwater Gulf's importance to secure domestic oil production, its proximity to Gulf Coast refinery complexes, and the fact that it has the lowest carbon footprint of any barrel of oil refined and consumed in the United States. Recognizing this, the Department of Interior has, in fact, just recently completed the public comment period for a brand-new five-year leasing program from 2023 to 2028, which includes the central Gulf of Mexico planning area, exactly where our industry-leading infrastructure is located. Furthermore, on October 20th, the Department of Interior and the Bureau of Ocean Energy Management announced next steps for oil and gas leasing in the Outer Continental Shelf to comply with provisions in the Inflation Reduction Act of 2022. These steps include holding lease sale 259 by March 31st, 2023, and lease sale 261 by September 30th, 2023. While there remain decades and decades of inventory on existing and valid leases, these additional lease sales will provide operators new 10-year primary terms to further explore, develop, and exploit the tremendous reserves in the Gulf of Mexico, which will help support the growth and stability of our basin-leading infrastructure in the Central Gulf for many decades to come. Turning now to our sodium minerals and sulfur service segment, the macro story for sodash remains intact as worldwide demand, ex-China, is continuing to outpace supply despite any concerns of a slowdown of the broader economy. According to third-party reports, estimated demand growth for sodash in the ex-China market alone is expected to be in excess of approximately 1 million tons per year through the end of the decade. The outlook moving forward is driven by a combination of industrial production growth and increasing demand associated with the green transition, specifically from solar panel and lithium battery manufacturers at the same time as there is limited new supply available to the market outside of significantly higher cost synthetic sodash production. As a result of this structural tightness and the cost structure of synthetic producers, Our non-contracted export SODASH prices have steadily increased throughout 2022, and this again held true as our fourth quarter SODASH prices are expected to be higher than our third quarter prices. Given this starting point and the nature of our contracts, we currently expect, and all of our recent pricing conversations thus far would confirm, that our weighted average SODASH price will be higher in 2023 than it was in 2022. This will be true even if we were to see a decline in market clearing spot prices over the course of 2023, which is not impossible but depends on a number of negative dynamics all playing out together. Soda ash is without question a fundamental building block of the global economy. With no practical substitutes and absent some major black swan event, will continue to be a vital component for future economic growth both domestically and around the world for the foreseeable future. The fundamental oversupply and undersupply in the sodash market has occurred despite the automobile industry producing far fewer units than historical average due to semiconductor chip shortages and various other supply chain issues. Moving forward, we would expect general auto production levels to return to historic levels as well as significant growth for soda ash expected from solar panel manufacturing and lithium battery manufacturing to support growing demand for EVs and batteries for renewable sources of electricity. We believe these tailwinds are likely to offset any potential reduction in demand for soda ash from construction-related activities or other smaller end markets which might be impacted by any recession or economic slowdown. You can read a lot out there about lithium that many are now calling the new white gold because of its place as a critical component in the manufacturing of batteries for electric vehicles as well as storage batteries for renewable energy from solar and wind. Well, SODASH really is another white gold as you need two parts SODASH for one part lithium to make one unit of lithium carbonate equivalent, which is a key component in battery manufacturing. Not lithium by itself, but soda ash mixed with lithium, using more than twice the amount of soda ash per the amount of lithium used. Based on the growing demand from green initiatives, which appears to be relatively invariant to general economic activity, it is evident the world will need more soda ash to support the transition to a low-carbon world and the general economic growth that will without question occur in the decades to come. We are very excited to be the first domestic natural sodash producer to bring online a meaningful expansion this decade to help supply this constantly growing market. The incremental volumes we will produce from our Grainger facility will not only allow us to supply our customers from multiple independent production sites, thus increasing our reliability as a supplier, but these new volumes will also allow Genesis Alkali to be the logical supplier of incremental sodash demand from our customers, both domestically and abroad, to support their future growth initiatives in the coming years. Along these lines, we remain on schedule to have first production from our original Grainger facility as early as January 2023, with the expanded Grainger facility expected to be online sometime mid-year. We continue to expect a net increase in production of around 700,000 tons in 2023, which importantly will be contracted at current market prices, with the full 1.2 to 1.3 million tons from old and new Grainger available for sale in calendar year 2024. Once expanded, Grainger will join our West Vaco facility as one of the lowest cost sodash production facilities in the world. Our legacy refinery services business continues to be a steady contributor for Genesys. The primary end markets we serve, specifically copper mining and corrugated paper market, provide us a stable baseline of business despite any concerns of a broader slowdown in economic activity. I think we can all agree that copper will remain the fundamental building block of the global economy, and specifically the green energy revolution for the foreseeable future, especially based on the various forecasts of electric vehicles, solar panels, and the build-out of the electric transmission and charging infrastructure. In addition, our sulfur-based products are used in various applications to support emissions reductions activities in various industrial applications. Despite any risk of a potential economic slowdown, we believe the combination of inelastic copper demand, steady demand from pulp and paper markets, along with the additional demand from ancillary applications will provide us with the steady to increasing results moving forward. I would like to take a moment to talk about how we believe the market continues to misunderstand and arguably undervalues our sodium minerals and sulfur services segment. For whatever reason, the market seems to value this segment like a generic bulk chemical business with minimal market scale and whose products likely compete with substitute products and are used in low to no growth in markets with low margins. Businesses like that should probably be valued by the market and call it an eight times EBITDA multiple. I can tell you we firmly believe our sodium minerals and sulfur services segment should instead be valued much more like a specialty chemicals business, where the market tends to value such EBITDA multiples north of at least 10 times, if not in the range of 12 to 13 times. Our sodash business produces a product that has no practical substitutes and is absolutely essential to everyday life, global economic activity, and the energy transition. Many of the products we take for granted, such as the windows in your house, at your place of business, or in your cars, iPhones, glass containers, solar panels, lithium batteries for electric vehicles, detergents, pharmaceutical products, among countless others, all require soda ash to produce and deliver an end product to a consumer. We do not compete with a substitute product, but rather we compete with synthetically produced soda ash, which is more than twice as expensive to produce and has a far nastier environmental footprint relative to natural production. The end markets we serve are not only vast and diverse, but they continue to expand and grow. Furthermore, after our Grainger expansion, we will produce and supply close to 13% of the global demand for Sodash outside of China. All of these factors should likely combine to contribute to steady and growing financial performance. It is interesting to note that since the beginning of 2018, the first full year we owned the Sodash business, we have been able to generate average EBITDA margins of as a percent of revenue of greater than 25%, fully loaded with all fixed and variable expenses. The calculated average EBITDA margin as a percent of revenues increases to approximately 30% if you exclude the impacts that the Black Swan pandemic had on this business in 2020 and 2021. These are realized EBITDA margins of specialty chemicals, not generic bulk chemicals. Similarly, our refinery services business provides essential emission reduction services to our host refineries, at the same time producing a specialty chemical that has limited and or significantly more expensive substitutes in virtually all of its applications. Additionally, it is an essential input into both the copper mining and pulp and paper industries. We continue to be one of, if not the leading supplier both in North and South America, and we support in markets that will continue to be around and grow for many years ahead. I think we can all agree that demand for copper is not going away, especially given its necessity in our everyday life and its increasingly important role in the energy transition to a lower carbon world. Also, the last time I checked, everyone continues to have countless Amazon, FedEx, or UPS boxes on their front porch every day. As a result of our competitive positioning, and the steady to growing demand from our various end markets, we have been able to generate EBITDA margins as a percent of revenue of greater than 30% since the beginning of 2018. This is quite remarkable, and once again, more akin to a specialty chemical business, especially given this business has generated these types of EBITDA margins since we first acquired the business back in 2007, or some 15-plus years ago. The world... and more specifically the green transition to a low-carbon world, will not be able to move forward, nor at the pace that everyone desires, without sodash and our sulfur-based products, period. Our marine transportation segment performed in line with our expectations as market conditions continued to support activity levels at or near 100% for all classes of our vessels, combined with increasing opportunities to steadily increase our day rates. The market for Jones Act tonnage remains structurally short across all classes of our vessels due to continued net retirement of marine tonnage across the industry, combined with steady refinery utilization levels and the robust demand to move refined products from the Gulf Coast to the East Coast and the West Coast. This structural tightness, especially for our inland fleet, has recently been exacerbated by record low water levels on the Mississippi River, which has caused increased traffic, navigational delays, and longer than normal wait times to move through locks. These conditions have reduced the practical availability of marine equipment available to make moves up or down the Mississippi River. It is important to note that we have not experienced any negative financial effects as a result of such conditions on the Mississippi River. We operate on a day rate plus fuel basis without going, quote, unquote, off the clock due to navigational issues, whereas traditional dry cargo or line haul carriers generally operate on a per ton mile rate structure. When you don't move a ton at least a mile, you lose revenue. That's not at all how we operate. As we mentioned in our release, the American Phoenix recently completed her scheduled dry docking and has started her most recent charter with an investment grade counterparty through the end of this year at a rate meaningfully higher than her previous charter. We also recently entered into a longer term agreement with another investment grade counterparty starting in January 2023 at a rate equal to or better than her current charter. This new arrangement will last a minimum of six months and more likely than not for all of 2023 at rates approaching what she commanded when we first purchased the vessel in 2014. All of the dynamics across our marine portfolio provide broad support for increasing levels of financial performance from our marine transportation segment moving forward, and we do not foresee a scenario where any short-term reduction in demand due to a policy-driven slowdown, would significantly alter its trajectory. As we have said in the past, we remain very excited about the future of Genesis. The decisions we have made over the last few years, the recovery in our market-leading business off the double black swan lows of 2020, as well as the expected growth we have in front of us, all combine to provide us with the foundation of generating increasing amounts of discretionary cash flow and an improving credit profile in the coming quarters and for years ahead. Our current expectations for 2023 will not only allow us to exit the year with a bank leverage ratio below four times, but will also allow us to manage our capital structure to the extent the regular way capital markets remain practically closed for any extended period of time. Along these lines, we have demonstrated time and time again we have tremendous support from our banks. And while we have no definitive plans to do so, we have historically been fairly creative in terms of executing on structured finance or asset sell opportunities to the extent we feel they are necessary and in the best interest of all of our stakeholders. As a result, we remain absolutely confident we have the flexibility and, in fact, multiple attractive avenues to deal with any near-term maturities as well as extend and possibly even expand our senior secured credit commitments. The management team and board of directors remain steadfast in our commitment to building long-term value for everyone in the capital structure, and we believe the decisions we are making reflect this commitment and our confidence in Genesis moving forward. I would once again like to recognize our entire workforce for their efforts and their unwavering commitment to safe and responsible operations. I'm proud to be associated with each and every one of you. With that, I'll turn it back to the moderator for questions.

Thank you. At this time, we'll be conducting a question and answer session. If you'd like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your hands in. before pressing the star keys. One moment, please, while we poll for questions. Our first question comes from Michael Bloom with Wells Fargo. Please proceed with your question.

Thanks. Good morning, everyone. I wanted to ask about the soda ash business. Specifically, just wanted to hear if you're having just what the supply chain and shipping conditions are right now and Are there any bottlenecks you're seeing to get your product to market? And then can you provide like a breakdown of end markets you're selling into right now?

I mean, I think in terms of delivery mechanisms, basically the vast majority of our product out of Wyoming goes out via rail and then is distributed domestically. via trucks and other means at that point, but the rail goes to ports where we load onto vessels for exports. So, you know, at this point we've not seen any disruptions in that ability to get there. It's important to note on our domestic sales, which is about half of our sales, We're just the agent for transportation. We don't take any – we sell FOB, if you will, Wyoming to our domestic customers, and we help arrange all of that. But on our international sales, our export sales, we do sell on a delivered basis. But given our size, we think we have more favorable – as the largest exporter coming out of the U.S., we have more favorable rates on both the railroads to get to the terminals, and our maritime costs are lower than other people because of the volume discount that we get through ANSAC by moving more product than any other domestic exporter. Regarding the current breakdown of sales, You know, I don't have that right at my fingertip, but, you know, Michael, we can get that to you at some point.

Okay, great. Appreciate that. And then you had some comments in, I guess, the press release and your prepared remarks about, you know, upcoming maturities and your ability to deal with those. And I guess from what I understand, at least, you don't really have any maturities until 2024, and it's not even that big a maturity in 2024. I guess I just wanted to make sure I'm not missing something there. Is there something that we should be aware of? And as you think about those options for the maturities that are coming up, maybe you could expand upon that.

You're exactly right. I mean, we don't have any unsecured maturities until mid-2024, and our senior secured facility expires 90 days inside that. Some people have brought that up as a potential overhang, given, obviously, the current dysfunctionality as I characterize it in a regular way. Capital markets, really the unsecured market at this point. It's only, as you point out, it's only a $340 million issuance. It's very small. We don't see it as an issue at all. We have multiple ways to deal with it and handle it. And so, yeah, I was just really trying to address some of the comments that we get that that's a concern to some people in the capital structure. We just don't view it, especially given the momentum of our business and the increasing amounts of discretionary cash flow that we have very high visibility towards.

Okay, great. Thanks for clarifying. That's all I have.

Thank you.

Our next question comes from TJ Schultz with RBC Capital Markets. Please proceed with your question.

Great. Thanks. Morning, Grant. Maybe just a broader question on tightness in the Sodash market beyond your Grainger expansion. Are you expecting any other material supply additions in the u.s market in the next two to three years i'm just trying to think how the natural soda ash market would get less tight from where it is today beyond any demand movements and if you could just touch on some of the dynamics that would all have to occur together to realize um lower pricing next year yeah i mean that there's no other uh

Near-term expansions of natural production in the U.S., which in our view can occur prior to the 2025-2026 timeframe. There's probably some de-bottlenecking that could occur in brownfield expansions. It could occur at the Shishikam site, but it doesn't appear that it's in their five-year capital plan. Solvay has announced... an opportunity to de-bottleneck. And these are all in the plus or minus 300,000 or 500,000 ton a year type deals. But again, we would think that that would take two or three years. And given that Solvay is currently publicly separating, if you will, its bulk chemical business, its sodash business from its other businesses, we don't perceive that that's going to, given that it's in one form or another, either for sale or going to be spun out, that that expansion is going to occur. And again, none of it can occur in our mind before 2025 or 2026 as we look at some of the at least kick around or announced potential new greenfield developments to expand In the Toronto Basin and Southwest Wyoming, I think those are, at best case, 2028 to 2030 type timeframe, based upon our view of what it would cost to do a greenfield development that has been kicked around. And I think some of this is in the public domain in terms of some of the public discussions that has occurred, that the cost would be in excess of $1,000 a ton of incremental capacity And given that there's no, in the SODASH business, there's not really the concept of take-or-pay or multi-year contracts, we would expect that you would need a clear runway to call it plus or minus $120 a ton net EBITDA margin to support that expansion and by golly, if there's $120 net EBITDA margins across the board, we'll make $600 million a year off of our 4.8 million tons of existing installed production capacity.

Okay, great. Maybe just following up on the end markets for Sodash from Michael's question without getting into the exact percentages, is the view essentially that Autos have effectively already suffered, so you'll see growth there, and then as solar and lithium grow as a percentage of the mix, that can fully offset or substantially offset any potential weakness that you may see or we may see on construction.

Yeah, I mean, that's basically our feeling, that the U.S. automobile manufacturers have been at a 13 to 14 million unit rate for a couple of years, especially... exacerbated by the chip shortage. In our discussions with the automobile glass manufacturers in the automobile industry itself, they believe that that chip shortage is going to be substantially addressed, call it by the first slash second quarter of 2023, when it can get back to potentially given pent-up demand and other things, get back to 17 to 18 million units on an annual basis. So that drives quite a bit of incremental demand. And then the demand from the green initiatives of solar panels and lithium carbonate for batteries and other things is conservatively about half a million tons a year of incremental demand. And so I think a pullback in construction activities, or at least our view at this point, pullback in construction activities is in large part going to be addressed by the growth coming from the green initiatives. So, you know, inventories are extremely low. you know, not all of the economies are, you know, are going to see things. We're seeing robust demand growth continuing and developing economies both in South America as well as Asia outside of China. So, you know, we feel quite confident in our discussions with customers as we start here the renegotiation period for 2023. I think that those dynamics are really holding up. So, you know, I got, just as we've been sitting here, I'll kind of answer Michael's question, which is part of your question also. But in general, about 54% of the total market is in glass of all kinds. So it's automobile glass, container glass, flat glass for construction activities. Generally, during recession, we see container glass absolutely go up. People tend to drink more for whatever reason, apparently. Soap and detergent is about 16%. About 17% goes into chemicals, and the rest is kind of in the metals, mining, and pulp and paper business. So that's a general breakdown of where the sales are.

Okay.

Thank you. As a reminder, if you'd like to ask a question, please press star 1 on your telephone keypad. One moment, please, while we poll for questions. Our next question comes from Carl Blunden with Goldman Sachs. Please proceed with your question.

Hi. Thanks very much for the time. You know, I was interested in your comments on the copper mining and market and was curious if you could provide a bit more color there. Are you, when you think about the forward outlook there, is that driven primarily by production volumes of your customers, is there any profitability tie in there for their profitability to your outlook or any market share opportunities?

No, we generally, I mean, we're an absolute critical component. The sodium hydrosulfide, which is the byproduct or the product that we make in the removal of the sulfur that is entrained in the crude oil that enters a refinery, is used in copper mining to basically as a reagent to separate the copper from molybdenum, which is a very hard word to say. And so then you get the copper miner gets the revenue impact of being able to sell the molybdenum as well as remove it from its typical entrained form. molecular structure with copper. We're critical, but a very small part of the input. We structure everything on the basis of basically a fixed margin delivery from our perspective. Whether or not copper prices are $3.40 or $2.80 or $4.50, we get the same margin per ton of sodium hydrosulfide that we sell into that market. It's our belief, and you can read a lot of commentary from Freeport-McMoran and BHP and others that are large publicly traded copper producers, that basically their cash cost of producing copper across their portfolio of mines worldwide is in the $1.40, $1.50 range. pound range. And so with today's copper prices of $3.40, there's absolutely no, they're producing everything that they possibly can. And so unless and until you see a long-term forward copper pricing curve of $2 or less, we don't expect anything to any effect on our ability to market the tons. So that's kind of the dynamic we see.

Yeah, that's really helpful. It ties out with the commentary we've seen from the miners, too. With regard to the capital structure, and we do appreciate being proactively discussing that you have options to deal with the 24 and 25 maturities. When you think about the preferred options, should we still think about unsecured debt as the preferred way to go? You know, those bonds have rallied recently, close to 9% yields now, but is that the preferred option to keep the capital structure simple over time, or are you increasingly looking at things that could be, you know, lower costs, you know, whether they're structured or equity-linked, etc.? ?

Yeah, I think that, you know, we're looking at right now, even with the bond rally to unsecured at 9%, that doesn't seem to be overly attractive at this point. But, you know, I think that we would like to – we are looking at cheaper alternatives, which could possibly be an expanded – senior secured commitments in one form or another that gives us a cheaper cost of capital to go forward and simplify the capital structure as well as potentially harvest some of what we perceive to be mispriced bonds in our unsecured complex. So I think that given the radically improving financial financial performance of the business, the calculated leverage, and with the clear growth that we have in front of us in 23 and beyond, I think that we're in a very enviable position to be able to be creative in either a regular way or other ways to simplify the capital structure, and ultimately with reducing the cost of capital, if you will. that exist on the balance sheet at this point.

That's really helpful. Thank you.

Thank you.

We have reached the end of the question and answer session. I'd now like to turn the call back over to Grant Sims for closing comments.

Again, we appreciate everybody listening in, and we look forward to continuing to deliver good news in the on our fourth quarter call and as we go through 2023. So thanks, everyone, and we'll talk soon.

This concludes today's conference. You may disconnect your lines at this time, and we thank you for your participation.