Hudbay Minerals Inc.

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to the HUD-Bay Minerals, Inc. First Quarter 2021 Results Conference Call. At this time, all participants are in listen-only mode. Following the presentation, we will conduct a question and answer session. To join the question queue, you may press star then 1 on your telephone keypad. Should you need assistance during the conference call, you may signal an operator by pressing star and 0. I would like to remind everyone that this conference call is being recorded today, May 12, 2021, at 8.30 a.m. Eastern Time. I would now like to turn the conference over to Candice Brule, Director, Investor Relations. Please go ahead.

Thank you, Operator. Good morning and welcome to HUD-Base 2021 First Quarter Results Conference Call. HUD-based financial results were issued yesterday and are available on our website at www.hudbay.com. A corresponding PowerPoint presentation is available and we encourage you to refer to it during this call. Our presenter today is Peter Kakilski, HUD-based President and Chief Executive Officer. Accompanying Peter for the Q&A portion of the call will be Steve Douglas, our Senior Vice President and Chief Financial Officer, Kashil Maher, our Senior Vice President and Chief Operating Officer, and Eugene Lee, our Senior Vice President, Corporate Development and Strategy. Please note that comments made on today's call may contain forward-looking information, and this information by its nature is subject to risks and uncertainties, and as such, actual results may differ materially from the views expressed today. For further information on these risks and uncertainties, please consult the company's relevant filings on CDAR and EDGAR. These documents are also available on our website. As a reminder, all amounts discussed on today's call are in U.S. dollars unless otherwise noted. And now, I'll pass the call over to Peter Kokilski. Peter?

Thank you, Candice. Good morning, everyone, and thanks very much for joining us. Before I begin today's presentation, I wanted to recognize that the COVID situation continues to present a challenging operating environment for our business units. While we are encouraged by the recent rollout of vaccines in certain regions, We remain focused on adhering to our strict COVID protocols and procedures to ensure our workforce returns home safely to their families at the end of every shift. We have recently encountered cases in our operations, and our safety protocols and contact tracing efforts have helped to ensure workplace transmission is limited. We are proud of our team's strong efforts over the past year, which has allowed our mines to continue to operate safely and efficiently. In this presentation today, I'll touch on the past quarter's results, followed by the progress we have made on our growth initiatives, an overview of our leading organic copper growth pipeline, and a recap of the many near-term catalysts at HUD-Bay. First quarter consolidated copper production was 24.6,000 tons, a 10% decrease from the fourth quarter of 2020. This was primarily as a result of lower mill throughput at Constantia due to a scheduled semi-annual mill maintenance shutdown, partially offset by higher copper grades at 777 and higher copper recoveries at the Flin Flon Mill. Consolidated gold production increased by 10% compared to the previous quarter, achieving a new record for Hud Bay due to higher gold grades at 777, higher gold recoveries at the Flin Flon Concentrator, and higher gold grades at Constantia. Consolidated zinc production in the first quarter was 8 percent higher than the fourth quarter due to higher zinc grades and throughput. Consolidated cash cost per pound of copper produced was $1.04 in the first quarter, an increase compared to the fourth quarter due to lower copper production, higher operating costs, and lower byproduct credits. Incorporating cash sustaining capital, royalties, selling, Administrative and regional costs consolidated all in sustaining cash cost per pound of copper produced was $2.37, which increased from $2.24 in the fourth quarter due to the same factors impacting cash costs, but was offset by lower sustaining capital. Operating cash flow before change in non-cash working capital was $91 million during the first quarter, a slight increase from the prior period due to higher realized prices offset by lower sales volumes. Adjusted net loss per share and adjusted EBITDA in the first quarter was $0.06 per share and $104 million, respectively, after adjusting for one-off financing charges and the net mark-to-market loss on financial instruments, among other items. This was relatively unchanged from the fourth quarter, as higher realized prices were offset by lower sales volumes. First quarter Peru sales were impacted by a delay in the 10,000 ton shipment of copper concentrate valued at $20 million for which a payment was received in the first quarter but did not meet the revenue recognition criteria due to the delayed timing of the shipment into early April. First quarter Manitoba sales were impacted by a delay in accessing additional rail cars after a strong copper production quarter. This resulted in the buildup of approximately 5,000 tons of copper concentrate in excess of normal operating levels, which is valued at approximately $18 million. Had both parcels of copper concentrate been sold during the first quarter, we would have realized approximately $39 million of incremental revenue. These parcels have since been recognized as revenue, and copper concentrate inventory levels have normalized in the second quarter. First quarter results were also negatively impacted by the realized copper price hedging of our provisionally priced copper sales. We exited the quarter with $311 million in cash and equivalents, lower than end of last year, mainly as the result of capital investments as we complete our growth initiatives in Peru and Manitoba, along with interest payments and bond refinancing fees during the quarter. Our full year 2021 production and operation cost guidance has been reaffirmed, and we are pleased to announce Pampa Cancha commenced production at the end of April in line with the timelines incorporated into our guidance and recent updated mine plan. On slide four, you will find a summary of our operating results in Peru during the quarter. Constancia produced 17.8,000 tons of copper, 4.6,000 ounces of gold, 406,000 ounces of silver, and 294 tons of molybdenum. Production was lower than the fourth quarter, primarily because of lower throughput from a scheduled mill maintenance program that was delayed from the fourth quarter into the first quarter. Ore mined during the first quarter was lower than the fourth quarter, as mining levels were optimized for low mill throughput while managing the level of contaminants and hardness in the ore sent to the mill. Ore milled during the first quarter was lower compared to the previous quarter due to the plant maintenance shutdown, Milled copper grades were relatively consistent with fourth quarter levels, while milled gold grades were higher as we accessed higher grade ore from the deeper banks of the pit. Recoveries of copper were lower than the previous quarter, but in line with the recently issued Constancia mine plan, and gold and silver recoveries remained relatively consistent with the previous quarter. Unit operating costs in the first quarter were higher than last quarter, primarily due to fewer tons of ore milled, and increased operating costs related to the planned mill maintenance shutdown and enhanced COVID-19 protocols. The COVID-related costs amount to approximately 72 cents per ton in the unit costs. However, even with projected elevated COVID costs for the balance of the year, we expect the full year unit operating costs to decline to be in line with our 2020 guidance range. Peru's cash costs was higher in the first quarter, compared to the fourth quarter of last year, primarily due to higher milling costs and lower copper production. Sustaining cash costs for the first quarter improved to $2.36 compared to $2.58 in the prior quarter due to lower cash sustaining capital spending, partially offset by the same factors affecting cash costs during the quarter. In early April 2021, we finalized the remaining land user agreement for Pampacuncha and gained full access to the site's complete pit development activities. First production from Pampa Concha was achieved at the end of April, which is consistent with what we assumed in our annual guidance and recently published mine plan. Slide five shows real-time photos of the start of mining activities in the Pampa Concha pit, a significant positive milestone for both the company and for the community of Chiaroya. Turning to slide six, I'd like to talk about our updated Constantia Mine Plan, which we released on March the 29th. This update reflects an increase in copper and gold production from 2022 to 2025 as the higher grades from the Pampa Country deposit enter the mine plan. It incorporates higher grade reserves from the Constantia North Pit Extension, which contributed to an increase in reserves of 33 million tons at a grade of 0.48% copper and 0.115 grams per ton of gold and extends the higher grade profile to 2028. This resulted in an increase of approximately 11% in contained copper and 12% contained gold over the prior year's reserves. With the incorporation of Pampacantia and Constantia North, annual production at Constantia is expected to average approximately 102,000 tons of copper and 58,000 ounces of gold over the next eight years. an increase of 40% and 367% respectively from 2020 levels. Constancia maintains its low cost profile with average copper cash cost of $1.18 and sustaining cash cost of $1.71 per pound over the next eight years. Moving to the next slide on Manitoba, production during the quarter included 28,000 tons of zinc, 6.7,000 tons of copper, 31,000 ounces of gold, and 291,000 ounces of silver. Production results for all metals were higher than the previous quarter, primarily due to higher head grades and recoveries. All mine at our Manitoba operations during the first quarter was higher than the fourth quarter due to full production levels at the 777 mine after the shaft repairs were completed in the fourth quarter. Copper and gold grades at 777 were higher than the fourth quarter, as higher grade remnants stopes were mined as 777 nears the end of its mine life. The Larlor mine achieved the increased targeted throughput rate of 4,650 tons per day during the quarter. Development and underground construction activities continue in the lower part of the Larlor mine in order to position us well for consistent gold and copper-gold production upon startup of the New Britannia Mill in the third quarter. We have approximately 26,000 tons of gold ore stockpiled, up from 12,000 tons at the end of the fourth quarter, and this is expected to continue to grow during the second quarter. The incremental mining activity associated with growing the gold ore stockpile has contributed to elevated unit operating costs during the first quarter. We continue to see strong performance from the stall mill. Ore process during the first quarter was only 3% lower than the record levels achieved during the fourth quarter, despite the continued stockpiling of Larlor gold ahead of the New Britannia mill. Ore process at the Flin Flon Concentrator increased compared to the previous quarter as a result of a full quarter of 777 production, but were not as high as prior periods due to less of the Larlor ore being diverted to Flin Flon in order to grow the gold ore stockpile for the New Britannia mill. Recoveries of copper, gold, and silver were higher than the previous quarter due to higher grades. Unit operating costs increased by 8% compared to the fourth quarter, but remained within the annual guidance range. The increase was primarily due to lower capitalized development at both LALOR and 777, as well as higher mining activity at LALOR to grow the gold stockpile, as I mentioned. Anatoba's cash cost was negative $1.04, higher than the prior quarter, primarily due to higher mining and G&A costs and lower byproduct credits, offset by higher copper production. Sustaining cash cost was $1.62, which was higher than the previous quarter due to the same factors affecting cash costs. In early April, production at the stall mill was suspended for four days as a precaution due to COVID-related absenteeism. The Laurel mine was not affected. We were able to utilize spare capacity at the Flin Flon concentrated during this period, and therefore we do not anticipate any material impact to second quarter production as a result. The New Britannia refurbishment project continues to track ahead of the original schedule and is nearing completion with approximately 82% of the project completed as at the end of April. Commissioning of the gold plant is expected in mid-2021, with first gold production expected early in the third quarter. The new copper flotation facility is on track for commissioning and ramp-up in the fourth quarter of 2021. Operational readiness activities are progressing as planned, with underground development of Lalor's gold-rich lenses well advanced in preparation for the start-up of New Britannia. We continue to see some COVID-related cost pressures on the project capital estimates at New Britannia, which we will continue to manage. On March 29th, we also announced many significant advancements as part of the third phase of our Snow Lake Gold Strategy. The third phase focuses on expansion and further optimization of operations, and several of these opportunities were incorporated into an updated mine plan, which is summarized on slide nine. This enhanced mine plan contemplates an increase in annual gold production from approximately 150,000 ounces to over 180,000 ounces during the first six years of New Britannia's operation. The average gold cash cost and sustaining cash cost are expected to be $412 and $788 per ounce respectively over the first six years. Mine plan enhancements include optimized recoveries and throughput at store, the conversion of additional resources to reserves at Lalor, the plans to expand Lalor to 5,300 tons per day by 2023, and the mining of zinc reserves from the 1901 deposit starting in 2026. These mine plan enhancements optimize the processing capacity in Snow Lake in a manner that maximizes the net present value of the operations. As a result of these initiatives, the production of gold, copper, and silver are expected to increase by 18%, 35%, and 27% respectively from 2022 to 2027 compared to the previous mine plan. Slide 10 shows our consolidated copper and gold production profile incorporating the two updated mine plans for our flagship operations. These graphs demonstrate that our growth strategy has been successful in significantly increasing near-term copper and gold production. Through our well-thought-out investments in Pampacuncha and the New Britannia Mill refurbishment, we expect to begin reaping the benefits of these decisions this year and more fully in 2022 and beyond. Our prudent management of capital is expected to begin paying off this year, not only in terms of a growing production and cash flow profile, but also in being a copper-focused company with a diversified organic growth pipeline. We believe we have three of the best undeveloped copper deposits in our portfolio that provide the potential to further grow our medium to long-term production profile as summarized on slide 11. Rosemont is one of our more advanced projects with attractive returns and a 19-year mine life based on a recent feasibility study. Once in production, Rosemont is slated to be the third largest copper mine in the United States. Though we have run into a delay with an unprecedented court ruling, we are appealing this ruling alongside the United States government, and we continue to explore our wholly owned private land in the district adjacent to Rosemont. In March of this year, we announced our Copper World Discovery, where our 2020 initial drill program intersected high-grade copper sulfide and oxide mineralization on our private land at depths much shallower than Rosemont. In the photo on this slide, you can see the green oxidized copper on the side of the mountain at Copper World. We've commenced a larger 2021 drill program to test the limits of these deposits and the potential for a viable open-pit operation at Copper World. We've recently increased the 2021 budget by approximately $24 million, which includes $14 million for additional exploration drilling and $10 million for engineering studies. Depending on the exploration program results, we expect to complete an initial inferred resource estimate before the end of the year and a PEA in the first half of 2022. And in April, we published our initial PEA for Mason, which contemplates a 27-year mine life and production levels that could more than double our production profile. We acquired this project for $50 million, and it is 100% owned by HUD-BAY. At a copper price of $3.10, the after-tax NPV using a 10% discount rate is approximately $520 million, and the IRR is approximately 14%. The valuation metrics are highly sensitive to the copper price, and at a price of $3.25, the NPV increases to three-quarters of a billion dollars, and the IRR increases to over 15%. Mason has a large measured and indicated resource base at 2.2 billion tons and has the potential to host high-grade satellite deposits on our adjacent land claims, similar to Copper World. Turning to slide 12, we also have several exploration initiatives in both of our Peru and Snow Lake operations. In Peru, the Constantia North discovery enhanced the mineral resource estimates through an improvement in the head grade at Constantia. Measured and indicated copper grades increased to 0.22% from 0.19%, and inferred copper grades increased to 0.3% from 0.18%. A significant portion of the Constantia North resource estimate is classified as inferred due to wide drill spacing, but there remains the opportunity to upgrade these inferred resources to a higher classification as we complete infill drilling. There also remains further opportunity to extend the Constantia North resource by incorporating steeply dipping high-grade scarn mineralization through a potential underground operation. The mineralization remains open down plunge to the north. In February of 2021, we commenced drilling on the Kawincha North high-grade scarn target located approximately 10 kilometers from Constantia, and drilling continues with five holes completed to date. Discussions continue to progress with the community of Uchikako on the Maria Reina and Caballito properties, both of which are located within 10 kilometers of Constantia, and we expect to reach an agreement in due course. We also expect to commence drilling activities at the Yagen property in the coming weeks. Yagen is a copper porphyry target located in northern Peru near the city of Trujillo and in close proximity to existing infrastructure. Exploration efforts at the Lalor mine in 2020 continued to be successful with the definition of an additional 1.8 million tons of mineral resources, increasing total inferred at Lalor to 6.2 million tons. The inferred resources have the potential to extend the Lalor mine life beyond the current estimate of 10 years and maintain the 5,300 tons per day production level beyond 2027. Preliminary results from Manitoba's 2021 winter drill program in the Chisel Basin in Snow Lake indicate that a potential copper-gold feeder zone to the 1901 deposit exists, with one hole intersecting 11.6 meters at 2.7 percent copper and 3.4 grams per ton of gold, which is similar to the known geology at the Lalor deposit. A review is underway to determine next steps for exploration at 1901 and whether it will be best conducted from surface or from underground once development of the deposit has commenced and suitable drill platforms can be established. We also continue to test other targets that exist within the Chisel Basin. I'll close on slide 13 with a recap of our 2021 catalysts, many of which we've touched on throughout the presentation. In Peru, we expect to receive further results from our Kawincha North drilling program in the coming months. We will begin drilling the Yagen property in the second quarter. We expect to be advancing the exploration poverty process at the other regional Constantia properties this year once we reach a community exploration agreement, and we intend to complete a trade-off study for the Constantia North underground operation before the end of the year. In the medium term, we expect to advance our work on examining ore sorting and copper recovery improvements at Constantia. In Manitoba, we expect to complete commissioning of the New Britannia gold plant in the coming months, and to achieve the first gold pour early in the third quarter. We have started the work in preparation for the ramp-up to 5,300 tons per day at Lalor and the Stal Mill Recovery Improvement Program. We also continue this year's exploration program in the Chisel Basin. In the medium term, we will continue to look at future opportunities for extracting gold from the tails at Stal, expanding the New Britannia Mill beyond 1,500 tons per day, and delineating new reserves and resources in the prospective Snow Lake Camp. In Arizona, we look forward to releasing further exploration drilling results to potentially extend the mineralization at Copper World, publish an initial resource estimate before the end of the year, and work towards a PEA to be released in the first half of 2022. We also expect to receive a decision from the Ninth Circuit Court of Appeals on Rosemont in the second half of the year. And at Mason, we will continue to compile and interpret historical data on our land package and complete geophysics in preparation for a future drilling program. We are a disciplined, growth-focused company. And as we look to deliver the next stage of growth at Hutt Bay, our priorities over the medium term will be to unlock value at Rosemont, drill the copper world discovery, test the Constantia regional exploration targets, add reserves to the Snow Lake mine plan, advanced mason and exploration pipeline projects, and optimize value from snow lake gold, while remaining vigilant for other opportunities that match our strategic criteria and never losing focus of prudently managing our balance sheets. And with that, we're now happy to take the questions.

Thank you. Ladies and gentlemen, we will now begin the question and answer session. To join the question queue, you may press star, then one on your telephone keypad. You will hear a tone acknowledging your request. If you are using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star, then two. We will pause for a moment as callers join the queue. Our first question comes from Orest Waukadao of Scotiabank. Please go ahead.

Hi, good morning. Could we please get a bit more color on sort of what happened at Constancy in the first quarter? I realize there was a maintenance shutdown, but the throughput there still seemed really low, unless the maintenance shutdown was over two weeks. I'm not really sure how long it was. And just along those lines, are there any other anticipated maintenance shutdowns later this year?

Good morning, Orist, and thanks for the question. You know, to start to answer your question, yes, the maintenance shutdown was longer than planned because we deferred it from the last quarter of last year. So the duration of it certainly would have impacted results for the quarter. But, Cashel, why don't I ask Cashel to provide a little bit more color around?

Yeah. Good morning, Orist. Certainly, the maintenance shutdown was a little bit longer than anticipated by the added work from the quarter. Also, it was longer due to some of the logistical reasons. We ran into some unusual weather events and not to mention complications with segregating workforces, contractors, et cetera, on site. And so, some of the work took longer than under normal circumstances and obviously impacted the days available for throughput. The other was is in the beginning, the sequencing of the mine, we're mining a little bit harder ores in the lower part of Constantia, and so throughputs were a little bit down, but fortunately now we're mining in Papagancha, and that'll offset a lot of that hardness that'll be going through, and we expect now to be at normal sort of throughput levels going forward. With respect, I believe there is also in Q4 another scheduled maintenance shutdown later in the year.

In order to just, your question was your ratio. It was approximately two weeks to shut down? Yes.

Thank you. And just shifting gears, when we think about your medium-term growth, whether it be Rosemont or Copper World, is it fair to say that the earliest we could see or we should anticipate investment from a development perspective is probably 2024? Or do you see a scenario that you could see early works begin before that?

Boris, I think that your suggestion is certainly reasonable. What I would say with respect to Rosemont is that a number of potential outcomes are possible. But if we succeed, we would be in a position to be exactly where we were back in July of 2019. which could mean that we could effectively be moving into construction pretty quickly. Now remember that back in 2019, the thing that we really were focusing on were obtaining a partner for Rosemont, a joint venture partner, as well as we would likely need to just take another look at the estimate in order to revalidate it in the context of some improvements that we've made in the interim as well as current pricing. So I think it would be fair to say that if we received a positive court decision this year at Rosemont, we could be in the field as early as 2023. And I would say 2024 is like a conservative estimate.

Thank you.

Our next question comes from Jackie Prisblowski of BMO Capital Markets. Please go ahead.

All right, thanks. I guess I'll just start by following up on Aura's question. When you talk about doing a PEA at Copper World next year, I think you said, how does that factor in with Rosemont? Are you going to contemplate that PEA as a standalone or is that going to be a a complex between the two operations?

Morning, Jackie. The PEA that we're conducting is for Copper World as a standalone project. There certainly is the potential for it to be combined with a version of Rosemont, but we are approaching it as a standalone project right now.

Okay. And so a positive decision on Rosemont would would result in you going forward with the construction of Rosemont, and then CopperWorld would sequence in sort of after that. Is that the right way to think about it?

I think it, you know, we really needed to complete the work on the PEA for CopperWorld to better understand how sequencing might occur. So I think what you're saying is a fair assumption, but certainly is not certain at this point.

Right. Okay. That's helpful. Shifting over to Peru, I know you've probably been asked this a million times, but given that we're getting closer to the runoff election in Peru, can you talk about how it's affecting HUD-BAY, if at all, at this point? increased kind of attention to different political views? Does that change the interactions that you're having with the community and the progress you're making on getting access to the exploration properties that you have up there?

Jackie, in a nutshell, I think, you know, the team, Javier and his team in Peru are doing an extraordinary job of staying out of politics and maximizing contact and support, contact with our communities in Chumbivilcas and support of those communities. With respect to the election, I really do think that it's too early to predict the direction that the runoff will take. You'll recall that the polls in the first part of the election didn't even include Mr. Castillo in the top five candidates. So, you know, again, as I've said before, if I view Peru in the context of my personal experience over the past couple of decades, almost every election is characterized by extremes. Ten years ago, the same thing happened with Ollanta Humala, who was a left-wing candidate. and he was considered to be Armageddon for the mining industry in Peru. But we saw that after his election, he moved to the center, and mining continued to be a key driver of the nation's economy. And I see no difference now. Mr. Castillo is already beginning to soften his tone. If he is elected, and this is a big if, Hud Bay will work with his administration constructively, as we always do, and we'll defend and advance the interests of our investors and our stakeholders. But I do believe, sort of going back to the first part of my answer to you, is that the best way to do this is to remain deeply focused on our communities in Chumbawilkas and on our common purpose. And the team is totally focused on that.

And the ask from the communities hasn't changed materially with this sort of background noise?

No, no, in fact, we are very, very solidly engaged with the community, and we have a number of agreements with the communities.

Okay, that's really helpful. Thank you very much, Peter.

You're welcome.

Our next question comes from Matthew Field of Bank of America. Please go ahead.

Hey, everyone. Thanks for providing the color on the shipments that sort of got pushed into 2Q. Have you been able to sort of think about if that $39 million had been in revenue, kind of what the EBITDA throughput would have been in the first quarter?

Thanks for the question, Mac. Why don't I ask Steve Douglas to respond?

It's not a number we really disclose. But suffice to say, you know, we'll get back to you on the number as to what the calculation would be.

Okay, and then, you know, just thinking about the rest of the year, you know, obviously global freight, global shipping is challenged right now for a number of reasons. Is there any reason to believe that, you know, this is just a one-time issue and, you know, 2Q will kind of have outsized results because there will be nothing pushed into 3Q? Or is this kind of a thing that you're going to be monitoring for the rest of the year to make sure kind of shipments go out on time and sort of everything that you produce can get sold in a reasonable amount of time?

We have no indication that there will be any change. Certainly we have no indication in the short term of any changes, and we certainly expect next quarter to go ahead as planned, and there's no indication that things will change from that beyond the second quarter.

And, I mean, I think it's worth knowing, and Peter pointed out in his conference call notes, we actually got paid for the shipment in accordance with the commercial terms. It was just delayed literally a matter of a few days. So, I mean, these logistical hiccups come and go. And we definitely aspire to not have them. And I think our marketing team does a fantastic job of dealing with a lot of variables. So absolutely, I would reiterate what Peter said, that we don't anticipate this occurring again, but that's all subject to the vagaries of the areas in which we function.

All right, fair point. And then last one for me, you start delivering gold ounces under the prepay agreement next year. Given the move, significantly in prices on gold, you know, more so on copper since you signed the gold prepay. Is there any thought to kind of taking advantage of the good metal prices to kind of maybe mitigate the impact of those ounces? You know, kind of going away on your cash flow from financing in 2022?

Matt, you know, I think that we concluded the agreement at a decent price, which is actually not that far off today's price. So right now, we are not really giving consideration to alternatives with respect to how we make those payments or how we deliver those answers.

Okay. Thanks very much. I appreciate it.

Once again, if you have a question, please press star, then 1. Our next question comes from Lawson Winder of Bank of America. Please go ahead.

Hello, Peter and team. Good morning. Thanks for the update. Just a question on Rosemont. In the event that the court actually rules against Rosemont, I'd like to kind of understand what your thinking is in terms of how to proceed. So, one, are you in a position where you could fairly immediately move ahead with some sort of plan that avoids federal lands? And then how long would it be before you could submit for those state approvals? And then secondly, would your intention be to appeal or just leave it at that?

Morning, Lawson. Look, I think that's an insightful question. Our intent, if we were to lose the case, we would most certainly seek leave to appeal. And the reason why I say that is because this decision not only affects Hud Bay and Rosemont, but it affects the entire industry in the Western United States and possibly the entire United States. And we have previously said that there are some 25 or so projects and billions of tons of copper that are potentially impacted by this. So it's something that affects the entire industry. And we think that an appeal certainly would be in order and would be certainly appealed by the industry and other industry associations. Now, I remain pretty confident or optimistic that the appeal will go away, but that's beside the point. So if we do appeal, of course we would look at alternatives for going into production. I think it's fair to say that the copper world discovery certainly provides us with an alternative avenue, although a slower avenue.

um but but we continue to look at alternatives with respect to how we might move forward if we in fact do lose the appeal okay that's great um and then um maybe if i could just ask on the collective bargaining agreements uh it seems like this is a bit delayed i'm just curious what to what you would attribute attribute the delay in getting um those contracts finalized. And then, you know, I think it would be really helpful to get some color on what proportion of each site is unionized and what job functions are primarily represented by those union members.

Dawson, I would say that, you know, in the case of Manitoba, it's a more complex environment given the pending closure of 777. But we continue to advance the collective bargaining process there with our unions to work towards concluding an agreement that works for everybody. Ultimately, we and they are focused on a fair settlement, and we expect to achieve that. Now, to your question of the proportion of personnel who are unionized, in Manitoba, the entire workforce is unionized, and in Peru, approximately one-third of the workforce is unionized.

And those in Peru, are they concentrated in one particular function, or is it spread around? They're spread around. Okay, that's great. Thanks for that, Collar. And then just one final question. I mean, you mentioned, of course, you re-edited the guidance, you reaffirmed that, and you're confident in meeting that. But I did note that you called out $4.6 million in Q1 of additional costs that I think were unexpected related to COVID. And... Yeah, my question would be how persistent in each of the consecutive quarters in 2021 could that $4.6 million cost be? And, you know, if you were to get $4.6 million of additional COVID costs in each of Q2, 3, and 4 in 2021, would that put the Constancia guidance at risk at all? I mean, I think the high end is 1090. Is there any risk of sort of breaching that level?

Yeah, Lawson, thanks for that. So we had initially guided towards some $2.5 million of quarterly costs with respect to COVID. However, with the increased precautions that we're taking, we are now saying that the last quarter was $4.6 million instead of the $2.5 million run rate that we've been experiencing. We expect the overall COVID-related costs for this year to be of the order of $20 million, so $5 million a quarter, but we do not expect those to impact the guidance that we have issued.

Okay, fantastic. Thank you, Peter.

You're welcome. This concludes the question and answer session. I would like to turn the conference back over to Candice Brule for any closing remarks.

Thank you, operator, and thank you, everyone, for participating today. If you have any further questions, please feel free to reach out to our investor relations team. This call has now ended, and you may disconnect your lines.