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spk01: Good morning, ladies and gentlemen. Welcome to First Quarter 2024 Earnings Call. This conference is being recorded and the replay will be available at the company's website at oraminerals.com slash investidores. The presentation will also be available for download. This call is also available in Portuguese. To access, you can press the globe icon on the lower right side of your Zoom screen and then choose to enter the Portuguese room. After that, select Mute Original Audio. We would like to inform that all attendees will only be listening to the conference during the presentation, and then we will start the question and answer section, when further instructions will be provided. Before proceeding, we would like to clarify that any statements that may be made during this conference call regarding the company's business prospects, operational and financial projections and goals are the beliefs and assumptions of Aura's Executive Board and the current information available to the company. These statements may involve risks and uncertainties as they relate to future events and therefore depend on circumstances that may or may not occur. Investors should be aware of events related to the macroeconomic scenario, the industry, and other factors that could cause results to differ materially from those expressed in their respective forward-looking statements. Present at this conference, we have Rodrigo Barbosa, President and CEO, and Kleber Cardoso, CFO. Now, I will turn the conference over to Rodrigo Barbosa. You may begin your conference.
spk08: Well, good morning, all.
spk03: We are very proud to be here. Thank you for being here with us to watch the first quarter result of 2024. We are very proud to release the results that we did yesterday. uh for a few main reasons and then we'll go to the presentation number one this is the fifth quarter in the role without no lost time and injuries in our in our operations setting that we are among the best uh companies to work related to uh accidents and that's It's interesting to see that normally, and I invite investors to see, accidents and safety come together with good production, good cost efficiency, and good results. Number two, this quarter we also increased compared to the first quarter of last year, 28% in production. We increased 45% in terms of EBITDA and yet not fully including the recent run for the gold prices and copper price. Comparing to the first quarter of last year, gold price is close to 9.8% and copper price actually has decreased by 6%. So if you include fully priced of gold and copper, you would have imagined that our results would have been even higher compared to the first quarter of last year. So Natasha, if we now go to the product. The first slides, as always, do the summary of the results, some main milestones achieved during the quarter, and then Kleber is going to step in and go more specific on the results. So again, very proud to have another quarter without any lost time in that. I thank all the team and all the leadership within our operations. That comes from a hard work for a long time. It's been years that we've been working in hand or safety standards, and the results that we have are now at 15 months without lost time incidents. In terms of production, so we increased production by 28%, reaching 68,000 gold equivalent ounces, very similar to last part of last year, significantly higher compared to first part of last year. That mainly comes from higher end recovery production, recovery production in Minossa that's now becoming stable, and also Almas that was not in production for semester last year. now at a full production, producing 12,000 ounces of gold during the quarter. So we also continue to pursue a cost efficiency in all operations. The gain of productivity in Minos, together with also gaining recoveries, that comes from hard work from the team as well, to reduce our cash cost on average. Although for Almas, for example, we still have some room to continue to decrease. In terms of organic sustaining cash costs, the results of this cost efficiency and gain of productivity, we could bring the organic sustaining cash cost to 1,287, which is below the guidance, although we believe that we will be within the guidance for the year. So strong production. Slight increase in gold prices, which will be more efficient during the second quarter. And low cash costs, a significant increase on EBITDA. And we should expect this EBITDA to continue to increase as gold and copper price has significantly increased since we finished the last quarter. Another very important milestone, which is Borborema project. As we built ALMA on time, on budget, Borborema is heading towards the same milestones, achieving production on the schedule that we believe, which is first quarter next year. and within our budget. We are now 25% advanced in the project. All the land work has already been done. We are now starting the civil works and also getting some of the parts to start building the parts within the plant. We also entered the process to move the road in Borborema, understanding that the current feasibility study and the results NPV, internal rate of return that we published, are limited only to 814,000 ounces of gold at reserves, but we can more than double that. Once we move the road and the process of moving the road has already been started, then we expect this to be granted the license within one year. And then it will take another two years to do all the construction, the process. So we believe that we can start increasing our reserves within this year, but then adding in production only in three and four years. We also during the quarter updated our mineral resources and our mineral reserves adding 2.4 million ounces of gold equivalent ounces and measure indicated and 0.9 in proven and proven which is major milestone and a result of the exploration investment that we are doing within our operations that we're now starting to harvest the first results. I would remind that For example, very important milestones that we've been sharing with the market, Apuena, where we had and we still have a shorter life of mine compared to the other operations. We started, we ramped up this mine in 2016 with three years only life of mine. We already operated six years and now we increased to five years of life of mine. So we are building life of mine in our operations as we move forward in the future. And as a subsequent event, two things. One, we have the buyback program in place, approved by the board and also by the regulator, which we could not start within the blackout period. So we should start with this process after the blackout period finished, which is right after the results were released, two days after. And we also, and Clementine will give a little bit more information, we, as gold price has rushed above our expectations, so we have heavy progress, put and calls, that we now, that will now clear all the need for margin calls in this program, relieving all the cash within our operations to benefit from the upside in the gold price, which we believe that can continue to appreciate in the near future. Next slide. Well, again, already mentioned, very proud on safety standards that we are achieving a very important milestone and precedent milestone for Aura, which is 45 partners without any lost time incident. And two, as we do a monthly monitoring by independent consultants, we're using the highest procedures and technologies. All our structures, your technical structures, are within the standards and very satisfactory level. So we continue to monitor this and continue to enhance all the structures when needed. Next slide. So I would call for attention from the investors and the analysts. On the slides on the left side, on the bars, you have the quarter production. On the line above the bars, you have the last 12 months of production. So as we mentioned, after Q2 and during Q3, we reflected last year. We reflected the curve after almost the start of production and also addressing the loss of productivity in Minossa, we could start increasing the production of the last 12 months, and we will continue to do that for the next quarter as well. If you see, we already have three quarters of 60,000 to 70,000 ounces of production, and the last one comes from 49. So the next quarter, you can easily think that if we manage to do the same production of Q1 2004, we will add additional 20,000 ounces on the last 12 months of production, which will put us on the running rate at 270,000 ounces of gold equivalent ounces of production. So that's very important because that will come together with the combination of higher gold prices, higher copper prices and stability on our cash costs. So when you move them to the right side of the slide, on the two bars, on the partly production per unit, we see a slight decrease in Aranza Azul. This comes very much in line with our mind sequencing. As I mentioned, and already talked to investors and analysts, the nature is not homogeneous, it varies the grades and the characteristics of the ore body, so we knew that this quarter we would have a slightly lower production in Aranjo Azul, which continues to be a significantly stable operation for us. To Apoena, also as we projected, not a significant part of Ernesto high-grade peat anymore. So now we see the production decrease to 15,000 to 12,000. And Minossa, that's also how we continue. This is the fifth consecutive quarter that we increase in production in Minossa, starting last year with 12,000, 14,000, 16,000. $18,000, now $19,000, now achieving a very stable production. And we know perhaps we continue to explore opportunities to also gain efficiency and reduce the cost. In Almas, we produced, we had a below expectation production in the last part of last year due to the low productivity from the contractor. We sold that productivity, but we sold it at a higher cost. But now we achieved the 12,000 ounces of gold on the partner. We are now focused on decreasing the cash cost of that operation. So we already in place many initiatives, including making the changing contractor with a more efficient level so that we can now reduce the cost while maintaining the production in-house. Next slide. So in terms of all the sustaining cash costs, this is the second part that we are reducing all the sustaining cash costs that comes from a combination of internal initiatives to reduce costs, but also gaining efficiency mostly in amino acids. This is, that's, we understand now, we'll continue to work on reducing our unsustaining cash costs, but I believe that we are now in a more reasonable levels and that shows Aura can control its costs and can gain efficiency in operations. And we are very much focused on that and the problems we had in the past is because we are very focused reducing our cash costs. We change the contractors, boost, and we lose efficiency then we work and we gain efficiency and then we can recover or even gain in cash costs while inflation is going up we've been able to reduce our cash costs next slide In terms of comparing the guidance, we reiterate our guidance for the year. We had a good result in the first quarter, 68,000 equivalent houses. We maintain our guidance at 244 and 292, of course, with a strong result. If we continue to have a strong result over the year, we should be more to the top level of the guidance in terms of production. In terms of cash costs, we are much within the guidance, slightly above the lower part of the guidance, and always sustaining cash costs even below the lowest part of the All In Sustaining Cash Clause, although for the year we expect to be within the guidance in All In Sustaining Cash Clause. Of course, if we move our production to the top level of the guidance, then All In Sustaining Cash Clause could be on the bottom level of the guidance. And in terms of CapEx, although the charts might indicate that we will not achieve the guidance of CapEx of the year, but that's not considering that most of the expenses of Borborema comes during the second semester where we'll be mounting the parts and finishing the construction of the project. Again, that I think highlights the importance of this project of Borborene. On the left side, you'll see pictures that we already did all the land work. It started preparing all the ground for the civil works. Actually, all the bases are already being built. and very much in line with our expectation, 25% achieved. 80% of the capex has already either been disimbursed or negotiated, and we don't expect any surprise in terms of capex for the project, neither achieving the schedule that we promised to the market, which is to start ramping up the production by the first quarter of next year. And next slide. I would highlight to investors that this is a major project for Aura. It's important, it's big, and it has very interesting margins, very interesting returns, even without considering more than doubling the reserves, which is absolutely feasible after we achieve the licensing and moving the loan. We published the feasibility study last year before initiating the construction of this port with 812,000 ounces of reserves only, $182 million of NPV, 22% internal rate of return, and 40% of leveraged internal rate of return. And that was with the gold price at $1712,000. If you use the same study that we published last year and apply the current gold price that can go even higher, the 2300, we are talking about increasing NEPV by 143%, going closer to NEPV of $440 million of this project. leveraged the return for the whole life of mine of 74% per year in US dollars, and then leveraged a payback of 2.4 years. And again, considering only 812,000 ounces of reserves in all that study, if we move the road, we can more than double the result because the gold is already there, has already been measured, has already have been studied and very similar continuation of the org audit. There's no secret. The mine plan has already been designed. It's just matter of licensing and then accessing these. So I would invite everybody to think what can happen with the NPV of this project if you add more than double of the reserves into the cash flows. Next slide. So very proud of these results. Now I'll turn the floor to Kleber that will talk more about the results, specifically in details, and then we come back for the Q&A.
spk08: Thank you. Thank you, Rodrigo. Good morning, everyone.
spk05: So I'm going to go over the main financials for the quarter. As we can see on the page, the main financial KPIs for this quarter reflects, especially on the net revenues and on the EBITDA. what Rodrigo was presenting on the operational side of the business. If you see, our net revenues will also increase by the third quarter in a row now. We are reporting $132 million in net revenues on this quarter. And now we are already exceeding $450 million in the last 12 months in our net revenues. When it comes to adjusted EBITDA, also the third increase in a row on this quarter, we were reporting $53 million EBITDA. which comes from a combination of keeping production levels the same that we reported last quarter, more favorable gold prices, and lower cash costs as Rodrigo presented. It is important to highlight again that gold prices on the first quarter, the average gold, metal prices in general, significantly lower compared to where they are today. Gold prices were the average during the first quarter at $2,070 and in copper prices at only $3.86. Now copper prices up over $4.40 per pound. When we look into the net income, the story is different, which is mostly explained by no cash losses related to the need to follow the account rules to do a market-to-market of outstanding gold derivatives in our books. This is the same we saw in the previous quarter. So, in the fourth quarter, you might remember, we incurred in a $20 million non-cash losses because gold prices came from below 1,900 by the end of Q3 to above 2,000 by the end of Q4. Now, during the first quarter, gold prices moved as well. We ended the quarter at 2,200, so we recognized another $20 million in no cash losses. which combined in the last two quarters accumulated 40 million dollars which again is important to understand that this is not expected to become cash losses in the future out of these 40 million dollars considering current metal prices we would expect those to translate in only about two to three million cash losses in the next few years And then when we come to the cash and net debt, we see that we ended the quarter again with a strong cash position, $214 million at the end of the quarter. There was a slight increase in our net debt in the quarter. to $105 million, which was expected, mainly because of the investments in the Borborema projects and also non-recurring working capital consumption during the quarter, which I'm going to explain in a minute. Now on this page, we show the main items that explain what's between the adjusted EBITDA and the income for the quarter. Starting with the EBITDA, what I highlight is out of those $53 million that we reported, we see a good balance among the four business units. Arun Zazu, once again, was the main contributor to the quarter with a reported EBITDA of $18.5 million. But Minoza, Apuena and Almas all of them reported EBITDA above $10 million each in the quarter. So we see it was a balanced quarter and it was a strong quarter not only for Orozco, but also for each of the individual operating business units. Looking at the depreciation and amortization, we are requiring expenses of $16 million in this quarter. Until last year, we used to have between $12 and $13 million in amortization expenses every quarter. From this year on, we should see that number increasing. It should be more around the number we're reporting this quarter. Basically, because now we have hours in production and we are starting to depreciate its fixed assets. The financial expenses is mainly $34,000 is mostly explained by what I said in the previous pages is related to the no cash loss is related to the gold derivatives. We also had a recorded three million effects expenses in the quarter due to the appreciation of the Brazilian real income tax expenses that 11 million dollars came pretty much as expected considering the strong results by overseas units and then uh some small uh other expenses bringing our uh result to a net loss of not 90 million dollars which again would have been positive would have been 12 million dollars positive if we excluded the the non-cash losses related to the gold derivatives the next page And then here we bring us as always we're bringing a detailed analysis explaining the change in the cash and pressure equivalents during the quarter in the far left side of the page we see our starting. a million dollars at the beginning of the year. In this left side of the page is what we call adjusted pre-cash flow to the firm, which is the pre-cash flow generated by the firm minus the production not including how much the amount we're investing to grow the company. That side of the business generates strong cash, $19 million in the department, despite first no recurring increase in working capital. We consume $13 million in the department. Part of that is explained, for example, due to the Easter holiday and Good Friday in Mexico, where we couldn't ship our concentrates. Thank you. in the next partners this year and also uh the first part is the part where we pay most of the taxes uh we paid nine million dollars in cash in taxes of which half was related to uh special mining duties in mexico where we pay just once a year so going forward uh on one side we we would expect to see uh the cash flows increasing uh with more clear metal prices we have some of cash consumptions in the first quarter that we shouldn't repeat in the next few quarters. Investment for growth. This is the cash we're putting into increasing reserves and resources and expanding our business. We invested $23 million in the quarter. Most of it, the investments for the Borgodemo project, $17 million. That trend should continue for the rest of the year, even increasing the amount we're putting in Borgodemo project for the next few quarters. And then on the right side of the page, we see the financial items. The main item here is the interest paid on debt, which consumed $11 million of our cash in this quarter, which was above our recurring interest payments, basically because every month of January, we pay interest for the ALMAs, the ventures in Brazil. So in Q2, the number should also be lower than according to more what we've seen in the last few quarters. And with that, we ended the quarter with $214 million in cash and equivalents. And finally, we reported also subsequent events as we anticipated. We negotiated in the month of April all of our gold hedging programs. The elimination of what's called the credit support agreements, which is mainly the ability for the banks to call margins. So for a fee, the banks agreed to... to exclude that portion of the agreements. And regardless, wherever the prices go in the future, there will be no margin calls against Aura. That's also, we highlight that as an important accomplishment and shows how we're getting strong in terms of credit with the main financial institutions. With this, I will end our presentation. I have a bunch of questions. Thank you.
spk01: We are going to start the Q&A session for investors and analysts. If you wish to ask a question, please press the button Raise Hand. If your question has already been answered, you can leave the queue by clicking on Put Hand Down. Our first question comes from Edgar Pinto de Souza with Itaú BBA.
spk09: Hi, Rodrigo. Hi, Kleber. Congrats for the consistent results. so my first question would be regarding borborema it seems that conversations for the the road reallocation are advancing so i would like to understand how long how should we think about capex for this expansion after you move the road how long it would take to move the road and after you move How can we think about the capex of this expansion compared with the green fields that you are doing now? And how long do you think it will take until you start producing in the expansion? This would be great. And then my second question, maybe regarding your growth projects, if you could bring any news regarding the investment in Matupá, if you are advancing with the financing of the project and when do you expect to start up the construction, if it is on track and on budget and also on your other growth projects, if you have any news on discoveries in Serra da Estrela, for example, it would be great. Thank you very much.
spk03: Thank you, Edgar. So first, Borborema, we already entered the first conversations to get the license to move the road. We expect to have the license within, I would say, one year after you have the license that you still have to do the final drawings, engineering by the landlord is appropriate and then build the road. I think that will take additional two years until you get it finished. Once we get the licensing to move, we already can consider measure indicated as a reserve, so of course then you need to draw and understand what how many ounces is going to be out of the pit and so on, but then we will publish an update on the feasibility study, including that ounces. The capex to move the road, we don't have the final numbers yet, but will not be relevant. compared to the capex as we have today will not be meaningful compared to the cash that we generate after that. What we will have to invest then is building the plant for 2 million tons per year. flexible, as we did with Almas, to increase capacity by 50% or more as we move the road. So the plant is already being flexible and designed to support the high production, but once you get the license, then you need to invest more to increase production, because we don't want only to increase the life of mine, of Borborema, once you have this increase in reserves that we want to increase production and to increase production we have to invest and that but we can start doing that after the licensing so everything that we believe that we can increase production on the year four three or four ahead of as we are today And then your question about Mato Pa. Mato Pa, we are now in the final process of licensing. All the conditions have already been met. We already delivered to the Environmental Agency. We expect the preliminary license to be issued by June, July. This is when we would right after the start and make the decision to start the construction of the project. So still going very much in line with expected. We continue in the meanwhile, do exploration in Serrinhas, do exploration with X1 and do exploration actually very near mine X1, which we believe can potentially add a new resource and reserves, but yet we have not disclosed we are consolidating some information so that we can uh disclose that might be also looking alternatives uh that if you're if the the better remind uh either almas and matupa uh smaller plants but the deposits that many deposits that can uh feed to the plant so we are actually looking alternative to increase new deposits uh 2x1 so that can also guarantee a life longer life of mine format power also to increase from there so we are looking alternatives also to bring more uh uh gold from other deposits very close to the to the mine And then you asked it also about the new project to continue to grow. We continue to actively look M&A, we have a list, we know we have targets that we are looking, we know what we want. Of course, we also have to combine what you want to what is available, but that's a lot of efforts within our company. It's to look for new alternatives to continue to grow and pathway for us to be above the 500,000 ounces of gold equipment production within the next two or three years.
spk09: Okay, thank you, Rodrigo. Just a follow-up on my first question. Do you have any idea of how much capex efficiency we will have given that it is a brownfield project compared if you would build a new plant with 1.5 million ton capacity for example in in burgorema i mean how much of cost efficient capex efficiency could we think that you will have given that it's just a plant expansion and not a new project
spk03: It's not a new project. It's just a brownfield expansion.
spk09: Yes.
spk03: The base is there. All the infrastructure will be there. Power lines, water. Also, some of the buildings are going to be already built. So it's not an insignificant capex. It will be meaningful, but not compared to what we are doing now to work. We should expect to be significantly lower, $288 million. There is a lot of efficiency doing just this increase in the power plant capacity instead of just building a new plant. It's not going to be the capacity of building a new plant for sure. It's going to be just the profit expansion of the current plant.
spk08: Okay, thank you.
spk01: Next question from Guilherme Nipes with Shispic.
spk08: Hi, guys.
spk00: Can you hear me?
spk08: Loud and clear.
spk00: OK. Thanks, Rodrigo, Cleber, and Natasha for the opportunity. And congratulations on the results. So I have two questions here for EPP. Costs were the main highlight in our view. And you already started production at the Lagrinhas and S2C pits. So could you give us any update on the production and cost that you're already seeing in these two new pits? And my second question is on Alma's operations. So when do you expect the cost reductions to normalize so the company will be on track to deliver the guidance for costs in 2024? So when we could expect the issues faced by the contractor during Q3 and Q4 to impact costs? These are my two questions. Thank you.
spk03: I will start with the second question, then I'll pass to Kleber to answer the first one. So we are right now, as we speak, transitioning a contractor. This month, so we will be as a transitional. We do not expect any significant cost reduction during this quarter, but then for Q3 to Q4, yes, we expect that. this gain in productivity, we also perhaps have some gaining rates and also gaining cost efficiency. So Q3, Q2, probably the same cash cost on ALMAs for this year. We might even have some slightly lower production because of the transitioning, you lose a little bit of productivity, but then setting all the stage to a very good results during Q3 and Q4.
spk05: or clever if you want to talk a little bit about the poena as you know you can see crime is much taller than i am so we'll have to play a little bit in the camp so uh basically our expectation for winning and the other also the other decisions but it's to deliver our guidance for these inputs of cash costs uh We know that by the end of last year, in this first Parker, we had some remaining ounces from the Nassau pitch, which is a high grain material that usually drives to a lower cash cost. So it was expected to see some positive impact on this Parker. The new pitch, they don't have the same kind of material for the rest of the year. So what you should expect to see until we are at least for us to be within the guidance for the cash flows.
spk08: Thank you.
spk01: Please hold while we poll for questions. Our next question comes from Flavio Bica with Cia Valor Futuro.
spk08: Hi, people.
spk02: How are you doing? Thank you for taking my question. I have two questions by my side. First one, is the increases expected in NPV for Borborema related to gold price increase already net from caller hedge loss? The second one is about taxation reform. Have you expected some critical changes or have you done some calculation about that? That's my both questions. Thank you.
spk03: Yeah, so let's remind that the loss that we had was accounting loss, not cash cost loss. That is because you have to market to market the options, the calls that we sold to buy the puts, because the calls, the strike price are $2,400 and above. As we did the simulation at $2,300 worldwide, there's no lose at all and the gold price up to 2400 it's fully priced and can be fully absorbed by the NPV in Borborema. After that for the first years then we were locked and most of the production to the 2400 so still have even room to increase gold prices and benefit in terms of returns in the project up to 2400 so losses at all up to 2400 gold price in Borborema. Actually, if it goes beyond that, it's not that we are losing, it's just that we are not getting the benefit in most of the production of Borborema. We will get the benefit in the other productions. And then the other question was about... We don't have any information yet to believe that there will be a significant impact in our production and our taxes. There might be some, but yet we don't see any meaningful changes for taxes within operations in Brazil.
spk08: Thank you.
spk01: Next question from Ricardo Monegaglia with Safra.
spk08: Two questions.
spk07: Can you hear me? Hi, guys. I have two questions. The first one on production. What do you think are the main risks to reach the high end of your production guidance for 2024? And maybe if you could share with us, after the first few figures and part of the second few pastors, are you more confident now on reaching the high end of the guidance than you were at the beginning of the year or at the time that you release the guidance. And my second question is on shares liquidity. If you could give us some color on the latest initiatives to increase the liquidity of our shares would be interesting. Thank you, guys.
spk08: Thank you, Ricardo.
spk03: So, the main reason not to achieve the guidance is always related to the instability of production that comes from a few different reasons. It can come from contractors' problems. That means we had a loss of performance at the mine or a severe weather. beyond what we project. We already project heavy rainy seasons and non-rainy seasons, rain above the average and rain below the average, we all do that, but if there is a 5% scenario of excess of rain in some of the operations, that might also impact and slow our production. and also uh issues with the contractors although uh we already all the contracts are in line and the one that we are changing now in almas is the one that we operate in in in aquaena so we are we know very much we know how to work and actually the mines in aquaena is more complicated to operate than ours so we don't expect uh a significant loss in productivity, perhaps during one month, it's likely to lose with the transition and then a good part is on the Q3 and Q4. And you mentioned about where with the start of this quarter, do we expect to be within the guidance and where the guidance? The first quarter came off of what we expected, so we should put that in perspective. Yes, we believe that we will be within the guidance, but now we are moving towards the high end of the guidance in terms of production and the low end of the guidance in terms of sustaining growing cash flows. As I mentioned, if we If you replace the second part of production to the production that we expect, if we maintain the production of Q1 to Q2, you're adding 20,000 ounces on the last 12 months. So we are adding, if you replace the Q2 with the Q1 production of this year, we are already at 270 and above of production, which puts us more to the higher level of the guidance and the lower... consequently lower level on the organ sustaining cash cost and also cash costs.
spk08: Thank you Rodrigo.
spk07: Just one follow-up on the first question. If you could share which operations or which mines do you think there are higher risks of reaching the maybe the high end of the guidance by mind. So just to understand, I know the risks of not reaching were very clear, but which operations do you think there's the risk of having operational issues or maybe that you still depend on some factors to improve like operational efficiency to improve so you can reach the high end?
spk03: Let's go mine by mine. Azul has been stable for many quarters of the year, actually years. We ran this mine in 2019, we increased capacity and we operated very stable, very much in line since then. Apoena is the mine that we have ups and downs depending on where you're entering, but it's a known variation, so that is already put in perspective in our project. ALMA is probably where we are transitioning in contractor that I would say that has some risks because a new contractor is coming in and we need to make sure they will perform according to the expectations and Honduras with the fifth improvement in the role in terms of partners, so very stable, reaching now very good levels of production. That was the last mine that we implemented, the ORA360 PureTurb, which is a The way we make decisions, the centralized, very, a lot of connections within the employees and communication. And this team has been rebuilt since we changed the general manager, the director of operations, we opened there. they have consolidated a very strong team that we believe we can keep this stability in terms of production for the coming months. So one operation that I would, first one that would pay more, pay more attention is this transition in contracting armaments. In Aquena, there's always some variability changing one piece to another one, so we need to make sure that we'll keep a good stability in that operation as well.
spk01: Next question from Happy Nizami with National Bank Financial.
spk06: It's nice to see a strong Q1. I noticed that it's a significant proportion of guidance compared to the last couple of years. So my first question is basically on that. Can you give us some more thoughts on your goals to achieve a more steady, more predictable production and costs? And specifically thinking about when you can give us some guidance as to how you, how are you thinking about quarterly performance through the year at that point?
spk03: Not sure if I understood the question. So if we expect to continue to have stability in terms of production and cost, and what is your expectation for the second semester, right?
spk06: Yes, basically for a point, It has a variable production history and we're looking at your annual guidance and Q1 looks great. Can you tell us a bit about what factors will affect Q1 versus Q2, Q3, Q4, just the ups and downs that will balance out to reach the full year?
spk03: It's very much in line of the guidance we gave initially. First quarter, we still had some high grades from Ernesto. We don't expect this to happen in the second quarter. Then Q3, Q4, you went to . So we will have some balancing between one and other quarter, but yet very much in line to what we disclosed in the beginning of the year. Overall, on a consolidated basis, we expect Q2 to be very similar, slightly below, slightly above Q1, not significant changes. And hopefully, as we've seen in Orem during the last three years, but not with that a latent change but we should expect some improvements in Q3 and Q4 in terms of production so that's why we already running rate at the 270 000 ounces if we replace Q2 of last year to the Q1 of this year and then we can go to 170 and above in terms of our production but yeah we are in the beginning of the year as you mentioned Things change, weather changes, so we are very conservative in maintaining the same guidance that we gave early this year.
spk06: That's where we go. And is it, given that Ernesto is exhausted and looks like some of the stockpile effects have also been lessened, can we expect longer-term grades to be Also to reserves, or rather to ask a simple question, will stockpiles continue to be a significant portion of the feed this year?
spk03: It could be, yes, it can be. Stockpile and the grains, we should expect us returning to what the company was producing before the next. At the same time, also strip ratio, their net was high, and now also strip ratio returning to the levels we had two or three years ago before we started going to the master. So yeah, reduction in grades, reduction in strip ratio, one thing partially offset the other. But we should see, as we gave to the guidance, we already produced 60,000, 65,000 ounces of gold. We should not see that in the near term again. It goes back to the level that we projected earlier this year.
spk06: Thanks, Rodrigo. And if I may ask another one, on the gold, the hedges and the credit support agreement that you've resolved recently, can you give us some background on, was this agreement tied solely to the Borborema collars or was it based on overall credit thresholds for
spk03: Overall, 100% of our hedge program calls does not have any more need for margin calls.
spk06: I see. So this change has no implication towards future debt capacity or any other covenants. Is that fair?
spk03: No change.
spk06: Perfect. Okay. Thank you very much. On the hedges, could you give us a little bit of a color on, in the next 12 months, something, some sense of what the distribution of the hedge downs is in terms of the ceilings and the amounts that are applicable in the next 12 months?
spk05: Yeah, so most of our hedges are related to either the ALVAS program or the Berbonema program. In our financials, we split the two programs. So for ALMAs, we should see all the callers. They are already expiring on a monthly basis. All callers should expire by the middle of 2025, by June 2025. And in July 2025, we start having the maturity of the Borborema Gold hedges. which is going to mature between the middle of 2025 and June 2028. So it's going to be three years. For Borromea and Almas, we had 80% of the projected production. Borromea has just one strike price for the seedlings, $2,400. And for Almas, which is expiring, it's going to expire for the next 12 months. The average seeding prices are about 2450, ranging from 2300 to 2800. But I would say most, by now, by far, most of the programs are for the Borborema hedges, which starts maturing by the middle of 25 until 28, and all of them have a strike price of 2400.
spk06: Perfect. Thank you very much for the time. We appreciate it.
spk01: Next question from Steven Sanga with Arlo Investments.
spk08: Can you hear me?
spk04: Yes, now yes. Yeah, yeah, yeah. Thank you. Yeah, I'm a longtime shareholder. So a couple of questions. You've been doing a great job. First thing, it's a TSX. You're not getting much value for what the company has done. And have you thought of moving more to an international exchange like the Chicago Board Exchange where it's more on seven exchanges and you get more reflection of value? The TSX I find is, you know, there's some shorting. It's very liquid and the share price doesn't reflect what value you have. So that's my first question. My second question is I'm a long-time shareholder. So with Rio Novo, the Almas pit mine is quite large. And the Pail pit, we never could drill originally way down the bottom. The Pail pit could expand my life mine dramatically. the mind of that, you know, the extension of that and significant resources for Almas. And my third question, last question is, you're becoming a mid-tier producer here. Do you think, you know, chances are a major might buy you out? Thank you for your time.
spk03: Thank you, Stephen. Thank you for being here for a long time. So your question first about the liquidity and TSX. Yes, I think we feel the pain of not having a stronger liquidity in TSX. um that comes off a combination that we are a new story or i was not a very successful story in the past in tsx so there's still some legacy of that image and also we've been able to raise capital uh in brazil and outside brazil mexico would significantly cheaper to any country that's raising capital in canada so we are not using uh canada debt and equity capital markets because we've been able to find cheaper now we are raising capital at a dollar plus eight dollar plus seven point five for three four five years long the thermal while many companies are above uh uh the two digits on the two digit levels and also equity capital market we don't have to use we did IPO in Brazil of 200 million Canadian dollars while in Canada TSX people were celebrating 30 to 50 million dollars of issues so we've been able to find cheaper capital in other sources and that's part of why we don't get a lot of traction also in Canadian market having that said we implemented several initiatives to increase liquidity in Canada, including more increasing investments in investors' relations. Yet, I would say that the result is below what we expected, so we are obliged, yes, to consider other alternatives of listing. Aura, it's a company that will have a very strong cash flows and growth and dividend story, right? Not many companies, if any, in the sector can show the growth that we are having, while we can continue to pay dividend and be under leveraged. And Canadian investors in general, they are more towards the exploration and the new acquisition or a new hole that you're going to drill and increase resources and reserves. So perhaps our story fits better in the United States or Europe, as you already could imagine. Then you asked about ALMAs, right? That's why you're not doing a significant investment exploration to increase the lack of mine at the current peak. And then you were completely right. The peak is completely open. We know that if we drill more down deep on the side, we can increase reserves very easily, although we already have 15 years' life and 16 years' life of mining armours. We don't need to expand the life of mining armours, so our effort is concentrated on exploration in areas that we can then increase the feed to the plant. You don't increase the feed to the plant if you increase the reserves on the down deep, but we can increase the feed to the plant if you do the exploration satellites, satellite deposits, which we have been doing and we've been having very interesting results.
spk04: Well, thank you. And thank you for that question. That makes sense. I know Verisign around, there's a lot of deposits to bring in there. Anything for that Telfrida Columbia project? Is that just on hold or is that just an asset we will hold long term? Thank you for your time.
spk03: Well, we are doing very basic exploration to see if we can expand the resources and reserves. And also, we still have some permitting license that needs to be renewed. That is being discussed with the local and federal government. So that's more that people talk about. I think it's more long shot. Now we continue to monitor, we continue to work there, but it's a longer shot. I think we can easily put, and we'll put Borborema in production next year. We can easily put them up by production also and start construction very soon. Exploration in Serra da Estrela, that was questioned before, it's been very interesting and we are building and putting the numbers together so that we can share with the market. So we have other focus in the company right now and pending to this licensing process to finish in Colombia so that we can then gradually start increasing investments there.
spk08: Thank you for your response.
spk01: Our next question comes from Roman.
spk03: We might have room for one or two questions more.
spk01: Perfect. We have a couple of questions from Roman. The first one is, you've mentioned lower costs at ALMAS, thanks to some initiatives. Could you give us some color on what initiatives and in this cost reduction will be sustained over time?
spk03: On ALMAS, the main initiatives is because we could this contractor did not perform according to expectation during last quarter last year when we reached a hard rock so that we lose productivity we could fix equipment and investing more to offset their inefficiency. So now we're changing the contractors so that we don't need to put all this new equipment and investing for them to be efficient. If you apply the efficiency they have in Apuhena, two hours in action, it's even easier to operate. Now we can easily understand that we can bring that cash cost down significantly. more towards the Q3 and Q4 of this year. There was a second question
spk01: Yes, we have three other questions. The second is increase in OPEX in Adam Zazu beyond the appreciation in the Mexican peso and lower copper prices. Is there any other factor that push costs higher? The third question is ore mill and gold recovery are slightly behind the technical report in ALMAS. What are you expecting going forward? And the fourth question,
spk03: Let's just wait, because I won't remember. Let's do two per hour, per time.
spk01: Okay, sure.
spk03: So the first one was Aranjo Azul... I'll pass it towards Cleber.
spk05: So Aranjo Azul... Also, we did expect some increasing cash costs and all in this year compared to last year. That has been reflected in our guidance and our expectation is to deliver the guidance. There are two microeconomic factors. The first one is that Romain indicated the effects. But also when you look in gold equivalents, there is a conversion, gold prices move faster into one than copper. Then when you do the conversion, it seems the cash cost was higher, but it's just a matter of conversion. Then ideally, it's better to do the conversion on constant metal prices. And it's important to remember that in Aranzazoo for this year, as a whole, we expect always agreements that we are renegotiating this year that didn't have all the inflation impacts in the last two, three years because there were long-term agreements with fixed prices. It's natural when we renew, we do see some impacts. mostly explained together with stronger Mexican pesos and in the metal prices, this increase in cash costing around this year compared to the previous one.
spk01: Our third question is, ore mill and gold recovery are slightly behind the technical report in ALMAS. What are you expecting going forward?
spk03: We expect production and recoveries to be very much in line to the feasibility study. This change comes more from mine sequencing that we lost productivity from the end of last year. And so we expect the grades and also recoveries to be very much in line. We don't have a major deviation from the feasibility study. It's more linked to the mine sequencing.
spk01: Fourth and last question, looking at your CapEx guidance, it seems you have accelerated in the coming quarters. What expansion CapEx are you expecting in the coming quarters?
spk03: We expect capex to be very much in line with the guidance. As I mentioned, we are now ramping up the speed in Borborema. First, we do the land works, which is the low cost. So now we should see a gradual increase and more latent increase in Q3 and Q4 this year in terms of capex. So most of the capex for Borborema is disimbursed and invested during the second semester of this year.
spk01: Okay, thank you. The question and answer section is over. We would like to hand the floor back to Mr. Rodrigo Barbosa for the company's final remarks.
spk03: So thank you all for being here with us. That Q1 was a very strong result. But I would invite the analysts and invite the investors to look ahead, to see what is going to be this company with a combination of putting Amazon food production for the whole year, putting a lower cash cost and higher gold price. The first part is just beginning. assign what we can do during the year and the first part again we did perform a gold price of 270 we are now running at 2300 and managing continue to grow with this gold price and now in next year We will continue to grow. That doesn't stop this year. This year we already increased 28% of the production. The year is already moving to 207,000 ounces of production or above as we calculated together here. And next year, another project that's meaningful for all. It's close to 90,000 ounces of yearly gold production in the first four years that will start ramping up Q1 next year in a mine that is not only big, but also has a lower cash cost compared to ourselves. We should continue to grow during this year, high gold prices, spot control, and next year, putting online a project that has 90,000 ounces of production and a lower cash cost compared to where we are right now. So next year, you can expect at least, if you compare 90,000 ounces to 270 on average that we might be doing this year, it's an additional 30% increase in terms of production combined with the higher gold prices and lower cash costs. And we will do all of that, again, while we continue and we maintain our guidance in terms of dividends, our policy, 20% of miners recurring capex, and we can continue to pay dividends, maintain the low leverage, and build the products. So, thank you all, and we'll see you on the next part.
spk01: Aura's conference is now closed. We thank you for your participation and wish you a nice day.
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