Aura Minerals Inc

Good morning, ladies and gentlemen. Welcome to the first quarter 2025 earnings call. This conference is being recorded and the replay will be available at the company's website at auraminerals.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. Para acessar nossa conferência em português, clique no ícone do globo ao lado inferior direito da sua tela Zoom. Ao acessar a nova sala, certifique-se de mutar o áudio original. We would like to inform that all attendees will only be listening in 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 our 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 Cléber Cardoso, CFO. Now, I will turn the conference over to Rodrigo Barbosa. You may begin the conference.

Well, thank you very much for all for participating in this part. I'm very happy and glad to be here with you and also announcing another record high results for Aura. As we're going to go through the presentation, I will say and we've shared with investors that Aura continues to progress into our growth projects. We continue to generate a higher margin. We continue to pay strong dividends, and we continue to grow. to build the portfolio in order for the growth to achieve over 450,000 ounces that we announced a couple of years ago. With Bluestone, we can go beyond this, and we continue to monitor the market as well. So I'll ask Natasha to share the presentation. And as always, I'm going to give you the broad overview about the quarter results, and then Kleber, our CFO, is going to go more in the details about the EBITDA bridge to free cash flow and also net income. If you want to go to the first slide, yes. Very well. So as we can see, and we already shared with the market the production during Q1, we achieved the 60,000 ounces of gold equivalent production. And that is slightly lower than last quarter, as the market knows and will be sharing for the last four years. Mining, especially mining in gold, that you have variation in grades, you have variation on the mine, so that sometimes you have changes in production from one quarter to the other quarters. Last year, we finished the year very strongly, and now we're very much in line with our projections. Internal projections, we produced 60,000 ounces, which is 9% below last quarter and 7% below Q1, understanding that APOENA, As we shared with the market late last year, we're going to go through this year and next year investment phase. Although we will be producing, although we will be producing and generating positive cash flows, we consider this as investment phase because we need to open the pit. We're going to have a lower production to achieve higher production after these two years. Nevertheless, we're also very happy to see the gold prices continue to increase, and that helped us to achieve another record high EBITDA for the quarter with $81 million, with the gold price at $2,786. Today, it's close to $3,400. And now, as we can see, we should progress production. We think the port d'eau, the assets that is already producing, Almas, Aranjo Azul, Minosa, and Apoena, And we will add on the top of that during Q3 the production for commercial production for Borborema, Q3 and Q4. So we should see along the next quarter the progress within our production while your gold price continues to evaluate and we maintain the cash cost very, very stable. I would also highlight that we, on the last 12 months, We reached an EBITDA of $295 million, with the gold price only at $2,500. Again, gold price today is $3,400. And on top of that, we have growth of production and Borborema coming in also with a lower cash cost. That EBITDA translated in recurring free cash flow at $27 million. Claiborne is going to go more in details. Net income, we had a net loss of $72 million. I remember last year I was once asked, well, now that you're already market-to-market your hedges, can we be comfortable that we will not have any more, any loss due to the market-to-market? And my answer was, hopefully not. Hopefully we continue to have losses. on our market-to-market hedging, because that means that the gold price is significantly increasing, and we are hedging a small portion of our total production, so we are benefiting significantly from the higher gold prices, but the market-to-market effect the net income on the quarter that the gold price had a volatile. Cleber is going to go more in detail on that. But we are happy to see this net loss coming in because that means it came from fully a significant increase in gold price. And gladly, gold price continues to appreciate since the end of our last quarter. I would also highlight Borborema. We finished this construction of Borborema in the first quarter on time, on budget, as we were disclosing to the market. We are successfully ramping up the project, and we continue to project the commercial production for Q3. And I would recall the investors that Borborema will bring a significant increase of production from 80,000 to 84,000 ounces in the first year. with all the sustaining cash costs below our average. So that will significantly boost our results from the second semester and then next year. And in terms of return to our shareholders, we also announced that we renewed our program, our buyback program. We continue to do the most we can, respecting the regulation of the market and also respecting the blackout period. But as we move forward, we see the curve is significantly underdeveloped, so it's a good capital location to continue to buy our shares back. On the top of that, We also announced a dividend, $30 million for the quarter as a dividend. That, if you put that in perspective, it's 11% of dividend yield in the last 12 months. Very few companies can provide those kinds of levels of dividends together with the level of growth that we are presenting to the market. And we will continue to grow and we will continue to pay dividends. In this dividend, as we shared also, we are using the rule of 20% of EBITDA minus recurring capex. As we also received extra cash from the state of Sarathe that was pending upon APM selling this to the buyer, we received an outstanding debt that they had with us of $13.5 million. So we included that to pay dividends, showing our consistency and our commitment to the shareholders that we want to remunerate shareholders through. the shares appreciation, which grew over 200% in the last 12 months, and also dividend yield and share buys back. So that sets Aura as one of the highest dividend, if not the highest dividend yield in the gold sector in the world. We also, during the quarter, we updated our 43-101 report, so all the technical reports are now released by the end of March. We also could replenish resources, so we are moving forward and extending the life of mine as we are also increasing production. And lastly, as we also disclosed and as we've been sharing with the market during last years, one of our points that we needed to address is daily trading volume. Our daily trading volume in the last year was $1 million, $1.5 million per day. That is very low if you want to bring significant investors. Our objective is to significantly increase our daily trading volume, and the U.S. market, we believe, can bring us the opportunity to increase our daily trading volume. So we filed this with SAC, and now we will wait for them to react. And as we are clear, then we will move forward to the next phase. In terms of safety, again, super proud that Aura is setting new benchmarks in the world on mining industry with one single lost time incident, and that was a very light incident during over two years where we were finishing construction of Almas, where we built Borborema, and where we also are doing a lot of work within our operations. So one single lost time incident during these two years with all that's happening with Aura is something that we that work with Aura, We're very proud of, and you as a shareholder should also be super proud of our benchmark setting, benchmarking the world for safety standards. And on the geotechnical structures, again, we continue to monitor. We have third party. We have consultants, independent that make reports, and all our geotechnical structures are under satisfactory stability conditions. Well, as we can see, there is changes in part to part in terms of production. That change from Q4 to Q1 was absolutely expected, as you could see, in the last three years. It started with a weaker Q1 and Q2 and then could increase production to Q3 and Q4, and we expected this. the same kind of movement during this year, and on the top of that, we will also increase production through Borborema. Next slide. In terms of all-in sustaining cash costs, I would invite the investors also to take a look on this difference from Q4 to Q1, 25, Q4, 24. You see this increase. But, again, as I mentioned to you, in Apuena, we will go through an investment phase. We have to account to this all-in sustaining cash costs, including the high cash costs, because all the investment that we are doing, in Apuena to expand the PIT and to be able to increase production should be also accounted, and we think they're all in sustaining cash costs. So we increased this at 1,461, but that does not mean that our all in sustaining cash costs has increased. It's just because Apuena is under investment phase. If you take out the The APOENA higher all-in sustaining cash costs will be very stable compared to last year, and this was very much in line with our projections, and we keep and we maintain the all-in sustaining cash cost guidance also for the year. As I mentioned, we built Borborema on time, on budget, and without any single lost time incidents. And we are now in the process of ramping up. Of course, all the ramp-up has problems here and there. That's why it's called the ramp-up. The team is very keen to adjust and fix everything that is showing. We are very glad in the success. We should continue to successfully ramping up to declare commercial production on Q3 2021. So with that, Kleber, I'll pass the floor to you.

Thanks, Rodrigo. Good morning, everyone. We start with a summary of the main financial KPIs for the reporting partner, the last few partners, and in the other line here, we have accumulated for the last 12 months. Starting with net revenues, we are reporting $162 million in revenues on this quarter, a 6% reduction compared to the previous quarter, which is explained, as Rodrigo was explaining, by a lower production due to the minus sequencing, but partially offset by higher gold prices. When we see the last 12 months, we reached a new record high with net revenues accumulated at $624 million. When we move to adjust EBITDA, another two record highs, as Rodrigo already mentioned, for the third quarter in a row a week. We have a record high EBITDA of $8 million. So, again, despite the lower production for this quarter, the gold prices helped, and then we exceeded the previous quarter EBITDA. And our accumulated last 12 months, such as EBITDA, is reaching close now to $300 million. We closed the quarter with accumulated $295 million. When it comes to net income, we are reporting a net loss of $73 million. basically for the same reason we had losses in some quarters last year, because of a sharp increase in gold prices throughout the quarter, and then the increase in the market-to-market liability and no cash losses related to the gold hedges. I'm going to go later in a few pages with more detail about that, but excluding that impact. we see that our adjusted net income was positive, $27 million for the quarter. And then moving to cash and net debt, we close the cash position at $198 million at the end of the quarter. Our net debt increased to $272 million in the quarter, as expected. In this first quarter, we invested close to $40 million in the final phase of construction of Borborema. We acquired Bluestone, in which we paid close to $20 million in cash and received about $20 million in debt. And later I'm going to show you more details. We had some higher income tax payments on the first quarter. That's related mostly to the 2024 results. Despite those impacts, we'd like to highlight that we have been able to keep our net debt over ABW loan on time throughout all this period that is shown here, despite the fact that we built Roborem in this period, acquired Bluestone and kept paying dividends and doing buybacks throughout all the periods. Now understanding the main items between adjusted EBITDA and net income for the quarter. When we look in the adjusted EBITDA by business units, we see was another strong quarter at Minoza around the Zona Almas, all of them reporting over $22 million in EBITDA in the quarter. Even a poena that we, as Rodrigo said, we knew and planned because it was going to be a more difficult year with lower production and higher costs, reported a decent EBITDA of $13.5 million. Amortization and deposition expenses came as we expect and aligned with what we report usually. Then the main item, the financial expenses in $122 million in the quarter, of which, as I mentioned, the main item by far was the non-realized losses and no cash losses for the quarter with the good derivatives. That was $100 million. And then when we did have some hedges that expired and were settled during the first quarter, that impacted our P&L in only $6 million, as we indicated here as well. Income tax expenses of $21 million, that's pretty much related to the strong results of the operating business units, bringing them to a net loss of $73 million. But as we always present, when we exclude the items that have no cash impact, we come to a positive adjusted net income of $27 million. Now I'm going to go quickly over two pages with a more detailed analysis on the impacts of the gold derivatives. The first one is understanding the accounting impact in the MTM losses. Again, it's more provision. Does it impact cash? And then in the other page, I'm going to show an analysis, more economic perspective, what to expect in terms of cash impacts of these gold derivatives. If you can go to the previous page. So, here what we show on the left side is a table with the closing gold prices for each of these reporting periods. As you can see, gold has been increasing almost every quarter since the third quarter of 2023. uh and then on the right side uh we can see that there is a strong correlation between increasing gold prices and increasing the market to market liabilities when the golden process increases faster the liability increases faster in one instance when good price decrease toward the end of the year the liability reduces And fortunately, in this quarter, the gold prices increased the most, over $500, which then explains why the increase in provision was the biggest for this period. But then, looking from what you expect from a cash flow perspective, here we demonstrate all outstanding gold colors that we have for the next few years. We see all our gold colors, they expire between Q2 2025 and the fiscal year of 2028. They are spread throughout these periods. And we bring here two references. The first reference is our production guidance for 2025, which does not include Borborema producing full for a full year and does not include any of the new projects. And then we have a second reference, which is our long-term guidance to achieve 450,000 ounces of gold equivalent in terms of production. Then when we analyze the outstanding colors per year in these references, we can see clearly that both our current and future production that is hedged, it's just a small portion of our current or projected production, which means that we do expect most of our production to be exposed to spotty prices, both this year and the next couple of years. And then moving now to understand the changes in the cash position throughout the quarter. Here in the far left side of the page in red, we show the initial cash position of $207 million. In this left side of the page that we call just free cash flow to firm is the cash flow to firm that is generated by the four miners in production, not including what we invest in to grow the company. We see that portion of the business generated $28 million, despite the fact that we had some non-recurring throughout the year or temporary impacts, such as the income tax payments that I mentioned, that we usually most of them we pay in the first part related to the 2024 results, which should not be repeated in the same proportion. for the next few quarters, and changes in working capital that also should partially be offsets in the next quarters. In the middle of the chart, we show the investment for growth, that was where we allocated most of our capital. We put $62 million in most of the expansion capex, the final phase of Roborema construction. and the Bluestone acquisition. And then when we move to the right side, the more financial-like items, which we highlight the dividends and share buybacks we did until March, $20 million, bringing the cash to $198,000 twice the end of the quarter. And now we end the presentation. We're open to questions. Thank you.