Aura Minerals Inc

Good morning, ladies and gentlemen. Welcome to first quarter 2026 earnings call. This conference is being recorded and the replay will be available at the company's website at rminerals.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 e selecione a opção Portuguese Room. Ao acessar a nova sala, certifique-se de mutar o áudio original. 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 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 Kleber Cardoso, CFO. Now, I will turn the conference over to Rodrigo Barbosa. You may begin your conference, sir.

Sure. Thank you. Thank you all for this first part of the year. As always, I'll be talking about summary of the results and strategic movements During this portion, NCLAB will follow with more detailed information about the financials and cash flows. Before I start, I think I would be good to recap that this was a very solid quarter for us, where I can show to you that we move forward under the three avenues that we propose to deliver value to our shareholders, and this story has been shared with the market since 2020 and reinforced since the NASDAQ listing last year. We're going to build value to our shareholder by three different avenues. Number one, we're going to increase production. We're going to develop green fuel projects and reach over 600,000 ounces after all the process are developed. Number two, we still have a significant area unexplored and room to increase life of mine. So we should also see, together with improvement and increase in production, a significant increase in resources and reserves along the next few years. And number three, we should tackle also our price per NAV multiple through growth and also improving our daily trading volume to the market. So what I'm going to share with you during the next few slides is a factor that consolidates solid steps towards these three avenues. So, we jump into the first slide. So, in summary, again, we reached a new record high production as we already disclosed to the market. Of course, now including MSG acquisition that was last year including only in December reaching 82.1,000 ounces of gold equivalent ounces. And then that together with the higher gold prices, some $380 million in terms of revenues. Now, when we add, comparing to first quarter last year, Borborema, that was still beginning to ramp up, then now full year of Borborema, stable productions in our mines, plus MSG, we're going to see higher gold prices. We see the EBITDA three times higher than the first quarter last year, now reaching the $244 million, another record high EBITDA for the partner. Together with our EBITDA, then we can see the all-in sustaining cash costs reaching $1,829. This is a significant increase compared to last quarter's. mostly because of now we are consolidating MSG. And as we disclosed to the market since early stages in the acquisitions, we understand that MSG has a higher oil interest than cash cost and will be higher during this year once we are focused on the turnaround, preparing the mine and to put our production levels above 80 or close to 80,000 ounces. And only sustaining cash cost goes to $2,000. But during this first quarter, and actually during the second quarter also, we should see MSG with a high all-in sustaining cash cost when we are focusing on our underground preparation, underground safety standards, underground development, so that we can prepare this mine for a better production. throughout the Q3 and then Q4, and even better than next year. And I will talk mind by mind and then following slides. So, higher EBITDA also translated in the strong recurring free cash flow, now reaching $95 million, which is 109% higher compared to less important. This strong recurring cash flow, Recruiting cash flow of $95 million, stronger even after a payment of $33 million on hedges due to the Borborema, which is a non-recruiting, but should happen this year and should also happen next year, and a temporary working capital consumption of $42 million. And Cleber is going to walk you through in more details about the decision from EBITDA to free cash flow. In terms of net debt, super stable despite the payment of $55 million during the quarter regarding the last quarter of last year. Investment also in production. We saw a company that has been able to grow and pay solid dividends while maintaining a very low net debt to EBITDA ratio. We are stable in that debt, and that continues to increase. We see the leverage of the company actually being deleveraged after all the growth acquisitions, payment dividends, and strong results from our mines. In terms of net income, as now we see, Unfortunately, this quarter, there was not a significant higher gold price as we were seeing in the last quarters along the year 2025. That translates into lower market-to-market losses in terms of the gold hedges. So, that translates into $95 million of net income. And Kleber is also going to walk you through in more detail. how we got to the 95, and also see what would be the adjusted net income without the non-recurring events. As we continue to grow, as we continue to grow EBITDA, we have no leverage, and margins continue to improve. Now we see room to maintain a high level of dividends to our shareholders, another record high dividends now reaching $65 million of dividends, or 0.76 cents per share. And then you add the dividends we paid in Q2 last year, Q3, Q4, and now this Q4, we see that the last 12 months on the quarterly basis, reaching 4.6% of dividend yield. And as we progress in the production, as we progress during the second semester, we're going to see a higher production compared to the first semester. then we need to think that we can continue to pay, to distribute a significant amount of dividends to a shareholder without jeopardizing the growth plan that we have. As additional events, and that we reinforce the three pillars that I mentioned to you earlier this call, we see that our, sorry, that we have, or growth plan continue to be super solid. Number one, we got the agreement signed by the need to move abroad that unlocked significant amount of resources and reserves in Borgorema, increasing the life of mine to 36 years now. Of course, we don't want to, we prefer to have a lower life of mine and higher production, so that's why We've been disclosed to the market that we are now finalizing all the studies to increase significantly the production of Borborema so that it can actually then stretch a little bit more and decrease the life of mine with increased production of Borborema. And we are finalizing all the studies and should we have any news to the market between now Q2 or Q3 this year. Very important milestone. is that we updated our resources and reserves on the report 20F. That was a significant addition of reserves, adding 3.8 million ounces of proven and probable, and also reaching, when you add proven and probable, also with the margin indicator, you're going to see that you can get close to 10 million ounces in our inventory for the long period. That's a significant increase compared to what we had before. While we continue to do exploration investments and see also room for further improvement in our resources and reserves as we move along the next years. A very important project, Era Dourada, earlier this year, as we shared with the market, we got the license to initiate the construction. That was followed by a full board approval to initiate the construction of Era Dourada. Then we are in full force for the year. And CapEx will be divided between this year and next year. And then we expect production to come now in 2028. So we talked about how we increase production. We'll go back to the other slide. So we talked about that we increased production. Last year we had the Borborema ramp up, actually this quarter we continue to increase a little bit more in terms of production. So that's the growth of this year. We come from last year of 284,000 ounces of production. This year, the guidance is between 340 to 390. So we continue to grow by developing the project and doing acquisitions. Second, we increase significantly our resources and reserves. And third, to tackle the price NAV, we know that we had to address daily trade involvement combined with a solid walk in the talk and delivering on the projects and growth. So we could see that obra is narrowing a little bit the gap of price per NAV, while you still have a lot of room to continue to narrow this gap as we maintain a high daily trading volume and continue to grow. There is a very strong correlation between size and price per NAV in the gold sector as we come from, in the past, 200,000 ounces of production, now on guidance 340 and 390, and we know how to get close to 600. We should see this continue growing. narrowing the gap of price per NAV. One of the factors has been well accepted by the market and widely amplified when we listed in NASDAQ is that we are now trading $94 million. That was the daily trading volume on the last average on last quarter. Compared to last year, quarter of last year, $31 million. And if I remind investors that where we were One year ago, it was $2 million per day. Now, we are on average $94 million per day, which is now attracting very large and more sophisticated investors that now pay attention to our and now also invest in our portfolio. Next slide. In terms of safety, after a long time without any lost time incident, unfortunately, we had the lost time incident in Port Borema. There was a maintenance on the filter. We are reinforcing all the procedures. There was not followed some of the procedures, so we are reinforcing training all the managers and all the maintenance team in order to follow the procedures and reinforcing the standards. This person is already back to work. There's no major injury. However, there was some lost time incidentally related to that accident. In terms of Stabilical structures, again, all geotechnical structures are in satisfactory level. So on the left side of this slide, we can clearly see on the line on the left side shows the last 12 months of production, as we are now increasing, getting from the standard of 60, 65, between 60 to 70,000 ounces of production that happened during the 24, 25. Now with Borborema and then MSG, we are now increasing to levels above 80,000 ounces and perhaps reach close to 90,000, even above during the second semester. which is now the last 12 months, ramping up our production coming from 265 that was on field three 2015, 280, 302. And we should see these last 12 months continue to increase as we are very comfortable in line with the guidance that we set to the market to finish the year between 340 and 390,000 ounces of productions. In terms of mind by mind, where we saw, which was expected, and due to the mind sequencing, due to the budget and the guidance that we sent to the market. At Aranjo Azul, we are now going to lower grades through this quarter. We should not expect a significant improvement through the second quarter, and then some improvement during the second semester in Aranjo Azul. That's the same that happens in Apoena, that Apoena can relate it to other years, where we start the year normally slower. and then production pick up during the third and fourth quarter. Minossa is super stable. It's just a rounding number here from 18 to 17, but it's actually 2% of decrease compared to Q4, and we should continue to see stable production in Minossa, and perhaps some improvement during the second semester. Almas, we continue to have a strong production at 15,000, 16,000 production, and implementing an investment where we are increasing the capacity of ALMAs to reach up to 3 million tons per year by the end of the year, while we are doing underground development so that we can, along the next year, continue to improve efficiency and also production in the project, while exploration efforts on the near mine and on the regionals, continue to give us strong indicators that this mine is not only going to have a very extended life of mine, but be able to even expand above the 3 million tons per year. Morborema, we had a stronger quarter compared to last quarter, mainly due to a high throughput, stabilization of the milling process, stabilization of the filter, There's still some room to improve production for the second CMS. MSG, this increase is mainly due to we are now consolidated three months compared to December last year. That was only one month. We should not expect MSG to improve. Actually, we expect MSG to decrease production during the second quarter. Why? We are totally focused. building the infrastructure underground in order to prepare this mine to do the proper production for the 27th year. So what we should see on Q3, Q4, productivity improving, costs going down, and also production going up, but not on the second quarter. Next. In terms of how we're sustaining cash costs, we see that reached in 1829 compared to 1521. If we were not by MSG, that is a position that we understand that would have a higher all-in-sustaining cash cost along the year of 2026, that's because we paid only $76 million on this mine. We understand that they had to go on the turnaround process. If in one hand, all-in-sustaining cash cost is above as expected, On the other hand, the underground development is being well within our expectations and significantly higher than what this mine was performing in the past. For example, the advancement on the underground tunnels, when last year it was close to 35, 36 meters per month, now we are reaching 60, 65 meters. So the efficiency that we want to implement underground to do preparation for our higher production is moving as fast as expected, sometimes even faster than we expect. So that if you take out the MSG, which should pollute our average during first quarter, second quarter, along the full year, then we would have been only sustaining cash costs close to $1,500 per ounce. Next. Very importantly that happened also during the quarter is Terra Dourada project that now we have a full approval. This is an outstanding project that is getting attention from many stakeholders in the world because of its potential to be one of the highest standard in ESG. Why I say so? Because this project is going to put many different variables in the same and learning from other mines in the same project. Number one, we bought a bluestone combined with a geothermal project. So this project, as we develop the geothermal project that is coming in the upcoming years, we'll have a renewable access to energy. And actually, we are thinking about increasing the megawatts in order to supply Guatemala with extra energy and with the renewable energy. Number two, we understand that clean water and treated purified water is an issue in the area. There's not many, if there is any, if any municipality that has a purified water, we will use the water that we have on the ground that we would have to treat any way in order to put this water back to the rivers. We are now improving and we approved additional investments on water treatment in order to have this water as purified and potable to the city, so we are now negotiating and offering the municipalities and the communities a possibility to have access to a potable water. renewable energy and clean water for the population, together with all the local training and focus on having local people working with us, local suppliers. And if we don't have suppliers, we train them, we form them, so that we can improve the conditions of living for everyone that is around us. In terms of production, there's a project that starts on the feasibility study that we mentioned, with annual production 111,000 ounces, yet with potential to further access upside, as we've been doing in Almas, as we've been doing in Borborema, we understand that Eldorado also has room for further upside as we move forward in the operations, as we more implement the project and go to commercial production. Another very important factor is that the significant increase in terms of reserves of this project that when we acquired as an underground it was close to a million ounces. Now we have 1.7 million ounces in terms of reserves and yet with some potential on the regional side to increase resources and reserves. Next slide. So I talked about Grand Path of Barborema now reaching record high production. That's a significant increase of production profile last year and this year with also lower all-in sustaining cash costs. Number two, now I'm going to share with you about increasing resource and reserves, and we saw a major change in our inventory in reserves and reserves. and resources coming from the last report that we applied on F1 for the Nasdaq listing was 3.4 million ounces in terms of reserves. Now we are reaching 7.2 million ounces. This is more than double the size of the reserves in one single year. Meanwhile, we come from resources of 4.6 million ounces down to 3.1, but that's a very good news because we converted 2.5 million ounces of resources are merit-indicated into proven and probable. If you add this back to the 3.1, you would see that we also continue to increase merit-indicated. So this is a major milestone that is helping us to improve our life of mine while we are also increasing production per year. Next slide. So I talked about increasing production. I talked about increasing resource and reserves. And now an important factor also to tackle the price per NAV, which is the daily trading volume. As I mentioned earlier, we come from $2 million, $3 million, $4 million per day. And long after the listing, then we started reaching $30 million. $40 million, and now we are, last month, we closed April with $120 million per day in daily trading volume, and on average, close to $95 million on the first quarter. So that is attracting way more quantity and quality of investors to our portfolio. So I'll turn now the presentation to Kleber, and I'll come back for Q&A.

Thanks, Rodrigo. Good morning, everyone. So I'm going to go over the summary of the main financial KPIs for the quarter. What we can see in the summary is an improvement in basically all of them, with revenues a new record high, closing the quarter with $383 million. Now, the last 12 months, we have exceeded revenues of $1.1 billion, and going forward, we expect this trend to continue. When we see the adjusted bias, Rodrigo commented before, we have a report for the sixth quarter in a row, a record high again, a substantial increase compared to 425, but mostly because a higher average world price in that quarter. so $244 million in the quarter, and now exceeding $700 million already in the last 12 months, also a trend that we expect to continue. When we analyze the net income, we see a substantial improvement compared to the last quarters. That's a combination mainly of two factors. First is the improvement of the operational results, and second is on this quarter, gold price decreased. increased between the beginning and the end of the quarter, but at a lower rate than the increase we had in the last few quarters. So, as a result of that, we had lower market-to-market losses with gold hedging derivatives that is impacting less our P&L this quarter than previous quarters. Later, I'm going to go over more detail on this as well. But with that, we are reporting $95 million in net income and then $190 million in adjusted net income. In terms of cash and net debt, mostly stable compared to the year-end. We closed the quarter with $115 million in net debt. And we see an important reduction in the financial leverage of the company as a result of stable net debt and increasing accumulated EBITDA. uh our net leverage coming from 0.28 to 0.16 at the end of this quarter uh now we uh just to understand the main items between the uh adjusted digested net income uh for this quarter uh out of the the 244 uh million dollars adjusted We see the three larger gold mines contributed the most. Borborema had the highest EBITDA, as we were already anticipating, $61 million. Minoz and Almas coming strong as well, $58 million and close to $50 million, respectively. Arandazu, Also strong for $1 million, Apoena, which we expect a much stronger second semester than the first semester, but already contributing with $24 million. And MSG, despite we're just starting the turnaround, so contributing as well with $17 million ended up for this quarter. Depreciation and amortization, it's been in line with our expectation. It's been increasing in the last two quarters, basically, because we added two new operations, Burborema Commercial Production in Q4-25, and now MSG, a full part of production in 2026. The net financial expenses, once again, the main items are the non-realized and realized losses with the gold derivatives. the new realized portion of $24 million, and we paid $33 million with realized losses. So combined, it was $55 million compared to over $100 million we had in losses with derivatives in the last quarter. So that explains a portion of also the improvements in our net income. Income tax expenses coming as well as expected, considering strong results from the operations. Some small other expenses bringing the net income to $95 million. And then here to the right side, we excluded the typical no-cash items, the unrealized portion of the losses with the good derivatives, some no-cash impact in the free tax income. excluding those items that just the net income would have been 109 million dollars by the end of the quarter and here we we bring a detailed analysis of the change in the cash position of the company throughout the quarter we see on the red and the left side here we start with close to 290 million dollars in cash Here, on the left side, we have what we call the recurring free cash flow to firm, which is the cash flow generated now by the six mines in production. That portion of the business generated $95 million. It's pretty much stable compared to the previous quarter, but mostly there are two Items that consume the cash proportionally higher in the first quarter than we expected for the rest of the year versus working capital. We have some temporary increases in accounts tables and inventory in this quarter that should improve in the next few quarters, and also income tax payments, where we paid $52 million today. In the first quarter, the first quarter is usually the quarter that we paid most of the taxes, where you have annual tax adjustments, especially in Mexico. So that will not repeat in the same proportion during the rest of the year. Then in the middle of the chart, we see the investment for growth, where we invested $26 million, mostly in expansion cap, including Era Dorada. The CAPEX, especially the expansion CAPEX, is one that we expect to increase throughout the rest of the year, especially as we advance in construction of Era Dourada and also in the expansions in ALMAS. And then here to the right side, we see how we are locating cash in the financial items. We paid close to $20 million in gross debt, reducing the gross debt of the company. and distributed $55 million in dividends, ending our cash close to $207 million by the end of the quarter. With this, we end the presentation. I'm open to questions. Thank you.

Thank you. We are going to start the question and answer section for investors and analysts. If you wish to ask a question, please click on Raise Hand. If your question has already been answered, you can leave the queue by clicking on Put Handout. Our first question comes from Henrique Marques with Goldman Sachs. You can open your microphone.

Hey. Hi, everyone. Can you hear me?

Yeah, I can hear you. Awesome.

Yeah, so two questions from my side. First, regarding the cost in ALMAs, I think it did came above expectations and even like the guidance range for the year. But at the same time, this was the only mine you haven't commented on the mine sequence you waited on the second half of the year. So I just wanted to make sure, like, first, what really drove the higher cost in Q1? And second, do you see any risks to your cost guidance for ALMAs in Q2? If not, when can we expect some improvement in terms of cost for this mine specifically? And second one, just if you could give us a bit more call on the main stoppage of the CIL plant in Borborema. Is the situation resolved? Should we see any impacts on the second quarter? That would be great. Thank you.

Sure. Well, in ALMAs, while you mentioned that ALMAs had higher cash costs compared to the guidance, I would also invite you to take a look at all the sustaining cash costs that was actually below the guidance. In the first quarter, what we had is a highest repair ratio and slightly lower grades, but along that will improve during the second semester. So we are very much in line with the guidance for ALMAs. And We should also see improvement in MSG during the second semester. We should also see some improvement in Gorborema, Minos Stable, and Aranjo Azul. Some improvement also during the second semester. As we saw in the past, where the The first semester is lower production, and we should see a significant improvement on the second semester in terms of production, not on the second quarter, but third and fourth quarter. This varies about a mine sequencing, as just a quick reminder for investors, is that when we have a gold mining, it's very different from major copper or iron ore, where the It's a disseminated, the grades doesn't vary and the striper ratio doesn't vary. And gold, the nature is not homogeneous. It's always very quarter by quarter. Sometimes you reach higher grades or sometimes lower grades. Sometimes you need to push back a bit, increase a striper ratio sometimes. You just collect what you already push back. So there is some volatility in terms of the quarter, which if you look back on the last four years, that's what happened to our volatility quarter to quarter. But actually, when you go to the average of the year, we are very much in line with the guidance that we provide to the market. So we are very, very much comfortable that we are moving ahead with our guidance action on the upper hand of the guidance in terms of production.

Thank you. Yeah, I just wanted to clarify.

And Borborema, you mentioned about the CIA. Borborema is now... producing very well, there's still improvements that we can do, mainly on filters, this is the filters where we have the bottleneck, although we overestimated now, the filters are performing very closely, or slightly below the plant capacity, so we are now, we already ordered, we already include instruction of additional filters, already preparing them for further expansion, so the new filters will also unlock some bottlenecks, and that those filters will be started during Q3 and Q4, so we should see also some improvements in Borborema in terms of production. This is why we are finalizing our expansion plan for Borborema to reach 4 million tons on the upcoming years.

Great, thank you.

Our next question comes from Rafael Barcelos with Bradesco BBI.

Good morning. Thanks for taking my questions. Rodrigo, despite being, you know, solid results, I think there are some watch points when we compare the numbers with your production and cost guidance, right? So I just wanted to get a sense of which operations bring some concerns to you when you compare the production and cost evolution versus the guidance for the year. And lastly, if you can give us more details on your expectations for the second half of this year in terms again of production and cost. Another second question, particularly on the cost side. I mean, a lot has happened since you announced the cost guidance, right? I mean, we have the outbreak of the Middle East conflict. I just wanted to understand what sort of cost pressure you're seeing driven by the conflict, and if you can give more details on the specific impacts on the cost side. Thank you.

Thank you for the question, Rafael. Where it has been more challenging in the short term and not structural for us, This MSG, of course, we were not expecting as low standards compared to what we can put in terms of infrastructure and underground mines. So we are now putting more effort, improving underground conditions in order to bring that mine into the productivity that we believe that can be achieved. And every time we have any kind of issues in MSG, as I was mentioning to the market in the last quarter, we will always focus on the underground development, even if it has to jeopardize the production of the mud. So, if you have any equipment bottleneck, we will divert all the equipment into underground development, not focus on production. That's what the main mistake that the past owner was doing, is focusing too much on production and not doing the underground. So, we need to un-bottleneck the underground mine. This is taking more time than we expected. But that's things that we can correct, things that we can manage, and that's within the budget that we were projecting to invest $20 to $30 million in order to improve that conditions in the mine. On the other hand, structurally, the mine is actually better than what we expected. We saw a significant increase in the life of mine and resource and reserves of the mine come from $340,000 to $150,000 up to $700,000 and still a lot of room to continue to improve resources and reserves in that mine that we have not yet even started to take a look on the exploration we are focused on the mine. So, long-term, medium to long-term projections on this mine, that should be way better than we expected. Short-term, more challenging, as this is where we should see at the low range of the guidance, while some other mines are also we can go beyond what we were expecting to offset part of this. But yet, it's not our focus to have a high production this year in MSG. It's our focus is to improve underground mine conditions and finish the year with a very clear view that we can bring that mine above 80,000 ounces of production per year and close to $2,000 of all-in sustaining cash costs. And that hasn't changed, actually, when, as I mentioned, when we're doing underground mining, we are moving far more efficient than we were doing in the past. Again, we're moving about 35 meters per month. Now we are reaching 60, 65 meters per month. And this is being very satisfactory to see that we can, once we put them underground into our efficiency on the stable conditions, so that we can improve our efficiency according to our plan. In terms of the cost of diesel, this is all across the world that it's happening. Our impact in always sustaining cash costs of the diesel should be between, depending on the mine, 6% to 8%, even if you... So, even if you increase 10% or 20%, that will have a 1% or 2% impact on our resustaining cash cost. And, of course, then higher diesel triggers some inflation, many other different metals, but there's no other sector that is way protected to inflation, I guess, inflation that's cold and slightly copper. So, if inflation picks up, gold is going to increase. So, somehow the investors are very well protected in this sector through inflation in U.S. dollars.

Thanks, Rodrigo. Sorry? Just as a follow-up on the first question, so I understand that, you know, you're flagging more challenges on the MSG side, but is there any other, you know, operation that you would like to highlight as a watch point or anything that, you know, we should look at, particularly in the second half. Thank you.

No, you should see upsides coming from ALMAs. We continue to do exploration. We are increasing capacity. That mine, we are, as I mentioned, we already expanded to 3 million tons per year, and we are just waiting for more confirmation and more exploration information in order to go even further and perhaps go to 4 million tons per year, which will combine several open pits and also underground. So that's a very important upside that should be tackled by the market in the upcoming quarters. Together with Borgorema, we are also now, as we signed the contract, to reallocate the road, and now we are finalizing all the engineering for improving capacity up to 4 million tons. Also, We have several alternatives for more access to water, which is important in order for us to increase capacity. And in the following couple of months, we should have a decision on that, wrapping up with the new engineering, so that we can approve the board between Q2 or Q3. expansion for Borborema. Expansion coming up in Almas, expansion coming up in Borborema, while we continue to develop Era Dourada now going into full construction.

Okay, perfect. Thank you.

Our next question comes from Luca Duagi with XP.

Hi, everyone. Good morning. Thank you for taking my questions. Two follow-ups from our side. First one, MSG. Rodrigo, you commented on some of the improvements that we expect throughout the year, but just wanted to better understand the timeline regarding the turnaround on the project. I mean, now that you're much more familiar with the operations, what could we expect in terms of run rate reduction by year end? You mentioned that we should expect some decrease by second Q, but just wanted to understand what could be the run rate by the year end, and what are the most important milestones that we should be aware on such turnarounds? And finally, still on MSG, I mean, just to clarify, but do you see any upside considering the potential normalized volumes for the operations by the end of these turnarounds? And my second question on Borborema, another follow-up, but you mentioned the expansion, right, of 4 million tons of plant-aid after the expansion. Just to get a better idea on timeline, I mean, when could we see such investments being deployed? And if you could give us any idea on CAPEX and production improvement considering the marginal grades for the expansion would also be very helpful. Thank you.

Okay. For MSG, the idea is to finish the year with a very clear view that we will be able for the next year to be close to 80,000 ounces of production per year and close to $2,000 of only sustaining cash flow. That's our main objective. Our key drivers for you to take a look on that is how far, how fast we are advancing on the underground development. That's why I reinforce that in the past we were doing 30, 35 meters per month. Now we are close to 60, 65 meters. So we should continue to advance underground development so that we can invert the methodology, right? Now the mine is operating from up to down, and now we need to do underground development in excess so we can start doing bottom-up. This is what will change structurally our efficiency, recovery, dilution, and also productivity at the mine. And we need time to do that, right? We cannot do all those underground developments. you know, a couple of months. It takes several months, and we believe that we will be able to conclude that preparation by the end of this year. So, you should not see strong numbers, very strong numbers until 2, as I mentioned. Slightly and gradually increased progress on Q3 and Q4, not because of structurally the diversion of the methodology, but now we are gaining efficiency, reducing costs all across the board with contracts, redefining some scope with suppliers and so on. So that's all happening at the same time. And we are very comfortable that we will achieve this goal by the end of the year. In terms of a Borborema... We have not yet approved in the board and disclosed the capex. Unfortunately, I cannot yet give you a guidance on this, but we will do so as we approve the information in the board. And the investment, reallocating the board, preparing a water section, and everything should take close to two years, but we will get more precise information as we approve in the board. And as we well mentioned, you should not expect for example, to keep exactly the same grade, so doubling the capacity does not necessarily mean that we'll double the production, because then we can supply the additional capacity with a lower grade. Of course, when you have a restricted capacity, you focus on higher grade. When you increase capacity, then you can have both high grade and medium grade, so that's... translate into a higher production, will translate into a lower cash cost as well, but not necessarily will double the gold production.

Got it. Perfect. Thank you very much.

Our next question comes from Lawson Winder with Bank of America.

Thanks. Thank you very much. Hello, Rodrigo. Nice to hear from you. Appreciate the update today. First question I'd like to ask about staging. There's a number of projects happening at the current moment. There's the Vorborema expansion. You're looking at going underground at a mass. There's Matthew Paul waiting right after Eric Rado. Are you confident that you have a large enough team in place that you guys can handle all this? And then in answering that question, how do you think about the staging of all these projects and making sure that you have the best people in the right place at the right time?

Thank you for the question, Lawson. And that's our main discussion that we have internally. It's about people. We have a lot to perform in order, a lot to increase capacity. Very few companies in the world can come from close to 285,000 ounces of production last year, and in the upcoming years, reach over 600,000 ounces without new M&As, which we are also planning to do. And that, of course, drags a lot of management attention. We have a very strong team to build new mines. It's the same team that built Almas. It's the same team that built Borborema. It's the same team that's now in Aradurada. Of course, this team is increasing. The good thing is that we are not, that's why we are not overlapping the construction of Aradurada and Matopá, right? We don't want to build both. We could start building Matopá right now. It's fully licensed and we have the feasibility study, although we are updating because we are going to incorporate new deposits. but we want to create a lag in order not to overlap the same functions of the team. And then during the construction, we'll have the preparation, early works, then we'll have the plant and the ramp up. So, we don't want to overlap exactly the same, we want to lag. So, perhaps build, start the construction of Matpad Guri next year, where we will be already on the final phase of Eredorado, and Eredorado will already be on a very good speed. And the team also combined with the local team in Borborema and Almas. It's not taking full attention from the construction team in Borborema and full attention from the construction team in Almas, where there's some shared activities. And we have also, we're going to bring the engineers and construction team also into the sites, not only using the Eradorada team. It is a thing that we need to pay close attention. That's most of why we are not overlapping a construction of Matupá and Adodorada. But it's something that we cannot disregard, and that's a concern that we have. And that's where myself, Glauber, the technical team is spending a lot of time.

And I think you read my mind because you mentioned M&A as another demand on the time of management. Could you just describe the current pipeline of M&A opportunities, particularly vis-a-vis, you know, the last year and the year before? I mean, would you describe the opportunities as increasing or decreasing? And any commentary on sort of valuation, where sellers are thinking of valuation and where buyers are and whether there's a gap there or whether you think there's room for negotiation?

Good question. It was increasing opportunities, but not for the right reasons, just because in the past, just a couple of months ago, when gold price reached $5,500 or $5,400, increased a number of opportunities, but the expectation of the seller was completely out of what we would also be paying. But now we see some, it's accommodating the expectation of the seller and the expectation of the buyer. There's still some gap, but there's more room to work. So we are confident that now we can engage in a more, can get more traction in M&A activities along the year. Of course, it's unpredictable. M&A is a combination of what we want and what or what is available. But the fact is, there are opportunities, we are looking for alternatives, there's nothing that is advanced, there's nothing that is close to happen, but we are, of course, prospecting and engaging in a few different conversations. M&A is like an investor, what the investor does, right? They select 10 companies, start analyzing, deep diving, in six, start negotiation, five to get only one, right? So that, And it takes time.

Okay. Thank you. That's all my questions. Today's update has been very helpful. Thank you for that. Thank you. Awesome.

Our next question comes from Tatiana Congeni with J.P. Morgan.

Hello, everyone. Good morning. Can you hear me well?

Yes. Yes.

Okay, so I think I just have, like, a couple of follow-ups from the questions that you already answered. So my first one, and I would just follow up on the question that you just answered on M&As. So as you already flagged, I think we have, like, Mazapa already under the radar. The company still has a very, like, comfortable cash flow and actually balance sheet position at this point. So my first question here is, when it comes to M&A, you mentioned that you know what you want. So can you share just a little bit on what are the main perspectives that you search when you are thinking about the M&A, if you have, like, any specific region that you see more availability, if you want to grow more in Brazil? So just understand a little bit of the profile that you are looking to the next M&As. And I will do my question after. Sure.

No, I think it's clear that we are America's player, North America, Central America, and South America player. We are not focusing in looking alternatives in Africa, Asia, or Australia. We are gold and copper, so we look in both sides. We like combination of gold and copper. We used to be 30% copper, 70% gold. The gold price has improved. We are investing in gold, mostly, in the last three years. So, the copper is being reduced, but we would like, preferably, to increase our copper in our portfolio, but yet, the alternative that we've been seeing in gold is way more attractive. So, that's why we are now more on gold. In terms of, we don't look for state-of-the-art projects. Those projects, state-of-the-art and flagship assets, they tend to be overpriced and overvalued. So normally companies overpay for state-of-the-art projects. that has full feasibility, big production, higher grade, and no concern in any kind of jurisdiction. So, I think if you look at what we've done in the past, it's a very good example of what we would look at in the future. Take Borborema. There was already We don't like also to take full exploration risk. We are not an exploration developer. We don't feel we have the skills to find new mines out of the blue. We like to enter in projects that already have good progress in terms of exploration, significantly by risk. also in exploration has already resources and reserves had problem with our water access we had an angle to solve at the water access and then we could implement the project era dorada that could be defined the state of the art in terms of grades and capacity but had a strong local and community opposition, because the project was open pit, we converted back to underground, so we couldn't lock the opposition from the community. Actually now they support the project, that's why we are moving forward with them. And so those are greenfield projects, close to construction, not a lot of exploration risk, but had some issues that we had to put our people to work and unlock the value. Another example, MSG, a mine that's already operating, but not core or major players, that is underperforms in terms of productivity, that we understand that we can buy for a good value, implement all that we know how to do the turnaround, improve efficiency gains, and then put that mine into a higher production so there's always going to be a very strong eyes and where are we adding value to that project not just by for full price to increase capacity by size on the objective.

Very clear on that one and the second question is still on MSG I think that's the main subject here today so When we check your guidance on cost, of course, they are higher than the average of your project. But this kind of implies that your second half costs are going to be like almost half. So how confident do you feel that this is going to be delivered? Do you have like any, like what is your main struggle to actually reach the guidance that Do you feel that anything – like, we discussed a lot of moving parts, right, with the underground development, with effects, also with the diesel. So do you feel there is, like, a room for this to get even, like, further than the top of your guidance here?

Yeah. I don't know where you got the number that we need to now perform as a health during the second semester, because that should also have a higher production on the weighted average. Maybe not sure which calculation you made, but there will be improvement on the second semester.

Sorry, just mentioned that it's like just thinking on cash costs per ton as an average, but that's fair.

Yeah. But structurally, we will see improvements in Q3 and Q4. Structurally, it's a mine that will not have the average of our hour. Structurally, it's a mine, actually, that will push our own sustaining cash costs above the average that we have. And that's not a problem, because we paid only $76 million to this, and the internal rate of return of this project will be significantly high to our shareholders, particularly now if you add – it was already high, and now you added a new resource and reserve. It's a project that we feel very comfortable. It's coming more challenging in the short term, as we expected. On the other hand, it's way above expectations on the long term. And we are not focusing too much on production. We're not focusing too much on cash costs during the first, second quarter. And we'll see improvement on the second semester. But our main objective, which is the KPIs and the variable remuneration on this project is way more towards preparing this mine to get close to 80,000 ounces of production and close to 2,000 ounces of how we're sustaining cash costs so that we can plan that for next year.

Okay, very clear. My last question – sorry.

No, go ahead.

Yeah, no, my last question, and I think we didn't discuss this a lot here in this call, but just kind of understand your view on gold prices. I think overall market remains very bullish on the overall story. We agree with that. But just wanted to hear your thoughts on how do you see this, like, all this impact from the recent war developments and how your perspective for this year?

Well, if we see the variables that we're being... First, I'd like to also disclose that I don't feel that I am an expert in gold price. I think investors are way more informed on that. So we don't take decisions in order of expecting gold price to go up and down. We take decisions based on what is the higher production I can achieve at the lowest cost. That's it. And gold price is just an input. Nevertheless, I need to... to learn, I need to participate and analyze, and I talk to many people, participate in other boards, so I need to follow. The idea is that on the big picture, what has been pushing gold prices up has been two major variables. Number one, is the excess of capital, the excess of liquidity in the world. So you see United States at $39 trillion now on debt, and plus $2 trillion per year in terms of deficit. And now changing treasuries, paying treasuries that cost 1%, 2%, to a treasury that costs close to 4%. So that's increasing significantly the financial expense over excess of debt over excess of deficit, and the world is starting to think about where this can go, right? Maybe we might have to print, maybe they'll have to lower interest and live with inflation, so that has not changed, and actually, the wars are even getting worse, because countries. That is the same situation with Europe. Actually, Europe is way worse than the United States. Compared to other countries in the world, the United States is not that bad, but yet it's not easy to tackle that deficit. And the whole world now, the United States is reducing the amount they spend on army in Europe and other countries, so they were now talking about increasing the budget for defense why they should be decreasing the deficit. So that's only pushing deficit to higher levels. That's only pushing the need to print money higher. That's one thing that the world is happening now. All situations only deteriorate in terms of public accounts and deficits. The most interesting thing is that we don't hear any single conversation about governments about tackling the deficits. There's many other subjects to talk about, but reducing costs has not been politically talked about in any country so far. So that is, we'll push and continue to push gold ahead. The second point that pushes gold ahead that has not changed, actually, is also improved in terms of pressure, is that The result of the war of Ukraine and Russia, where the world confiscated all the U.S. dollars from Russia, has just hit an alarm that the countries that don't feel aligned with the United States, they should not have super high exposure to U.S. dollars, which means treasure. So what we've been seeing now in the world is that China continues to import and produce higher gold and continues to Central banks are also in high, very high purchase. Last quarter, another record high purchase from central banks, particularly in China, which they disclose. We do not know what they do not disclose. So that's just getting worse and worse. So the factors that push gold higher are there and getting even more present. But on the short term, there is this volatility that happens. But if my humble opinion is that we will continue to see gold prices going up. Actually, I would also invite, that was just really another day, that who is buying the treasury now, right? So we see now Fed buying treasury, internal market in the United States. The world is not yet, not anymore, giving that much of support for the U.S. debt. So that is a structurally significant change. in the world, while perhaps the U.S. will not be that important in the upcoming years, in the upcoming decades, at the major price. We continue to be important, but perhaps lose some importance, and gold plays a major role on this rebalancing of currencies.

Thank you very much, Rodrigo. Very clear.

Our next question comes from Edgar de Souza with Itaú BBA.

Hi, hi everyone. Rodrigo Kleber, Natasha, thank you for the questions. So, I want to start, I'm sorry to insist in this point, Rodrigo, on the cost front. I think that you were super clear about the gradual improvement in production throughout the year. This makes us comfortable that you are going to achieve your production guidance for the year. But on the cost front, We are a little bit disappointed in the first queue. We understand that there are some mind sequencing, there is the infrastructure works at MSG and so on and so forth. But we have something that is important, that is the effects impact, right? So, I want to understand from you, first, which was the average effects that you considered during the guidance? Do you have any sensitivity about the impact of a stronger BRL and also a stronger Mexican peso on your cost guidance? Because this, despite you being very comfortable about the operational performance, maybe could put your performance in the year more closer to the upper end of the guidance, right? Or do you think that there is room to be even better in terms of operational and more than offset the impact of the effects here? And then my second question is related to the heads, right? We have been discussing this a lot, so how are you going to think about hedging policy going forward? But the fact is, for Almas and for Borborema, you started building the heads once you approved the projects, right? Now you approved the Era Dourada, and I wanted to understand what are you going to do in terms of hedges for Era Dourada, if you are doing something or not, and when you want to build that. And also to connect this with my first question, do you consider any structure in terms of hedges for the effects? zero cost color and so so forth we we know that some companies not old companies but other companies that we cover they are using a lot of structures of zero cost colors for effects uh for costs and so so forth so how do you think about that also thank you

I will start the first question, and then I will ask Kleber to finish. Talk more specifically about FX, and then we go back to the hedges, right? So, in terms of our cash cost, you know, sustaining cash cost, I think I just, as you highlighted, and I will reinforce, is that it varies quarter by quarter, mine by mine, according to the mine sequences, mainly due to rates, strip ratio, and Well, if you are pushing back the pit or not, right? So, I will see progress in terms of production during the second semester that give us very comfortably that we can reach a production at the middle, if not above the middle of the guidance, right? So, close to that. And then that will reflect also in cash costs. So we'll see higher production and lower cash costs. Also, very comfortably, that will be in the guidance. Kleber, if you want to talk a little bit more on FX impact in Brazil, Mexico, I think that would be good.

Yeah. So, Edgar, yeah, the FX was around – 530 that we use in the guidance. Yes, there is some challenge, but so far, as we see and we do our rolling forecasts, we would still be comfortable in delivering the cash costs and now in sustaining cash costs of the Brazilian operations. We have also cost reduction initiatives in all the business units. So, considering the levels where the maximum is in the Brazilian real are now, we're comfortable with that guidance without needing to review the guidance considering the current appreciation of those two currencies. And can you comment on the hedging as well?

Yeah, you can comment.

Yeah. So, the hedges and you compared with what we did for Burberry and Almas, it's important Just to first understand the context when we do the hedges and second, where we are now. So historically, we did the hedges to protect the company because it was a major investment we did at those times. So if gold prices had some reduction, sharp reduction that could put the company at risk at the time, And then I historically did a zero-cost caller because it was a way, setting the calls was a way to finance the insurance, which was the put options, not to hedge until we got the payback and make sure that the money we invested in the project, we got the payback. So what's the difference now? First is, in terms of company, we're much more diversified. If you remember when we When we started building Almaz, we had only three other mines. Now we have six. So we are less exposed at risk with one single project. In seconds, also our margins now are much stronger, much higher, both the EBITDA margins and the cash conversion than at the time. So we have much more buffer and the financial risk is much less. Regardless of that, we are analyzing. We still are discussing with the boards. Potentially, we have now an opportunity not to do zero-cost caller like we did in the past. We might buy put options because good price was so much in the last few years. And that might be much cheaper today to buy put options. So we might put the insurance in place without giving up on the upside. but it's still, because we have that less pressure and because there has been so much volatility in the gold prices in the last couple of weeks, any option becomes more expensive. So we are analyzing and we keep quoting and seeing the cost of these structures and discussing with the board the scenarios and the right timing to implement this kind of hedging.

And for exchange rate, There's nothing you can do against or in favor in the long term. You can hedge short term. That has a cost. But structurally, you don't change. You don't protect your business of hedging short term. If you have an important milestone that you need to achieve, and if you have a capex to do that you already calculated or generated a return, and half of the capex in dollars, half of the capex is in reals, then we might think, but structurally, there's nothing we can do. We're just going to pay every partner to do a hedge that won't change your business overall. What we can do is get more, if the exchange rate pushes our cost up, more focus, more attention, and try to bring back the cost down by new efficiency gains or cost reduction. And AI, it's coming there, right? So it will give many companies alternatives to find places to reduce costs.

Okay. Thank you, Rodrigo. I really like the pictures from El Adorado. Very interesting. Oh, yeah. Advancing there. Thank you.

Our next question comes from Marcelo Arazi with PTG.

Hi, guys. Good morning. Two questions on my side as well. I think the first one is a simpler one. The company has been delivering several triggers and milestones, especially since the IPO last year. And looking forward, what else can we expect to be announced until the end of this year? So what are the next milestones for the investment case? And if I may have a second one, just a follow up on the M&A discussion. We have been seeing other bigger gold projects being developed in Latin America. I think especially in Guyana, with productions in the north of 200, 250 ounces, can we expect Aura to be looking at this kind of project? Rodrigo mentioned that it has to be something that Aura can add value to, and despite being a bigger asset, I think they are still sitting on more challenging jurisdictions that you guys can operate quite well. So just wanted to hear your thoughts on that as well. Thank you.

Thank you, Marcelo. So, in terms of figures, I think we have expansion of Borborema. We have exploration and further expansion, perhaps in Almas, but that will be more towards the end of the year. We are also updating feasibility study for Matupá towards also the end of the year. And, of course, the improvement of the progress we make with the turnaround in MSG. So, those are important factors for us to monitor along the next quarters. In terms of M&A, we monitor those transactions. Some of them we participate, some we don't, some we like, some we don't like. But it's not that we do not like bigger mines, 200,000, 300,000 ounces. but we need to find out where we're gonna find out where is Aura going to build value into that operation, right? So that will always depend on the entry price. So we are very, very concerned and very focused on internal rate of return. If you overpay, and then your internal rate of return is going to be reduced, and normally you overpay for very big assets, so then you leverage or you put a lot of capital in a lower return project that can jeopardize the average. So our story has been super successful so far. We believe we can continue to do projects between 100 and 150 where shows ability to have a higher internal rate or return up to a million ounces. After that, then we would have to rethink our strategy, and for sure then we would have to go into a bigger project that has lower return. So I think there's still room for us to continue to go into high return projects up to a million ounces. After that, we'll have to reshuffle and rethink the strategy and go to a lower return project.

That's very clear. Thank you.

The Q&A session is over. We would like to hand the floor back to Mr. Rodrigo Barbosa for the company's final remarks.

Just to recap, we are moving forward very solid steps towards our story that we share with the market, first in 2020 and recently with the NASDAQ listing in mid-2025. We are increasing production. We developed Borborema last year. Borborema continues to improve production. This quarter, we mentioned that we would continue to grow through acquisitions. We acquired MSG. MSG now is in the turnaround process very much. Our focus is to buy greenfield products that are ready to build or Mind that is an operation that we have an angle to add value to the turnaround, so we did that also with MSG. We mentioned to the market that we would start construction of a new greenfield project during this year, either was Era Dourada or Matupá. We just approved the construction of Era Dourada. We also mentioned to the market that we would increase resource and reserves. We just published a 20F with a significant increase in reserves to over 7 million ounces and now resources about 3 million ounces. So that's also extending the life of our mines while we are also increasing production. We also mentioned to the market that we would have to increase our daily trading volume. And now we are delivering on average less than $95 million. So we are doing very solid steps towards our strategy to reach above 600,000 ounces, which is already We know very well how to get there, but we would like to continue to grow through M&As. I just mentioned that we aim to achieve 1 million hours, but that would require new M&As that we should do perhaps in the upcoming years. So, it was also a solid clock in terms of results. as the market analysts question, all-in sustaining cash costs above the other quarters. Most of these come from SHG, which was expected, and, secondly, also from mind sequences, which was also expected. So, we should see second semester coming in strong, which will improve production, also reduce the all-in sustaining cash costs. While doing all of that, continued a very solid step with dividends, continued to be one of the highest dividend yield in the sector. Despite that, our shares have significantly appreciated. Our dividend yield, of course, reduced compared to what we were one year ago, not because of the lower dividends, just because now the market starts to pick up. Yeah, there's still a lot of room to increase the multiple, and we will be tackling this multiple buy increase liquidity, more conversation with investors, telling more the story, and walking the talk, and increasing our size. So I thank you all for participation, and I will be following up with the market as we have any kind of news.

Our conference is now closed. We thank you for your participation and wish you a nice day.