Copper Mountain Mining Corporation

Good morning. My name is Anas, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Copper Mountain Mining Corporation First Quarter 2022 Earnings Conference Call. All lines have been placed on mute to avoid any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star, then the number 1 on your telephone keypad. If you would like to withdraw your question, please press star 2. Please note that comments made today that are not of historical, factual nature may contain forward-looking statements. This information by its nature is subject to risks and uncertainties that may cause the stated outcome to differ materially from actual outcomes. Please refer to slide two of today's presentation on Copper Mountain's first quarter 2022 management discussion and analysis for more information. I will now turn over the call to Gil Clausen, President and CEO of Copper Mountain.

Good morning, everyone, and thanks for joining us. We're starting on slide three, presenting with me our Eric Dell, our Senior Vice President of Operations and Brad Bolger, our Vice President of Finance. I'll begin by discussing details on what impacted us so heavily in the first quarter. Eric will give a more detailed discussion on our operation along with an update on our concentrator expansion projects at the mine. Brad will present our financial results and then I'll wrap up with a summary of some of our upcoming milestones. and then open the call to questions. Turning to slide four, getting through the quarter was a real challenge. Production was extremely low due to lower grades combined with low tonnage rates. The lower grade, which was planned, was due to almost all production coming from phase two. The tonnage was low due to the secondary crusher shaft damage in Q4 of last year, which forced us to run at reduced rates and deliver much coarser feed to the grinding circuit. We also had lower operating time due to major conveyor belt repairs to the sag mill feed belt and modifications to the grinding circuit to run properly with coarser feed. But these issues are behind us now. A new secondary crusher shaft delivered earlier this month was installed and operating by April 7th. We're now ramping up the mill to target capacity of a steady state of 45,000 tons per day with ball mill three operating well as designed. In fact, we've been operating above the 45,000 ton per day of late and we have also ordered a spare secondary crusher shop that will be arriving in August. We expect Large throughput and production increases in the second quarter compared to the first. Further, we're beginning to mine ore from the north pit in Q2, and we'll start mining higher grade from phase four mid-year. We expect production to be much stronger in the second half of the year. This production increase will have a positive impact on our cost per pound. Costs this quarter were abnormally high because of the lower production rate. and major non-recurring costs that are not planned to impact us for the balance of 2022. All in costs in Q1 were higher due to extensive maintenance backlog work we completed on our shovels and drills. Also building up spare parts inventory on shovel hydraulic hoses and systems to prepare the mine for increased production rates. In Q1, the company had to rent portable crushing equipment to produce crush waste for winter road material and for engineered crush fill for our sustaining capital projects, a task which is normally done with our secondary crushing circuit because we have usually spare capacity there. That rental crushing plant has been demoped with the secondary crusher back to normal operation. We also increased maintenance contractor expenses during this period of heavy workload to assist with managing COVID-19 related maintenance workforce absences. And also of course to do that major conveyor belt rip repair experienced when we had that really severe cold weather that occurred late Q4 of last year. There were also other non-recurring sustaining capital items as well. The costs associated with the assembly of the trolley assist haul trucks and payment for the installation of MineSense. MineSense actually has been a great addition to our fleet. It measures the actual copper ore grade in the shovel and loader bucket and has greatly improved our ore and waste selectivity and grade control. Capital expense items will not recur this year as well. The construction of a new haul road underpass for vehicles leading to the mill and concentrator, that began in Q1. This underpass will improve safety and greatly reduce haul truck cycle times and delays on our main waste haulage road by eliminating haulage interference from light and commercial vehicles that were crossing the haul road to head to the mill. This road construction is expected to be complete mid this quarter. Also, environmental water management projects were also included in our sustaining costs in Q1. Overall, these are now all substantially complete with a few smaller scope projects left. All water management projects will be fully complete in Q3 of this year. To a lesser extent, we did experience some inflationary pressures as well. Similar to everybody else in the industry, we saw diesel prices increase by about 60%. Steel prices are up 19% and other mill consumables up 10%. Higher production levels throughout the remainder of the year and the non-recurring costs behind us, we expect unit costs to greatly improve in Q2 and even more significantly in the second half of the year. However, we're increasing our all-in unit cost guidance to a range of U.S. $2.25 to $2.75 per pound. We are maintaining our production guidance of 80 to 90 million pounds of copper, but we're guiding at the bottom end of that range. We'll revisit our guidance each quarter as is our normal practice. Slide five. Despite an unpleasant quarter, we did have some big achievements. We exceeded our sustainability targets for last year, achieving at least an A rating on each of the TSM protocols. We also commissioned our trolley assist project. We have seven haul trucks that are now pantograph equipped and Both ore and waste is being hauled up a one-kilometer trolley ramp. We're proud to be the first open-pit mine to commission electric trolley assist in North America. Our electric-powered haul trucks will now travel up our haulage ramp at more than twice the speed of diesel trucks and at one-tenth of the energy cost and near zero GHG emissions. This is truly a huge success. Also in the quarter we completed the balance of the 2021 exploration drill program at the Copper Mountain Mine. We drilled over 50,000 meters with about 28,000 meters at New Ingerbell. We continue to see positive drilling results at New Ingerbell which extended mineralization at depth and to the west. That deposit remains open laterally and at depth as does the Copper Mountain Main deposit and we're now working on updating the mineral reserve and mineral resource estimates with a new life of mine plan which will include an expansion study as we've discussed in the past. All of which are progressing on schedule for mid 2022 release. Earlier in the quarter we closed zero cost collar option contracts for 3.3 million pounds of copper per month through the balance of the year with a floor price of US $4 per pound and an average ceiling price of US $4.91 per pound. I will now turn the call over to Eric, who will provide more detail on our operating results and development projects.

Thanks, Gil. I want to first start with an update on safety. The mine's injury frequency rate saw an uptick in the first quarter, while injury severity remained similar to 2021, our lowest in almost five years. Management is putting additional focus on reducing the risks related to injury. Now I'll move on to production, turning to slide six. The first quarter was challenging with production of 13.2 million pounds of copper. Production was lower than the first quarter of 2021 as a result of lower grades and reduced throughput. As Gil mentioned earlier, the lower grade was in line with their plan as we were mining mainly from the lower grade phase two area. This was planned for the latter part of 2021 for the commissioning of ball mill 3. The lower throughput was the result of the damaged secondary crusher. Copper recovery was higher in Q1-22, and it's expected that the higher recovery will continue and further improve with the plant improvement projects that I'll speak to in the subsequent slides. With the installation of the secondary crusher's new shaft, the completion of our plant improvement projects And as we begin to mine higher grade ore from phase four in the second half of 2022, we expect production to be stronger in the second half of the year compared to the first half. Just to touch on costs before we move on, costs were higher across the board when compared to Q1 2021. This was principally due to lower production, higher sustaining capital, and non-recurring operating costs as alluded to previously, and to a lesser extent, inflation. Turning to slide seven. Most of our ore came from the lower grade phase two area of the main pit that was for commissioning ball mill three. Phase four pushback continued in Q1. We moved over six million tons of waste from phase four, accounting for 67% of the total waste movement in the quarter. Phase four mining is continuing to progress and is expected to be a main source of higher grade ore for the second half of 2022 and in 2023. Grades are expected to improve as the year progresses. North Pit pre-stripping activity started in Q1, and the mill expects to begin processing the North Pit ore in the first part of May. It should be noted that the North Pit has a low stripping ratio and low mining costs. Turning to slide eight. We continue to invest in our plant to improve efficiencies, copper recovery, and production. we achieved a significant milestone with the commissioning of ball mill 3 at the end of 2021. It is operating well and now with the secondary crusher repaired, we have already started to operate at over 45,000 tons per day and we're working to consistently maintain this milling rate. We're also installing another concentrate filter press and increasing cleaner circuit flotation capacity. The new filter press will be installed in an extension to the existing concentrate storage building as shown on the bottom left of this image. A single new large flotation column cell is being installed inside the existing mill building and an expansion of the rougher flotation circuit is taking place to the north of the mill building. Turning to slide 9. The new filter press will allow the mill to maintain maximum tonnage rates while processing higher grade ore for extended periods. Concrete installation is complete and the filter press was delivered in Q1. Mechanical installation is now underway. The cleaner column expansion will support maximum cleaner circuit recovery for all ore types, eliminating a production bottleneck at high grade and tonnage. The concrete work has been completed and the column has been installed. Both the filter press and the cleaner column expansion are advancing well and are on track for completion by the end of Q2 of this year. The expansion of the rougher flotation circuit will further enhance rougher recoveries for all ore types. This project is also moving forward with most of the concrete work finished. The rougher expansion is expected to be completed in Q3. The combination of these three plant improvement projects are expected to increase copper recovery by 2-4% above current values. These projects are part of our longer-term growth plan and they generate significant value by increasing our overall return on invested capital in the mill. I'll now turn the call over to Brad to go over our financial results.