Capstone Copper Corp.

Good morning, my name is Sylvie and I will be your conference operator today. At this time, I would like to welcome everyone to Capstone Copper Q1 2022 Results Conference Call. Note that all lines have been placed on mute to prevent 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 number one on your telephone keypad. And if you would like to withdraw from the queue, please press star then two. Thank you. Mr. Gerald Annett, you may now begin the conference, sir.

Thank you. Good morning. I'd like to welcome everyone to Capstone Coffers and General Results Conference Call. Please note the news release and regulatory filings announcing Capstone Coffers 2022 first quarter financial and operational results are available on our website and on CDAR. If you're logged into the webcast, we will advance the slides of today's presentation which is also available in the investor section of our website. I'm joined today by our CEO, John McKenzie, our President and COO, Kashal Mar, our Chief Financial Officer, Raman Randhawa, and our Senior Vice President, Risk, ESG, and General Counsel, Wendy King. Following our brief remarks, there will be an opportunity for questions. Please note that comments made on the call today will contain forward-looking information within the meaning of applicable securities laws. This information, by its nature, is subject to risks and uncertainties, and actual results may differ materially from the views expressed today. For further information on the risks and uncertainties pertaining to our business, please see Capstone's most recent filings, which are available on our website and on CDAR. I'll just note that all amounts we will discuss today are in U.S. dollars unless otherwise specified. Now I'll turn the call over to John McKenzie.

Thank you, Gerald, and good morning, everyone.

I'm pleased to report our inaugural first quarter of Capstone Copper, and I'd like to take this opportunity to thank our entire organization and our stakeholders as we progress our integration efforts to what has been an incredibly busy period since announcing the transaction in November last year. On slide five, before we kick off the call with respect to our Q1 operating and financial results, I wanted to take a step back and briefly revisit the vision of capstone copper as we continue to build a leading copper producer in the Americas. Our portfolio of four operating mines, the Brownfields Monteverde expansion, and our fully permitted Santo Domingo project create the foundation of a truly peer-leading growth profile over the coming years, with the ambitions of building a world-class district in Chile, while simultaneously improving the asset quality of our portfolio with higher-grade, lower-cost sulfides coming online. Moving on to slide six. In Q1, we produced 22,500 tons of copper at a C1 cash cost of $2.31 per pound. Our quarterly results include a nine-day stud period for our trillion operations, Montes Blancos and Monteverde, as a result of the Montes Copper transaction closing towards the end of the quarter on March 23rd. Inflation has been a topical theme this quarter, not only amongst our peers, but for the world more generally. Our operating costs were impacted by inflationary pressures felt over the last six months and further exacerbated more recently as the war in Ukraine and the associated sanctions on Russia have led to higher energy and input costs, which we'll speak to further on the following slide. On slide seven, we've shown the year-on-year change in our C1 cash costs to illustrate where we are seeing the largest impact on our business from an operating cost standpoint. Prior to the impact of our Montes Blancos and Monteverde mines, our C1 cash costs were $2.17 per pound in the quarter, impacted by inflationary pressures primarily felt at Pinto Valley with respect to power, diesel, grinding media, and other input costs, as well as higher TCRCs, where global benchmark terms for copper have increased by around 8.5% year-on-year. On the top right-hand side of the page, we show the impact of our trillion operations for the nine-day stub period in the quarter, where costs were heavily impacted by record highs for peric acid prices. and I'll cover this in more detail when discussing our guidance for the remaining nine months of 2022. With the completion of the ramp up of the Montes Blancos sulphide plant debottlenecking in Q3 of this year and the commencement of production from NVDP late next year, we expect our costs to decrease substantially. As I mentioned earlier, our vision is to build a world class district that encompasses Monteverde and Santo Domingo. Now I'll pass over to Rama for our financial results.

Thank you, John. We are now in slide eight. Despite the inflationary pressures John referenced, we had a solid quarter underpinned by higher sales and gross margins driven by a realized copper price of 478 per pound, resulting in adjusted EBITDA of 123 million in the quarter versus three consensus of approximately 95 million. Operating cash flow before working capital in the quarter was impacted by some one-time items, including transaction costs related to closing the Mantos transaction of $19.9 million, as well as the annual Mexican tax payment was higher by $23 million, which related to actually income from 2021. Turning to slide nine, and with the Mantos transaction closing in the quarter, we highlight our strengthened consolidated balance sheet with available liquidity of $638 million, which included our cash and short-term investments of over $400 million, with an undrawn revolving credit facility of $225 million. Subsequent to the quarter, we had been working on this before the quarter, we further enhanced our financial flexibility. We actually increased our available liquidity by amending our revolving credit facility from $225 million to $500 million plus $100 million accordion at very attractive terms. This financing was about right-sizing our borrowing capacity for a company of our size, i.e., Capstone Copper, and the amended RCF is now expected to be in place before July this year. With the enhanced RCF, our total available liquidity has increased from the 638 I noted as of March 31st to now $913 million, or over a billion dollars with the accordion. Capstone copper with four operating mines all generating meaningful operating cash flow underpins our ability to finance our growth plans. Our financial strength coupled with our EBITDA generation shown on the right-hand side here, even at meaningful lower copper prices, which is shown on the right-hand side of the page, illustrates our ability to fund our next phase of growth. Now, as John mentioned, build a world-class district between Mantua Verde and Santa Domingo. From a capital allocation perspective, we have actually phased in a disciplined approach with respect to our major capital projects in construction. And the major project that we do have in construction is Mantua Verde, the sulfides of which 40% is already spent on the 825. plus 80% of the Mantua Verde capital costs are fixed, relating to the lump sum turnkey of the Cinco, and the fact that we ordered mining equipment from Kamatsu pre-inflationary environment. With that, now I'll hand it over to Cashel.

Thanks, Raman. We're on slide 10. At Pinto Valley, we produced 14,400 tons of copper at C1 cash costs of $2.60 per payable pound. Mill throughput was strong at an average of 58,400 tons per day, while grades and recoveries of 0.32 and 82% are expected to improve as we progress through the year. Copper production is weighted towards the second half of the year as we have taken some planned annual maintenance to home time in Q2. The waterfall chart on the slide shows the areas where we saw 37 cents per pound higher operating costs in Q1 compared to our January guidance. About 12 cents per pound or a third of the higher costs is due to inflationary input costs, as John mentioned earlier, like fuel explosives, branding media, reagents, and some contractors. The balance is mostly due to Q1 being a lower production quarter, plus the impact of capitalized stripping. We'll comment more on Pinto Valley costs a bit later in this presentation when we cover our nine-month guidance. The photo on the top right of the slide is a recent drone shot of our demo dump leach testing pad for our PV4 study. This is in addition to column leach testing we are performing using the jetty catalytic leach technology. The opportunity here is that excess SXEW capacity at Pinto Valley is available to process increased dump leaching activity. Work continues on our pyrite agglomeration project We'll conduct column tests to determine the amount of acid credits that could be potentially generated by diverting a tailing stream containing up to 50% pyrite and mixing it with our dump leach feed. The results of this will be included in the PV4 PFS. This study is expected to be released in H1 of 2023. And recall, we are aiming to extend the Pinto Valley mine life by 10 to 15 years into the 2050s. Before I leave this slide, And not mentioned is the work that we have done so far this year at Copper Cities, just 10 kilometers from Pinto Valley. We believe Copper Cities is a geological mirror image of Pinto Valley. Recall we announced in January that we have entered into an 18 month access agreement with BHP to conduct drill and metallurgical test work. Today we have completed the required drilling and have sufficient samples to commence metallurgical test work in H2 2022. So I believe that the $7 million program is going quite well. Moving to slide 11, Cozumel had a good first quarter with production of 5,900 tonnies of copper at a C1 cash cost of $1.12 per payable pound. On the cost side, Cozumel came in on the lower end of the guidance we provided in January. Throughput of just over 3,700 tons per day was slightly impacted by planned downtime to install a mill end to increase grinding capacity to over 4,500 tons per day. This compares to our current mine plan of 3,780 tons per day, so the additional mill capacity will provide future mine expansion optionality and overall operational flexibility. The top right of the slide shows a recent photo of the dry stack tailings and pace backfill facility, which continues on track for completion at the end of this year with commissioning in H1 of 2023. The total project investment is estimated at $45 million, of which $23.2 million have been invested to date. Cozumel's exploration teams were very active during Q1, testing the Maranoche football zone and the Maranoche Main Vane West target. Drill testing has commenced from the underground west crosscut area. This is significant because our drilling accuracy and efficiency has improved as a result of as we are targeting a zone that appears to extend the Malanoche Bay. We expect to provide results of our Cozumel drilling within a broader corporate exploration update before PDAC next month. Now on slide 12, commissioning of the Mantos Blancos de Bottlenecking project was completed in Q1, and subsequent to quarter end in April, we reached a throughput of 18,000 tons per day. So we're well on our way to achieving design throughput of 20,000 tons per day. And typical to all ramp-ups, you need to see steady state throughput first before process optimization can take place, where we expect to make gains and recoveries. They are currently in the low 70s, and we expect to see the targeted 80% level that was in the technical report in Q3. Important to note that Mantos Blancos is processing feed grades in the 0.8 to 0.9% range, and when we achieve design production, this will drive down C1 cash costs at the mine. The higher cost oxides are now considered secondary production, which we can dial up or down depending on input cost factors, namely sulfuric acid prices. We'll talk about this more in detail in a few minutes from now. Phase II PFS work to expand Mentos Blankets to over 27,000 tons per day throughput will be completed in Q2, and this will be incorporated into a feasibility study we will release in Q4 of 2022. Recall the expansion aims to tie in unused old mill capacity with the new mill operation currently in ramp-up. We expect this to result in an attractive IRR and overall low capital intensity. Moving to slide 13, Manto Verde will become our crown jewel world-class asset that is expected to double our company's EBITDA during its first year in production in 2024. As you can see by the photo below, major construction is well underway. Bulk earthworks are complete for primary crushing and grinding area platforms, and major TSF construction activities have commenced. We have received 13 new Komatsu 830 haulage trucks, and they are currently in operation. And finally, the construction camp is complete and operational. Over 40% of the projected capex has been spent at the end of Q1. In terms of inflationary pressures, we are seeing a small increase in capex owing to $25 million in higher pre-stripping costs related to higher diesel prices. And we added in an extra $15 million contingency. The projected capex is now $825 million or $38 million higher. Recall we have a lump sum turnkey contract with Asenko, which $525 million, or 67% of the original capital costs, have been fixed, plus $140 million in mining equipment is fixed, which equates to a total of $665 million on the $825 million, or 80% of the project fixed. Now on to slide 14. One of our top deliverables for this year is for a Manto Verde-Santo Domingo district integration plan to be announced just ahead of an analyst and investor tour scheduled for the week of November 14th. The plan will outline how we believe the large copper, cobalt, gold, and iron resources at Manto Verde and Santo Domingo should be developed so as to maximize the value of the district to the benefit of our shareholders and stakeholders. We expect to communicate an optimized flow sheet as part of this plan, as well as detailing the synergies that will be maximized by integrating these properties. We are targeting 200,000 tonnies per year of copper production with first quartile operating costs driven by efficient operations, high copper grades, and strong iron and gold byproduct credits. Top that, we have an enormous potential to be one of the largest battery-grade cobalt producers in the world. at lowest cost with strategic byproducts sulfuric acid used to treat district copper oxides and fill excess SXEW capacity. We would produce 1.4 million tonnies of sulfuric acid per year, and currently we consume 900,000 tonnies between Mento Verde and Mentos Blancos, which would be significant cost savings for additional oxide production. The plan will map out how Mental Verde Santa Domingo will link together with flow sheets, which we will then work on to deliver feasibility studies as follows. In H1 of 23, an updated Santa Domingo feasibility study that captures district infrastructure synergies. In H2 of 23, a Mental Verde Phase 2 expansion feasibility study that captures district synergies. Also in H2 of 23, a Mento Verde Santo Domingo cobalt feasibility study which captures production from both Santo Domingo and Mento Verde with byproduct sulfuric acid production. In H2 of 23, a further updated Santo Domingo feasibility to capture the copper oxides opportunity where excess SXCW capacity at Mento Verde can be utilized. This approach will enable us to provide informed timelines for each project that can be phased appropriately to reduce our execution risk. Timelines for studies outlined above will ultimately influence decisions around green lighting growth beyond our near-term MVDP project under construction. We recognize we're in a fortunate position given our low altitude location near major mining centers, the scale of resources, the existing production base, and with key permits in hand. This is rare. Clearly, this growth pathway will keep us incredibly busy over the next 18 months, so I'm pleased that Castellan Copper continues to attract top industry leading professionals to join my team. In April, Peter Amalungson joined us as VP Technical Services, and he'll oversee plant optimizations across the portfolio. Quarterback our technical reports or studies, including the Mental Verde-Santa Domingo Integration Plan. He's a professional engineer with 25 years of operational and senior management experience at numerous copper mines across the globe. I have had the honor in working closely with them for many years and look forward to this next chapter as our team executes in our exciting growth strategy. Now on slide 15, one of the largest synergies we have in creating the Monteverde Centro Domingo District is in cobalt. The iron oxide copper gold deposits in the Atacama region typically have high concentrations of cobalt associated with pyrite, and we have the opportunity to be one of the world's largest and lowest cost vertically integrated battery grade cobalt businesses. As mentioned, a strategic byproduct will be sulfuric acid, and we anticipate more than we currently require, allowing us to pursue copper oxide growth opportunities around our operations where we have excess SXEW capacity. We are currently evaluating two different processes, roasting and acid pressure oxidation, or POCS. POCS has potential to be a lower capital alternative which is why we are pursuing this process in parallel with roasting. A flow sheet will be selected and a cobalt resource update will be completed for Mental Verde Santo Domingo in H2 of 2022. Then in H2 of 2023, we will have the cobalt plant engineering and reserve estimate followed by cobalt Mental Verde Santo Domingo feasibility study completed. Now over to Wendy King for the sustainability review.

Thank you, Cashel. We're now on slide 16. We are pleased to announce our upcoming sustainability report that will be published in June. This is our sixth sustainability report prepared in accordance with the GRI standards and the SASB mining and metals standard. We are also beginning to align our disclosures with the task force on climate related financial disclosures. Tailings management was a key focus in 2021. Pinto Valley established and convened its independent tailings review board, a requirement of the global industry standard for tailings management. Construction is underway for the new pace backfill and dry stack tailing storage facility at Cozumel, which will result in a smaller land footprint and lower water demands. Our global workforce grew by 30% in 2021, mainly driven by growth projects. Women's representation in our employee base held steady at 11%. We created a diversity and inclusion committee, which will work across sites to develop an action plan in 2022. Our board diversity target is 30% women by 2023. We also made efficiency gains relative to production in water use, energy, and greenhouse gas emissions. Overall, water intensity, or the amount of water used per ton, decreased by 11% over 2020, despite a global production increase. Trends in emissions closely followed energy use, which increased from added fuel demand for capital construction projects. However, the increase is still well below our production increase. We are committed to taking action on climate change by reducing our greenhouse gas emissions, In 2022, we will establish a company-wide target and assess decarbonization pathways for all our sites. This process began in Q1 with a review of greenhouse gas inventories to establish a baseline in line with industry best practices. We are also developing our ESG strategy with focus on the areas that would be critical for Capstone in this new growth phase, which are tailings, water, climate change, land management, responsible value chain, workforce development, and community impacts. Our strategy will include actions and targets for these focus areas. Through our strategy, we aim to link our performance to the ambitions of the UN Sustainable Development Goals. Now I'll hand the call back to John.

Thanks, Wendy. We're now on slide 17. I'm pleased to provide Capstone Copper's inaugural guidance Keep in mind, this is for the nine-month period from April 1st to December 31st. For the balance of 2022, we expect to produce between 91,000 and 100,000 tons at C1 costs between $2 to $2.15 per pound for our sulfide business. Additionally, we expect to produce between 45,000 to 50,000 tons of copper from cathodes at $3.55 to $3.75 per pound. During the quarter, we critically looked at our business in the context of the current inflationary environments. The world has certainly changed since providing guidance in January this year, with the war in the Ukraine and sanctions on Russia adding to inflationary pressures, which we're experiencing on input costs such as fuel, sulfuric acid, explosives, grinding media, and freight charges. The capital costs are roughly 70 cents per pound, higher than what was published in our technical report. because we are assuming spot sulfuric acid prices of $280 per ton for the balance of this year, which represents all-time highs. This compares to $180 per ton we assumed in the technical report for 2022. The perfect storm has led to where the sulfuric acid price and sulfur market is today. Incredibly strong fertilizer demand is coinciding with pandemic-related logistical challenges in Asia, and high ocean freight costs would have hampered the supply side of the equation. We believe sulfur and sulfuric acid prices at these levels are unsustainable and will ease in the second half of 2022. Prudently, we've price fixed around 65% of our sulfuric acid purchases in Chile for the balance of the year. Also, when copper prices were higher in April, we made a decision to protect a $4 floor and lock in margins for over half of our cathode production for the balance of the year. This works out to 27,000 tons of copper cathode with a $4 floor and a ceiling price of $4.86 per pound. Now onto slide 18. We added this chart to illustrate how we're proactively improving the asset quality of our portfolio by transforming our business to lower cost sulfides as we ramp up the Montes Blancos concentrated e-bottle making project. and complete the construction and ramp-up of the Monteverde Sulfide Project in 2024. Delivering the Santo Domingo project will further increase our sulfide business, improving margins through reduced costs. Low-cost sulfides are expected to contribute over 90% of our future total copper production. The development of the world-class Monteverde-Santo Domingo integrated district is expected to drive company-wide consolidated C1 costs to approximately $1.50 per pound. Slide 19. This slide shows our capital and exploration guidance for the nine-month period from April 1 to December 31. At Pinto Valley, our sustaining capital includes one-time items totaling $24 million related to tailings and water management initiatives, especially important as we are actively looking for ways to maximize more throughput. At Montes Blancos, for financial reporting reasons, we were required to reclassify some operating costs to production phase deferred stripping, which is expected to be just over $50 million for the balance of 2022. As previously mentioned, total initial capex for our Monteverde development project has increased $38 million to $825 million, with expansionary capital this year focused on the primary crusher, pipelines, stockpiles, camps, and tailings. At Cozumel, capital spending is on track with respect to our paced backfill and dry stack tailings plant, and at Santo Domingo, capital is primarily focused on rerouting Highway C-17 and spending on the Cobalt Feasibility Study. Our exploration efforts for the balance of this year are primarily focused on brownfield opportunities at Cozumel and in Chile, with a focus on delineating the oxide resource at Santo Domingo, as well as greenfield exploration at Copper Cities. Looking forward, we expect increased brownfield exploration efforts in Chile, particularly at Monteverde and Santo Domingo. On slide 20, we've set forth an exciting pathway to transform capstone copper into a premier mid-tier company, en route to 100% production growth and lower costs. We also have an opportunity to create a world-class cobalt business. that will put Chile on the map for yet another critical green metal as the world accelerates its decarbonization efforts. We're applying a disciplined and phased approach to growth, and we have the balance sheet, a strong cash flow base from current operations, and the leadership to execute on this plan. Finally, on slide 21, capstone copper is expected to produce 185,000 tons of copper production over 12 months in 2022, which has been illustrated on the slide in the first stage of growth. The second stage of growth, as we commissioned the NBDP, is expected to generate copper production of 260,000 tonnes by 2024, which represents 40% growth. Beyond this, we expect to deliver another 45% growth to 380,000 tonnes per annum with Santo Domingo, with further expansion opportunities throughout our portfolio. You can see that we have a tremendously exciting growth trajectory, and this doesn't factor in the robust pipeline of other growth initiatives that we have referenced, including PV4, the Phase 2 expansion projects at Montes Blancos and Monteverde, and the cobalt production. Of even more importance is the fact that these projects all serve to lower our unit costs, allowing for strong cash flow generation throughout the cycle. I'd like to take this moment to thank our team at Capstone Copper for their huge commitment to our integration process, which I'm very pleased to say is going extremely well. With that, we're now ready to take questions.

Thank you, sir. Ladies and gentlemen, if you would like to ask a question, please slowly press star followed by one on your touch-tone phone. You will then hear a three-tone prompt acknowledging your request. And if you would like to remove yourself from the question queue, please press star followed by two. And if you're using a speakerphone, we do ask that you please lift the handset before pressing any keys. Please go ahead and press star one now if you have a question. And your first question will be from Urs Wakeda at Scotiabank. Please go ahead.

Hi, good morning, and congratulations again on the transaction. I've got a couple questions about your guidance, and I appreciate the pretty detailed guidance for 2022. When we start to think ahead to next year, Am I correct in thinking that your copper production consolidated will be fairly similar in 23 versus the 185,000 tons in 22 with really the step up beginning in 24?

Or a second answer to that a little bit. I mean, as you know, metals, blank list is the main asset that's ramping up this year. So when you look ahead to 2023, that will be the pickup and production that you'll see when you look through the four assets.

But should we expect pretty minimal contribution from that in 23 specifically?

Yeah, I mean, we don't give 2023 guidance, but if you go to the tech report, you'll see it. I wouldn't say it's minimal. You'll see the numbers there in terms of how many tons there is.

I think the other thing that's important about it is it's represents quite a significant shift at Montes Blancos from oxides to sulfides. So that does have quite an important impact on our unit costs at Montes Blancos.

Right. Okay. And then sort of in similar vein in terms of CAPEX, I was a little surprised how high the plan CAPEX was for this year. Am I correct that like when I deduct what's left for the project, that we could be looking corporately at capex sort of similar for next year somewhere maybe in the 500 to 600 range to finish the mana verde project plus all the other uh sort of smaller sustaining and everything else going on is that kind of a good ballpark number yeah so i'll pass across to ramon to give you a more detailed answer but um you know the main portion of the the capex spend on the montevideo project is this year

I think there's the tail, if I'm not mistaken, is about $140 million for next year, I think, was the main portion for 2023. And I think the one item which obviously does influence the size of that capex spend is obviously the sort of pre-stripping and deferred stripping at the various operations.

So when you look at it, Orst, the number is 825. We've spent 338, we've said to date. there's 265 in our guidance for this year, so that leaves another 220 for next year, roughly, on that toverday. Right, plus all the other assets. Yeah, I mean, the sustaining capital and our other assets. One thing, you know, when you look at our capital guidance of 620, it includes 125 of capitalized stripping, so the tech report's never had the accounting for capitalizing stripping. That was probably just kind of in the OPEX line, so that's That's kind of new to standardize our accounting when you look at our guidance. So if you back out the 620, the 125 on stripping, that's really a 500 number when you look at it from a capital perspective without stripping.

Yeah, no, fair enough. But we're not really seeing the offset, though, in terms of reduction in your OPEX, right? So it does seem, I'd say, incremental to the net numbers. And I get that that's largely inflationary, but It's not like we can add 120 to CapEx and then take it out of OpEx. Yeah, I agree.

I think the asset and inflation is heating into a bit of that.

Okay. Okay. Thanks. I'll pass it along.

Thank you. Next question will be from Ralph Profitti at 8 Capital. Please go ahead.

Good morning. Thanks for taking my questions. If I may, I have two on Manto Verde. And just looking at the, you know, the construction progress at 14%. And you talked about sort of monitoring, you know, COVID-19 risks and logistic risks. But it does seem that inflation risks are pretty much, you know, in check just because of the OSINCO and the EPC lump sum contract. So just wondering, you know, of those three things, which should we be most concerned about? in terms of stressing on, you know, either the CapEx number or scheduling? Is it COVID-19 or is it more of a logistics chain that sort of, you know, brings in the incremental risks?

Yeah. Thanks, Rob. I'll take that and then just ask Kessel if he's got any further comments. But, you know, we've obviously been through sort of two odd years of COVID already, and I think the procedures that have been put in place both at the operation, the project, and the country as a whole have proven pretty resilient to sort of what COVID has thrown at us to date. And I think we did have the advantage of negotiating the contract with Orsenco, taking into account COVID. So we've actually assumed a sort of full-blown pandemic for the full period of the construction. So all of that is built into the procedures. There's things like additional transport, additional accommodation, various issues of productivity that we have assumed in the project. So I think COVID is well taken care of. I think we spoke quite a bit on inflation and how we've obviously been somewhat impacted just by diesel price increase and the pre-stripping that we've now built into our estimates. We've been fortunate that basically we locked in the prices for all of the mining equipment and the plant equipment, I think, before we saw this sort of inflationary period. And to an extent, you know, we also locked in our orders before we hit the big sort of scheduling challenges. So before the – there's certainly, we're seeing in the market today, timelines for lead times for orders growing significantly. So I think we're reasonably comfortable there. I think, as you know, there sort of are logistical kind of challenges around the world with shipping, et cetera, and particularly, I think, around China. So these are things we need to keep a very close eye on just sort of as we sort of ensure the final equipment delivery to the project. I don't know, Kesha, is there anything you would say?

No, I'd just echo, you know, I've been to Chile several times since joining Capstone, and it's incredible how that country's managing COVID. I mean, they're very robust protocols and procedures, businesses as usual, and they've adapted to it. Where COVID interrupts us is exactly where John is saying, is what might be happening in the various areas where parts and components are being manufactured. So we're bird-dogging that. We don't have any notice to date that there's any major issues, but that is our biggest concern. If that was your question, what is your biggest concern? It's some of these areas, maybe what's going through the Shanghai Harbor versus a different harbor and those types of things. So we're keenly aware of those things, monitoring them, but to date we don't have any confirmation of any major impacts to the project. But that's where it would lie if we were to try and guess where something might happen.

Okay, yeah, that helps a lot. I appreciate it. Casual, let me stay with you. Because there's been a more robust build-out of the team there, are there any scope changes that have happened at Mental Verity that have been implemented or are potentially being looked at just as sort of a fresh set of eyes has sort of come in and looked at that project as you're sort of near that 50% completion rate? Or at the risk of repricing some of these contracts, you've sort of held back on that?

Look, I'm completely familiar with the EPC deliverer, Asenko, that's there. And as it happens, that flow sheet is the exact same as the Constantia flow sheet. So I've had lots of opportunity to work with that engineering group, and I understand that flow sheet. It'll serve extremely well. It's already been proven. So I don't think there's any modifications that, you know, myself or any of the new additions to the team would come in on that project. Where we see the value, and that's what we really focused on and outlined, is what the future value for the integrated district is. And that's where we see maybe there's some other plans we can bring in, but that's in time and it's in steps. So it's not changing anything than what was previously planned or thought of at the integration of these two companies.

Gotcha. Outstanding. Well done. Thanks very much, all.

Thank you. Once again, ladies and gentlemen, if you would like to ask a question, please slowly press star followed by one on your touchtone phone. And your next question will be from Craig Hutchinson at TD Securities.

Good morning, guys. Just a question on the ramp-up of Monteverde. Previously, the intent was, I think, to have this thing in ramp-up mode at the end of 2023, and now it looks like the ramp-up is beginning in 2024. Is that a change, or are you guys just being more conservative in terms of what you're showing now?

Again, I'll see if Kessel's got anything further to add, but I don't believe we've

um made any changes on that um i think we're still talking about uh sort of commissioning and commencement of ramp up in late 2023 and obviously sort of fitting full stride in 24. yeah that's it and often on the back end of these large uh concentrators there's a scope given to ramp up um we're just saying that we'll be at complete and full production in 24. So there's that normal period in 23 that's sufficient to get to full production. It's just we don't see sustained full production until 24, and that hasn't changed from the original timing at all. Maybe the wording is different, but it hasn't changed.

Okay, so we could see some incremental production basically at the end of 2023.

Absolutely, yeah, and our full intention is to have ramp-up production through there.

Perfect, and then maybe just a follow-up question to what Oris was touched on earlier in terms of the capitalized stripping, the numbers you're quoting this year for Montes Blancos and Monteverde, can we expect similar numbers as well next year on that kind of level of capitalized stripping?

Yeah, we'll get you some more details on the strip ratio, but it's kind of by pit and by phase. But when you look at it, you can expect kind of in that range next year as well.

Okay. I mean, just a last question for me. I know in the past you guys have looked at partnership options for Center Domingo. I wonder if there's anything kind of actively engaged there or whether really the intent is to wait till you guys have some updated information, whether it's on the feasibility study or the district integration plan.

Yeah. So, Greg, definitely the latter. We have no engagements at all at the moment on partner studies. on sort of partner discussions. I think our entire focus is on the study work that we've described. And I think once we've got a much clearer idea of the integration plan, the value of the opportunities, I think at that stage we'll consider whether a partner would be desirable or not. All right. Perfect, guys.

Thank you.

Thank you. And at this time, Mr. McKenzie, we have no further questions. Please proceed.

Thank you very much. Well, thank you, everybody, for joining us today. And we look forward to meeting investors at both the Canaccord and the Bank of America mining conferences next week and at PDAC in Toronto next month. And in the meantime, please reach out to Gerald if you have any further questions. Thank you very much and have a great day.

Thank you, sir. Ladies and gentlemen, this does indeed conclude your conference call for today. Once again, thank you for attending. At this time, we do ask that you please disconnect your lines. Have a good weekend.