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spk00: Good afternoon ladies and gentlemen and welcome to the capstone copper first quarter 2024 results conference call. At this time all lines are in listen only mode. Following the presentation we will conduct a question and answer session. If at any time during this call you require immediate assistance please press star zero for the operator. This call is being recorded on Thursday May 2, 2024. I would now like to turn the conference over to Mr. Gerald Annette. Please go ahead.
spk11: Hello. I'd like to welcome everyone to Capstone Copper's Q1 2024 conference call. Please note that the news release and regulatory filings announcing Capstone Copper's 2024 first quarter financial and operational results are available on our website and on CDAR+. If you are logged into the webcast, we will advance the slides of today's presentation, which are also available in the Investors section of our website. I'm joined today by our CEO, John McKenzie, our President and COO, Kashil Maher, 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 meeting 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+. And finally, 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.
spk03: Thanks, Gerald. Good afternoon, everyone in North America and Europe, and good morning to those dialing in from Australia. We're pleased to present our first quarter 2024 results and achievements. Starting with slide five, we produced just over 42,000 tons of copper at consolidated C1 cash costs, of $2.88 per pound in Q1, and we're reiterating our 2024 guidance. We've started off the year strongly, with production close to the midpoint of our first half guidance range. Our sulfide cash costs of $2.55 per pound were also at the midpoint of our guidance, while costs in our smaller cathode business were higher than planned. As a reminder, with our transformational Monteverde development project ramping up this year, Sulfites will make up a significantly larger proportion of our production base, contributing to a reduction in our consolidated cash costs. The MVDP remains on track and on budget. We're on the cusp of producing first saleable concentrate, and our team is focused on ramping up production to the design run rate levels. I was in Chile a couple of weeks ago, and I spent some time at site reviewing our progress and meeting with our team. I'm very pleased with the work done to date and believe the future of Montevade looks extremely positive. As part of my meetings in Chile, I attended a SESCO dinner where President Gabriel Boric reiterated the government's desire to continue to develop an investor-friendly environment for copper miners with the objective of increasing foreign private investments in copper mining. This bodes well for capstone copper as we progress our feasibility studies for MVDP-optimized and our Santo Domingo project in the Atacama region, which we plan to release by the middle of the year. On the corporate side, our net debt decreased substantially from $927 million at year-end 2023 to $740 million at the conclusion of the first quarter. Our balance sheet is in excellent shape as we ramp up Monteverde ahead of our next leg of growth. Also of note in the quarter, Orion Mine Finance, which was previously our largest shareholder, reduced their ownership position from 24% to 12%, following two secondary placements of shares. Orion's second sell-down of the quarter was placed directly into Australia via our secondary listing, which trades on the Australian Securities Exchange under the ticker symbol CSC. We're encouraged by the success of our CDIs to date. and we believe we're on track to be considered for the ASX 300 index rebalance in September. The ASX is a premium market with a long track record as a platform for mining companies, and we're excited to continue growing our investor base in the Asia-Pacific region. And with that, I'll pass over to Raman for our financial results.
spk10: Thank you, John. We are now on slide six. In Q1, we recorded copper production of 42.1 thousand tonnies and copper sales just shy of 41,000 tons. LME copper prices during the quarter averaged 383 per pound, up close to 4% compared to 370 per pound in Q4 2023. Our realized copper price of 385 per pound was largely in line with the LME average price. Today, copper prices are closer to 450 per pound. Every 10% increase in the copper price in 2024 impacts our EBITDA by around 125 million. And next year, with MVDP at full rates, a 10% move in copper prices would increase our EBITDA by just over $200 million. We recorded a consolidated C1 cash cost of $2.88 per pound per payable pound in Q1, which were $0.03 above our first half guidance range. We expect a large step change in our consolidated unit cost in the second half driven by our mantle bird aid development project down to $2.10 to $2.30 per pound. Adjusted EBITDA on Q1 of $80.1 million increased by 21% year-over-year for the first quarter of 2023, largely due to higher copper sales and lower cost. Moving on now to slide 7. On the left-hand side, we summarize our available liquidity, which as at March 31, 2024, was approximately $540 million, which includes $132 million of cash in short-term investments and $400 million of undrawn amounts on our $700 million corporate revolving credit facility. Our liquidity position increased substantially from here and driven by net proceeds of a $253 million from our primary equity raise in February. As a result, we finished Q1 with a net debt position of $740 million and an attributable net debt balance of $591 million. Our balance sheet is in very strong shape during the ramp-up of EBITDA ahead of our next phase of growth. The chart on the right-hand side of the page illustrates our EBITDA sensitivity at various copper prices. In the first two bars, you can see that we expect significant near-term EBITDA growth with mantle-vertebrate sulfides at full run-rate production. This year in 2024, EBITDA will more than double from 2023 levels with EBITDA ramping up. And with EBITDA at full capacity, In 2025, we expect to generate between $1.2 to $1.3 billion of EBITDA at copper prices of $4.50 per pound, equivalent to today's pricing levels. The EBITDA generation associated with Manto Verde will enable us to focus on generating free cash flow to de-level our balance sheet and be quickly below one times net leverage at spot copper prices, which provides additional financing capacity to advance our future growth pipeline in terms of Manto Verde Optimized, exploration, and Santo Domingo, depending on market conditions. Now I'll hand it over to Casho for the operations review.
spk08: Thanks, Robin. We're now on slide eight. Pinto Valley produced 15,672 tonnes of copper at a C1 cash cost of $2.53 per payable pound during Q1, which are competitive compared to similar-grade copper mines in the USA. the production performance was above the high end of our first half guidance range, while our cash costs were below the guidance range, driven by stronger than expected grades. We are starting to see the benefits of our newly implemented asset integrity program, and there is still room for us to increase the mean time between failures and improve our overall availability to be able to deliver more consistently higher throughput. Water inventory levels are positioned well ahead of the dry season. Moving to slide nine, Cozumel Mine delivered a solid first quarter, producing 6,006 tonnes of copper at a C1 cash cost of $1.93 per pound. The mine demonstrated another quarter of nameplate mining rates after transitioning to the new cut and fill mining method earlier last year. Costs have increased 12% year over year due to a stronger Mexican peso and additional contractor costs with more cut and fill as part of the mining sequence in 2024. Our Mantos Blancos asset is highlighted on slide 10. Total sulfide and cathode production yielded 10,967,000 tonnes of copper at a C1 cash cost of $3.05 per payable pound. Our sulfide operations ran at a consistent level to what was seen in the back half of last year. which is below the nameplate capacity of 20,000 tons of ore per day, largely driven by bottlenecks in the tailings dewatering area of the plant. During the first quarter, we continue to execute on our plan to address plant stability that includes improved maintenance and optimization of the concentrator and the retrofitting of the tailings systems. During the second quarter of 2024, we expect to install the final pieces of equipment, notably a surge tank and pumps that will allow us to ramp up the plant to its nameplate capacity in the second half of this year, which will also drive a commensurate decrease in costs. We are confident that we have both the team in place and the asset that will support full run rates. Our efforts are focused on achieving this, and after that, we will recommence our studies related to the Mantos Blancos Phase 2, as we believe the ore body can support a further expansion. We will also look in to increase our exploration efforts at Mentos Blancos, as we believe we have highly prospective near mine targets that could allow us to improve our grade profile and increase our tonnages over time. Now on to Mento Verde on slide 11. Q4 2023 oxide production was 9,476 tonnes of copper in cathode at C1 cash costs of $3.82 per payable pound. While costs were above our guidance range for the cathode business in Q1, we anticipate a step change in the cost profile for Mentor Verde following the ramp up of the MVDP sulfides. During the quarter, important commissioning progress was achieved. Notably, we have now fed ore to the grinding circuit, excuse me, principally the sag and ball mills, and we remain on track for our remaining key commissioning milestones. first saleable concentrate during the second quarter, and the achievement of nameplate operating rates in the third quarter. Once the operation is fully ramped up, Mantua Verde will produce approximately 120,000 tonnies of combined cathode and copperin concentrate with over 30,000 ounces of gold per year. We advanced a feasibility study for our Mantua Verde optimized project during the quarter, and we plan to release it by mid-year. MVDP Optimized is a brownfield expansion to increase ore throughput at Mantoverde Development Project by about 40%. And we expect this project to be very capital efficient. Slides 12 through 15 show our construction and commissioning progress at several key areas of the MVDP. Slide 12 shows the assembly of the fourth and final shovel. The three previously assembled electric shovels commenced mining activities last year and led to the stockpiling of over 5 million tonnes of sulphide ore. We also have a further six months of sulphide ore exposed in the pit, further de-risking the ramp-up. Slide 13 shows a close-up of the sag and ball mills with the flotation circuit in the background on the left. As I mentioned, The mills have been spinning under power, and we have introduced material during the first quarter. Specifically, the sag and ball milling circuits have been tested at 100% charge load, and we are approaching a 30-day running test. Positioned behind the mills and to the left are various portions of the flotation circuit. We have commissioned the rougher flotation cells, which are ready for full throughput testing. The cleaner columns tower mill scavenger circuit and filter press are also in various commissioning stages and we are on track for fur saleable concentrate in q2 on slide 14 you will see the tailing storage facility and in the back you can see our water reservoir which has been filled with desalinated water for use on site what you'll also notice from this slide Mento Verde is one of the driest places on Earth and sits at about 900 metres above sea level. In our view, it is amongst the best places on Earth to have built and be ramping up a copper concentrator. Lastly, on slide 15, you'll find our desalination plant on the coast, about 40 kilometres away from our mine. It has now been expanded and ramped up to support MVDP. We are excited to continue ramping up the Mento Verde development project over the next few months. Turning to slide 16, we were targeting an initial two-year $25 million exploration program focused on our highly prospective Mento Verde Santo Domingo land package. We believe this program will further demonstrate the world-class nature of the district. With Mento Verde near completion, we can now focus on growth opportunities including the plan to execute a $25 million exploration program that will include over 61,500 meters of drilling. This program has three initial objectives, which are to target higher copper grades, explore new areas adjacent or inside the current Mantelverde pits with potential to add new reserves and or resources, and thirdly, to test priority targets in the northern area of Mantelverde land package with the potential to support the Manto Verde-Santo Domingo district. The initial program is broken down between near mine targets and northern district targets. On the slide, you can see the Manto Verde-Santo Domingo district on the right hand side. In the northern area of our Manto Verde land package, there are several high priority targets identified with either outcropping copper mineralization, or a set of geological and geophysical features resembling Mento Verde mineralization style. The current Mento Verde pits trend along the Mento Verde fault, and to the north is approximately 12 kilometers of underexplored area along the Atacama fault. This fault line contains several historic artisanal mine workings, and in our view, the northern area of the Mento Verde district is highly prospective. In the northern district of Mento Verde, we are targeting a 200 to 300 million tonne ore deposit, grading between 0.4 to 0.6% copper. Beyond this initial program, we are also identifying our priority exploration targets at Santo Domingo. Two important areas of focus will be drilling out the oxide resource at Santo Domingo, which could be used to supplement our underutilized SXEW plant at Manto Verde that is only operating at two-thirds capacity. The second is to advance exploration for further copper-bearing sulfides closer to the current pits. Turning to slide 17, we have profiled the near-mine targets that we believe have potential to supplement our grade profile and support mining for longer at Manto Verde. We plan to explore continuity along the Santa Clara corridor and test areas north of the pit, whilst also drilling for sulfides between the Manto Russo and Karoki reserve pits. Overall, the team has identified nine targets for near-mine exploration that we believe could impact our grade profile at Manto Verde in the future. The exploration program is the start of what we believe will define copper mining in the Monteverde, Centre de Mai and Gaux districts for many decades to come, targeting over 250,000 tonnes of copper production per year. Now over to Wendy King for the sustainability review.
spk01: Thank you, Cashel. We're now on slide 18. with a review of our sustainability highlights for Q1. At Mantos Blancos, 100% of electricity use in 2023 was covered by renewable energy certified sources, as defined by the International Renewable Energy Certificate Standard. As part of our sustainable development strategy, we are working towards transitioning to at least 50% renewable electricity in Chile by 2025. and greater than 90% renewable electricity across Capstone by 2030. Also in Chile, both Mantos Blancos and Mantos Verdes received ISO 5001 Energy Efficiency Management System certification. ISO 5001 was developed for organizations committed to addressing their impact, conserving resources, and improving their bottom line through efficient energy management. We believe this management system will make it easier for our organization to integrate energy management into our overall efforts to improve quality and environmental management. Our sustainable development strategy also includes an interim target to reduce greenhouse gas emissions from fuel and power by 30% by 2030. compared to a 2021 baseline year. To support this, GHG emissions and energy management teams were formed at all our sites to lead the development of our operating-level greenhouse gas and energy reduction plans. During the quarter, we also completed a climate-related risk and opportunity assessment and scenario analysis. This will further align Capstone with the Task Force on Climate-Related Financial Disclosures. This quarter, we began including a section dedicated to ESG within our management's discussion and analysis, and we expect enhanced disclosure in the second half of 2024. In 2023, both Manto Verde and Mantos Blancos were awarded the Copper Mark, And Pinto Valley and Cozumel are actively striving to replicate this. During Q1, PV and Cozumel updated their self-assessment and gap closure projects to align the latest copper mark version 3. And both sites are aiming to sign commitment letters in 2024. Lastly, all our sites remain active in our local communities. supporting various initiatives and priorities. Some of the highlights from the first quarter include the Pinto Valley Creek cleanup, the graduation of the third cohort of the Learning for Development Community Training Program at Manto Verde, and the graduation of the first cohort of all-female haul truck operators at Manto Verde. Creating a positive impact in the lives of our people and our communities is core to our purpose at Capstone. We are always pleased to discuss our ESG performance and initiatives with analysts and investors and are available to take calls to discuss further. And with that, I'd like to pass it back to John.
spk03: Thanks, Wendy. Turning to slide 19, we've outlined our sector-leading growth plans and some of the additional upside within our portfolio. As can be seen, we expect NVDP at its full run rate to bring us to a consolidated annual production level of around 260,000 tons of copper at costs around $2 per pound. As Kessel mentioned, we plan to release a feasibility study for our Monteverde Optimized project by mid-year, which is a low-risk ground-filled expansion that we think will unlock another 20,000 tons of copper with a highly attractive capital efficiency of around $7,500 per ton of annual production. From there, we have a pathway to over 400,000 tons of copper production with the addition of our Santo Domingo project, which is 35 kilometers from Monteverde, and which together will create a world-class mining district in that region of Chile. Beyond that, we have further upside across our portfolio with another low-risk brownfield expansion opportunity at Montes Blancos, the ability to unlock cobalt in our MVSD district, and lastly, the potential development of a world-class district around our Printer Valley mine in Arizona. Turning to slide 20, we highlight the timelines for some of the studies that I've mentioned and for other milestones as we execute on our growth plans. Building a copper production growth profile like what we have at Capstone doesn't happen overnight. At Monteverde, where we are about to produce first saleable concentrate, the decision to grow production was taken nearly nine years ago. Looking across the industry, the pipeline of copper projects is smaller than it's been at any time in the past 20 years. Meanwhile, the world is going to need an enormous amount more copper going forward. As an example, it takes eight times as much copper to produce one megawatt of offshore wind energy as it would to produce one megawatt of coal or gas-fired energy. Expansion of the energy grid and distribution networks will also require vast amounts more copper. And most recently, we're learning more about the data centers that will be required to support artificial intelligence. In our view, we're in the early stages of a new era for the copper market, And it's a great time for us to be ramping up production at our flagship Monteverde asset. With that, we're now ready to take questions.
spk00: Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star, then the number one on your telephone keypad. You will hear a three-tone prompt acknowledging request. Questions will be taken in the order received. Should you wish to cancel your request, please press star, followed by the two. If you are using a speakerphone, please lift the handset before pressing any keys. Once again, that is star and one to ask a question. Your first question comes from the line of Dalton Barreto from Carnicorp Genuity. Please go ahead.
spk06: Thank you. Good afternoon, John and team. I want to start by asking about MBDP. You've had OAR start to go through the mail as of March. And I'm just wondering, you know, what your opinion is on how the circuits responded so far, not just from a metallurgical perspective as well as just a general operational perspective. Thank you.
spk03: Yeah, thanks, Dalton. I'm going to pass that across to Cashel to answer a bit more fully, but I would say that I was down there a week or so ago, and, you know, I would say the plant is responding sort of Exactly as planned. I would say we're very pleased with progress. And certainly sort of what we're seeing down there is very, very much in line with our expectations. Maybe just for a slightly more fulsome answer, Kessel. Sure.
spk08: Yeah, it's a bit early in the process to be talking about metallurgical characteristics. However, the grinding circuit and the crushing circuit is working extremely well. We're just getting into, in the next few weeks, looking at metallurgical responses. But everything's going according to plan. You know, knock on wood, when you start these ramp ups and these late commissioning cycles on these things, what you're hoping for is there's no major failures. And everything is normal behavior under a ramp up or commissioning process.
spk06: uh we're really encouraged uh we're remaining on track on schedule and we're really happy with the progress we're making so far great thanks cashel and then maybe switching gears to santa domingo um yeah as you're putting the final touches on the report um if i think back to the november 2022 release with all the synergies um can you remind me john which of those will be included in this report yeah um
spk03: So what we're incorporating is quite certainly a number of the synergies that we identified at that time. You know, the synergies come in various buckets. And, you know, some of them are efficiencies by dint of having either infrastructure or operations in the same neighborhood. Obviously, some of them are scale synergies that we have between the assets. I would, however, say that the biggest synergies are really those that generate revenue ultimately. And those are, for example, the processing of the oxide ore that we have at Santo Domingo at the Montevideo SXCW plant, and for example, the sort of joint processing of cobalt from both sites. Now, at this stage, those studies are not yet at the same level of feasibility that the rest of the Santo Domingo project is at. So those will... be in the opportunities section of that feasibility. And we expect to, in relatively short order thereafter, be able to incorporate those opportunities into the base case.
spk06: Thanks, John. And then maybe if I can just squeeze one more in. As you are looking ahead to sanctioning Santa Domingo with your former employer, John, in play now. I'm wondering how you think about the buy versus build argument.
spk03: Yeah, I think we're in a very, very fortunate position that the opportunities we have are actually very high on the capital efficiency curve. And so we've just completed the construction of Monteverde, at around $11,000 an annualized ton. Our estimate for Monteverde optimized is around $7,500 an annualized ton. And we also believe that Santo Domingo, whilst it's got a mixture, I'd say, of sort of greenfield and brownfield characteristics, is going to be somewhat higher than Monteverde. It's still going to be extremely competitive. And so I think our perspective on this is what the world really needs over the coming decade or two decades is going to be a lot more copper. And that has to come from somewhere. And I think we're in the fortunate position where we're able to bring it online in an extremely capital efficient way. And that's really a reflection of three things. The one is we've got great grades at those deposits. We already have very, very significant infrastructure in the district. And then finally, it's just a very good location to be building projects in. It's low altitude, it's close to the coast, and it's pretty near to some major mining centers. So I think from our point of view, our strategy to pursue our sort of internal organic growth remains very much intact.
spk02: Thanks, John. I'll leave it there. Thanks, Dalton.
spk00: Thank you. And your next question comes from the line of Flores Valcudal from Scotiabank. Please go ahead.
spk09: Hi, good afternoon. I'm just sort of picking up where Dalton left off. I'm just wondering what your thinking is in terms of how quickly would you move ahead with the Manto Verde optimization project as you ramp up here in terms of phase one?
spk03: Yeah, it's a good question. I think The way we're looking at it is we fairly recently submitted the permit application for that project. It's a DIA. We would expect to get that probably in the range of somewhere around 10 to 12 months. It's not a complicated project. There's not really anything really we're changing to the overall footprint of the business. That would really position us to early next year in a position to actually commence with the project. We're looking at progressing the detailed engineering prior to that. We're looking at placing some long lead time orders earlier than that. What we've said on Monteverde is we're going to be ramping up during the third quarter. We expect to get steady state production in the fourth quarter. We would certainly be looking to then, from that point onwards, as we bring on the incremental equipment that's involved in Monteverde Optimized, be moving up to that 45,000 tons a day as we progress towards the back end of 2025. Okay.
spk09: And are you still envisioning CapEx for that project, circa 150 million or so? Yes. Okay. And then just finally one more if I could. I'm just wondering if you can give us an update on the JV process for, JV sale process for San Domingo.
spk02: Sure.
spk03: So, you know, until we've actually published the updated feasibility, we can't really progress that process meaningfully. We expect to have that updated feasibility around the middle of the year. And then our intention is during the second part of this year to really sort of engage with those parties that we already know have expressed a strong interest in participating in Santo Domingo. So we would hope to really sort of have a lot more clarity on who that part is going to be by the end of this year.
spk09: Perfect. Thank you very much. Thanks, Harish.
spk00: Thank you. And your next question comes from the line of Ralph Profti from 8 Capital. Please go ahead.
spk12: Thanks, operator. Good afternoon, everyone. You know, Kashil, it sounds like from a technical perspective, you know, the separation between sort of a grinding circuit and flotation was sort of, you know, equally technically challenging and just wondering, you know, as you move to sort of particle separation stage, you know, what are the kind of key deliverables of the design criteria that you'll be keeping an eye on?
spk08: Sure, well, thanks. Actually, in my experience in ramping up copper concentrators, you know, the key component that you focus on in the beginning of a ramp up is throughput, and it's the most important component. Because obviously, if you can't crush or grind the rock, you have no chance of liberating any of the minerals. And all our reagents and our flotation circuits and all these types of things is just moving slurry. And actually, it floats quite easily. And we know that it floats very easily, the chalcopyrite, almost immediately. So what you're doing in the back half of a ramp-up is you're optimizing going from sort of low 80s to almost 90% recovery. And it's only that 10% you're working with and you're tuning and you're doing that sort of thing. So what we're seeing is at 100% load charge, we're meeting the P80 specs that we require for the flotation cells to be able to liberate the chalcopyrite and do the flotation. So we're just bringing on in the last sequence of our commissioning some of our cleaner circuits our scavenger circuit, our copper thickener, and our filtration, which will allow us to start floating that material. But as any sort of ramp up of a copper concentrator, you always focus on the crushing and grinding first. Then you focus on the flotation. Then you focus on the hardening of the crushing, grinding, tailing circuit. You do the flotation. And then when you get your throughput, to a consistent sustainable level then you start tweaking the recovery of copper to move it up but uh everything is going exactly as planned um to date and again i'll uh knock on wood okay thanks uh quite encouraging to hear uh as a follow-up uh
spk12: you know, when you look at that exploration slide at NBDP, it sounds like between outcropping and what the IP has done, that the opportunities are both for oxides and sulfides. I'm just wondering if that's the same strategy at Matos Blancos, where you also talked about stepping up the exploration efforts where oxides and sulfides potential are both, you know, something that we could see.
spk03: Yeah, I'll just make a couple of comments and then pass across to Cashel. Yeah, look, just by way of example, when Anglo-American bought Montes Blancos in 1980, it had five years of life. And, you know, every time we drill there, we continue to sort of extend the resource and the reserve. So, you know, I think right now we have around 16, 17 years of life at Montes Blancos. I think it's the longest Montes Blancos has actually had in terms of its life for the past 30 or 40 years or so. um but what we do know is is there remains huge prospectivity sort of both um at depth in the pit historically we haven't been able to drill um at depth in the pit because of the the old underground workings now that we've mined the pit through those we actually do have the ability to to sort of see what's at depth and and actually the the couple of drill holes we've put into the bottom of the pits have continued to go through very attractive grade um sort of copper beyond there. So that said, around the lease area, there are certain other areas where we think are very highly prospective for either oxides or sulfides. And we are in a very fortunate position where we now have processing facilities for both. So to an extent, our exploration programs are you know, focused on both. We see sort of significant opportunity both on the sort of oxides and sulfides at Montes Blancos.
spk12: Encouraging.
spk02: Thanks, John. Thanks, Cashel. Yes. Thanks, Rob.
spk00: Thank you. And your next question comes from the line of Bryce Adam from CIBC Capital Markets. Please go ahead.
spk05: Thank you, Capstone, for the update and presentation. I wanted to clarify the milestone for MVDP nameplate capacity. When you guide to achieving nameplate rates in Q3 of this year, does that mean reliably and consistently running at nameplate, or does it mean doing so for a period of X many days? I'm just thinking about it. Let's say that first concentrate is produced here in May, June. That implies a ramp-up, or could imply a ramp-up to full capacity in about four months. which if done, I'd be looking at that as very strong performance and just wanted to clarify what the definition is around that milestone. Sure, Bryce.
spk08: We sort of move into what we call a commercial ramp-up phase after we've hardened the grinding and crushing circuits for a 10-day run. And so we're beginning that process now where we feel we're getting to the stage where we're able to accomplish that. So that to us is the technical milestone of when we move into the official commercial ramp up phase. You're quite right to say that four months to get to sustainable full nameplate throughput production is a great metric to achieve. We believe we're on target for timeframes like that. You know, in the initial feasibility, if one was to look back at the 43-101, I believe it was around six months. So we're right around that timeline now if you do it. But with the way things are going, we don't see any reason why we can't achieve what we've laid out. And so far, everything is going extremely well. That's great to hear.
spk05: And does it also mean design recoveries in the same timeline?
spk08: Yeah, so the recovery curve is a little slower than the ramp-up curve, but yet we do see us getting close to that. It's a little longer, the curve, to achieve that, but we consider when we've got 80% to 90% of the design recovery so that that meets the commercial ramp-up definition, and then we continue tweaking from there.
spk02: Okay. Thank you. I appreciate that. Not at all.
spk00: Thank you. And your next question comes from the line of Craig Hutchison from TD Bank. Please go ahead.
spk07: Hi, guys. Good afternoon. I was wondering if you could provide some color on your concentrate offtake commitments, just given how tight the market is right now. I mean, one of your peers last night announced that they're receiving negative TCRCs, actually getting paid to take their concentrate. I wonder if you could just provide some color across your operations, whether you have commitments, whether you have some exposure here to the spot market to get lower TCRCs. Thanks.
spk03: Right. I want to flip that question across to Gerald, who I Aside from investor relations, also, she covers our marketing area. So, Gerald, of course, to you.
spk11: Yeah, thanks, Craig. I kind of expected that question, so did a review of this. We do have considerable unencumbered tons to move. We're in the process of discussions with various traders and smelters. I'd say the big impact would be 2025, where at SESCO in Santiago, we were happy with the discussions. And I would say that it is clear to us that the benchmark is likely to move considerably lower next year. But in addition to that, we can lock in tons today for 2025 and even in 26 and 27 at terms that are extremely attractive and not seen in decades. So I would say that a $50.05 decrease in our effective treatment charges would lower Capstone's consolidated C1 cost down by over 11 cents a pound for next year. So when John said that NBDP at full rates were going to be around $2 a pound, then If this happens, like I mentioned, we'll be in around the $1.90 range. Okay.
spk07: So it sounds like the exposure is more for 2025 rather than upside, I guess, in terms of cost this second half this year.
spk11: Yeah. So we may have a few parcels this year, and to get negative treatment charges is on the table. But I'd say the big impact for us is 2025. Okay, great.
spk07: maybe just one last question for me just on the oxides so the costs were higher i guess than you guys expected the first quarter here can you just talk to what what drove that and whether that's a one quarter thing or whether we should see some higher costs on the oxides into q2 as well thanks hey greg yeah um yeah we were a little bit behind probably in our ambitions on the amount of cathode we were going to produce and so um
spk08: We're catching up now, more or less, in it, and some of it had to do with placement, and some of it had to do with some irrigation, but minor operational issues, but it's nothing that we see ourselves not catching up on and correcting that in the second half of the year.
spk02: Okay, great. Thank you.
spk00: Thank you. Once again, should you have a question, please press start, then the number one on your telephone keypad. And your next question comes from the line of David Radcliffe from Global Mining Research. Please go ahead.
spk04: Hi. Good morning. Good afternoon, John and team. The first question is on Pinso Valley, which is obviously tracking well to the guidance and backing up a strong Q4. Maybe could you talk to the grade profile and what it looks like over 2024? Are you still looking for better grades in the second half when there's Was the high grading queue on to plan, or did you pull forward some grades? Thanks.
spk09: Yes.
spk08: Sure. Yeah. So there was a little bit of resequencing in the first half due to some minor operational issues. So there was some surprise in the grade, and there was some resequencing. But I think overall, I believe the guidance is still current and will balance out for the year on the grade profile. What I would say is, you know, we've been increasing steadily the throughput from Q4 to Q1, and now we're seeing it again in Q2 at Pinto Valley. So our work on our asset integrity program is paying dividends now, and we're really seeing it in the consistent throughput. So I'll be happy to see in the next quarters that the mine will finally be challenged against what the plant can, meeting more consistently nameplate throughput numbers. So yeah, so I think it's still on guidance. We did sort of do a little change in sequence, but we're back on plan now.
spk04: Okay, thank you. And then maybe shifting to Mantis Blancos and the sulphides there, looks like obviously some more stability issues during the quarter. You're sort of tracking under expectations and I think you're now saying you want to reach the 20,000 tonne per day mark in the second half of the year. So it sounds like that's been pushed back a little bit. So you're maintaining guidance. So how do you actually catch up at Mantis Blancos sulphides?
spk08: Yeah, so basically what it was is when we initiated the guidance, we had some engineering on the area of the plant that is causing us the sustainability and the maintenance issues, which was, I think we've described several times before on the tailings deposition and transportation portion. So we've gone through a large engineering project. We've gone into procurement. We're into civil earthworks and pouring foundations for the various positive displacement pumps and pipes and tanks and infrastructure that are required to get more sustainable production. Some of the procurement and some of the work in engineering took a little longer and some of the scope of work increased. So that's why We sort of pushed out getting to the nameplate capacity of 20,000 tons into sort of like we believe the sort of Q3 area. We say H2. We're still waiting for delivery of some of the items, although all items are on the current new schedule to be ready for assembly in the middle of this year. As far as catch-up goes, we'll see what the opportunities are in sequencing in the mine. So that's being worked out now to see if we can maintain the guidance production from that one plant. But we believe overall as a company that we'll meet the guidance with all the mines together because we have opportunities elsewhere.
spk02: Brilliant. Thank you very much. I'll pass it on.
spk00: Thank you. There are no further questions at this time. I'd like to turn the conference back to Mr. Jan McKenzie for closing remarks.
spk03: So we look forward to updating you again in early August with our Q2 results. And until then, stay safe and feel free to reach out to Gerald or Daniel if you have any further questions. Thank you for your continued support and have a good day.
spk00: Thank you. That concludes our conference today. Thank you for participating. You may all disconnect.
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