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spk00: Star 1 on your telephone. Again, press Star 1 to come to the question queue. Please be advised today's conference is being recorded. If you require any operator assistance, press Star and then 0. I would now like to turn the call over to Gato Silver Chief Executive Officer Steven Orr. Sir, I give it to you.
spk03: Thank you very much. Before I begin, I would like to caution our attendees that I'll be making forward-looking statements. And these statements are not guarantees of future performance. I'd like to start the presentation on slide number three. So we've previously mentioned that 2021 is a year of optimization for GatoSilver. Many of the initiatives that we have previously discussed focused on Cerro Los Gatos, But most recently, we executed initiatives to strengthen the Gatos silver balance sheet and provide greater financial flexibility for the company. In July, we entered into a revolving $50 million debt facility with the Bank of Montreal. And it has an accordion feature, which would allow us to expand this up to $100 million. Then in mid-July, we completed a primary equity offering, raising $125 million. Proceeds from the equity offering, along with a modest drawdown from the revolving debt facility and corporate cash, allowed Gato Silver to retire its 70% share of the Cerro Los Gatos term debt facility. And concurrently, our joint venture partner, Doha Metals & Mining, retired their share of the term debt, thereby extinguishing the entire Cerro Los Gatos term debt facility. This frees up additional cash flow from the operation to fund our sustaining capital projects, which will further improve the operating performance and create additional value at Cerro Los Gatos. And we'll discuss all of this in greater detail later in the presentation. And as previously released, Cerro Los Gatos achieved record ore production exceeding its design production rate from the mine, and the processing plant achieved or exceeded design recovery for all four of our revenue metals. Our exploration programs continued during the quarter with 19,000 meters completed at the Cerro Los Gatos Resource Conversion Program since its inception late last year. This program has been successful beyond our expectations, and we actually recently expanded the program. At Santa Valeria, the first phase of that program has been completed and the exploration team is conducting data analysis for the design of a second phase. At Esther, we're in early phases of the program with 3,100 meters of the planned 19,000 meter program completed to date. And we're intercepting mineralization where we expected and pleased with the results. I'd now like to introduce Dale Andrews, President for Dr. Silvery, who will provide detail on our operating performance during the second quarter. Dale, over to you.
spk04: Thanks, Steve, and I'll start on slide four. At our Cerro Los Gatos mine, we have a strong and unwavering commitment to safety and to the surrounding communities. We have robust systems in place to ensure we are working consistently to reduce our safety incidents and we continue our constant focus on strengthening our safety culture. Our COVID management protocols are working well and our daily screening and testing program is still in place and the number of vaccinated employees are steadily rising as the rollout continues in Mexico. In fact, today we currently have over 40% of our employees with at least one shot. We recognize that it is essential to conduct our operations in a manner that protects the environment and benefits our local communities. This is not only through employment opportunities, but also education assistance, medical care support, and provision of sustainable clean water. As a priority, we hire our employees locally, and over 20% of our employees are female. We continue to focus on improving the lives of those within our area of influence on the project. And this has been recognized by the government and importantly by the local communities. Turning to slide five, we are very pleased with our record setting performance in the second quarter. In the mine, we had both record tons and grades delivered to the plant, helping to drive record metal production for the quarter. We averaged 2,638 wet tons per day, a 13% improvement over the first quarter in the mine. The mine has consistently delivered expected feed rates to the plant since the shutdown in February caused by a storm-related power outage event we experienced. Contributing to this performance, we completed over 1,700 meters of development work underground with a continued focus on accessing deeper and higher grade portions of the mine in both the northwest and central zones, and to continue to build flexibility into the mine plan as we further optimize. Turning to slide six, we also had record setting performance at our plant operations in the quarter. We processed an average of 2,535 tons per day through the plant, above design capacity, and we know the plant has capacity to do much more. We achieved excellent metallurgical results, helped by the silver grade, which averaged a record 322 grams per ton for the quarter, with recovery of silver at 89%, which is fantastic, and we continue to focus on driving that even higher. recoveries for both lead and zinc were excellent as well. We have lots of improvement initiatives underway, including the use of new reagents to further improve recoveries, and there will be more initiatives to come as we move into the second half of this year. A plan was put in place to make up for the shortfall in the first quarter after the power outage, and we continue to execute very well against that plan. We also continue to maintain the original guidance sets for the year including our cost guidance for both sustaining capital expenditures and all in sustaining costs on a unit cost basis. Slide seven shows some highlights of our record setting performance in the second quarter. As we disclosed in our production release in July, we produced 2.1 million ounces of silver, as well as records for lead and zinc production. To put the quarter's performance into perspective, It is worth noting that our production was a manual run rate significantly higher than the top end of our guidance. So we are making up for that first quarter shortfall. Our cost performance was also excellent with our all in sustaining costs on a byproduct basis, averaging $12.63 per payable ounce of silver. This was helped by the significant increase in production during the quarter, including byproduct volumes and prices. as well as our efforts to control operating and capital costs. Sustaining capital costs are back-end weighted to the second half of 2021, so we do expect these all-in sustaining unit costs to be higher for the next few quarters, but with overall unit costs for the year still anticipated and tracking towards the bottom end of our guidance range. And if it tracks the way it's going, we'll come in under. On an operating cost basis, unit cash costs after byproduct credits were under $3 per payable ounce of silver, showing the cash generation potential of this high-grade deposit as we finish some of our key sustaining projects in 2022 and as we continue to optimize the operation. Turning to slide eight, the table clearly shows the dramatic improvement in the second quarter compared to both the previous quarter and 2020 performance on key production and cost metrics. The annualized rate of silver production achieved in the second quarter was double the rate from 2020 and the all-in sustaining cost of $12.63 per ounce dropped by over a third from the first quarter of this year. Steady feed from underground with much higher grades and excellent plant performance with record recoveries has been key to the success. Looking at the bottom section of the table, showing the breakdown of unit costs, you can see the split between operating unit costs, the byproduct credits, and the sustaining capital portion. Our cash unit cost performance before sustaining capital, as I said, was under $3 per ounce. and a significant improvement in both operating costs and very strong byproduct credits in the second quarter, as you can see. Our focus for the second half of 2021 is to complete our planned sustaining capital projects that are currently in progress, such as the second refrigeration plant and the new underground dewatering system, both of which will support mine production and development work as we go deeper in the mine. together with the next lift of the tailings down to support future production, and all of these projects will be complete by the end of the year. The paste plant project started construction this month, and this is a key project for Cerro Los Gatos, which will both improve flexibility in the mine plan and importantly, reduce operating costs and reduce the amount of tailings sent to the storage facility. The project is expected to be commissioned in the third quarter of 2022, so that's next year, and we are targeting to remain above 2,500 tonnes per day through the plant in the second half of this year as we implement various improvement projects and continue to access lower levels in the mine, which gives us more flexibility. With that, I'll turn it over to Roger Johnson, our Chief Financial Officer.
spk03: Thank you, Dale. Looking at slide nine, I also have record financial results to talk about. For the first half of 2021, Gatto Silver had almost $12 million of net income or 20 cents per share. And we had 23 cents per share for the last three months period. Our exploration expenses were essentially as we had expected for the period, and journal and administrative expenses are higher in 2021 due to the higher public company costs, in particular non-cash stock option expenses. The LGJV had record earnings in the second quarter, resulting in $21 million for our equity income in the JV for the first half of the year. Recall our ownership increased from 51.5% to 70% in mid-March. I am very pleased to discuss the LTJV financial results on slide 10. The excellent operating performance drove record financial performance. We had record sales of $75 million for Q2 on higher metal prices and the increased production. The higher metal prices continue to be favorable. In early August, the silver price was $25.58, only slightly below the $26.18 per ounce realized for Q2. And both zinc and lead prices are higher than where they were for what we had achieved for the second quarter. As for costs, Dale already discussed operating costs, which were less than $3 per ounce of silver after byproduct credits. As for our expectations, we had slightly higher mining costs, dewatering costs, and performance professional services costs per ton that were offset by the higher grades in the materials. As a result, the LJGV had net income of $36 million for the six-month period. Looking at cash flows on the right-hand side, for the first half of 2021, operating cash flows were exceptional at $56 million, driven by the items I just mentioned. Consistent with Dale's comments on sustaining capital, we invested almost $39 million of cash in mine development and other capital projects in the first half. We also spent $17 million in financing activities, of which $16 million was the first payment on the DOA term loan. And as Steve mentioned, as of July 26th, the LGJB is substantially debt-free as the DOA term loan was extinguished through capital contributions to the LGJB at the end of July. I'll turn it back to you, Dale.
spk04: Thanks, Roger. Slide 11 shows the 103,000 contiguous hectares of mineral rights controlled by the Los Gatos Transpensure. This mineral rights package is the second largest of our operating tiers in Mexico, and we also own the surface rights over the Cerro Los Gatos deposit, the Ester resource, and the Amapola resource, all shown in blue. We initiated three separate exploration and resource expansion programs, and there are currently five active drill rigs turning. Three of these drills are focused on expanding and upgrading the resources at the Cerro Los Gatos deposit, with one drill currently on the resource expansion program at the adjacent Ester deposit, and we also had one drill conducting initial exploration at Gatos Silver's 100% owned Santa Valeria project, near to but outside the Los Gatos dry patcher. The initial 5,400-meter program that Steve mentioned earlier at Santa Valeria is now finished, and we are assessing the results, which will take a number of weeks before deciding next steps on this target. We have tremendous upside potential with lots of drilling targets with mineralized zones already established as well. And so while we assess the Santa Valeria drill results, we plan to move this drill to other exploration targets identified on the Los Gatos Joint Venture property. The program at Cerro Los Gatos is being expanded, as Steve mentioned, from 27,000 meters to 45,000 meters, with the focus continuing on both the northwest and southeast zones. We've completed about 19,000 meters of this program to date on Cerro Los Gatos at the end of Q2, and we'll be releasing preliminary results of this program very shortly. Based on the expanded program at Cerro Los Gatos and the 19,000-meter program, it's still completed, Esther. We're only about 3,000 meters into that. We're in still pretty early days. We are also looking at bringing in additional drawings. In the second half of this year, we will be completing a new resource model and life of mine plan update. Once that work is complete, we will reinitiate studies in early 2022 to look at various expansion scenarios. Previous studies targeted 3,000 tonne per day for an operation, an expanded operation, and we will be looking at options above this as well. We have a strong key for a proven track record of delivering results of projects on time and on budget. which sets us up very well for executing on future growth options as we continue to define the full district potential. And I do finally also want to reiterate how pleased we are with our record-setting Q2 operating and financial results, and we look forward to providing further updates as we progress through the year. With that, I'll turn it over to Adam.
spk05: Thank you, Dale. This is Adam Dewis, and once again, I'd like to thank you all for attending today's call. This presentation and the full Q2 financials of Gatto Silver will be available later today on our website. Now, at this time, we'd like to open up the call for Q&A.
spk00: Thank you. As a reminder, if you would like to ask a question, please press star, then 1 on your telephone keypad. Once again, press that star 1 to come into the question queue. To withdraw your question, simply press the pound key. We'll pause momentarily to compile the Q&A roster. Once again, press star 1 to come into the question queue. And our first question is going to come from the line of Cosmos 2 with CIBC World Market.
spk01: Thanks, Steve, Gail, Roger, and Adam. Maybe my first question is on grade. You know, looking at it, certainly Q2 grades improved quite a bit quarter over quarter. I guess the first part of my question is, Is it all due to mine planning or is there some kind of positive grade reconciliation to the block model that you can speak to? And the second part of my question is on sustainability. If I were to look at your technical report, I think you're forecasting uh even higher grades on an annual basis i think 368 grand per ton for the year so to confirm is there still room for you to improve um on that uh on that grade as we look into the second half and is it coming from the scale as you mentioned the lower parts of the deposit yeah um i i can take that um
spk04: Thank you for the question, Cosmos. Yeah, so the grades are variable depending on the zones that we're mining, but they definitely get higher as we go lower, deeper. And as we were able to advance the ramps, both in the northwest zone and the central zone, and in particular over the last three to four months, that has enabled these higher grades that we saw in the second quarter. So we're going to continue to drive those rounds lower. There is higher grades as we go lower. I just do want to flag that, you know, like any mining plot, sometimes they go up, sometimes they go down. But you can expect similar grades for the remainder of this year. And that's what we're targeting. And similar, as I pointed out, continuing to run above the 2,500 tonnes per day Right now, the mine's operating really well, and we think that both the tons and the grade are sustainable, but I just do want to caution, on a quarter-by-quarter basis, they can swing around at the margins, but in general, we'll be producing similar on both tons and grade.
spk01: Of course. Maybe moving on to cost, and certainly your $12.63 per ounce on sustaining costs. Came in lower than what I had expected. On that, I think Roger had mentioned that maybe on a unit cost per ton basis, it was slightly higher. Could you give us a bit more color in terms of how that looks in terms of cost per ton and what are you targeting for the year?
spk04: Again, I can just offer some brief comments, and Roger or Steve may want to follow up on that. But, yeah, I mean, when we look at the significant drop, a lot of that is due to the increased production, and it's why we decided to put a table to actually show the breakdown of the site operating costs as well as the byproduct credits and the contribution of the sustaining capital. So sustaining capital is fairly consistent. It is going to go up on a total dollar value basis in the second half of this year. So that will drive costs up, as I mentioned, in the third and fourth quarter. But it really is tonnage and grade dependent. And if we're able to continue to drive the kind of tonnages we have, and similar grades. You know, there'll be some impact with a higher sustaining capital cost going forward, but we're quite pleased with that. I think when we, you know, and I think we maybe mentioned it on previous calls, there is some cost impact with COVID related protocols. We still have the majority of those costs in our cost profile that we're spending to date. With 40% of our workforce vaccinated and more being vaccinated every day, we do hope to be pulling back a significant portion of those costs towards the end of this quarter. And I think you'll start to see that translated into our cost performance going forward as well. But obviously, the more tons we pull up, the lower our cost per ton is on a tonnage basis. And there's no significant cost driver that is being introduced. We're not a huge fuel consumer. So in general, I think we're doing fairly well. I think there's more opportunities, I would say, than pressures that we're currently facing. Great.
spk01: I guess Dale, bigger picture, you know, it seems like Every conference call these days, there's always a question on inflation. As you said, you know, you're not a big consumer of fuel, but we're also hearing some cost pressures on other input costs, maybe labor as well. Could you make a comment on, you know, potential inflationary impact, what you've seen so far, have you been impacted so far, and do you see that as a risk?
spk04: Yeah, I think I would frame it that we're always going to have some cost pressures. And I guess with the market the way it is, and I would say it's not just on operating costs, even on sustaining costs as well. I think we have lots of focus on how we're managing those costs and are doing so. So we will continue to see some. I don't think it's significant because our labor costs on a per ton basis or a per ounce basis isn't that significant compared to other costs like supplies. But we're not seeing a huge amount of escalation. The escalation that we will see, I think we're targeting to offset that with our improvement projects, both in increased tonnage and production, as well as just straight up cost reductions, things like peeling back COVID costs. So I don't see a tremendous risk on that front. If anything, maybe there is, and I think we're managing it well, but maybe some risk on long lead items for sustaining capital projects. And, you know, we put the orders in on the pace plant for things like the electrical gear and the pumps. And by getting those orders in right away, I think we can mitigate any kind of risk on schedule on that front.
spk01: Mm-hmm. Great, thanks a lot for answering all my questions.
spk03: This is Roger, just to maybe finish up on your cost per ton question. We're running right around $100 per ton for the full six-month period. We were slightly below that for the three-month period as we had, as you know, the slight delay in February for the power outage.
spk00: so if you you can probably count on around a hundred dollar mark or maybe slightly below that for 10 basis yeah thanks roger that's really helpful and thanks again for answering all my questions thank you and our next question will come from the line of michael superco with rbc capital markets
spk02: thanks guys thanks for taking my question um if you could expand a little bit on uh the expansion scenarios uh you're thinking about for for next year you mentioned you had looked at 3 000 tons per day uh maybe looking higher than that uh while also running at higher than design capacity now can you talk a little bit about what the major drivers would be in terms of, I guess, that first step of expanding to 3,000 tons per day, and then what would really trigger a decision to go higher? Would it be developing satellite operations or executing more than you have to date on the resource conversion?
spk03: Or both. So maybe, yeah, Mike, maybe I can jump in. This is Steve, and then I'll turn it over to Dale. As you know, Mike, we contemplated going to 3,000 tons per day even as part of the feasibility study. And so some of our capital investment we made in the plant was to allow us to very easily ramp the processing plant up. And we're very pleased that we had the foresight to do that because, as Dale mentioned earlier, already the plant performs so efficiently that it's been able to take everything the mine can provide it. So it's given us a great deal of comfort that without much, if any, capital investment, we can take the plant to 3,000 tons per day. And so our focus has been on the mine and getting its production rate up and up on a consistent basis. And you can see we're achieving that now. So we're going to keep pushing this thesis that without much capital investment, we can get close to 3,000 tons per day. And so that's something to watch in the quarters, the forthcoming quarters. But the resource conversion program at Sierra Los Gatos is key to this. And we're having such good success converting the remaining 3.7 million times of the third resource into measured and indicated that we've decided, and plus we've made new discoveries. And you'll see some information on that soon. That's the reason that we have made an internal decision to expand that program. And depending on where we end up on that program, that'll get vector us in on where we could possibly take this operation to. It won't be an issue on the processing plant ever. It'll always just be an issue on the mine. And Dale, over to you.
spk04: Yeah, thanks, Stephen. And maybe I'll just add, I think you've covered it really well. Maybe I'll just add, I don't think either the progressive steps that we're taking, as Steve outlined, with little to no capital towards that 3,000-ton mark, or we'll call it a modest expansion decision to go to 3,000 tons or something above that to invest something if we needed to to make that sustainable, is dependent on other deposits, so developing other deposits. I think We have that in our sites for Cerro Los Gatos. I think as we progress the programs at Esther and other deposits, other Amapola or new deposits that we hope to progress resources on in the future, I think that just opens up the door for other opportunities. and optimization program is contingent on exploration. And I think, as Steve pointed out, we're hopeful we'll be quite successful in the resource conversion on the Cerro Los Gatos deposit itself to support that.
spk02: okay fair enough uh thanks for the answer maybe uh one other i had some trouble uh getting on the call so apologies if you have covered this but uh just on on the guidance for the balance of the year heard about a bit of it but obviously uh you're about at the halfway point uh from from original guidance q2 was obviously well above pace um given given that you haven't changed guidance how should we be thinking about the second half is it Is it just some conservatism about maybe some variability, or is there something with respect to the sustaining activities that you have going on in 2H that we should be aware of in terms of the final number?
spk04: Yeah, and maybe I'll take that as Dale. I think it's both, so we want to make sure we account for any quarter-by-quarter variability. uh but but we you know our guidance for the sustaining capital is unchanged of the 65 to 75 million um you know we're just getting underway in our pace plant which we hope to progress as quickly as we can um but we've only spent uh you know less than half of the plan program on the sustaining program in the first half so it will be higher sustaining costs so on a per ounce basis you know, you can expect the sustaining capital costs to go up. I think for the first half, if you averaged out the first quarter and second quarter, we're in and around the $16 range. And as I mentioned in the previous remarks, we're, you know, trending even with that higher sustaining capital in the second half towards the bottom end of our range. So, you know, in that $17 an ounce range. And obviously we're going to try and do everything we can to beat that.
spk02: And on the production side, I mean, if we see a repeat plus or minus of Q2 and Q3 and Q4, my numbers, anyway, suggest that you'd be well above guidance.
spk04: Yeah. So just looking at silver as an example, we've produced 3.6 million ounces. uh you know year to date uh to the end of june so um you know you know i think if if we did repeats we'd be comfortably uh with it within the guidance range of two point you know two point one or two to two point one in the in the third and fourth quarters of this year we'd be comfortably within the guidance range okay fair enough maybe maybe one more for me um
spk02: In terms of the increased flexibility on the balance sheet, if the suggestion is that it wouldn't take much in terms of capital to increase throughput beyond 3,000 tons per day, and obviously you could look at bigger scenarios, has there been any initial thoughts given to what you would look to do at a potential for a dividend, corporate strategy, M&A, all those kinds of things. Can you talk about that a little bit?
spk03: I'll take that question. Mike, we haven't talked a great deal about that yet. And the reason is that, one, we're really focusing on these sustaining capital projects. And it's the four that Dale mentioned in his presentation, because they do so much in terms of giving us certainty that Cerro Los Gatos can consistently perform to expectations and actually beyond current expectations. So first and foremost, that's our focus. Secondly, the best way that we can add value legally to shareholders is through exploration. Now that Cerro Los Gatos is performing, now that the deposit is performing, I think it's given the market a great deal of confidence in the integrity of the asset itself. But we have so many more regional targets. And, of course, we're on Esther now. We've just started that. Dale mentioned that we are now considering expanding the number of drills at Esther. And we're looking at that very seriously because we want to generate information faster from Esther. We're already getting good results from it. And I think this will give the market confidence that not only does Cerro Los Gatos have integrity, but as the company is represented, we have an entire district of this with multiple zones of generalization. So I think in the short term, certainly through the remainder of this year, you'll see cash flow directed to the performance improvement initiatives in sustaining capital and exploration.
spk02: Very good. Thanks very much, guys.
spk03: Thanks, Mike.
spk00: Once again, to ask a question, press star 1 on your telephone keypad. Our next question will come from the line of Ryan Thompson with BMO Capital Markets.
spk05: Hey, guys. Thanks for the update. Cosmos sort of already asked my question on grade, so maybe I'll just ask it. follow up maybe just looking a little bit further out it sounds like you're kind of guiding to flattish grades into q3 and q4 um is it possible can you give us a little bit of color as to sort of what to expect into 2022 i know that the technical report is calling for the grades to move up into the 400s just how should we be um thinking about that
spk04: Yeah, Ryan, it's Dale. At this stage, you know, I think we will be giving 2022 guidance at the end of the year. I think it's important to do the resource conversion and the new life of mine plan update before we speak too much about that. You know, I think there is a focus obviously on accessing the deeper zones and the next levels that we do access have higher grades. But I don't want to put out any specific number at this stage until we update those, both the resource model and the life of my fund. And obviously that will feed into the 2022 budget and guidance.
spk05: Okay. Fair enough. Understood. Maybe just one other quick question here. There's been some talk of new laws in Mexico relating to sort of outsourcing and how contractors are paid and so on. Can you just talk a little bit about that new law and if there's sort of any expected impacts to Gatos?
spk04: Do you want me to take that, Steve, or do you want to do it?
spk03: Actually, either Roger or Adam, can you go ahead and talk about this? Roger, let me give a response. So the new law does impact the ability to do outsourcing and how the – and if you consider that to be contractors, I think that's a good way to put it as well, Ryan. So this new law has been actually extended. It was supposed to take effect – now, but it's been extended. However, we have made the changes and modified whatever we need to do, so we're effectively in compliance with the new law. So that new law will require a certain amount of reorganization in our group to now place some employees who were in another entity that we had used as an internal outsourcing environment And we will have it – they'll now participate in the profit sharing up to 25 percent of their annual salaries as additional compensation. And we will see some higher costs for that. At this point, they're not going to be significantly higher costs. However, they could be in the range of $3 million annually for those costs, for higher labor costs. This kind of dovetails into an earlier question about, are we seeing inflationary impacts for wages? And this would be one I'd say we are. So if you're modeling, you should plan on that we'll be having higher costs beginning in the fourth quarter. And we may implement this study earlier, but certainly in the fourth quarter and going forward, we'll have the higher costs of roughly $3 million annually in our estimates.
spk05: Perfect. No, that's a really helpful thing. Thanks for that. And, Ryan, maybe just this is Adam. Sorry, Ryan. Can I just add that I just want to declare just one other item there. Roger summarized it well. We were quite successful in actually completing our reorganization in July, by mid-July, prior to the original August 1st deadline. And one piece to note about that new outsourcing regulation is it doesn't eliminate all or eliminate the possibility of outsourcing any jobs. It's only the core services as defined in your company charter. So as we've gone through and updated our charters, there's still many outsourcing entities we'll be able to use, those who have now met the new standards. So it's not a holistic now, you know, there's no outsourcing available, but only certain specialties could be outsourced to individual companies. Got it. Well, thanks for the added color there, Adam. And maybe just one last question just on the tax line and modeling taxes going forward. I think I'll remember you do have some sort of tax law schools that can be applied. If you have the number, do you have any guidance as to when those sort of tax law schools would sort of be fully utilized and how we should be just sort of thinking about taxes in general going forward? I can take that one Roger. Yeah, I mean, so there's some from some of our previous calls. You'll you'll you'll recall we have two elements. You're right. We do have some tax NOL carry forwards to be used at our disposal against taxable income, and there's also a portion of VAT receivables that are available for offset against those same taxable income. These relate to more much more older VAT receivables that we incurred during the construction phase of the mine. So while the VAT carried forward has to be utilized first, those will be, from a modeling perspective, it's likely that those will be fully utilized by the end of the year, especially given, as you've seen, the robust production and certainly the record financial results we just reported. So it's reasonable to expect those would be absorbed in the primary operating entity of Operationis by the end of the year. There's some tax carried forward losses with our other entity, Monero Plata Real, that will likely extend much past this year into 2022. The good news is that a lot of the VAT receivables that I just referred to that are also available to offset some of that taxable income are primarily on the operating entity, Aberrationes. So those will then come into the frame much more quickly, and you should expect to see that those VAT receivables will then start to come down due to that tax. resulting offset here, if not 2021, certainly into 2022. Perfect. Thanks. That's very helpful, and that's all I had. Congrats on the good quarter, guys.
spk00: Thank you. And with that, I see no further questions. I'd like to turn the conference call to Stephen Orr for closing comments.
spk03: Thank you very much. Thank you for attending our Q2 presentation. We're very, very pleased with the performance of the operation, and we fully expect that we'll be within our guidance range for remainder of the year. Thank you again.
spk00: Thank you. And with that, we'd like to conclude today's conference call. Once again, we do appreciate your participation. You may now disconnect.
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