Lundin Mining Corporation

good morning ladies and gentlemen and welcome to the london mining of first quarter 2023 results call and webcast at this time all lines are in a 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 0 for the operator this call is being recorded on thursday may 4th 2023 I would now like to turn the conference over to CEO, Peter Rockendale. Please go ahead, sir.

Thank you, operator, and thank you, everyone, for joining us today. I will draw your attention to the cautionary statements on slide two, as we will be making several forward-looking statements during the prepared remarks and likely during the Q&A. On the call to assist with the presentation and answer questions are Tyler Polson, our Senior Vice President and Chief Financial Officer, and Juan Andres Morrell, our Senior Vice President and Chief Operating Officer. Before we discuss our results, I would like to compliment our team on an exceptional start to the year with health and safety. Our efforts across the company with visible felt leadership and the implementation of FRM fatal risk management has brought a discipline that is already impacting our team. Health and safety has always been a key value at Lundin Mining, and while we have made good progress, we will continue to strive for even greater results. Moving to our quarter. We delivered solid operating results across the portfolio, producing nearly 103,000 tons of copper-equivalent metal. Copper production increased by approximately 10% over the fourth quarter of last year, with particularly strong performance from Candelaria and Shipada operating as per plan during the rainy season. Zinc production also increased 10% quarter-over-quarter, with the zinc expansion project at Nevis Coral Grove continuing its ramp-up and achieving record quarterly production in addition to zinc-driven performing well. With a strong operating performance, we generated a tributary net earnings for our shareholders of over $145 million and adjusted EBITDA of over $335 million. Operating cash flow, adjusting for the working capital draw was $235 million and free cash flow from our operations was over $70 million. Our balance sheet remains very strong with $1.7 billion of liquidity. As Tyler will speak to, we are realizing the benefits from the foreign exchange hedging program entered into late last year, and in April we initiated a diesel hedging program to protect the operating cost structure at Candelaria. Our focus continues to be on growth. However, we will also continue to be very disciplined in how we allocate our capital. With yesterday's financial results, our board of directors has maintained our peer-leading regular dividend of Canadian 9 cents per quarter, or 36 cents on an annualized basis. On the growth front, We're very excited about our recent acquisition of Casaronis. I was in Chile last month with a number of my colleagues, and much of the integration work has begun. Both our Candelaria and Casaroni teams are looking forward to working together to create even further value. Also, it was evident after spending time with numerous government and regulatory officials that the transaction has been very well received in-country. Casaronis complements our existing operations, and we believe will enable us to unlock synergies in the future as we integrate our teams and resources. In particular, Casarone's proximity to Candelaria will allow us to leverage our knowledge, experience, relationships, supply chains, and potentially existing infrastructure in the region. The transaction is immediately accreted by key cash flow and other financial metrics, and we will continue to maintain low financial leverage post the acquisition. We also continue to advance our large-scale Jose Maria Copper Gold project. Detailed engineering currently stands at 40%. As I'm sure most on this call are aware, much has occurred in the Vicuna District since our acquisition of Jose Maria, including our most recent purchase of Castorones. We will continue to progress our Jose Maria project in a prudent manner and take into consideration many of our learnings over the last year with respect to the region. We announced the first mineral resource estimate for the Saúba deposit in February. The maiden estimate is nearly 180 million tons of indicated resource containing 1.3 billion pounds of copper and 1.1 million ounces of gold. We expect the estimate to increase with ongoing exploration efforts. At Candelaria, study work evaluating expansion of the underground mines to add roughly 20,000 tons of copper per year to the production profile has been completed. With potential changes to mining royalties and taxation in Chile moderating from earlier proposals, We are looking forward to updating the study with any new information and making an investment decision upon receipt of our 2040 EIA. In summary, Blending Mining delivered a strong first quarter and is well-positioned to deliver on our strategy of operating, upgrading, and growing a base metals portfolio that provides leading returns to our shareholders. I will now turn the call over to Juan Andres to provide a summary of our production results. Thank you, Peter.

Well, as Peter mentioned before, we produced approximately 103,000 tons of copper equivalent metal in the first quarter. Copper production of 61,500 tons increased 9% over the fourth quarter of the last year. Candelaria had a strong first quarter, processing over 7.2 million tons of ore. Chapada copper production declined quarter over quarter as expected with lower head grades and recovery rate. as the operation managed the first quarter rainy season well, as Peter mentioned before. Copper production at Nevers Corvo, Eagle, and Zingruban all increased over the fourth quarter of the last year. Copper production is tracking well to annual guidance of 236,000 tons to 260,000 tons. Zing copper production increased 10% quarter over quarter to over 48,500 tons. Run path of the zinc expansion project at Neves-Corvo progressed in line with plans, delivering its fifth quarter of sequential production improvement, with production increasing 13% over the fourth quarter of last year. Zinc production throughput increased 10% over the last quarter, processing 510,000 tons of ore, and recovery improvements to 79%. Zinc grubin has had a good start of the year, producing nearly 20,800 tons of zinc. Zinc production is tracking well to annual guidance of 180,000 to 195,000 tons as production is expected to increase over the course of the year with initiatives to enable ZEPP to consistently achieve nameplate capacity and recover improvement. 3,700 tons was lower quarter over quarter as expected with plant grade profile at Eagle. Both copper and nickel production at Eagle were impacted in the first quarter by end plant downtime of one of the ball mills, which has been rectified. And rehabilitation work on the main ground that limited oil production from Eagle East, as well as winter weather conditions in the Upper Peninsula to a lesser extent. Even with the slower than planned start of the year at Eagle, nickel production is tracking to our annual guidance of 13,000 to 16,000 tons. Gold production was 36,000 ounces for the first quarter, with Candelaria having a strong start of the year and Chabada having operated through the rainy season as planned. Gold production continues to track well to our annual guidance of 140,000 to 150,000 ounces. All in all, an operationally strong start of the year. I will now turn the call over to Titor to provide a summary of our financial results.

Okay. Thank you, Juan Andres, and good morning, everybody. Moving to slide six, as Peter mentioned, we generated meaningful adjusted EBITDA, operating cash flow, and free cash flow from operations in the first quarter. Starting with the top line, we generated over $750 million in revenue. Our sales remain leveraged to copper, with the metal generating 70% of the quarter's revenue. Zinc and gold contributed 13 and 8%, respectively, while nickel contributed 6%. Other revenues include sales of lead, cobalt, PGMs, iron, and other byproduct metals. With the price of copper and several of the other metals we produce increasing during the quarter, Revenue was positively impacted by $40 million of prior period price adjustments. A summary of the realized copper, zinc, and nickel prices for the quarter are presented in the chart on this slide. Ultimately, we realized prices of $4.49 per pound of copper, $1.39 per pound of zinc, $7.36 per pound of nickel, and 2,074 dollars per ounce of gold for the first quarter, including the adjustments. At the end of the first quarter, approximately 89,000 tons of copper were provisionally priced at $4.08 per pound and remained open for final pricing adjustments, as did over 41,000 tons of zinc at $1.33 per pound and over 2,000 tons of nickel at $10.75 per pound. On slide seven, production costs total nearly $420 million in the first quarter, an improvement of 7% compared to the fourth quarter of last year. The decrease is largely a result of improved prices of consumables, primarily at Candelaria and Nevis Corvo, and particularly diesel and electricity compared to those of 2022. The chart on this slide presents the relative impact of the key drivers on the total operating and capital costs by operation for the quarter. Candelaria's production cost improved 9% compared to the fourth quarter of last year, benefiting from the lower rate electricity contract that commenced at the beginning of this year, which more than halved the per kilowatt hour cost quarter over quarter. The new PPA with our existing provider also ensures a minimum of 80% renewables in the energy mix, prioritizing wind and solar. The new three-year labor agreements with the two remaining unions were reached in the first quarter, impacting Candelaria's production costs and cash flow. On a cash cost basis, the impact was $0.08 per pound of copper in the first quarter. Candelaria's cash cost guidance of $1.80 to $1.95 per pound of copper in 2023 remains unchanged. Chapada production costs decreased roughly 20% compared to the fourth quarter of last year. While electricity and realized diesel prices did improve modestly, much of the quarter-over-quarter change owes to how the operation is managed during the rainy season, with a greater proportion of the new feed being from previously stockpiled ores. Chapada's cash cost guidance of $2.55 to $2.75 per pound of copper in 2023 remains unchanged. Davis Corbett production costs increased 9% compared to the fourth quarter of last year, primarily due to the higher sink production volumes. Production costs benefited from the easing of inflationary pressure on consumable prices, in particular electricity, where the realized rate in the first quarter was less than half of that experience for much of last year. Cash cost guidance is $2.10 to $2.30 per pound of copper in 2023, with improvement expected as sink and lead production volumes increase with the continued ramp-up of SEP towards nameplate. Eagle's production costs improved 10% quarter over quarter, though cash costs were impacted by lower nickel sales volumes. Cash cost guidance is for $1.50 to $1.65 per pound of nickel in 23, and is currently trending higher with the expected year-on-year increase primarily a reflection of the plant's lower production volumes. Zinc-grown production costs were consistent with those of the poor quarter of last year. Cash cost guidance is for 60 to 65 cents per pound of zinc in 23, net of the lead and copper byproduct credits. Capital expenditure tracking well to our guidance with sustaining CapEx of nearly $160 million in the quarter, compared to our full year guidance of $700 million. Expansionary capital expenditure on the Rosa Maria project during the quarter were approximately $90 million in support of advancing the project, including the continuation of detailed engineering, procurement of long lead equipment, and pre-construction activities such as road upgrades and geotechnical work. Lastly, on this slide, we continue to realize the benefits of our foreign exchange hedging program intended to provide better visibility on our USD requirements of future operating costs and cutbacks. In the first quarter, we realized a gain of $14 million. Additional unrealized gains bring the fair value of the onset of contracts to $85 million at the quarter end. As Peter mentioned, in early April, we initiated a diesel-hacking program to protect the operating cost structure at Candelaria, where we operate our largest open-pit mine. We have initiated diesel swaps representing approximately 75% and 50% of the attributable purchases we forecast for the remainder of 23 and all of 24, respectively. Our key financial metrics are presented here on slide eight. First quarter revenue, as I said, was over $750 million, which was a slight decline quarter over quarter with $35 million less of positive pricing adjustments in the current quarter. We generated adjusted EBITDA of over $335 million, and adjusted earnings were over $125 million. Adjusted operating cash flow was $235 million, and free cash flow from operation over $70 million. Details of the adjustments are broken down in our MD&A disclosure. We remain in a strong financial position. We finished the quarter in a very modest net debt position of $35 million, and today have a net debt position of approximately $93 million. We have significant liquidity of approximately $1.7 billion. And I think it's fair to say that the strength of our balance sheet and our funding capacity are two of the levers that enabled us to acquire Casarones. Upon closing of the acquisition, our leverage will remain conservative given our overall net debt ratio and the additional contribution of EBITDA from Casarones. We will remain well on side with our debt covenants after closing of the Casarones transaction, and our liquidity headroom will also remain at a robust level. Based on our latest disclosed net debt position of 93 million and coupled with the further drawing of 800 million, open closing of the Casarone transaction would leave a net debt position of approximately 890 million before accounting for the likely net cash position that will exist within the Casarone's locked box transaction mechanism. The transaction structure is centered on the locked box principle with locked box date being 31st of December last year with a zero debt and zero cash balance as of that date. This means that by the time the transaction closes later this year, the company that we are acquiring a 51% stake in is likely to have accumulated a net cash position at the point of the transaction closing. Slide 9 presents greater detail as to the sources and uses of cash in the first quarter. Before changes in working capital, the direction of and timing of which is heavily swayed by provisional pricing, our operations generated $235 million in the first quarter, net of $40 million of cash taxes paid. Cash and cash equivalent at quarter end were approximately $185 million, a decrease of roughly $7 million, with cash flow from operation primarily used to fund sustaining and expansionary investments in our assets. With that, I will now turn the call back to Peter.

Thank you, Titor. Slide 10 highlights the meaningful scale and material growth of our copper portfolio. As mentioned, we're very excited about the Casaroni's acquisition. Casaroni's complements our existing portfolio with large-scale and long-life copper and molybdenum production in a jurisdiction which we already operate in and know well. Over the last five years, Casaroni's has produced approximately 130,000 tons of copper concentrate and copper cathode plus moly. On a pro forma basis, Casseronis would have increased our consolidated copper production by over 50% last year. Closing the acquisition remains on track for the third quarter of this year, and our technical team is working hard to be in a position to publish an updated NI43-101 technical report on or prior to closing. As Tyler mentioned, we also have the option to purchase another 19% of Casseronis for $350 million, and the effective date of the ownership is at the beginning of this year. We continue to make good progress advancing our world-class Josemaria Copper-Gold project and continue discussions with potential partnership groups. We will continue to advance the project in a deliberate and disciplined manner. Candelaria's life of mine has been extended to 2046 with the mineral reserve estimate announced in February. The base case plan of the corresponding technical report does not yet include the Candelaria underground expansion project, which has the potential to have roughly 20,000 tons of copper production per year nor does it include the potential restart of the Al Caparosa mine. And lastly, on this slide in February, we announced the maiden indicated resource estimate for the Tsau'u discovery and view it as the first of many iterations of increasing mineral estimates to come. I also want to take this opportunity to highlight the significant exploration potential within the emerging Vicuna District on our existing land package. At the top of the figure on slide 11, With Casarones, we will be acquiring a large package of over 58,000 hectares in Chile of highly prospective and underexplored land with several near-mine carts ready for drilling. The Casarones claims but the land package of NGX Minerals' large Los Alamos copper-gold deposit, in addition to some of NGX's more recent positive exploration results. The light green and pink shading on the map indicates our Josemaría land packaging claims. Also illustrated is the planned Josemaría infrastructure including the process plant, tailings facility, and the bedded arrow camp. We believe Jose Maria is well positioned to be the center of future development and expansion for this emerging world-class district. Some of the top exploration targets on the Jose Maria property are outlined on the map, including Potro Cliffs, Hortones, Las Pailas, and Jose Maria at depth. We will begin drilling on many of these targets this year. In conclusion on slide 12, We have a very desirable portfolio of long-life quality mines and are advancing meaningful growth projects in a disciplined manner. We delivered solid performance in the first quarter, leading to strong operating cash flows and a strong financial position from which to grow. We remain well positioned both operationally and financially to continue to deliver consistent results for the balance of the year and beyond. And with that, Operator, I would like to open the lines for questions.

Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star followed by the number one on your touchstone phone. If you would like to withdraw your request, please press star followed by the number two. One moment, please, for your first question. Your first question comes from the line of Ioannis Mazoulas from Morgan Stanley. Please go ahead.

Peter and Tim, thanks for the presentation. I have a few questions from my side, and starting with Jose Maria, it seems to me that the messaging has changed a bit. You haven't reiterated explicitly the timeline for a CAPEX update in the second half of this year. You now refer to an updated EIA submission by Q2 2024, and you show the slide on the Vicuna District optionality. What's your latest thinking here on the best way forward for Jose Maria, and what are the associated timelines? And maybe if you can share latest views around the optimal configuration and potential capex, that would be great. And I'll stop here. Thank you.

Thank you. Thanks for the question. You know, we continue to progress the technical work, as mentioned in the presentation, but arguably that's a good observation, probably at a bit of a slower rate. And the reason it's a bit of a slow rate is really the findings that we've had over the course of the last year and then also taking into consideration the Castroni's acquisition. So we were trying to do a series of trade-off studies which take time and whether or not we can benefit with some of the infrastructure that we now have in place. We just thought that would be a prudent approach given the materiality of some of that infrastructure. Also, there has been a lot of exploration success in the region, and we just want to make sure that some of the decisions we've made with respect to positioning of the mill, et cetera, are still 100% the best decisions given the development in the region. Nothing major, just making sure we're making all the right decisions. On that front, we're still pushing to make those decisions towards the end of this year. In parallel, we've been very, very busy on a lot of the partnership discussions, so that hasn't slowed down. I've been on the road for the better part of the last few weeks in a few different jurisdictions, and we are looking to maintain that kind of structure, if you will, of a partnership. The other area maybe I would add is there has been information kind of coming out of Argentina with a few potential changes on how they deal with blue chip swaps. currency controls, et cetera, many of these things would have a pretty material positive impact on the project. We're trying to get that information and take it into consideration, but it's also difficult because it's an election year. We're starting off with the provincial election, then moving to federal. Getting that information finalized is arguably a bit slow at this timeline.

Understood. Thanks very much, Peter. That's very clear. And I guess to your last point, would you expect any major update on the fiscal front before the elections, or is it more of a 2024 story as things stand?

Yeah, I would be surprised if it comes out prior to the election. So it could be a late 2023, arguably, and if not, early, early 2024.

Perfect. Thank you. I'll join the queue again. Thank you.

Thank you. Your next question comes from the line of Ralph Raffitti from Aid Capital. Please go ahead.

Good morning, team. Thanks for taking my questions. Peter, the MD&A at Jose Maria talked about procurement of some long lead equipment. Just wondering what specifically those items are. Where have you needed to get into the queue even though you're now going at a slower rate? Is it sags, is it shovels, trucks? A little bit more specific on that would be helpful.

Thanks, Rafael. It's more we don't need to get in the queue. We were in the queue quite a long period of time ago. So it's mainly on the milling and crushing side. Most of those items, quite frankly, have been complete. And arguably, I would say at the end of the next quarter, there probably wouldn't really be any outstanding items in the long lead. long lead items, if you will, in the queue. So it's just the ones that were ordered quite a period of time ago that are being completed as we speak, and those are the two areas in particular of focus.

Okay, great. Yep. You also talked a little bit about the Jose Maria regional exploration on those three targets. I'm just wondering when we can get a little bit more of a concise strategy on regional exploration at Kazaronis, right? sort of fall behind Jose Maria in terms of its priority? Or are you waiting just more until you get sort of integration of the asset to look at exploration?

Yeah, I would say our exploration teams are already talking. I was just down in Chile for a pretty extended period of time and having meetings both with Casaronis and Candelaria, the teams that really hit it off, which is great. So I think this is going to be a pretty quick transition integration, if you will, and then we focus kind of phase two on the local synergies and then expanded synergies. We've got a fairly extensive process in place, and we have someone that actually is leading that process. From the exploration perspective, we've already come with a proposal for a budget at Kasseronis, keeping in mind that there's about 58,000 hectares at Kasseronis, so it's a huge footprint, arguably double the size of Candelaria. But we have maybe eight or nine specific targets, and one of the ones that's of particular interest, if you recall, some of the most recent drill results that came out from Los Latos were about 50 meters from the Casarones border. So I think we have a pretty good understanding of the geology of that area, and that is going to be a focus. We are getting into the winter stretch right now, so we'll see what we can get done, but I mean, there's no question that both Casarones and Jose Maria are going to be a huge, huge focus for us this year and next year. And we spent a fair bit of time actually yesterday in our board meetings outlining the plan to our board.

That's good to hear. Thanks for that update.

Thank you. Your next question comes from the line of Daniel Major from UBS. Please go ahead.

Hi there. Yeah, thanks for the questions. First, just a question on the operational side. It was a good performance in Q1. If I look at the run rate of certain metrics, you look very well positioned versus the guidance for this year, particularly if I look at the ramp-up of the ZEP at Nevis Corvo. I mean, you previously indicated a sort of sequential improvement in zinc production through the year, but the current Q1 run rate would certainly be achieving or above guidance. So, I guess, is there some upside risk or conservatism built in, particularly the Nevis-Corvo guidance for this year? You could probably say something similar around the sort of run rates in terms of throughput at Candelaria. So, yeah, if you could just give us a bit more color there.

Good morning, Dan. This is Juan Andres. Thanks for the question. I think we put together a very strong and robust budget for the year, and Q1 is tracking according to the budget. So at this time, we don't see a need to change any of the guidances in either Navis-Corvo or Candelaria.

Okay, thanks. The second question, at the time of the presentation, when you announced the Casarenas acquisition, you made some commentary around, I think it was a 45-day timeline before publishing technical report or updated guidance on the asset. Can we get an update there, and should we expect that before the deal closes?

Thanks, Dan. It's Peter. Back to Peter here. Sorry. No, I think... When we made the announcement, if you admit forward-looking statements, it then triggers a timeline for which you have to get the technical report out. So our thought is, you know, I think it's best to put the technical report out, if we can, exactly at closing. So, therefore, we're going to continue to maintain avoiding, you know, the forward-looking statements. And right now, from a closing perspective, we are tracking extremely well to probably the very early part of Q3. Yes.

Okay. Thanks. And one more, if I could, just on... the bigger picture around Jose Maria and et cetera. I mean, you've mentioned in the past looking at multiple scenarios, you know, one stream being a sort of offtake type silent partner and the other selling a larger stake to one of the big mining companies. Can you give us any color in your recent discussions as to which pathway is looking like the more likely option?

Yeah, I've been on the road a fair bit over the last few weeks and meeting with many of these different counterparties. I would say that the proposal that we said from the very beginning, which would be like many of the other South American big, big projects where perhaps you have a major in there and then maybe even a smaller trading house, that would be the most likely structure we would try to accomplish. And the discussions we've had to date seem to be supporting that.

So just to be clear on that, that's more than one counterparty, but with a major as an operator, is that what we should be thinking?

Well, I would start off with probably one larger partner, as you said. It doesn't definitively mean who the operator would be. And then it just does give you the opportunity to bring in someone smaller, but that would be a second stage approach.

Excellent. Thanks. Thanks.

Okay, hopefully that answers your question, sorry.

Thank you. Your next question comes from the line of Bryce Adams from CIBC. Please go ahead.

Yeah, thanks, Peter. Good morning. On the back of the Casaronis announcement, I was going to ask around potential upcoming changes to taxes and royalties in Chile. Can we get your updated thoughts on changes to the royalty bill and when you think that we're likely to see a final outcome. Thank you very much.

Sure. Well, as I said, I was just down in Chile, and I found the tone was quite positive in this area. We had a great meeting with the Minister of France, Mario Massal, and myself and Juan Andres spent a fair bit of time with him as well as the Minister of Mines. And I would argue that their tone is being – every time we meet with them, it's more and more moderated. And in fact, when we were there, there was a proposal put forward for a cap at 47%, and that was rejected. So the trend continues to go in the positive. Sorry, it is a positive trend, so we're quite happy with that. Because we were both in the same meeting. So I think from where they first started talking way back when on some pretty high numbers, every time we have a meeting, it keeps getting better and better.

When was the 47, 48% cap rejected? I recall a 50% proposal, but that was going back to earlier in April.

Yeah. Three weeks ago, approximately. It was a modification presented by the government to the bill.

All right. Perfect. Thanks for the updates. Appreciate it.

Thank you. Your next question comes from the line of Greg Barnes from TD Securities. Please go ahead.

Yeah, thank you. Peter, I just want to go back to your answer to Ralph's question about the long lead items. Am I correct in understanding that all of the milling and crushing equipment, all the major components, have been ordered and are in fabrication?

Yes.

Okay. I guess that's good news. Secondarily...

More than fabrication. They're basically complete.

They're complete. Okay. Secondarily, on Jose Maria and the discussions with the government around the stability agreements, are you having sit-down, face-to-face, concentrated discussions with them at this point? And if not, when do you think you actually get to that point where you're sitting down with them and you're hammering out an agreement?

We've had those discussions face-to-face, both at the provincial and federal levels. and in some cases we've had actual agreement. I would say just last week that there was further discussion, but it was not face-to-face, and I have just my own personal view with the elections coming up. I suspect some of those face-to-face discussions in the near term may get a bit more challenging just to be able to hold.

So is there a structured process around this? Is there a a set schedule about meetings and discussions and a working document that you're putting together to pull together a final agreement? I just want to understand what the process is and how concentrated and how focused the discussions are.

Well, there's a working document, but as far as having it on a timeline, it's not quite that formalized. And I think, again, it's just because the reality is you could have a new governor in short order, right? So... That's why we're just taking a bit more of a cautionary approach on the timing, and some of that is actually spilling into the broader Jose Maria timeline, if you will. Okay. You need to get those things out of the way.

Which things out of the way? Sorry?

Just the elections.

Right, obviously. Okay, okay. Good enough. Thank you.

No problem.

Thank you. Your next question comes from the line of Stefan Iwanu from Cornmark. Please go ahead.

Thanks very much, guys. Maybe just to follow up on Ralph's question as well, just on the exploration, outside of Casaroni's on that slide you show on slide 11, do you think we'll actually see some drilling then at the Patroclis and Portoni's in Las Paz this year, just given the success NGX has had right there as well?

I think that is very much a priority for us. We've already started discussions on whether we can get a couple of rigs over there You have to just keep in mind that it is shifting into winter season, so that gets a bit challenging. But I would say from the Jose Maria side, it is very, very much a priority. And we have a view on which ones we should start with first, and we already have some locations in mind. And there's a budget that would be allocated for it.

Okay, great. And you guys have permits or whatever required to go in and actually put a rig up on all those right now, or is that still in the works as well?

There's some areas where we have permits, some that are still awaiting.

Okay, okay, great. Thanks very much, guys.

Thank you. Your next question comes from the line of Gordon Lawson from Paradigm Capital. Please go ahead.

Yeah, thanks for taking my question. I just have one easy one for you here. So with respect to synergies at Tessaroni's, would that include a possible expansion of the SXPW plant through the Jose Maria off-site?

No, we haven't taken that into consideration at this stage. I mean, perhaps it's something down the road, but it hasn't been factored in. Most of the synergies that we're talking about right now will begin on the Chilean side and are focused with Candelaria and also heading all the way down towards Caldera with our pipeline, port, desalination plant, things of that nature. So the low-hanging fruit will be G&A, procurement, and just sharing of knowledge and certain skill sets that are best achieved at Casseroni's or at Candelaria.

Okay, thank you very much.

My pleasure.

Okay, your next question comes from the line of Jackie Zibilowski from BMO Capital Markets. Please go ahead.

Thanks very much. Actually, the question that Gord just asked was basically what I was going to ask, but can you talk maybe about what we're going to see in the technical report that comes out? Are those synergies with Candelaria going to be included in that tech report, or would that be some future upside?

No, they wouldn't be included in the tech report. The tech report would be a standalone document our team's well advanced in that document i wouldn't anticipate there would be any you know large surprises in it from previous years of operation but then we already do separate to that have a formal strategy that we can you know perhaps jackie go through off the call on how we plan to approach the different phases of potential synergies

Okay, that sounds great. Thanks, Peter. And if I can maybe ask, and I know you've sort of answered this already, but if I can just ask again, because I just want to be totally clear on the elections that are coming up in Argentina, can you just talk a little bit about what news flow or what disclosures you might be releasing prior to the elections? Or should we be expecting to wait on essentially any kind of news flow from Jose Maria until after those elections are finished? Can you just sort of spell that out for me?

Well, I guess I would say if we have material news and it's pre any election results, we would put that news out. We won't hold anything back, but there are certain aspects of bilateral agreements or negotiations of that nature that are going to be extremely hard to proceed as we get into the finale here on elections. Anything of that nature is probably going to come out on the back side.

Does that include the feasibility study, updated feasibility study?

They're not linked, so I don't think it will have an impact.

Okay, thanks very much.

Thank you. Just a reminder, should you have a question, please press star followed by the number one on your touchstone phone. We have a follow-up question coming from the line of Ioannis Metzvoulas from Morgan Stanley. Please go ahead.

Great, thank you. Yeah, just a couple follow-ups from my side. First, Peter, to your point on the mining royalty bill in Chile, this 47% was rejected. Is that the all-in tax rate? or is the actual tax rate higher than 45% as per that proposal? Just trying to figure out whether we are comparing apples to apples.

Yeah, it is the all-encompassing rate.

Okay, that's clear. And then the other question I had is around the Al Caparosa. How is the remediation work progressing there, and what's the timing for a regulatory decision about a possible restart?

Yeah, so I think myself and Juan Andres will both answer that one. When we were down in Chile about 10 days ago, I just wanted to mention that our meetings with, you know, the Minister of Finance, as I said earlier, a couple times with the Minister of Mines, Sir Najiman, and other government officials was really, really strong. I think the transaction with Canceroni has put us in good standing with the government, especially given some of the headlines of other companies that have been a bit pushing back on the government. So, We're getting extremely good support. That being said, it still does require permits to move the remediation process forward. We are out for a bid right now with about five different companies that are going to be part of that remediation process. So once we get those permits, once we can determine the most appropriate bid, That will begin, and it should move in pretty quick order, but I'll pass it on to Juan Andres to add.

I don't think I have much to add to what you said, Peter, but yes, we're working on different phases of the remediation and, of course, the potential reopening of Alcaparroza in the second half of the year. And as Peter said, right now, all the studies or most of the studies have been completed. We're just awaiting for the final permits from the different government agencies to proceed with the actual works.

And I would just add, unfortunately, from a permitting perspective, those are extremely hard for us to determine how long that takes.

That's fair. Thank you both for the answer. Thank you.

Thanks for your question.

Thank you. Your next question comes from the line of Patrick Jones from JP Morgan. Please go ahead.

Thanks for taking my question. It's just regarding a follow-up on Jose Maria. Obviously, given the timeline is looking like it's taking a little while longer and, you know, formal approval is looking like it would be sometime post Q1, Q2 next year. You know, I just wanted to kind of inquire as to what kind of, capex spend you could have on an ongoing basis prior to an FID decision? Obviously, the guidance this year is about $400 million. Is sort of $100 million per quarter a good rough estimate for what you'd spend pre-FID into next year? And also, is there sort of a limit that you would spend on a total aggregate basis prior to FID?

Yeah, I think first of all that the spend this quarter has come in a little bit below anticipated original number. I think that trend will probably be similar for the back half of this year. And I don't think until we actually have a definitive go-ahead decision that, you know, moving out into 2024, I think the number will be fairly moderated down until we make that actual decision. Because a lot of the bigger items were some of these long lead items, and those will be complete this quarter.

Great, thank you. No problem.

Thank you. Your next question comes from the line of Dalton Barreto from Canaccord. Please go ahead.

Thank you. Good morning, Peter and team. Just one question from me. With the center of gravity kind of coalescing now around copper and gold on the Chilean-Argentinian border, How should we think about your European businesses now? Are they still a core to you, given that, you know, they're geographically removed and, you know, big sync component there?

No, I think they're still assets that we're very happy that are within our portfolio. In particular, for starters, if you look at Nevis Corvo, you know, they've just had a great first quarter on health and safety, which we're very proud of them on. We've also seen the production ramp up. Obviously, it's been a challenging project, but we're now starting to get into that gradual ramp-up mode. So I think there's going to be huge demand for zinc in Europe. And, you know, as zinc grew, it has been an amazing asset within the portfolio for a long period of time. So happy to have both assets in our portfolio. If something changes, you know, one day down the future, we'll look at it differently. But right now, they're a core part of our team.

Thanks, Peter. That's all for me.

No problem.

Thank you. There are no further questions at this time. I'd now like to turn the call back over to Mr. Rockendale for any closing remarks.

Thank you, operator, and thank you, everyone, for joining in today. I think Lindy Mining has had a very, very good first quarter, in particular, as mentioned at the start, on health and safety, but also seeing the operational stability within the company. And we're going to be pretty vigilant going forward to ensure those two areas continue and look forward to updating everyone on our Q2 conference call. So thank you for joining.

Thank you, sir. Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines. Have a lovely day.