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spk00: Bienvenidos a la presentación de resultados del primer trimestre de 2024 de Mineros. Mi nombre es María del Aire, seré su operadora para la llamada de hoy. Todos los participantes se encuentran en modo silencio. Al final de la presentación habrá un espacio de preguntas y respuestas en la plataforma web únicamente. Por favor, tenga en cuenta que esta teleconferencia está siendo grabada. Please consider that today's conference will be held in Spanish with simultaneous English translation. We remind you that if you have difficulties visualizing the slide on the website, maximize the window called slides. From now on, I give the floor to Alan Bansier, CFO of Mineros. Mr. Bansier, you may begin.
spk04: Good morning and thank you for joining us. El idioma original de esta llamada es español. Sin embargo, está disponible la opción de olerla en inglés. To listen to this call in English, please follow the two steps. First, identify the box that says English and click on Start. Then, to avoid listening to both languages at the same time, identify the box that says Media Player and click on Mute. Antes de comenzar, Es prudente avisarles que esta llamada y la presentación pueden contener información sobre las perspectivas del desarrollo futuro del negocio y que, por varias razones, estas estimaciones pueden o no cumplirse de acuerdo con lo planeado. Por esto, advertimos a los inversionistas que deben tener precaución en el momento de tomar decisiones de inversión y no basarse únicamente en la información aquí presentada. It is also worth mentioning that this presentation contains measures and non-conventional indicators according to the NIF, such as the cash cost and the adding sustaining cost per ounce of gold sold, the average price per ounce of gold sold, the adjusted EBIT and the net debt. Additional information about these measures can be found in section 10 of our MD&A published in Canada, which is in SEDAR, under the profile of Mineros. Today we are in the room with Andrés Restrepo, President of Mineros, Ana María Ríos, Vice President of Business Development, and my person, Vice President of Administrative and Financial. Additionally, we are accompanied by Ana Isabel Gaviria, Vice President of Legal and Sustainability, Santiago Cardona, Vice President of Colombia, and Luis Fernando Villa, Vice President of Nicaragua. With this, I give the floor to Andrés Restrepo, President of Mineros.
spk03: Thank you, Alan. Buenos días y gracias por acompañarnos hoy en nuestro reporte de los resultados del primer trimestre de este año 2024. Vamos a desarrollar esta agenda, hechos relevantes, desempeño financiero, indicadores operativos, detalles por operación, retos y perspectivas. El primer trimestre de este año fue bastante positivo, impulsado principalmente por un incremento en la producción del 2%. y por mayores precios del oro, el cual se encontró casi 186 dólares por encima al precio del año pasado. Hemos estado haciendo una gestión eficiente de costos de manera continua, y aunque estos se incrementan debido a lo pagado a mineros artesanales, que es un porcentaje del precio spot del oro, y a la fuerte revaluación del peso colombiano, que fue del 17% en lo que ha ocurrido del año, The comparative results from last year are positive. During the first quarter of 2024, we continue with our exploration campaign in the project Porvenir de Nicaragua. Our plan is to finish updating models during the first semester of this year. Let's move on to the next slide. Relevant facts. Dividends. On March 26, in our shareholders' assembly, an annual dividend of 10 cents was approved, distributed in an ordinary dividend of 7.5 cents per year, which is paid in four quarters, of 1.88 cents each, and an extraordinary annual dividend of 2.5 cents, which is also paid quarterly. o sea, .63 centavos cada trimestre. En esta misma asamblea, fueron reelegidos tres miembros de la junta directiva anterior y fueron nombrados seis nuevos miembros. Estos seis nuevos miembros que ingresaron son personas con mucho conocimiento del negocio minero y les damos la bienvenida a estos nuevos integrantes a nuestra junta directiva. All these members have the necessary qualification to perform this important job in a year like the current one, in which Mineros has any amount of opportunities to sell. During the first quarter of 2024, the price of gold had a positive behavior, placing itself at 6.4% above the closure of the last quarter of last year. closed at $ 2,195 per ounce, and as some of you may have seen in the last few days, it has followed with a slight rise. In this slide you can see the minimum and maximum price of the quarter. In this first quarter of the year, the fluctuation of the gold price may have been affected by regional conflicts, such as Israel-Gaza, o el de Rusia y Ucrania, que ya han incrementado el riesgo político a nivel mundial, pero también porque datos positivos de la economía de Estados Unidos llevaron a que la Fed decidiera mantener sus tasas estables, lo cual generalmente influye en los precios del oro. Con eso les dejo de nuevo la palabra a Alan, quien les va a explicar el desempeño financiero de Mineros en este trimestre.
spk04: Thank you, Andrés. Let's start with the state of the results of the quarter. I remind you that the figures are expressed in millions of dollars. Income grew by 15%, placing itself at 114 million dollars, explained by a higher average selling price of 10% compared to the first quarter of 2023. by a greater number of ounces of gold sold in 2% and by an increase of 92% in silver sales, almost 2.7 million additional dollars versus 2023. The increase in sales costs is due to higher costs for the purchase of artisanal material, given the higher price of gold for almost 5 million dollars. for greater depreciations and amortizations by 1.1 million, in conjunction with a revaluation of 17% of the Colombian peso. Both the gross utility and the adjusted EBIT increased by 8%, thanks to the increase in income. The net utility of operations remained stable, benefited by the increase in income and gross utility. Contrarrestados parcialmente, con mayor diferencia en cambio por 2.1 millones de dólares, mayores gastos administrativos y menores otros ingresos por 3.2 millones de dólares. La caja del trimestre disminuyó en 11 millones, cerrando en 46 millones de dólares. explained by sales to be raised at the end of the quarter related to the last shipments of the quarter. The flow of operations is composed mainly of income by sale of gold and silver for 98 million, payments to suppliers for 67 million, payments for benefits and wages of employees for 14 million and payment of taxes for 9 million. The cash flow used in investment activities is explained by buying equipment property for 10 million and buying intangible or mainly exploration projects for 1 million. The flow used for financing activities was largely composed of the payment of dividends for 5 million and the payment of financial obligations for 6 million. Now let's look at the adjusted EBITDA. This had an increase of 8% due to a greater amount of sales, added to the increase in the average selling price. Finally, let's look at the debt. The reduction of net debt is explained by a lower balance of loans and loans for 32 million, added to a higher balance of cash and equivalent cash de 46 millones. Esto refleja una sólida posición de caja de la compañía, lo que nos permite flujos disponibles para atender nuestras obligaciones y proyectos de crecimiento. Como parte de nuestra estrategia financiera, monitoreamos permanentemente el mercado en busca de oportunidades, con el fin de estar preparados cuando las necesidades de caja así lo requieran.
spk02: With this, I return the word to Andrés, who will talk about operational indicators. Thank you, Alan. Let's start then with production issues, average price, value and costs.
spk03: This graph summarizes the operational performance of the last five quarters. As you can see in the bars, the production of the first quarter increased by 2% in the first quarter of 2023. The increase in production was mainly due to a higher production of 7% in the Luján Lechí area, explained by higher volumes, and similar production in Jembo. The cash cost for the sale had an increase of 14%, explained in great measure by the higher cost of the artisanal mining. We have already talked about the fact that the artisanal mining is paid 1% of the spot price, so that higher cost is due to the increase in the price of the gold. as well as the strong devaluation of the Colombian peso, which was 17% at the beginning of the year, and which influences some of our costs included in that currency. The only sustaining cost for a Saturday sold in exchange increased by 14%, explained by the increase in costs already mentioned and by the 20% increase in CAPEX, of sustainment for operations, given changes in the fleet of vehicles y mantenimientos. El precio promedio de venta del trimestre tuvo un incremento del 10%, situándose en... Un segundo.
spk02: Usted perdió aquí en la cifra del precio promedio. En... 2067. 2067.
spk03: Before moving on to the next slide, I want to show you and talk a little about these stable figures. One could be distressed comparing a company like Mineros with a company, for example, commercial, because one sees that every quarter is similar. What happens is that mining operations work at full capacity. We try to keep our drugs and our plants at full capacity. And that's why the variations are so small. There are variations in the Olin Sustaining Cost, which is an indicator that is used a lot in the Toronto market, because the Olin Sustaining Cost includes capital investments for sustenance. And those are more, if they are more potent, one could say, and they are more changing between one quarter and another. But in general, what one sees is a very, very, very flat operation. When can you expect there to be changes? When you incorporate an additional operation or a project that adds ounces. In general, what we can expect from a mining company, if it goes well, is that it is very stable. So, that which in other businesses one considers to be a not so positive signal, in mining it is, because what it shows is that Mineros is a company When one is selling an asset that serves as a refuge to investors, it is very important. Now let's move on to look at details by operation. Let's look at Colombia then. In Colombia, the production of the first quarter was 19,000 ounces, which represents an increase of 7% with respect to the first quarter of 2023. Remember that in the first quarter of 2023 we had a significant This is also explained because we had a higher volume of drag. So we had a good first quarter, but we have had better ones, as you can see in the Q2, Q3 and Q4 of last year and we are working to raise those volumes. Here there are also normal variations in the aluvial mine. In the aluvial mine, one passes through areas of higher tenor and through areas of lower tenor, so it has slightly better quarters in some cases than others. Al compararlo con el primer trimestre del año pasado, el Only Sustaining Cost, o AISC, incrementó un 16%, debido a un incremento en costos de personal. Recuerden que el incremento de salarios en Colombia fue del 11%, y eso sumado a una revaluación del peso del 17, hace que el incremento en dólares sea tremendo, el impacto sea muy grande. to higher taxes on gold and jewelry, to greater depreciation and amortization due to weight regulation. The gross utility decreased by 5%, to $12 million, given the previously mentioned increase in costs. Here we say the same thing again, look, it is a very constant operation. We see that variation in the All-in Sustaining Cost, but it is not so big in the Cash Cost, which is the one that is based on the costs and does not include CAPEX, so in general what I see is an operation in good condition and solid results.
spk02: Let's move on to Nicaragua. The production of the Angelco trimester was 33,000 ounces.
spk03: Look at those numbers, 33,000, 32,000, 27, 34, 32, 33. This is 27,000 oz of the third Q of last year when we decided to stop to intervene the tail company and the toxification plant. But in general, what you don't see is a plant working at full capacity. The AISC per oz sold increased by 15%. This is mainly explained by the increase in the price of gold, which we had already mentioned, by larger purchases of artisanal minerals, and by an increase of 64% in the maintenance cap. This increase of 64% in the maintenance cap is also normal. We did more mining development. When you operate in a underground mine, you have to basically make development by moving sterile materials to reach the rich zones where the debts are. and that is accounted for in maintenance caps and also completing the commissioning of the detoxification plant for the tails of the process. The utility rate increased by 8%, mainly explained by higher sales of silver. We are having a substantial increase in silver sales, which we find very interesting. There is an area of our mining property in Nicaragua, which has an unusual presence of silver. They are not such large volumes as for one to say that we are going to become a silver mine, but they are interesting volumes that have an impact on the best results of the operation.
spk02: Let's move on to the issue of challenges and perspectives.
spk03: It is customary in the Toronto market to give what one calls guidance, that is, how do you think their production and how their costs are going to be. Our guidance for 2024 is that we are going to have a production between 209 and 229,000 ounces. Our cash cost is going to be between 1,180 and 1,270 and our holding and sustaining cost between 1,430 and 1,530. As you can see, we are meeting the goals without problem. In what has to do with growth and exploration, Our focus this year will be to follow the course of the upcoming project, in which we hope to finish the feasibility stage during the second half of this year. And focusing on what has to do with the red moon deposit, we are going to focus on expanding current mineral resources, identifying new objectives around the main deposit. We are doing mineralogical studies and we plan to carry out field work centered on geophysical anomalies from the third quarter of 2024. This year we plan to make 8,000 meters of perforations in Nicaragua, which is an interesting exploration campaign. 6,500 of those meters will be in a target that we found very interesting, which is the Guillermina target. With that I finish and we move on to your questions.
spk02: Well, let's start with the first question.
spk04: Juan Antonio Mejía asks us, given the changes in the shareholding composition with that of Sun Valley and Mercantil Colpatria, how is the new shareholding composition? Should shareholders update it for us? Sun Valley acquired 22.5% of miners,
spk03: And that participation was sold by Colpatria. So Colpatria was around 8%, 7.9%. The other shareholders maintain their historical composition, so there has been no variation in the share composition. This information was communicated as relevant and is also visible in our page.
spk02: We are waiting to see if there are additional questions from some of you.
spk04: Andres Vergara asks, can you please explain how the price at which the artisanal mining buys gold is composed? Does it work as a formula in which they maintain a margin over the international price? in case they do burn?
spk03: Yes, we pay the artisan minerals a percentage of the price of the day. However, that percentage is not the same in all cases. They bring a mineral that varies in gold content, that is called tenor mining, and when they bring us a mineral with higher tenors, we pay them a higher percentage of the price. When they bring us a lower mineral, we pay them a lower percentage because all minerals have the same processing cost. So the mineral with tenors is called that, with high tenors, it is more cost-effective for us to process and that is why we pay it better. So it is a variable formula where we pay them a percentage over the international price, it generates a good margin, the margin of the artisanal mining for us is similar to the margin of the own mining. However, artisanal mining has less need for capital investment. So, the oil and sustaining cost of artisanal mining is better than the oil and sustaining cost of the own mining. However, for strategic reasons, it seems to us that both must be maintained.
spk02: We have our own mineral production and we buy artisanal mines organized in cooperatives.
spk03: Maybe what I would like to add there is that then that variable price of mineral purchase makes that in times when the price of the oil is high, the cost goes up, but it has a net positive effect on the utility and in times when the price of the oil is low, the cost goes down and it helps us to have a kind of natural coverage in that risk of the price of the oil.
spk02: Question Carlos Quintero.
spk04: Regarding the court's sentence on the deductibility of royalties, how much impact do the projections of the results have at the beginning of the year versus now? And as a second question, what is the degree of progress of exploration projects in Chile? Carlos, I will answer you first. The decision of the Court is not yet firm, so it has not affected the financial states yet. However, if it were to affect them, what we are currently seeing is that it is not a very material figure yet and we are waiting for what happens in the courts.
spk03: And regarding the progress of the exploration project in Chile, that project is in something that is known in mining as maintenance care, and it is that the minimum is invested to keep it active. Why is it in maintenance care? Because we were partners of Yamana in that project, Yamana was sold, so now we are partners of Pan American Silver, and this is a project which is at the end of the line in the priorities of Pan American Silver. So they have not yet made a decision about what to do with this project and we do not expect them to decide. We have a 20% participation. The decision is basically taken by the majority partner. Nicolás Álvarez asks us
spk04: I had understood that with the exit of Hualcamayo, the cash cost and the AISC were going to decrease, but it has not happened. What is the reason? Nicolás, there are two main reasons, which is what we are seeing this year. First, the price of gold continues to increase and this affects the costs of the artisan mining in Nicaragua substantially. Number one. And number two, the weight is quite overvalued versus last year, and this also significantly affects our costs in Colombia. The increase in the costs of artisan mining is not necessarily bad news, because just as we are paying more, we are also receiving more when we sell it. And the revaluation of the Colombian weight is a reality. The Colombian weight has devalued almost consistently in the last 10 years. Last year it revalued, it went up against us, but we have to wait and see what happens with our weight in the next 12 months.
spk02: Question from Andrés Vergara.
spk04: I understand that in the artisan mine they have a natural hedge at the price of gold. I have seen that they use covers as derivatives of the price of gold. What percentage of the production has a price covered with derivatives and at what time do they have the covers? Yes, Andrés. Historically, we have made some gold covers. However, at the end of the quarter, we only had covered 4,500 ounces of gold, 1,500 ounces a month until June. So, from now on, I think we have a very good exposure to this price of gold. We do not have more coverage this year, at the moment. Maybe I would like to complement the issue by saying that, in general, what the policy foresees is that we cover
spk03: the most challenging operations, the operations with higher costs. And in general, with the sale of Guacamayo, both operations, both the one in Nicaragua and the one in Colombia, have low costs, low cash costs. The oil is also high, to complement Alan's answer a little bit, because we are investing hard in Nicaragua and Colombia. making investments to increase our drag capacity, and in Nicaragua we are making investments to increase our mobility capacity and to reach mining areas. So there is also a certain stationaryness in those oil and sustaining costs a little higher. So, if one removes these capital investments, the cash cost of both operations is good, it has a considerable margin with respect to the total price of the oil, and that makes us have pressure to take coverage, it is better that the company is exposed to the price of gold, because that can generate a better result for you as shareholders, because the coverage we took had floor and ceiling. That would allow us for the price of gold not to go below a floor, but it also put us on the limit of how much benefit we could have from the best prices of gold. Pedro Castro asks us,
spk04: Buenos días. Los felicito por el manejo financiero que tiene la empresa. Solo la caja puede cubrir las obligaciones financieras a corto y a largo plazo. Adicional, pueden atender la deuda, hacer inversiones en CAPEX y repartir dividendos. Mi pregunta es, debido a que la producción de onzas baja por la venta de operaciones en Argentina, ¿qué posibilidades tienen los otros proyectos de crecimiento para aumentar las onzas producidas por la compañía en el 2024?
spk02: Thank you, Pedro.
spk03: Porvenir is a project that I think we have already made public the profitability of that project, right Ana? So it is a project that in profitability we are estimating that it can produce between 60 and 70 thousand ounces a year. So that would increase the mining production if we go ahead with that project. However, we are also permanently looking for options and acquisitions which is an opportunity that was presented to us thanks to the state in the Toronto market. Many times people ask us in colloquial conversations, well, the state in Toronto did serve for something, it served for a lot, and one of the great benefits it has is that we are in the same market as an important number of companies with which there may be potential fusions, or small companies in which we can make acquisitions, in many cases using not only cash, but also mining shares, as the equivalent of each. So we are currently in the search for those projects to increase the production of ounces. We have not yet closed any business, nor is there any sufficiently advanced so that it is relevant information that I should communicate to you, but we are still in the search. This is a good time to identify that type of project. And we are also working on organic growth, which is with the project to come. Las demás variaciones son muy marginales. Tenemos la posibilidad de incrementar un poquito nuestra capacidad de molienda en la planta de Panamá, pero eso es marginal y estamos incorporando algunas onzas, algunas, perdón, dragas formalizadas en Colombia. Eso también nos va a dar un crecimiento marginal de la producción en Colombia, pero nada material. Crecimientos materiales se van a dar cuando logremos algún negocio de fusión o adquisición o cuando echemos adelante el proyecto por venir. Well, we don't have any more questions, maybe I wouldn't want to go without telling you that we also see with very good eyes the good behavior that action has had during the last three months and we are going to be very active talking to investors to try to keep that going. Oh, here they started to ask.
spk04: Joana Rivera asks, what strategies are you planning to implement to mitigate the negative effects of unforeseen tariffs on the processing plant in Nicaragua?
spk03: At this moment, the truth is that if you don't look at it, the numbers in Nicaragua are quite stable. The truth is that the plant in Nicaragua is reliable and has a preventive and corrective maintenance program. However, we are also making a master plan because what we buy in Nicaragua is a plant of 86 years of existence. So it is a plant that we are operating and at the same time we are renewing it. That renewal improves the reliability of the plant and what we want to do is make it a master plan so that we know when a new old team is going to be replaced by a new one, where that new team would go. so that it becomes a more modern and more efficient plant. From the point of view of public order, we do not see, for now, any situation that generates any alarm. We completed trade negotiations in both countries last year and we have agreements with the trade unions that have two years in force, that is, it is not seen for now as any situation on that front. The public order in both countries has been stable in our operations and we trust that it will continue.
spk02: Well, now that the questions are over, we thank you very much for your assistance. See you in three months, or we will see you in three months.
spk00: Thank you. We end today's conference. Thank you for participating. You can hang up now.
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