Q1 2020 Earnings Call

[music].

Mr. Newell. Please go ahead.

Thank you operator, and thanks, everyone for joining us today.

Joining me on the coal from their respective home, so <unk> public school chairman and CEO.

How much smarter CFO, Justin Post school director of strategy.

The bottom hole structure operations Zambia.

But director of operations.

As usual before we proceed oh draw your attention before but over the course of this conference call, we'll be making several forward looking statements and also trying to read you to read the cautionary note that accompanies I'll first quarter, Andy and I and the related results news release.

Well, it's a restructuring, particularly through our company, which are detailed in our most recent annual information form an available on our website.

No.

A reminder, presentation, which accompanies this conference call is available on our website.

So as usual I'll go to start to get some opening remarks before harnesses review the financial results. Then we'll open the launched <unk> questions.

However, there isn't so much that is usual about anything these days because we're dealing with the pandemic.

This is the first time, we'd know how to at least some of our group assembled and one office to participate in all quarterly calls.

Today I went all joining the call those calls from our home when it's certainly an unprecedented Todd.

Before the quarter become a very few people that even heard of Mcrone abolish cool October 19, that's all last call in February it still seems like a China problem. So that was about to change dramatically.

The impact to fish was not significant anoro operations continued normally introduction of new protocols around sanitation distancing I'm traveled to shoes in fact, the operations performed quite well during the quarter.

Cobre, Panama, we experienced some unplanned downtime, but I'm not issue was resolved.

I'm Frenchie was a little better than expected with improved throughput and recoveries false sense an overnight study.

Oh cost within guidance and all in sustaining cost was better than guidance.

That's a new wells increasing pressure on the call to torched it despite that we come sooner I continue to generate strong cash flows.

We continue to advance rate and stop operational readiness, what culminating in the restarted production through the atmospheric Leach April Twentytwenty, followed closely by the hard pushing leach slumped.

Before I turn things over to Hummus trio is review I do think it started and Paul Morgan betray <unk> first condoms top priority health and safety safety of its employees and communities throughout the organization, we've implemented new protocols and procedures to provide protection for our workforce in the community at large.

These protocols are being developed and implemented according to the strict restrictions guidelines and regulations that are already the government and health authorities in each of our operating jurisdictions.

I'm showing some governments are put in place to mitigate spread to the virus like travel restrictions Boulder closures nonessential business closures I've had an impact of all business, but we're dealing with these issues I'm finding solutions.

The results of the government controls, we had an interruption of operations at most crews is less of a few weeks, we're able to continue to place a stockpiles and have recently commenced feeding threshold in the mine.

Cobre, Panama operations have also been impacted it was placed on preservation safe maintenance on April seven although we all keeping the Paul <unk> power plant operating Pablo maintenance activities and defeat the National Penn Panamanian grid.

As a result of these impacts we have reduced our previously announced overall production expectations for the year by some 75000 tons of copper on 30000 ounces of gold on the assumption that cobre, Panama all regimes production by the end of my.

As you would know two bucks expected we've completed a thorough review of all spending that's a result of significantly reduced our expected capital spending for the year.

Our operating costs have benefited from the decline in pricing some of our inputs together with reductions in G., a night through headcount reductions compensation costs for most senior style of up to 25%.

Exploration spending will also declined passes results of troubled restrictions.

And so along with financial improvements made in Q wall. The bottom chop issue in January the ongoing hedge program in more recent neither resetting of bank debt covenants, all of which promise we'll talk about shortly the actions we're taking it out operations with the support it behooves governments and all of our employees will help us.

With Stan these unprecedented challenges.

So with that I'll now ask kinda still take you through his review.

Thank you Jonathan Good day.

Oh Lucky sorry, you to the small I talked to financial management.

He is actively focused management of <unk> capital spending and operating cost, while maintaining a high level of safety and.

Yeah Vicki.

During the recent into times.

So do you just don't guidance, but capital expenditure and all in sustaining cost.

What did you prices have weakened over recent months, but the companys corporate.

And nickel each grew against mitigate some of the price volatility in the near term.

Yes, I agree the company will say 800, an 18 million liters of ultra low sulfur diesel photographed cost management strategy.

Recently, we announced that we have to mean that financial covenants and at the senior team under revolving credit facility responds to uncertainty related to kind of at Nike.

They did decrease cool to see school just since June 2016 put it to improve <unk> cash cash equivalents 1.1 billion, that's cool to into available.

Turning to the next not commit I'm not priced onto preservation unsafe maintenance.

Yeah, I outlined some of these excellent and not being placed into preservation site maintenance.

Following the decision.

Nice company Cinnamon preservation site maintenance it picked up seven April.

I've been spending up or do you actually God is between each week he has been reduced to.

218000 tons to 235000 tons.

And gold got introduced to 90000 200000.

I don't since.

Everything in the production guidance is dependent upon receiving approval from the Ministry of health.

Publicly.

Panama.

In the preservation and site maintenance shutdown and took a means to restart of operations before well by the end up my 20 Treaty.

Production guidance <unk> operations.

Unchanged.

But I shouldn't say maintenance costs estimated at between <unk> and $6 million per week.

I mean, this the speech labor contracts and other big everything fixed costs.

Turning to the next launching Twentytwenty Gordon.

So just noted couldn't be Panama cough, and cold call I didn't have been reduced in total production guidance is now.

And 155000 to 805000 tons compared to 850 to 880000 tons.

Previously issue.

It'll go go guidance has been reduced to 250 to 270000 ounces.

50000 pounds decrease from gone its previously issued.

Speed you mentioned, the company's reduce capital expenditure God in school tweet Tweedy <unk> company you want to view.

Production of $175 million from previous guidance issued this now down to 675.

Megan.

The reduction in capital expenditure will be getting treats moving construction on crush it seems willing to twentytwenty, one as well as deferring some sent expenditure together with the storing some process improvement and maintenance programs.

Operations.

It's part of the cost management strategy the at the end of the total.

The one cost range has been reduced cost since the town wells reinstating costs.

Guidance range has been reduced by five cents, but sounds as well.

I should note that production guidance and cost guidance includes assumptions on the impact of kind of at 19 on operations, including the assumptions on the deterioration that preservation them safe maintenance, that's kind of my Panama.

Turning to the next 90 production total copper production for the pool 295000 homes was 43% Oh yeah.

Comparable period between 90.

Decrease reflects 56000 tens of coverage animus contributions.

Oh production of 69000 ounces was 39% higher than the same period in the prior year.

The increase attributable to 23000 ounces.

I don't know production.

And he could then [laughter] <unk> review.

Comparative even though wander to 34 million don't this quarter is an 18% increase on a comparable quarter between 290.

EBITDA will benefit the for the quarter with 857 million contribution from calibrate animal.

And the favorable movement in the each program ethics, despite the impact of 8% lower realized copper price and the ramp up costs that right and so both $32 million.

[noise] comparative lots of $79 million in the quarter on a comparative loss of 11 cents the shape.

Net loss includes a niche phonetics being $284 million.

Approximately $192 million would it be eligible for customization and the same quarter last year.

They did decrease for the first time since June 2016, a reduction of 16 month.

Turning to the next launch it highlights but more detail in the movements in just illustrates the impact called Cobre, Panama on the EBITDA.

So turning to the next slide on multi unit cost hope to see one cash costs of $1.30 per pound was hussein's below the same quarter than the prior yeah I.

<unk>.

I hope to see one cost for the quarter was a dollar city I don't know.

All in sustaining cost of $1.60 pool.

Now for the quarter decreased did you see against the same period in the previous year.

The decrease would fix and they were titles he want to cash costs together with no way sustaining capital.

As mentioned previously referred to use the guidance, we're all in sustaining cost spot I teach that down do you see upper range of C. One my father seems but down.

Turning to call a hedging program outlook, we continue to utilize a copy.

<unk> program to ensure the.

Ability, okay stays while maintaining compliance with financial covenants met the fluctuations commodity prices.

So with the half the expected copper sounds of 23 tier age at an average gold price over $2 60 choose the town.

As 11000 tons and <unk> margin also <unk> pull with tells contracts at an average price of $6 76 downtown with maturities to Fabry Treaty 21.

Company is also helps hundred 19 million.

Liters of ultra low sulfur diesel at an average so city to U.S. since they need to help manage costs with maturities to April 20 to one.

And then it's not.

Great and liquidity profile at the Irene.

Yeah, that's at the cold chain.

The company ended the quarter with $1.1 billion neat unrestricted cash and cash equivalents and wasn't true compliance with all its financial covenants.

On April 22nd.

I used the coating the company amendment, the financial covenants, and Pena 2.7 billion dollar to learn and revolving credit facility.

Needed to EBITDA ratio has been increased to five times.

So the.

Second half of this year.

To 4.75.

For the first half of next year, and food and health for the second homes with next year.

It did service cover ratio has been decreased to one for the second third and fourth quarter well this year and full 1.21 0.1 full point next year.

Taking into account full cost just cash.

Operating inflows capital expenditure outflows and available cash and committed facilities.

Based on current assumptions of the impact of kind of at 19 operations.

The company expects to sufficient liquidity through the next 12 months to occur after its operating and capital expenditure plans information from compliance with these financial covenants.

We continue to take action to manage operational processes and for the street the balance sheet.

Thank you and with that on that now back at the time.

[noise], thanks, very much I Miss Thank you operator could you know turned over the call for questions. Please.

Certainly and at this time, we'll just remind everyone. If you would like to ask your question. Please press Star then one on your telephone keypad.

First question is from Orest Wowkodaw with Scotiabank. Your line is open.

Hi, Good morning, [laughter] I'm wondering if we could get a little bit a color on the not caught impact of the suspension at covert Panama and I'm wondering I mean, youve, obviously cut the guidance for this year I think you're assuming a essentially a two month suspension.

What kind of impact could that have to the ramp up next year.

Based on the guidance I think you'd previously issued which was about 310 to a high range do you anticipate any impact.

[noise] constant where do you do that.

Sure Oclock, hi, or us.

Yes, the extensively at the 300000 ton a copper production per annum at that level. We we were expecting to produce be producing about 75000 tons per quarter and really the impact of co. The 19 on our business is that.

It's really just how long these that duration and in the guidance. We've lost three weeks in April so far we were saying it but at the lower end of a pound Mike I was hoping to start in my but then it might impact production through to the end of.

June but at the upper end and I'm sort of mid July and then we would get back to the 75000 tonne per quarter and at that level.

You know, particularly for Q4 and.

At the high band, if we're able to do that.

In the third quarter as well.

You see any impact into the next year 2021, because we've got that at the 85 million tonne per annum throughput right.

Oh, that's excellent. Thank you and just in terms of the restart from the covert 19 suspension you put up guidance I guess of restarting by the end of May is that indicative of what the government is telling you with respect to the appropriate restart timeline or is that just sort of.

I'm just wondering if you give us some color on the timing here.

Sure our us look what I think it's like everywhere else.

I think we're gonna see a massive greenlaw or you know or anyone come down from the temple mountainside Everything's looking for business. What we have got in places a very collaborative approach with the ministry of health and the government around.

The priority being the health and safety other workforce.

And that we were able to have a clean and sykes ought to do business.

So at the moment is about 8000 1100 people long sought and really that's on care and maintenance. The reason we can you talk about preservation inside my sense is that we are able to determine the mills and that's important because the Panama climate, we wouldn't want condensation until until they reach rock going.

Into the meals the re some production happening, but it's really around.

And that a when we're ready to stuff that and everybody's happy that we can we can stuff and that will be around [laughter], demonstrating a clean unhealthy saw it which is.

We can put an end in terms of where we had as a source.

But then also I know the surrounding impact of caused it.

Tomorrow, and the overall trajectory of transmission in Panama, They always you'd be looking at the could nationally and making the decision nationally we would hope that <unk> cobre, Panama as an isolated saw it is a good candidate because its segregated from the rest of the country with it.

Reasonable ability to hold the border and then manage accommodation manage.

Personnel long sought to operate in the very strict protocols the ministry of health has food.

Thanks Trust I appreciate it.

The next question is from Lawson Winder with Bank of America. Your line is open.

Hi, everybody a trusted them, maybe I can just start off by following up on your commentary there on and preservation and let's say maintenance, obviously that that's different that you can you guys used in April 7th released when you call that care and maintenance you mentioned that rock is still going into the.

No no it is that a rock of.

Oh, hi enough grade to still have some ah some copper coming out and if you know what else is involved in preservation and safe maintenance as opposed to Karen.

Sure Lawson.

Extensively its care and maintenance, what we and we wouldn't be saying that we producing corporate mark that you know in terms of ships of Oh copper, leading cobre, Panama. It's not when you you you know what would be a pretty full production level, but what's important is that the mills and that's principally focused on the preservation of the assets I'm sorry.

You know for example, those big GM days, the gave us motor drives.

On on the on the Big Sag Mills on the Big Ball Mills, we wouldn't want to see any condensation. So it's important they run for continues period of time instead of 12 hours and for that reason you know we wouldn't want to be running them empty for that period of time. So that's why we putting rocking it's not about production, it's about keeping the assets in condition.

If you went to the other extreme which is a food care and maintenance program, you'd obviously be looking to completely empty and completely shut down and then the problem is when you come to stop you have a much longer ramp up.

The reason we were able to do that is the number of people, it's not materially different between care and maintenance and won't be cool preserve I shouldn't say maintenance.

You know, it's the same workforce.

So maybe we have the people on thought were confident that they can maintain social distance that we're able to.

In the risk the job and hazard identification for each tosco muscle it to manage probably the 19th managed to transmission divorce in you know like what practices.

And for that reason.

It's okay to keep putting material through but we wouldn't talk about in the context of production. The other activities that are happening.

You know, we're obviously focused on the timing stand and moving that forward and that again that's more around.

Environmental side that we managing that responsibly.

And then the other is the power plant.

Panama and the National grid authorities came to have that power into the grid and so at the moment.

How section is running it.

Pretty much full production.

Okay, great. Thank you for that and then.

Just another question I Cobre, Panama, you know your your guidance that normal production levels Cornbread Cobre, Panama will acquire from late they until the late January early July even threeq. All production there was a bit of a surprise to me I'm. Just curious if you could just give us an detailing on why you think it would take that.

For a long period of time to get from a restart at the end of May to the normal.

Possibly as late as mid July thing.

Yeah look I think the might <unk>, it's really around where we where we would be at breakeven.

And and it really depends on having a clean and safe sought available it isn't really that ramp up its about demonstrating and and making sure that personnel a safe as part of that.

At the moment, because we have a hod water to the mine it takes.

We were insisting on an isolation regime that two weeks in corn thing to come onto the sought to make sure that you know we don't have through the cases on my thought.

And.

You know you appreciate that moving a shift workforce on having two weeks of oscillation when they they into the gate to when they can actually work in the field, we just need to work through that in on that on a sort of context of manpower in life of mine.

And that so that we can maintain a cycle combination you know not be doubling up in accommodation units.

And that's really the reason there and then if we can.

Obviously, if if the could in Panama performed somewhat better than we can start to accelerate a little bit more than in the sort of metering in July.

Okay. Thank you for pretty much that color and then maybe just one final question on Cobre Panama.

I spoke about the four to 6 billion dollar and care and maintenance cost. So I guess now preservation and say maintenance cost.

Assuming the suspension of labor contracts and hard downturn of other variable.

And fix cost.

I'm just curious.

Uh huh.

Have you been able to suspend those labor contracts and to what degree can you effect, a hard downturn and or other variable cost the cost. Thank you.

Yes, sure. The simple answer is yes, I'm, saying we suspended.

The 7000 or labor contracts last Monday.

And that's progressing in order that according to the that was approved by Mitchellville, The Panamanian Ministry of light, but on the price Friday and that's happening in order so.

That's already underway or the other turned down on cost is really as a.

I was mentioned accessing cheaper fuel prices.

And so on and that's a really starting to come through to the business.

Thank you very much.

The next question is from Matthew fields with Bank of America.

It is open.

Oh, Hey, we want to.

I've two questions one on the term loan and one on the revolver. Good to see you got the covenant relief at April I see from Slide 14 that 450 million is is still do under that term loan amortization in 2020 and 2021.

Was there any discussion with the banking group for the covenant waivers that term loan amortization relief would be apart like you you might be able to defer some amortization totaled 21 or or even later.

Thanks, and then I've a revolver question.

Sure.

Okay.

It It was right you know I get right.

At this stage, we do have sufficient liquidity and hate crude and dissolved what we need for the remainder of the yeah and you see us through that period. So the plan is still to pre pay that term loan easily.

Hi annual installments of two to five every six months so.

So that's sort of less than you had a question on their evolve as well.

Yeah, I think so you know the January re Fi, where you did the the bond add on you know took care of the 20 ones. The 300 million stub there and then the Fourfifty excess was supposed to pay revolver down, but you ended up drawing it in full.

Why the draw a fully on the revolver. It does that for 50 now sort of is that earmarked for the term loan and what this year or is it something else and then do you intend to use the 300 million accordion feature before June on that revolver.

Right, so sorry, because I think in essence, but.

No no.

So the.

The into when we issue that wants to pay down the revolver, which we do it.

But then as you as you quite aware the circumstances change quite dramatically on the metal to an all three months and what we've seen is quite a few companies drawdown on the revolver and we.

No we did this time.

So that's what we did just before quarter end is just true down on that evolve and have that.

And the plus cash.

I can do with the accordion feature that's just an ability for us to bringing additional bank.

Before end of June.

Upsize that facility to 300 by the spin I think it's probably fee to stay in the current environments unlikely to.

Secure any fresh cash under that facility.

Count on that 300 being available at all under the facility.

Well, the incremental but somebody coated.

Okay. Thanks very much.

The next question is from Jackie principal those ski with BMO capital markets, but as of <unk>.

Thanks, very much a I just wanted to circle back to the garden and maybe maybe talk about the Capex spending that you are deferred or are you able to comment on what this means for 2021 Capex spending we assume most of that hundred 75 million deferral will be.

Pushed into 2021 and that spending in that your should go up or Oh with some of that 2021 spending discretionary and and maybe that the overall spending is gonna be similar to what the previous guidance was.

I just want to do up.

Yeah, I can maybe do the first before you can add onto that but okay.

A lot of some of the 21.

Okay stated it is discretion as well so you know I wouldn't ask the 175 to next year.

I would expect next year to probably be reduced from the previous levels, but usually if maybe you can then added but [noise].

Yes, I mean, all stocks right, but some of that is differing into 2021, Oh things like particularly the fourth question and Petsense to know.

But as I kind of such that you know when it when it comes to 2021, but you know we're really Oh do a full review as fast as well and it might be some discretionary spend schools after that as well so I wouldn't read into it but it means that our 2021 guy spelt out.

I don't think well.

I think and just shifting gears to Dan be Oh, I noticed in the M.

As a comment about how that.

San Diego revenue authorities looking to bring in some of 'em cobot mitigation measures in terms of tax relief.

No it doesn't seem like there's a lot of information.

Hi, techs measures, yet, but can you maybe give us some color around.

You might expect don't be implemented and if those are temporary.

You know what they're thinking on when those would be lift is and also if.

And you've got tax relief has been included in the news.

One in all in cost guidance that you've given.

Well that's all.

What do you want me to comment on that.

Well, maybe junior from the garden signs yet.

Yep.

In terms of you know why well well, obviously got no you had been an eye. It at this stage, but oh longest standing and looking into it is that that would be a if you look I know.

That's debate pro for the rest of the yeah that would be a saving on C level of about 40 pool or <unk> million dollars, which is three cents at group level, probably about six cents a consent seem four cents cents no and the post tax impact that would be about basketball million dollars, we happened to him.

Did that in into our guidance.

At this stage, because it's not an accident and we're waiting for the detail.

That's great thanks very much.

The next question is from Karl Blunden with Goldman Sachs. Your line is open.

Hi, Thanks, very much for the time, you've done a lot of can work in terms of hedging and limiting downside from commodity side. When you think about the additional sources of Macquarie. Your.

I realize you kept the revolver.

Could you give us it.

An explanation of what those might be if things continue to be worse than expected in the macros and preferences you might have some I think you've spoken about historically has been.

Secured that potential asset sales new project level debt.

Interested in potential liability national cutting down the line.

And if we we do have some.

Lastly, still available we want to do prepaid some on some of the screens or something like on on Corpus forward sale. So we do have some ability to do some of that.

Okay. So got some goal that consent and she as well that.

You know if you're looking at streaming deals that.

But as an option.

A secure data city in auction.

We don't have a lot of secure it does yes at levels. So we consider to introduce some I mean basically capacity within the banking group.

Introduce more that cable so that that is an option.

The next you will be aware, we all are running processes in terms of them.

Seven minority interest stake in Zambia, and rising soaked up you spoke about people that will take sometime but yeah. This is simply quite a few leave isn't that's without.

Turning to the bond market at the current environment, which is probably not that attractive.

That's helpful honest.

On those levers if it doesn't seem like it a couple of months couple of quarters before you have to make a decision. They obviously you can be opportunistic done a good job that parts when the markets about.

And if maturities, but should we expect anything you're kind of more that's kind of yes, you have 2020 say that will find a little bit et cetera.

Oh, I think it comes up liquidity.

The good in terms of the liquidity and we've we've now got some headroom and Tim.

Let me go up with the support of Al.

Very supportive banking group.

So that's given us headroom in terms of covenants and we do have liquidity. So there's no immediate need to Russia can do something so we can take on time and.

Basically the opportunities as and when applicable and I'll put you.

Thanks, very much good luck.

The next question is from Greg Barnes from TD Securities. Your line is open.

Yeah. Thank you Clive can you give us any guidance or color on whether the.

Discussions around those minority stake sales, particularly in Zambia, they reopen given China seems to be getting back to business or is that still.

A very slow process.

Triston do would you take that one.

Sure Oclock thanks, great for the question.

Yeah, we were seeing a little bit of China, reopening and yeah, I wouldn't say that things are progressing we price, but I think the.

Analogy given to me is there's things are a little bit luck at Donkey employment. If you were looking for an analogy Utica and animal analogies. You know you have to push the don't keep going hard, but eventually it will get the and I think that's the flavor. We have on things are coming out of China.

So would you push are you pushing the donkey or are they pushing it.

[laughter] keeps moving into the way, we we we'd be working on it substantially over the last few months and and I think that's.

Gives you some color as to where it gets it maybe seems to be some interest but I wouldn't.

In terms of likelihood, it's not like where it was and at this time last year.

Okay, Great got interested practical reality.

And that is that.

Oh it was probably.

And then issues have been running.

But of course, there all the due diligence requirements another.

Needs to witness.

Looking at things right at the moment.

None of the potential people can actually for that.

Nobody could get into western Australia them out of it all out.

So looking at Ravens Philip.

Just have to wait and that's probably.

Really constraining the timing of a thing.

Progresses continue more or less of a pace.

But.

Inhibited by affect that.

Things that call release can be done.

I mean, not that little bit uncertain, because you're not quite showing that change.

And would be different.

For different places across.

So.

Hi, Thanks, Philip just as well do you have any color on Covidien 19 and spread in Zambia for example in Africa in General.

It's the situation there the early stages do you anticipate it to accelerate and if it does.

With the government in Zambia travel restrictions, social distancing restrictions and things that would cause you to production a consensual Sentinel.

Mm Hmm.

Rudi.

Really do you want to do that.

Got it kind of text or.

Oh.

What is seen in in Zambia.

No doing all of this time since it is generally when we started to do.

Two.

Educate.

I'll look for <unk> and the communities that I'm looking for ways you could also done the soccer and scale in the center Colombia.

Earlier generally we've been.

Walden comedian communities and I've had education programs they went up.

When the first cases really started.

In in much.

The.

Yes, [laughter] Knuckling, you know Zambia had a or B C. Numerous examples to follow.

Throughout the world and especially the <unk> so.

I used to the action in South Africa.

He then in prison.

Effectively to stick to the excess designed if anyone if what you saw.

And.

Has made it and energy for people that come into the country is going to 14 day automation.

And that has worked well they haven't been the same sort of the koning distinctions put in place and then B S and South Africa, or Oh, or New York, We knew those places.

I want to think due to some extend it has had the benefit.

Yeah and that.

Zynga is gonna be the young population doesn't have the same sort of the cities of old people and it's a European countries, a consent and obviously it requires a different method of dealing with nothing is dealt with it likely markedly naturally.

Oh cells as the company is as all the others.

He said you did.

An enormous amount of all of work in screening and making a provisions for stuff and the communities.

So the downturn, especially aware of what's going on so.

We are now in going into my.

It's also then has had a month with all.

Oh knockdown of bars and restaurants like although yet they still have free movement is is it now and.

And that is a perfect. They look they will then be isn't he has he did so if all that a number of positive cases should there's none of them enough that tasting as you would see and the other European countries, but I think that's also part of its access to be quite honestly I don't think for one minute.

That we will find ourselves in a situation in Zambia away. The government would be would impose closure of mining mining or facility.

They have.

They have clearly.

Divided.

The board.

They are actively are encouraging the mine to continue.

While.

Observing.

Various hygiene and.

Factors that so.

I don't see.

And situations and they will wind down to like no.

[laughter] classic thanks, very much like huh.

The next question is from Cabrera with C.I.B.C. Your line is open.

Thank you operator good morning.

<unk>.

I was wondering if you could provide more color on the segmentation hope youre topics reduction of 175 million.

With respect to like sustaining.

Projects or no I think you already mentioned that part of it it has to do with what sense now, but just wondering if you could provide more color on it.

Jeanette.

Yes, sorry income so a major reductions it it will include.

The the deferral of some expenditure on the fourth cross shopping center no since it said that they adopt an element of it and as well as well a sensational so I'm I'm getting a delay what deferment of some process improvements cautious petrone assist phase a forum.

Hi.

We had we have produced an element Oh development Capex that we so I do not think we'd previously said we had.

The million and guidance and we produced that down.

She 2020 to 20 million as well that will say consign. She some differentials have gotten a improvement projects.

Such as.

So five gravity gold projects and some results drilling and sometime it took us a monthly replacement and mixed oxide Jamison project.

And then what.

Well, we've had some reduction rather than reduction in budgeted.

And then one or two areas.

Uh huh.

So that broadly I will say.

Adoption in India is spend Onstream ACA lithia, even so that's so those would be the sort of key key areas where.

Capital expenditure has a bond and decide already.

Okay. So you don't come from what I can gather go disclosure.

It was about a 50 million reduction in sustaining capex about a 21 billion reduction in capitalized stripping.

And and so the other ones that you mentioned that is that the full 175.

Correct correct.

And then one more thing Chris I know it is my understanding that there was approximately $2 million put aside.

Or greenfield projects was that.

Completely eliminated is up 15, I didn't mention reduced to 29.

Yes, yes, it's gone down from the 50 that we had there is still 20 that we may or may not spend.

[laughter], we've lapped it into the time be guide.

Okay. So that's that's helpful. Thanks, and then with respect to.

To your plans for the expansion into putting cobre, Panama and I'm, assuming that although he says they put on hold.

Can you just providers would your thoughts on how you're viewing this expansion into into current environment.

Interesting do you want to.

Absolutely, yes sure in terms of yeah expenditure. This year you did the major elements, we really on on design stage.

But at the moment.

You know the demand work stream is really on.

Hi continued delineation drilling between the tissue pit and and cleaner and in particular around to the video to area, which was the the root for the the the proposed a conveyor belt to go through and so that works not enormously expensive we are ready.

Completed a substantial portion of it so we would like to finish that off so that we can get on with the permitting.

And the environmental studies, and so on which are part of the time table. So those aren't big expenditure requirements, we think that the way. It's good practice to continue and getting always done, but yes. The major capital, which was in design, we sort of pushed that back because we think we can.

Ah you know there won't be.

To many other projects that were looking at a in the near term and so we'll be able to give some focused to that if we need to do that and for the timetable to them. I mean, it's it's it's pushing back design with a view that we could bring that in lights at an accelerated as we need to.

Right [laughter] Christian.

The 25 million into for capital spending for stripping was that all related to covert bottom.

[noise] it wasn't in the first quarter.

Okay. Okay. So you could you couldn't just clarify the question on stripping.

Yeah, No like I said, you know if you compare your you've gotten some topics and I'd be end of last year.

This quarter, there seems to be about a 25 million a reduction and capitalized stripping.

Yes, yes adopt that.

In terms so.

Yes guidance.

It is it isn't all that it's just it's just it just it I see they largely in Panama is correct adoption.

Okay.

Thanks, very much then lastly, if I may.

You know.

In terms of your hedging for core diesel.

Does that.

Cofins your requirements for you know until April 2021.

Not necessarily.

I mean hedging is a tricky.

Exercise.

Im pretty.

Happy that we see the color fries moving back of up to those 30.

We will watch it carefully.

As you all know, it's a very uncertain world and.

Its useful for us.

Two.

Sure a little more certainty and that's what we.

We focus a lot on the second quarter this year.

During the early in the <unk>.

As a hedge cost 12 month, that's why it took us and of 2020.

But then when the price Kim.

Got a lot there was no question that we look at that.

It's a process.

2021.

Yeah.

Okay, you ought to be much will not just comment that it.

They want provision made.

For capital expenditure.

Cobre Panama.

For what might be needed to achieve.

Eventually 100 million tons Ya.

But.

Until a plot was running steadily ramp up.

We always are the view that we didn't actually know what is for them as well.

And.

So what you're just seeing there for capital.

Could it amounts that were just provisional what it might take.

Oh, the another know something like that.

I think that.

Adam in essence, those are no longer in there.

And we've yet actually to determine what the limit is on that.

Going forward, an awesome opportunities to increase the production.

Without any major capital expenditure.

For example in the nature of the drilling lost I.

We haven't yet had the chance to.

Work on that too.

To to see its impact what the benefit of one of the benefits of this period when its little bit slower.

We haven't been able to make some.

Do some work in the plant and.

A variety of.

Elements that that needed what dawn.

And we expect that those will.

Manifest themselves.

To some advantage.

Speaking wind it up again, I think triston was referring to that I see.

[noise] expected capacity.

Oh the operation later on this year.

Yeah, well understood.

Thank you very much everyone and so.

Okay.

The next question is from Matt Vittorioso with Jefferies. Your line is open.

Hi, good morning.

Let's take a quick stab at a yearend liquidity question.

He's got a little more than 1.1 billion of liquidity today, and then on the or.

Net loan amortization as a minus but it seems like based on your current guidance you should generating some.

Positive cash flow throughout the year. So I guess just from a high level. How do you see you know if copper were to stay or in this to 35 to 40 range just for a conservative assumption I would you see liquidity at year end with those two sort of thing trying to balance each other the amortization in the positive cash flow would you see.

Liquidity meaningfully different from where it is today.

Look we see it a sufficient.

And that's the spent we might could making sort of going concern statements at making statements that we didn't make so.

I mean, we have reduced capital by quite a bit we do it and monetization is coming up.

But some of the core operating costs coming down as well. So there's a there's quite a few moving parts to that.

That's a sufficient liquidity.

How about just as it maybe a different angle I mean do you under your current guidance then that spot copper where it is today would you still anticipating generating positive cash flow for the full either.

Sorry positive cash flow.

We will get generally positive okay.

Certainly.

Yeah, No I think you know the Xenmatrix once we go back repeatedly and UK capital expenditure and operating expenditure one one of exercise units you repeatedly go back and revisit some of these some measures that we do too.

East Coast.

Yeah.

Okay alright, thank you.

The next question is from Gordon Lawson with paradigm. Your line is open.

Hi, Good morning, following up on those ambien tax relief is there where you can maximize your view a t. receivables during this period.

I think sort of how do you know the.

Yeah. The event yeah, Yeah, I mean, as we said earlier, that's okay, just like it yet.

Look it's an ongoing discussions with government in terms of how to do the historic VIP.

Yeah, but I think its age or say CMBS in a pretty tricky situation at the moment Ghettoised said.

In July so.

I wouldn't expect us.

Suddenly bangin that VAT receivable and hence we have classified in the NOL balance sheet as well as a long terms receivable.

Okay and can you comment on the expected costs to wrap cobre, Panama back up.

As it relates to capex versus Opex and or is there any a estimated timeline to reach a 100 million tons per year.

[noise] Trust.

Yeah. Thanks, Mark Gordon Yeah, we haven't really changed the timing 100 million remains the same as what was in the 43, one or one.

Well just have to.

Look at that iteratively, obviously the focus at the moment is on getting back into production back into the ramp up to the 85 or in terms of cost do that its Philip was was mentioning we've done a lot of work in the background now it's himself a.

Making that a viable to us once we reach dot restart properly.

And say look I don't expect you know anything really out of the ordinary in terms of cost we were continuing to make sure that we do.

The right level like expenditure for examples into TNF on that we you know because we were at that period, where we need to be covering the broad dice Oh.

The whole wall the whole sand wall.

And so we need to keep that weren't going but that's not no. We have the opportunity to do that over long periods and do it steadily and regularly so yeah, we don't see any one area, where we massively.

<unk> increased capital in fact, you know if anything things like sustaining costs for example in the morning slate relate to.

The ongoing PCL replacement of key pots, and that's directly related to the usage hours in it.

During the downturn like this change that and push out some of those PCR programs. You know that's not in the capital adjustment that's yet to the correctly with the so I'm because you know we would like to see where we land and how those she now it's come out.

No I don't see any Nigeria from large capex to get back up to 94.

Okay. That's it for me thank you.

The next question is from you want us most Willis with Morgan Stanley. Your line is open.

Thanks, very much for taking my question. So a couple unless the my side first I'm on a sentiment regarding the on the low you'll sit force.

Crusher should we be thinking about a fool yeah delay relative to these technical study you published a couple of months ago.

That's the number one number two.

In terms of the depreciation of the Zambian quotes or can you give us a beautiful indication on how.

How much of dog is baked into your cash cost guidance for the year and I'll stop there for the questions.

On the core shot.

<unk>.

Awesome things I thought we were using a rate of around 16, 50, I I think the car right.

Round about 18000 couldn't say when.

You know there, there's a little bit potential potential tie them now.

[noise], what's a good.

Where do you can talk about the fourth crush there, but I'll just comment that.

When you have in pet crushing in online.

There's a development persist going all the time and so you need to have crushes.

In different locations.

Central Husbanding has three crushers.

And.

In time it needs to move.

The crusher into whats called Vsan cutback.

And that's where the fourth crush Olga.

But in the meantime, they haven't three crushers and.

Hi, Ken.

The juice.

Well they need to it in fact.

At the American Central's running particularly well.

Oh, we have no reason.

He's anyway.

Like that.

And.

And then the fourth crusher will come.

Come into play sometime in 2021 and that just got just provide.

Next ability for them in terms of that mine plan.

No.

Significant change occurred to me because I have a fourth crusher other than [laughter].

Give them a lot more insurance on.

Capacity with a plant.

And some of us flexibility into what I know thing.

The crushing constitute.

So that's the significance of that cap expenditure.

Just the nature of what pairs <unk> crushing and of course, we get the benefit of that and they'll bring.

That's clear thank you and maybe a quick follow up if I may you talked about the process around the minority stake say libraries and be a or at the Raven store.

Is it fair to say that sticks and love Cobre, Panama is off the table, even when operations normalized.

What's really happening you want to Trump Panama was.

Was that.

As a 10% holding.

Correct, yes.

And they had tried to set up.

Now onto Okay, and then go through a process to do that.

With that success.

And discussions.

We'll be with cars, which is government owns a process is pretty slow.

And perhaps like saying what is that it has no interest to other parties and that's because.

The original Korean ownership.

It was up 20%.

Oh cover panel in a separate company and they structured it with a Canadian company.

When we purchased at a sneak that stake we ended up with 50%.

Of that Canadian company that in turn on 20%.

And then the original agreements there was a fairly.

Simple and conventional right relationship between 20% any ideas that they operate a that's.

Well there wasn't really much in the form of any agreement for the 50 50 ownership.

Listeners are encouraged.

So quite a steak ended up being a 50% ownership.

Oh.

And I've come to permit.

Other 50% the operator.

Well the whole lot knows the other 80%.

And that means that.

Because I'm, particularly interested in that because quite substantial amount.

What we've been trying to do is to sort out an arrangement or that relationship that might make.

That prices what data.

As you can imagine it doesn't happen quickly.

And that's okay.

And we will have to do that possibly setting tend to set up pause and then eventually acquiring the car is take or something like that.

It's not not to.

Easy to plot of course are though.

And that's all participant.

Uh huh.

That's very helpful. Thank you.

[noise] again as a reminder, please press star one to ask a question. The next question is from you and Russell with Barclays. Your line is open.

Thank you guys.

Just wanted to follow up on the but Zambian, but that balances question honestly I.

I see in the quarter, you are able to offset some of these that I assume it sort of shot that came due in the quarter against other tax balances.

Just wanted to get a sense I mean does seem instead of being the first time that you have been able to do that and maybe just comment on an expectation that at least for going forward. You would you could be able to do that.

And then the second question just.

Around the working capital side I mean, you mentioned Oh here there was quite at a sizable working capital inflow into the business. This quarter just whats your expectations are for the remaining quarter just from a sort of ramp up affected a cobre, Panama and I'm just elsewhere across the business and then just lastly on.

The what Triston you were saying on the production you don't expect any impact for next year on the business, maybe just sort of across the business I'm, giving you all reducing stripping.

Do you <unk> does is that assumption that you can catch up and they fall.

That should not pose a risk to production <unk> do you think that that might actually increased the risks or reduce flexibility for next year on the production side to maintain that guidance.

Yeah on 10, other bets Oh, yes weve.

We have received a bit of <unk> obviously.

Circumstances come up, but Oh, and the reason, but more recently.

You know, we'll we'll certainly look at all sitting at a very well with away and when if possible. So I mean that that was positive progress in August.

Cool to yeah, and then this this year we second my.

Piece of paper prices MBS on that front.

On the booking capital.

Okay. So we are ramping up that Ravens hopes are they will be small that's.

But we will incur there's some some additional ramp up that Panama or just in terms of the working capital.

Before the other items, it's just sort of large swings at quarter end.

Which would try and eliminates in terms of.

Finished goods and.

And receivables.

But I wouldn't expect a race to change by much left some possibly some reduction on the inventory over the next.

It's just with the restriction a movement over there.

Basis.

Okay.

Okay. Thanks.

[noise] beyond aim to address the the question on.

On deferred stripping.

Well at least speaking from the current Panama side for Us is that.

Disseminated soulful I'd Oh, we have much less of those.

Well when Weiss context, it's much more about <unk> the degrade of the block that's in front of view.

And you know which of those grades you selecting to take the crusher. So if.

We do have some abilities and its scope was mentioning in terms of the plant throughput to take additional blocks a into the into the mill. If we can get the volume a you know often above sort of a target right. So.

There is some risk they of course, if you you know if you would.

Simply high grading, who deferring pure stripping.

It's slightly more nuanced cobre, Panama, because we could take that block to the mill a if we have the volume and spice available to take that block that's really what we're thinking in what the mine exercise will be as we ramp up is to be pushing the great. It's going to the meal lower Laura on producing.

More and more incremental.

The next question is from Nick Jarmoszuk with Stifel. Your line is open.

Hi, Thanks interesting apart questionnaire regarding a JV.

And that's issuance <unk> question on or would you consider issuing any equity or equity linked securities yeah.

If you need to the liquidity to address the debt maturities.

I think the short answer is no.

[laughter].

And then on the concentrator mining license I have my notes it expires in 22 is that still the case. If you talk about when you start discussions in earnest with the government to extend the license.

Well, we didn't tell you the studio.

We didn't pass this is being doing that and that's the unforeseen issues that [noise].

Okay. When should we expect some sort of news there or what sort of can you just discussed what sort of term you're looking for.

<unk>.

Hi.

Can you repeat that please and then yeah.

Oh I was curious maybe discuss what sort of what the duration of the mining license would be that you're looking for.

I would just be a a new will oh, the current license, which looks to be in for 25 years, which covers that might kind of mine life of about 20 assets should be should be fine.

Okay, and then are you expecting any material changes from the current ones.

[noise] material changes in the lessons itself.

Yes, yes.

No not at all.

Okay.

Thank you.

Your next question is from Orest Wowkodaw with Scotiabank. Your line is open.

Hi, Thanks for taking the follow up I'm just curious if we can get some color on when the updated Sachi Technical report maybe released.

I think it's a it's sometimes later this year, but we haven't sort of pinned to date, yet I don't think.

Okay, and then in terms of the energy cost I mean, obviously diesel fuel has come down significantly can you maybe give us kind of a broad idea of what that might represent with respect to cost savings.

I mean with energy pricing falling and how can you maybe quantify what that might do from a C. One perspective across the portfolio.

I I think in the append to cease to the slide presentation. We we get some sensitivity on a deal movement say, you know 10% movements in oil price, including an had impact.

I seem to have an impact about $5 million.

If we didnt have to hedge in place it would be about $10 million.

[music].

So let's say for example on time on B M fuel price.

[laughter] sensitive.

No price, but there will be some additional color.

Lets just trying to Oh, Oh, then they could tie in a premium oh.

I'd say.

There are awesome.

Element.

Cost because while the triple digits.

It doesn't feel like we give a sense I think on page 19 will be like that.

Okay. Thank you [laughter] and then finally I'm just an accounting question can you explain the what the accounting treatment is at Cobra, Panama with respect.

The precious metal from the stream because it looks like your grossing up revenue kinda far greater than even the market value of the precious metals and then offsetting that with some kind of cost increase for refinery back credits I've never seen this before can you just walk us through that.

Caused some in their own already take that question.

So eating tend to be the revenue unwind is here to the screen, we we recognize the sound of or the gold and silver the thing come straight so for them.

That was part of being the stream, we we almost not deferred revenue, which which include the deposit was received in the construction phase of Panama and then the on the ongoing amounts as well.

From an accounting perspective that I read.

I have a great really on revenue.

The gold and on the screen, which is which is essentially the unwind together with the goal is.

For the copper in concentrate on then coming through at a cost styles is is the cost of B.

One about credit we patches to to satisfy about I guess.

So if you net so.

Gross profit really.

[music].

Okay, but your cash cost per pound reported.

And they are they a clean number or or are they using an inflated.

Precious metal.

The net it's in that number say within within the byproduct credit. We are we're seeing the the byproduct credit from the gold and silver. This in concentrate was one of the net impact to be a of the streaming agreement as well. So that that would include the revenue under the cost of the refining about credits. The next number so we're not breaking out the impact.

Well.

Perfect. Thank you very much.

There are no further questions at this time, we'll turn the call back to Mr. Newell for any closing remarks.

Oh, Thank you very much everybody. Thank you to the the first quantum team as well for the call today.

And if you have any further questions. So you know I watch a cold call myself, all Lisa hopefully we can on so those for you. So look forward seeing you well some of you again next week. So hearing from some of your again next week the H.M. otherwise.

Well talk to and then actually into next quarter. Thanks Bye.

Ladies and gentlemen. This concludes today's conference call you may now disconnect. Thank you.

[music].