Q2 2020 Lundin Mining Corp Earnings Call
[music], ladies and gentlemen, thank you for standing by welcome to the one Dean mining second quarter results Conference call.
At this time all participants are in listen only mode. After the speakers presentation. There will be the question answer session to ask a question. During this session you will need to press star one on your telephone.
Be advised today's conference is being recorded.
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I would now like to find the conference over to your speakers today are reading stress president and CEO.
Thank you.
Please go ahead Mike.
[music]. Thank you operator, thank you everyone for joining money mining second quarter 2020 results.
I would like to draw your attention to the cautionary statements on slide two.
We'll be making several forward looking statements throughout the course of this presentation unlikely in Germany as well.
On the call to assist you the presentation and answering questions. Our Gen Hickey Senior Vice President and Chief Financial Officer, and Peter lived <unk>, Our senior Vice President and Chief operating Officer.
[music] before we begin to the second quarter results I'd like to highlight that we issued our 2019 sustainability report late last month.
Now available on our website.
The report as our nice annual report as a standalone document.
So we have been communicating our CSR E.S.G. and help.
And initiative is what prior to that.
I encourage you to read the report and learn about our sustainability related performance I stated goals strategies for that's true.
We have been recognized by several of our research analyst firms for our achievements and addressing T.S.G. challenges and opportunities for our industry. We thank you for that sports.
If you have specific questions. After you get this report you would be happy to follow up with huge provides additional information, including access to their corporate members of our yes you team.
Leadership I wouldn't be mining.
During the second quarter fast growing infection rates over 19 in Brazil in Chile have increased the risk of up rates in the communities there, Japan I intend to Larry operation.
The same time races infection in the areas here operations to meet in Portugal, and the Upper Peninsula, Michigan and the last have remained relatively stable.
But continuing to learn and adopt new ways of operating in response to fill the 19, while remaining focused on ensuring the safety of our workforce and local community.
Janus within the framework of our pandemic response plan recommendations on health authorities, and local and national National regulatory requirements, identifying and implementing measures to protect our workforce and our communities.
To help address the effects of the pandemic in our local communities.
Operations have contributed approximately 3 million indirects relief effort.
I'd like to thank our streaming partners at all site frightened about eating precious Samsung and LG as always show to us to offer system and contributed to our office.
Lastly, I would like to getting knowledge all of the Lenny mining employees and our contractors, who continue to rise to the challenge to keep our operations right medley and most importantly, thanks.
Before turning the call of engine hand, Peter can run through the summer results and performance of our operations I wanted to highlight that we celebrated the first anniversary of the acquisition that you thought earlier this month.
It has been a very successful first year and we look forward to deliver and many more at the outset has developed its full potential.
<unk>.
Thank you Mary.
During the second quarter, our operations in aggregate produced over 105000 tonnes a base metals at approximately 44000 ounces of gold.
We sold nearly 100000 tons of base metals, and approximate 42000 ounce of gold generating revenue of $533 million.
Overall, there was a positive pricing adjustment this quarter as the market price because first of many of the metals we produce.
The positive impact on revenue was $32 million for adjustments on prior period sales.
Additional information on a provisional prices up actually adjustment is included in our Mdna and no 12 of the financial statements.
Copper generated 71% about revenues up from 64% in the first quarter gold contributed 13% down slightly from the 15% in Q1, well zinc nickel inlet contributed a combined 15%.
Slide six represents a summary of the quarter's financial results.
We realized a copper price of $2.85 per pound in the quarter well above the average market price in part reflecting prior.
Period adjustments of 21 cents per pound.
Second quarter revenue was 44% about that at the same quarter last year. This is mainly due to increased copper and gold sales volumes with the acquisition should potter as well as the higher realized copper price.
Attributable net earnings from operations for five cents per share an adjusted earnings were seven cents per share for the quarter.
He tells me the adjustments, including the deferred tax expense such a part of a rising for foreign exchange translation, which has no cash impact a broken down into Mdna issued last night.
I would also note that our cash costs and production costs include expenses related to our readiness in response to covert 19 as many of these costs are likely to be okay for some time.
We how however, excluding $3.8 million of onetime project standby and suspension cost some adjusted earnings and adjusted EBITDA is broken down in our M&A.
With our operations are performing well and the increase in metal prices, we generated adjusted EBITDA of over $230 million in the quarter.
Cash flow from operations was $38 million adjusted operating cash flow before changes in noncash working capital was nearly $180 million or 24 cents per share.
Working capital was negatively impacted the quarter by higher trade receivables due to timing of shipments and higher metal prices.
Second quarter capital expenditures lot of cash basis, what $100 million, bringing the total or the first half of the year to roughly $240 million.
Our board of Directors has again declared a regular quarterly dividend a four cents Canadian per share or 16 cents Canadian per share on an annualized basis, maintaining the increase of last quarter.
We remain in a strong financial position significant liquidity and low leverage we ended the quarter with $284 million in cash and equivalents and the net debt position up $220 million.
A further $430 million of liquidity remained available under the company's revolving credit facility, excluding the 200 million dollar accordion.
Our net debt position has improved further since he ended the second quarter and is now approximately $190 million.
I'll now turn the call to Peter to discuss our operations.
Thanks trend here.
On slide seven Canterbury performed well and the face of increasing Colby 19 related charges implementation processes and protocols to protect the workforce and local communities.
Unfortunately production wasn't impacted by unfavorable or characteristics and unplanned downtime.
Pictured here is one of the two systems to conduct Colgate 19, PCR test delivered as part of the 2 billion pesos commitment to data kind of my health network to fund various plans and programs.
We continue to operate with a reduced onsite workforce to end to minimize potential for workplace exposure.
So far we have not experienced any significant disruptions to production concentrate shipments the supply chain or regular maintenance due to Colby 19.
However, I times, we have prioritized production mining over development and have delayed our expected timing to complete the mill optimization program CE marked another project.
Mill throughput increased compared to the first quarter. So once again impacted by ore hardness and available operational horse in the mill.
Overall variability in ore hardness has continued as we mine to the upper benches, all the south section of phase pen and the open pit.
We are undertaking a serious a mine and mill actions to address these issues.
Additionally, while we work to minimize the impact of the mill optimization project interferences and other operational downtime affected Milton for more than plant.
The mill optimization program achieved substantial completion in the first half approximately 96% complete with exception of the replacement on the fourth policy holder.
We have postponed the installation of the final vulnerable to correspond with planned downtime in January two on the 2021 due to the limited ability to safely mobilize the necessary contractors and consultants as a result of coking 19.
All remaining equipment necessary to complete the project is onsite and available for installation.
Full year production guidance for copper and gold has been reduced to reflect the first half actual results as well as the expectation lower throughput than previously planned for the remainder of the or.
Despite the last sometime production per ton mill operating costs in the first half of the or have been in line and.
In Canada areas full year cash cost guidance of $1.35 cents per pound copper has been maintained.
Sustaining capital expenditure guidance for the years also unchanged at $230 million Oh, there's approximately 100 million remains with 130 million havent been capitalize on the first half.
2020 exploration expenditure guidance remains up 15 me on U.S. dollars, including over 50000 meters of planned drilling.
Approximately six and a half million what spent in the first half of your with nearly 30000 meters I'm wondering on exploration drilling completed.
Continuing which have popped up on slide eight the operation had a good quarter, particularly in the context of continuing to adopt operating procedures and the enhanced protocols to protect our workforce in communities from Colgan 19 infection.
So far surpass that's committed over 375000 in humanitarian relief medical equipment and educational support to help phase dependent like their efforts include bickering Colgate 19 tests, along with protective equipment cleaning food personal hygiene kits to local communities.
We continue to operate with a reduced onsite and workflows. So I brought back certain contractors on personnel on district protocols to perform necessary maintenance project work and exploration activities.
Copper and gold grades and recoveries, both improved significantly over those of there being impacted first quarter as we mined and milled According to plan.
That's led to a 16% increasing Q twos copper production and up 28% increase in gold production compared to the first quarter.
Full year copper and gold production guidance has been maintained as we expect slightly stronger production in the second half of the.
The second quarter Cashcall self 21 cents per pound was better than planned.
Cash costs benefited from a favorable foreign exchange rate and from strong gold prices, which Japan as expected production of 85000 to 90000 ounces are fully exposed.
Full year cash cost guidance has been further improved to 65 cents per pounds of copper from 85 cents given to 54 cents per pound achieved than first half of your and improvements to our foreign exchange and gold price assumptions for the second half.
Capital expenditure guidance is maintained a 40 million for the year with 12 million of this being having being capitalized on the first half. This includes all capital for the new mobile Crusher, which is expected to be operational at the beginning of next year.
The exploration program was temporarily reduced in mid March in response to Koby 19 to minimize the number of employees and contractors on site.
We have since been able to increase drilling activities again, we're bringing back up for its real rig in August and are planning to bring to more in September if we're able to safely mobilize.
We targeted 40000 meters of drilling for the this is a challenging target with the restrictions due to colder 19, we have been able to complete approximately 9800 meters and the first half we will advance this aggressively as we can while maintaining health and safety protocols.
The majority of this drilling is to continue to focus on your mind targets with some regional drilling as well.
And the photograph on this slide you can see or Japan geologists examining color from the current drilling campaign.
We continue to believe there's significant value to be created a chip out of three expansion at the appropriate time No study work is a bad thing.
We indicated previously the expansion strategy it will be underpinned by the exploration success that we can achieve.
Nevis Corvo on slide nine operationally had a strong quarter.
Well cobot 19 infection rates and the areas are Portugal near never squabble were relatively stable during the second quarter. The team remains villages and continues to manage respond and adapted pandemic within the framework of its crisis management and pandemic grips false claims.
Social investments efforts are focused on supporting local education by providing tools and technology to schools transitioning to a virtual learning.
I have also launch a community project to distribute mass produced by volunteers and bring safety awareness to residents on how to reduce the risk of spreading coping 19.
That was corvo continues to operate with a reduced onsite workforce. So how brought back some contractors homeowner outside the immediate region I Wonder increase testing and help protocols to help with the necessary development then make enough.
Production of copper zinc and lead all increase over that are the first quarter. This was driven in large by record combined mill throughput with over 1 million tons of ore milled in particular, the copper plants at a record for tonnes processed in may of 260000 calls.
Per ton site operating costs were better than planned the benefiting from lower contractor costs, an increase throughput and the second quarter cash costs improved 22% or whatever that over the first quarter $1.75 cents per panel copper.
That was corvel is well positioned to achieve full year production and cast cost guidance.
Major construction and commissioning works on the zinc expansion project continued to be temporarily suspended.
However, minor works were carried out to secure the surface and underground construction sites as well as demobilized some contractor equipment and supplies.
Minor works that can be carried out without introducing additional risk to the operation have been plan for the second half of the year to help facilitate an efficient ramp up of construction and commissioning when they occur. This includes the ventilation raise work pre commissioning activities on the Sag mill and the surface conveyor installations.
2020 capital expenditure guidance was that has been increased by 10 million to $65 million to do this additional work.
Total preproduction project spend it remains unchanged at 360 million Euro.
The project we started his plan for early 2021, its currency to requirements for social did something and other personal limitation remains in place in 2021. It is likely that the project mobilize a smaller number of contractors than originally planned with an extended schedule in order to take the project forward.
Moving to think through I'm on slide 10.
Sweden has taken a different approach that many countries to come for something called me 19, while rates of infection in the areas and everything through and were relatively stable. During the second quarter. We remain diligent to continue to implement many of the same preventive measures protocols that up our rather operations.
I think everyone is building on its previous support with the local woman's shelter to help combat the rise in domestic abuse, two independent Mike and it has invested in up by local campaign to help stimulate local businesses.
Our next time that campaign of crosses in copper ore during the second quarter resulted in increased copper production, though lower zinc and lead production compared to the first quarter.
Full year thinking copper production guidance remain unchanged operation is positioned for a stronger second half of the year. That's mine sequencing calls for a return to high grade think stopes in the second half and into 2021.
Certain mailed operation costs were better than planned in the quarter, even before the impact of favorable foreign exchange rates cash cost guidance of 60 cents per pound to think remains unchanged.
Sustaining capital expenditure guidance for the years also unchanged at 45 million.
With approximately 28 million remains 17 million be having being capitalized in first half.
Exploration efforts continue in the quarter on existing ore bodies, as well as targeting to albeit from underground.
Full year exploration guidance is 6 million with planned drilling of seven thing thousand meters approximately four and a half million was spent in the first half of the year with nearly 11200 meters are drilling and 200 meters of exploration drifting completed.
Lastly, finishing strong with Eagle on slide 11.
While rates of Colby 19 infection in the U.S. increase later in the second quarter and the upper Peninsula, New Eagle rates were relatively stable. The team is continuing to closely monitor dependent make within the framework over the crisis management. A pandemic response plan to ensure that are up prevention controls evolve and remain effective, particularly as the region.
Typically experiences an influx of out of town visitors during the summer month.
To help local economy recovery from the stay at home orders early on that pandemic Eagle has launched a rock in local campaign to encourage employees to buy goods and services from local businesses.
Michael Morrison equal social responsibility advisor is showing off when they cards given to the employees who else kick start to program.
Over 100000, U.S. dollars with investing in this program alone, which will help stimulate the local economy and promote small businesses across the region.
Operationally equal had a strong and save quarter her new record for days without a recordable injury with that and that's the another quarter. It was 239 consecutive days and still counting beating the previous record I'm wondering in Haiti.
Nickel and copper grades were modestly lower than planned. So this was due to recovering more or than originally planned on the two levels will be equally.
High grade ore body is very irregular and cut and fill mining has allowed us to effectively explore and extract this additional profitable or.
As mining progress is into the higher grade regions of the Eagle east ore body throughout the year nickel and copper feed grades are expected to increase.
Full year copper production guidance has been increased to 17000 to 19000 tons and nickel production guidance reiterated at 15000 to 18000 tons.
The second quarter cash costs improved over 20% Dot dollar 13 cents per pound on Nicole compared to the first quarter.
Full year cash cost guidance has improved to 85 cents per pound on nickel from a dollar given them $1.29 cents per pound achieved in the first half of the year and expectations for a strong second half.
Having generated approximately 57 million of free cash flow when the first half of the year. He goes well positioned to continue to generate meaningful free cash flow for the remainder of this year and then next several years ahead.
Well now turn the call back to Marie.
Thank you Peter and Janine.
Well, we have a summary of our current.
We are discussed in each of the operational Sachin.
Which is in our Mdna.
As we have noted during the second part or operations performed well and did not experience significant disruption adoption, she might concentrate or supply chain.
The 19.
However, as you're aware the global effect 19 are continuing to evolve.
Not just like potentials.
Jim or others.
Options where operation.
<unk>.
Number of new pieces in Brazil, Chile, and U.S.J. agree.
Given the uncertainty in the duration of magnitude impact of the 19th.
Subject to a higher than normal degree of uncertainty.
Uh-huh assets didn't happen.
And profile now benefiting from.
Batsmen initiatives over the last few years.
Did you decide for about 30%.
Visible copper production by 2021.
No level.
It was primarily attributed to realizing the benefit of Linda you made in 2018, 19, and I really need at Kendall area. In addition.
Yes.
Mr. Temporary mentioned that the never saw though you mentioned project.
You mean.
Anyone.
Production forecast, so well again show significant production ramp up that's isn't usage.
The addition of Jakarta reach our gold production and more importantly.
Research and visible.
Productions, nearly 100000 them this year based on her.
The benefits of this scene again this quarter.
And lastly, nickel production is that you increase at the higher grade.
You don't need on mine.
Our strategy to operate upgrade and growing base metal portfolio that leading returns for our shareholders throughout the cycle.
We continue to execute well on our strategy.
The mining favorably position financially and operationally for an uncertain economic environment, even better position.
I want to me hovers generating greater demand for the metals.
Thank you operator, and I would like to open the lines for questions.
Thank you. That's this time I would like to remind everyone in order to ask a question for stars on the number one when your telephone keypad.
Your first question comes from Forest walked off of Scotiabank.
Your line is open.
Hi, Good morning, I was hoping we could get more color on some of the operational issues that candle area.
You cited ore hardness, but I think there was some disclosure also about other operational issues unplanned maintenance can you give us some details on what those were and I'm also wondering whether any of these issues, including the or hurt.
Spill over into 2021.
Okay, I think source and we expected to got a lot of questions.
And you know essentially.
When you look at the time parts this year.
We had about 30 30 million tons of warranty processes here to meet the plan.
So our plan for this quarter.
After the year was just under half of that in reality email.
11.8 million ton.
So in order to reach the original guidance.
Looking out over 100000 times today, and we know we're not going to get there for the first half we would have averaged somewhere around 60000 tons per day.
You know Peter has its effect on the details of what makes up those differences, but we had such a better second half.
To do you know somewhere between 70 or 80000 tonnes per day, depending on the quality of the rock and what's what's your plan. So we've been in that range in July So we're fairly confident in the remainder of this guidance and we don't expect anything to spill over into next year, but up here I'll hand, it over to.
For the specifics of the.
She.
Yep.
Okay can you hear me.
Yep, so or so where it's a good question. So the combination of both ore hardness and unplanned then disruptions and operations or on the or hard that's a we're continuing to evaluate that we're doing a lot more drilling a and some more talent met tests or for the.
On especially on on page 10 of the open pit to understand and better calibrate our models going forward. So that's that's ongoing we're also working with a better drilling and a better blasting to improve or fragmentation and so we we get better or fragmentation to the mill.
The mail itself, a we've had a number of a onetime mill unplanned down a with had some issues without trunnion on them a ball mad male without a water leak and.
And Oh pipes coming in which has made US go down. These are things that have been resolved a there were a onetime things and during the quarter. A we've also experience operational issues with the pebble crushing circuit.
Which when we can't crush all the pebble that's been created for the or is harder we create more pebbles and if we can't crush all the pebbles, then we get <unk>, leading load to the Sag mills, which are lower throughput. So those are the things that we've been working on during the quarter trends are improving.
And also we've had some see mop related disturbances operational during the quarter. So.
Plugging I'll outline cycle lines and the weather we've learnt a lot during the quarter. We've made a lot of improvements or what else would do and then the mill.
Leasing ball mill charges to get more power dropped more power all the ball mills.
And all of course, we're working with the pebble crushing circuits came through both capacity and availability because we don't we can't afford to have those crushers down.
Because we need to crush all the pebbles I thought on created.
Okay, and what gives you the confidence that the ore hardness issue doesn't continue beyond this year.
It's a modeling that we see that different phases.
For the open pit so it's it's the thought logical models that we follow and predict.
The phase two studies done.
No we're in the higher benches, the 10, right now and as we get <unk>, the Oregon softer and not untypical no similar areas and paid nine. So you have said you know the history of phase nine being very close and how they wore trended and so we know that it's harder in the upper benches, then it will be analog.
So no we're definitely not finished.
Okay.
Thank you yeah, there I cut you off there I don't know here, let me know that was good [laughter].
HM.
Your next question comes from <unk> Morgan Stanley Your line is.
Oh, I guess, good morning, and thanks for.
Taking my questions.
Three questions from my side, the first on chip bother you mentioned.
And then just in a.
Continuing with a drilling activity this year.
How should we thinking about the timing of potential updates on on the expansion Optionality would do is truly be Larry I'm, new to maybe it would be line be ego plumbing I'm Fine line, then secondly, when we look at the Chicago.
She calls, but if we were to look up the revisions to your gold and FX assumptions is it fair to say that about two thirds or excuse the Dod and on the other onto a third coming from that their operational performance and then.
Lastly, I've come to lobby or there was some noise recently on headcount reduction can you elaborate on your auctions there and.
How do you see the upcoming wage stopes it playing out thank you.
I'm sure Okay. That's a good morning.
Good question, there I guess in terms of the drilling this year as Peter mentioned in his discussion of the operation.
Our targeted 40000 meters is an aggressive target given the fact that we had to curtailing the first quarter.
But yeah, we do and has Atlanta I'm not sure if we get the 40000, but we're going to try as hard as you can wants to maintain safety, we have been proceeding with the desktop studies and <unk>. So that's an ongoing so at the moment of course, the drilling is important to that it's difficult to say, how it will affect the timing so yes.
We had been thinking of an 18 month timeframe John achieved the drilling.
Within that timeframe, then could have a couple of months a delay, but it's very difficult to say right now, we maybe able to catch up on that so.
I think at this point, we're still hoping to get to that timeframe, but.
Give or take a couple of months.
Second question on the revision to the a and B C. One yes, definitely we had a very good benefit from the Golden Efax and so you're correct in assuming that there would be a large portion of the benefit from that I do note that our guidance.
Well under where the current pricing and so.
In terms of the gold price so there could be some further upside there and the site has done an exceptional job keeping a close a in hand and under control and so the costs on.
On a local currency basis Oh.
Let me very well.
On the headcount reduction handle area, yes, we did get a.
A little bit of crap.
I'm not a lot and of course, we are in labor negotiations. This year would be union and part of the layout program was an early retirement. So it was an early retirement business optimization program. So that included you know adjustment to Q.
Eliminate some roles where their new skills and technical capabilities that are needed in order to meet the changing environment.
And a good portion of that we Didnt then offers for early retirement to workers, who are over 55, and then they would have an enhanced compensation package with pension health education, depending on the work or circumstances. So that was he probably a just over 100 people in total.
So it wasn't a huge a portion 5% to 10% of our own direct employees, but as you know we had.
A large contractor workforce as well.
And so that's what the early retirement and and restructuring program was based on in turn on the labor negotiations in the current here, we have five unions, representing the workers that candle area and the port facility.
So we are we have started negotiations with them. We reached an agreement with one at the smaller unions, representing the plant workers that are land, which is on that side isn't valley.
And we're extending our current agreements have made 2022.
So we are currently in discussion with the other for Union and working towards that agreement how does the expiry of our current agreement.
I think that covers all the question.
Yes, it does thanks very much.
Thank you.
Your next question comes from Jackie for Spolsky.
Be more capital markets your wonderful.
Hi, Thanks, very much I guess I'll just start with a with candle area and then another thing you highlighted in the India name was a that you're moving back in your seat and pushed back you moving back into the area, where you had the wedge failure back in 2017, and a and obviously I mean, you're you're more aware of it in your monitoring it more closely now but can you.
Talk a little bit about a if there's any risks to the operation or or.
To the workers a in terms of moving back into that area and how you're able to manage around that fall Inc.
I'm sure. So Peter I'll have a goal here and then if you want to add anything. So yes. We are in the area, where we had the alleged failure and I'm just wanted to highlight that were in that area, where very cautious and of course, given the history. There the geomechanical can do.
Our similar so we have done quite a bit of expense in modeling to analyze the best way to mine, we are taking Boston, but we do have you know that the typical and things that you would expect flooring industry best practice in terms of monitoring you know that we have blasting protocol, especially for that area.
Dealing infection.
Radars that you would expect frieson.
Since I'm at or so all those things are deployed and at the current time, there's no movement in the area.
So we have examined and number scenario, so inherently modeling and it suggests that if we if we did have an issue. We don't have any concern for the current production profile, what you would probably anticipate.
Is.
You may have because it's in the area near one of our switch sat for the Rand you would how to Super inclined not for example, or use a longer haulage true phase 11.
But Peter you then involved and detailed modeling I don't know if I Miss anything there.
No I think you set up.
Being very cautious and area and the and monitoring continuously and modeling.
Have contingency plans.
That's great to hear and if I can just that's going to a different topic on city P. You a indicated that you're going to be a restarting that early next year.
With assuming everything goes well a with what's called the restrictions and things like that it if that's a if that's the schedule that you're on can you maybe just give us a bit of color in terms of like what the remobilization timeline would look like and when we could actually.
C or a completion of the project Gonna do you have that kind of detail at this point.
Oh, we do you have a number of different plans depending on the restrictions that we have so we are giving a little better work this quarter.
And Peter do you want to speak to the Remobilizing.
Yeah. So that's what we said we live.
Taking into account Colgate 19 situation and done a prediction how long are those conditions will last so we've put a plan together anticipate that work, we're not planning to bring a huge huge numbers of people back at same time, so we're going to spread out a that people to minimize any potential continued in fact.
Certain risks with it but we have to monitor the situation in the area cobot situation in the area and then we'll adjust accordingly, but will bring we're not going to being a the huge numbers of contractors back as we previously had bought again this subject to change depending on.
Things go.
Covert related.
Oh, that's answered a question.
Okay. Okay.
Thanks very much.
Your next question comes from Lawson Winder of Bank of America Securities Your line.
Hi, Good morning, everybody I'm, just a question for me, maybe Oh and as well.
Well what is it fair to say that.
Existing never Covre coal operations are benefiting from does that.
Currently shutdown.
[music].
I think.
Then he will be a benefit to never scored on it you did that.
Yes.
And I do think that given the current called the situation Navistar, though is the site, where we probably have the most challenge.
And just because of the way that the operation are laid out its very tight quarters.
You know change rhythms and common areas are very.
Tight and they don't whether constructed does not allow for a lot of social thing.
So I think you know in terms of being able to implement measures that we need to implement in order to <unk>.
The the operation.
And then yes, it would be very very fair to say that shutting down the project has helped that.
But you know it is a good project and well go forward at an appropriate time, when we're sure that the operational.
Okay.
First of all coming from younger.
Uh huh.
Hello.
Right. That's the reason that Throughputs were system.
This is production that.
With no longer interfering with the existing operations, but.
That means there.
Yeah.
You broke up a little bit at the beginning here, but I think you're asking about the fact that the throughputs were excellent in the last quarter and whether it was interferences that we're keeping up from happening before I'm, we've had a number of and projects there in our business excellent team and a very good no manager.
He will have been working to push that you put Peter I don't know if you have any comment on that I think you know.
Yeah no.
Sorry.
I I wouldn't know as that hasn't had no no in fact, a effect on that so it's it's got a lot of good work done by Mauricio and his team to improve availability and improve capacity throughput. So that's not related to those that that's up is currently a shutdown.
It's just a lot of good operational efforts.
Okay.
Here and then huh maybe.
Maybe to try to work.
Question, though not candle area.
Have you thought Neil.
You've only operation there.
The way the that there's the potential that.
Some additional crushing capacity order to deal with the or heard US are you satisfied that the current a capacity you have his vision.
We have done a lot of scenarios, we had some additional crushing in the original plan for Sema.
And I know that we're studying further Peter do you want to comment on that.
Yes. So we're studying that further that's correct as Murray as you said there was previously and originally and then see him up so that's something that were revisiting it again.
If we are to do something.
On the backend err on the pebbles crushing we're also studying as part of the underground potential underground expansion project, a further crushing of the incoming or to the mail to improve fragmentation further so yes studies ongoing.
On both both the fraud and then the Bakken well the plant.
Okay. So just the pebble Crusher study is the only acquired this late in the open pit.
The additional expansion is it's just related to the fact that you might have more or.
As opposed to ore hardness.
Let me for characterization.
That's the front end as it's more to deal with a harder underground or.
And then how the exact.
Okay and.
With the.
The big build in working capital in the quarter.
It is would it be fair to say, okay to unwind over the following quarters worth or some component that might be sticky as a result of.
KOVA disruptions.
Oh, we do expect a a better.
As mentioned working capital Gen. He did you want to address.
Yes.
Yes, I know, we do at 'em, we do expect it to lie to reversed in the yeah in the latter part of the year. Indeed, the negative impact I'm on the working capital as you know when you have the increase in metal prices.
Them you know you had the increase in receivables and it takes time for us to collect on that so that's the that's the main impact that we should see.
The some reversal come through in a in Q3 Q4 and a lot happier.
Yeah, and we were growing from any maybe low position for working capital at the end of last quarter. It you know at the end of the quarter or some other customers that we would typically have balances from we actually owed money on settlement. So work coming from a very low lucky.
And then turns and even though.
Okay.
Okay. That's super helpful. And then maybe I'm just I think that's on your your latest thoughts on the dividend return of capital and the.
In the buyback where your thoughts are with that going forward. Thanks, It's awfully.
Yeah. So we did announced our dividend last night. So we're happy to the no continuing with our dividend program and quite confident in that and we did stop on buying purchases on the IB during the.
The.
Second quarter for <unk> or last purchases were in the first quarter.
So it does remain in place we have stopped the purchases to focus on the preservation in cash or any uncertainty, but it's something where we will consider that as our cash sound grows and.
As we manage the balance sheet will continue to evaluate that.
As part of the regular capital allocation discussion.
Thank you so much.
Right, so well take maybe one more question operator.
Your final question comes from Daniel Major Yes. Your line is open.
Hi, there.
Thanks two questions.
One follow up on on Candelaria, maybe clarify your detailed explanations earlier, it's impossible to put a.
I got the percentage influence on the weaker H one production in the downgrade to guidance this year between ore hardness and operational issues.
Yeah, I think Peter you have that break down.
I do so.
If we look at if we look at seem often pebble related to compare to a unplanned down from about 50%.
Oh, there that less downtown mechanical less downtime is due to a combination of see mop issues and pebble issues and then compared to the ore hardness. It's.
I.
I don't have the exact numbers in had but it's all around 50% as well there.
Okay perfect.
That's right.
Just to kind of fall in the US we look into next year.
The the ore hardness from the Geological perspective is is is it is a key driver rather than you know significant operational change you don't have the downtime you anticipated on the ore hardness improves basis. The geological model, that's the right way of thinking about it.
That's correct.
Great. Thanks, and then my next question.
Particularly a scandal area around chip holiday what is your level of on site stauff relative to the normalized level and what is the the rates of stripping that's been achieved in the first half versus I guess my final order rates that you need to achieve and does that mean, you're going to be stripping hard to next year.
We are down.
On contract just what we do have a fairly healthy.
Complements still there and we do happen fairly good number contractors.
Peter do you have the specifics of the stripping it hasn't been an issue.
But just can be more more the contractors that we.
Suspended from site due to cold that happen on small projects in the project area. So I don't believe there's any impact.
Materialize.
I think standpoint, Peter <unk>.
We pushed a little bit of stripping on on phase 11, we push forward that will become caught up next year and thereafter.
But otherwise it's like has had the and that was a conscious decision from our part.
Otherwise, it's we've been moving people around from project.
To help operations.
Okay, and just trying to fill up a nice it's interesting comments on that the fact that you've got a relatively limited.
Reduction in onsite staff because.
The particularly Candelaria I mean, if you look to answer the gas to BHP Anglaise, you know they've probably been running.
23% down why do you think youre, you've been able to keep a higher proportion of your regular kind of untouched off.
Well I like it.
Oh go ahead, you know I was going to say, we had we have reduced.
Onsite staff, so we've reduced more or less almost 900 contractors temporarily suspended and.
800 contracts that have been terminated and then we also have I know a large number of our own employees working from home. So we have reduced.
The amount of of people on site.
Okay. Thanks.
And your money whats the percentage reduction is not.
Approximately.
20, 30%.
Okay. That's in line okay great.
Well go ahead.
Thanks.
Ladies and gentlemen that was or final question for today.
The calls where presenters.
Great. Thank you everyone, everybody very much and look forward to.
Karen next quarter results and the third quarter during our next call.
Ladies and gentlemen, this concludes today's conference call. Thank you for participating you may now disconnect.
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