Q4 2020 Nexa Resources SA Earnings Call
Good morning, and welcome to <unk> resources fourth quarter and full year 2020 conference call. All participants will be in listen only mode should you need assistance. Please signal a conference specialist by pressing the star key followed by zero.
After todays presentation, there will be an opportunity to ask questions to ask a question you May Press Star then one on your telephone keypad to withdraw your question. Please press Star then two.
Presenters on this call are Mr. Tito Martins CEO of next day resources, Mr. Rodrigo <unk> CFO of <unk> resources.
And Ms. Roberta <unk> head of Investor Relations. Please note. This event is being recorded I would now like to turn the conference over to Mr. Tito Martins. Please go ahead.
Thank you and good morning, and good afternoon, everyone. Thanks for joining us in another <unk> earnings conference call.
Hope you and your loved ones remain safe and healthy.
Good day, we'll be talking about low results for the fourth quarter and full year of two instruments.
Moving to slide three.
We begin our presentation.
Ian.
President and challenging scenario, we have safely resumed operations after day mandatory shutdowns.
Our financial performance recovered strongly from the first half of the year.
Although we are still learning how to adapt ourselves to a new normal with COVID-19, we were able to rapidly means additional health and safety protocols to mitigate the spread of the virus.
Regions and projects.
We estimate these additional protocols will remain at least 2021 and basketball Hall employees containerboard Stifel.
We maintain our efforts to build a differentiated sustainable and cost efficient business model generating value for all of our stakeholders.
The average production guidance was achieved.
<unk> was stronger than expected operational performance and cost reduction resulted from our next week.
Besides Mexico, we also have strengthened our inclusion and flu.
In this context, we reinforced our commitment of returning capital to shareholders.
Therefore based on our expected future cash flow and balance sheet. We are pleased to announce a dividend payment of <unk>.
$5 million.
To be realized next March.
Please turn to slide four.
In 'twenty, two and we have continued to Robinson, our social and environmental programs.
As mentioned before we are prioritizing our morality Goldman.
In 2000 net signed a commitment letter with the women in mind that aims to expand and strengthen the partnership based off of women in the sector.
We have created a dating downs websites improved transparency and our data management and we have also continued to improve our energy mix.
Denim is up our social commitment Mexico continued to collaborate the economic detail and quality adjusted life a whole host.
Yes.
Moving to the next slide slide five.
As you can see in slide five shows the projects no fiber line.
I do find millions all project.
And I will discuss in.
Okay.
Our projects are in different phases of maturities.
Since the beginning of the COVID-19 outbreak, we have been very concerned and disciplined about our capital allocation.
Because of that our project portion flow timeline subject to a continuous evaluation of moving back in our financials.
Engineering studies that much installed copper project have continued to progress and its weighted towards one we expect to advance further detail engineering and optimization opportunities to mitigate the risk of execution before proceeding with its approval.
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The Brexit debate.
Mike.
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Regarding <unk> oil.
Our teams were resumed in the third quarter of two months and were completed as planned.
For 2021 drill program will focus on best in Trinity of Dominion organization towards the startup date.
In Brazil, we have resumed exploration achievements of the bushel special project, the fourth quarter and engineering students have been resumed earlier.
Most SaaS.
The standard level titles.
Reinforced integration of four mines and smelters EBITDA.
Turning now to slide six please.
Here I will comment that if our non development.
Constructional work continue to advance and overall physical progress, reaching 70% at the end of December.
Operational readiness team is on site and stopes developed haven't stock.
Based on the current status of the engineering procurement and construction. We believe we will continue to deliver required per day up stages.
Mechanical completion is expected in the fourth quarter estimates, one and production should the stock right.
You've joined the bank means versant $187 million in the project and we estimated capex of $232 million on loans.
How do you partner reinforces our mining and smelting integration decreasing our exposure.
Third day parts concentrate by adding production something around 120000 tons of EBIT.
We estimate cash costs to be in the beginning of the second quartile of the cash cost curve.
We will reduce our average mining cash cost.
They reported on projects a one off thing.
Zinc Raj is underdeveloped in the award and we believe it will be a low life mining operation with competitive costs.
Please move to the next slide.
Since the approval of the project, we have continued to advance knowledge, leading campaigns either with mining, leaving an exploration regions. In response to COVID-19 exploration activities were temporarily suspended but resumed in the third quarter of 'twenty Duane.
The new exploration targets Babassu northwest was tested in the fourth quarter, our Permian extinction operating organization.
The weighted Randy 4000 meters offerings mature Jamie was completed and for 'twenty 'twenty. One we plan to continue the expansion really give us two months the west.
Based on current inferred mineral resources.
Our track record of conversion, we believe life of mine will be easily be extended beyond 20 years.
Now I would like to basketball Gatineau Modelo, our head of Investor Relations, We will comment on our results are best of breeds.
Thank you Tito with Martin everyone. Please let's move to slide nine.
Beginning with the first shock on your last console Nathan net revenue in quarter planning was $635 million 80.
80 per ton from same period, a year ago, mainly driven by higher zinc and copper price.
Adjusted EBITDA stood at $167 million compared with $65 million in fourth quarter 2019.
The main factors that contributed to EPS.
Farmers were lower operating costs and expenses.
The positive net price effect related to higher heating prices and Linguine byproduct contribution.
The U S dollar appreciation against the Brazilian real.
Pocketing back of $13 million.
In planet Ranney net revenue was approximately $2 million down 16% compared to 2019, mainly driven by lower average zinc and lead prices and volume.
Volume due to COVID-19 related measures.
Adjusted EBITDA, however, increased by 15% year over year Lasalle.
The solid performance of our operations in the second half of the year lower costs and the decrease in mineral exploration profit devaluation expenses were the main drivers.
The U S dollar appreciation against the President Hal had also a positive impact.
On the next slide we will discuss in further details our segment's performance.
On the slides.
We will comment on our mining segment operational results.
In fourth quarter, Lanny, I adjusted EBITDA stood at $87 million.
We're only recovering from fourth quarter 2019.
Mainly explained by the increase in net revenue due to higher production and better metal prices, lower operating and corporate costs and the Queens and mineral exploration and project evaluation expenses.
20th waning I, just didn't get that totaled $140 million compare week $173 million in 2019, net revenue was $748 million downplay high percentage year over year, mainly affected by lower average.
Zinc and lead prices and the decrease in volume due to the temporary suspension of our operations in Peru.
Which was partially offset by the solid performance of our mines in Brazil.
As you can see on slide 11.
The cuisine volume had a negative variation effect of $113 million.
By market related factors, such as lower prices and higher <unk>.
With an impact of $92 million.
These factors were partially offset by the positive impact from the Brazilian real depreciation against the U S dollar lower operating and corporate office and the degrees and mineral exploration and project evaluation expenses in terms of cash costs consolidated mining cash cost in 'twenty, Duane and decreased by 10%.
39 cents per pound, possibly affected by low operating costs.
Moving to the next slide.
This is line will comment on our three year production guidance at the midpoint of guidance range zinc equivalent metal production is forecasted to increase 7% on average mostly driven by the startup of <unk> 'twenty 'twenty.
For 'twenty 'twenty, one zinc production is estimated to increase by 8% from 20 planning.
And for 'twenty 'twenty two after at any point in Amp up an addition of 7% over 'twenty 'twenty one.
For 'twenty and 'twenty tweet zinc production is estimated to decrease primarily driven by a day, Queensland forecasted zinc head grades in Cerro Lindo mine.
Exploration activities and share holding will resume in the second half of 2020, and even maintain our workforce to replace an increase mineral reserves and resources in terms of cash costs, we make mining average cash cost of 33 cents per pound in 'twenty and 'twenty, one as we forecast higher.
Byproduct credits driven by better volumes at higher prices compared to 2020 and lower benchmark we.
Which should offset the normalization of mine development and infrastructure cost is in Peru. After the temporary shutdown restrictions.
Cost reduction initiatives also remain in place.
Turning to the next slide.
On slides 13, and 14 will discuss our smelting segment operational results in fourth quarter 'twenty adjusted EBITDA stood at $83 million.
One 7% from fourth quarter 2019, mainly explained by higher <unk> lower corporate expenses and the depreciation of the Brazilian currency.
<unk>, adjusted EBITDA and stood at $264 million or.
50% from 2019 I'll go off net revenue went down affected by the pandemic, especially in second quarter.
After any Duane as you can see on slide 14.
Adjusted EBITDA improvement was mainly driven by higher treatment charges, which were partially offset by changes in market prices in respect of quotation period price adjustments.
Lower operating costs due to a decrease in energy prices and higher silicate mix and then the squeeze in corporate expenses.
In terms of cash cost consolidated smelting cash cost and Quentin Duane decreased by 20% to one cents per pound.
Positively affected by higher T fees and lower operating costs.
Turning to slide 15.
This line will comment on our smelting segment per year guidance metal sales volume in 'twenty 'twenty one at the midpoint of guidance range is estimated to increase 7% hung plenty plenty.
In 'twenty 'twenty, one we expect our smelters you continue to benefit from improving the operational performance and will run at normal utilization rates.
2022 metal sales volumes estimated to increase 3000 tons over 'twenty 'twenty, one and to remain stable in 2023 over 'twenty 'twenty two in terms of cash costs. We made his mouth on average cash costs of 95 cents per pound in 'twenty 'twenty, one as the forecast lower benchmark.
<unk> compared to 'twenty, Atlanta, and at higher metal price, increasing raw material costs, which should be partially offset by cost reduction initiatives.
I will now turn it over to culture, how do we can maintain our CFO, who will provide more detailed information about how our balance sheet mainly please.
Thank you Rebecca good morning, good afternoon, everyone I am now on slide 16.
Before we discuss our financial performance I would like to present, our historical EBITDA and EBITDA margin for the smelting segment.
As you can see despite the changing prices smelter margins in 2018, and 19 were relatively stable.
It means smelter margins are mainly affected by changes treatment charges and operational cost.
As you May know, we applied the benchmark Tc per hour integrated mining and smelting operations.
Also our purchases of concentrates from third party suppliers is mainly based on the three year average benchmark D C, which has not changed much in 2018 and 19.
In the U S win 20, Tcf increase from 2019, and despite the volatility in metal price.
We delivered two digits Martin.
This strong performance not only reflects higher <unk>, but also our ongoing efforts on reducing fixed costs.
We wanted to bring this analysis to reinforce the strategic importance of being integrated and having smelters in our portfolio.
Turning to the next slide.
On slide 17 as.
Demonstrating the upper left graph.
Our liquidity remains strong and we continue to report a healthy balance sheet with extended debt profile.
By the end of 2020, our current available liquidity was $1 4 billion.
Which includes our undrawn revolving credit facility of $300 million.
We have overcome the challenges we faced at the beginning of the pandemic.
As we recall, we proactively managed our liquidity position by raising additional debt during the first half of 2020.
We added about $300 million to our cash balance through export credit notes in March and April.
We drew down our revolving credit facility, which was repaid with the proceeds of the $500 million bond issued in June.
And finally, we partially drew down approximately $90 million in the fourth quarter of 2020 from the B M D. As loan agreement from a total available amount of $140 million.
Net breakdown by category and currency shown on the lower left side of the slide.
As of December 31 day average maturity of our total debt was five four years on the right side, we see net debt decrease compared with the previous quarter, reflecting the improved results of our operations and cash generation are.
Our leverage measured by day net debt to adjusted EBITDA ratio also decreased to $2 29 times as a result of higher adjusted EBITDA and lower net debt.
Now moving on to slide 18.
In response to the COVID-19 outbreak and our focus on preserving cash we decreased our investments in 2020.
We invested $354 million in Capex, and we have accrued $18 million in tax credits with respect to our ongoing investments.
Consequently, total capex in 2020 amounted to $336 million.
The reported non project amounted to $187 million, 55% of total cabinet.
Sustained investment, including Hfc's expenses amounted to $115 million below our historical levels as we maintain only the essential investments to operate safely.
For 2021, we expect capex of $450 million.
We estimate to invest $232 million to continue developing and deploying them and we expect to resume our sustaining and HSE investments similar to pre pandemic levels in order to continue building a sustainable long term business.
In terms of mineral exploration and project evaluation in 2020, we invested $54 million for 2021, we will resume our mineral exploration and project evaluation investments as we will continue our efforts to replace an increase mineral reserves and resources supporting our business growth.
We estimate here, a total investment of $71 million.
In addition, we expect to invest $90 million in technology and contribute $10 million to our host communities, we invest in education training and we try to employ in contract local services supporting their social and economic development.
Turning now to the next slide slide 19.
On this slide we present next is free cash flow generation.
During the quarter, we generated $132 million.
Scribing it further and starting from our $167 million adjusted EBITDA, we had $89 million gain in working capital, which similar to the last quarter was mainly as a result of increased average supplier payment terms and income tax payable partially.
Offset by sustaining Capex interest paid in Texas.
Two nexon has generated $187 million of cash flow before expansion projects during the fourth quarter.
Non sustaining capex, which includes mainly our expansion projects and that appointment amounted to $58 million.
Finally during the quarter, we had a positive net impact from New Orleans and financial investments.
$66 million, partially offset by $53 million of other non operational expenses.
And the final cash flow generation of $132 million.
Now moving on to slide 20.
On this slide we present <unk> free cash flow generation for the full year.
In 2020, we generated $388 million starting from $403 million EBITDA.
Generated $92 million from working capital gains, partially offset by $123 million of sustaining Capex and then the other $71 million of interest paid in taxes.
To Mexico has generated $280 million of cash flow before expansion project.
Non sustaining capex, which includes mainly our expansion projects and that appointment amounted to $201 million.
Finally during the year as I mentioned earlier, we proactively managed our liquidity position by raising additional debt, which combined to the healthy cash flow generated from our operations resulted in the final $388 million cash generating quarter.
Full year.
I will now hand, the call back to cheat sheet too please.
Thank you May please move to slide 22.
Here, we will make some comments about the market fundamentals.
During the quarter zinc price were up by 10% compared to fourth quarter of 2019 and.
13% from the third quarter last going into 'twenty.
This increase was mostly driven by stronger demand in China, whose investments.
<unk> infrastructure continued to contribute to zinc demand and due to a weaker U S dollar.
In terms of market fundamentals.
Most mines in China, and Latin America have resumed activities in the second block and those plans are Duane.
But concentrate supply has not been sufficient to meet the improved demand from this analysis, particularly in Asia, we can see clearly by the current level of spot Tcs.
In terms of out of home market Lockdown zinc natural demand recover after the degrees in the second quarter and lost 20 Duane.
Demand has been recovering mostly driven by a mix of pent up demand stops replenishment and fiscal stimulus, particularly in Brazil.
Addition, we update long term balance between supply and demand shows that the previous estimates increase in supply should be lowered them forecasted main market balance should remain tight.
So now review metal price said the fundamentals to remain at higher levels.
Moving to slide 23.
One gives us line, we present the performance of other mix led copper and silver had a strong performance in the fourth quarter of 2020.
Similar to the zinc price increasing metal price for the third quarter levels was driven by a weaker U S. Dollar in a bus to low to move for global growth.
For 2021, the ultra Lucas bust, given how economies have responded to the various economic stimulus packages.
The us dollar per arm should also continue to feedback Asian naphtha price.
Obviously, COVID-19 remains a risk effects of Covid scenario, and we will continue to evaluate each day and day measures adopt to mitigate the virus spread including worldwide by Cemig.
Sure.
Moving now, Florida last slides.
We have delivered strong operational results.
Overcoming the challenges and restrictions imposed by the COVID-19 global outbreak.
Performance in the second half of the year demonstrates the resilience of our business the contribution off next week program.
Amit I'm all for a team with operational excellence and their enthusiasm to transport.
As I mentioned in my previous Slide COVID-19 remains a risk factor and we will continue to evaluate.
In fact in our value chain.
Good day, Reuben Vaughn recently announced a new quarantine periods in the country that should lessen fuel needs February.
For instance, last year mining and smelting operations were not suspended.
We remain confident that the demand for all products, we will continue to recover <unk>.
<unk> priority on capital discipline and cost control.
We believe we have an attractive pipeline of projects and we have been preparing ourselves to generate long term value building the mine of the future.
Thank you all for your time and Thats move loans with the Q&A session.
Thank you we will now begin the question and answer session to ask a question you May Press Star then one on your Touchtone phone if youre using a speakerphone. Please pick up your handset before pressing the keys to withdraw your question. Please press Star then two at this time, we'll pause momentarily to assemble our roster.
Okay.
Our first question is from Carlos de Alba from Morgan Stanley. Please go ahead.
Yes, good morning, everyone.
The first question Tito.
If you can just clarify a little bit on the next away. So I think you guys believe that EBITDA was supposed to be impacted by almost $100 million in 2020, and then you see 100 million $120 million annualized benefit.
The end of 2021 is these incremental so $20 million more in 2021 or is this a full 120 million more.
Throughout 2021 and similar for the additional.
Sure. So on initiatives that we identified post COVID-19.
Would you estimate will give you a benefit of $60 million also in 2021 is this in addition to the 120 by the end of 'twenty into 'twenty, one mentioned in the prior bullet in your press release or is this you.
Included.
Hi, Carlos this is a little bit ago speaking here I hope you are well as well as our family. Thank you for your question. It's a very good question.
So we should be explained and to be consistent with what was disclosed.
For it that's why we have this breakdown so from day $120 million that we have.
<unk> disclosed that our forecast in the middle.
The year, we have already captured $98 million okay.
That's that was the one of the fees that we paid back in 2019. So we are connecting with this 120 after the program officially.
Most recently and it was and what the plant. This was informed to the market by chicken and our call for the second quarter.
We identified additional initiatives, which Mike.
Caused us to have additional G&A or three $2 million to $10 million approximate EBIT above that in this group of new initiatives will generate up to $60 million. So coming back to your question, yes. The $120 million is until the end of the year of 2021, all of which 98 are already.
Within.
Catcher within our results in 2020, so they are within our power is that the EBITDA and more Moreover, we will have.
Aside from the 20 additional 22 by your accounts will have also additional seats that.
You're correct in understanding that.
I hope I have addressed your question.
Yeah. Thank you.
Yes.
Very good and these SG&A the three two.
Their teams.
And a temporary increase in SG&A really happen.
Mostly in the first quarter or how should we allocate these.
The first calendar year.
First half of the year, you would defend the amount will depend on the performance of the initiatives that they are forecasted to happen in the first half of the year.
Alright, let me add something here.
Thanks for your question Tito here speaking.
I think it's important to know that.
And that's always ongoing volume so of course, what we want to see it's more initiatives.
<unk> been created being generated.
Meaning that we actually can make him generating what ADP and cost cutting.
Reductions or increasing our performance.
Of course naturally it would generate more.
Yeah.
Pizza day.
Clearly if it happens we will have a chance to speak with the markets in the market.
Give some guidance about that.
Alright understood and then just my final question is if you can comment on your expectation for Tcs.
2021.
It's the one trillion dollar question.
Because nobody knows.
Well I tell you what 2000.
Uh huh.
<unk>.
It was in one conference.
I was asking about what they see and I made a.
Prediction and I was the absolute right I want to frame it myself.
That'll do anyway.
What's going on here.
Do you see that it's still very low below $100 in Asia.
We reached some point again in the knee.
As of last year that this is actually where almost zero in some cases.
We are.
<unk> seen that probably the benchmark move something around 150, but difficult to say because.
But we see huge drop comes from 300 to 150 <unk> right.
But it's very difficult to be precise as your hedges.
Alright, Thank you very much everyone Tito hopefully every day.
Yes.
Well and good luck this year. Thank you.
Thank you very much.
Thank you Carlos.
Again, if you have a question. Please press Star then one.
The next question is from.
Timna Tanners from Bank of America. Please go ahead.
Hey, there and thanks for taking my question just two I wanted to follow up on.
One was regarding the dividend payment of $35 million for March and that compares to $50 million from the prior year. So just wanted to get your thinking on how that's calculated given the market conditions seem to be better and you're talking about our improved balance sheet and then the second question.
Is regarding.
Just the.
Also capital allocation and hoping that you could talk a little bit more about how you think about the projects that you have right now so going through them.
Looks like there is a number of them on hold so what does it take to restart what are you looking for to make those decisions. Thanks a lot.
Oh, great Timna nice nice talking to you. This is illegal here. Thank you for your question dividend payment and $35 million well. If you take a look on the dividend yield we're paying as of today a bit above two 7% of dividend yield if you remember.
Remember last year, the $50 million.
<unk> five point for.
Four 5% of dividends either.
The moment, when we defined an approved or proposed and improved our dividend last year, we had a good <unk>.
<unk> reported a year was of course, the COVID-19 beginning to increase its effects and this was in January right.
Here, what we are recognizing here is that one we have been paying dividends consistently throughout the year, we'd have a minimum dividend to be issued according to our dividend policy up 2%.
And.
Although we had a challenging year last year.
We're successful in managing our cost levels and B.
Profitable by the end of the year, we'd have a good year ahead of US we are performing well and the operations. We are being we are being able to hold back.
Our our cost level, and we are performing well or our revised.
Project already partner. So we are we believe this is a.
System level off dividend, that's the origin of the amount.
Okay.
Yeah, and then on the projects if you wouldn't mind, yeah. That's clear thank you yeah.
Okay.
What do we have.
Our plan is for the year.
We are finishing up.
So everything goes as expected we should be starting up.
Production on some timing between on the less Florida at all for you.
Airports slots influenza cheap.
Despite the line we have following.
Strong.
Charlie 'twenty, one we will be.
Usability study with Val <unk> three per stage, what's the largest shop.
As soon as we had said in the past and we assume that we should not start a new project before we finish the one that we are.
Building.
<unk> reported.
But I just draw would be viewed to force it comes.
With the potential would return.
Only after we finish as reported.
So we had to climb along plenty to 'twenty one story.
Q2, finishing at Bell and action.
What does kick in working on the projects would be risky.
As much as possible.
Come up with a decision.
Do you see it or not.
Rob was stocking up with sometime in 'twenty two.
The other projects, we have we are still really low to you all.
We are very confident that we will be.
Value zinc.
Asset.
For future production may be replaced Italy and in the future.
And the other two Florida Candy, we're also keeping some some some some really.
Yes.
Shall we buy it we stop.
The developed last year because of the market conditions. The situation, we were facing with the lockdown.
In my view, we should return to these projects probably.
After that we see more stability in the market.
Yes.
We were being conservative and actually flow voyage invest more in new projects before we assure that our cash generation will be stable back to stability by the way as we have seen a day right. So I'm being optimistic should return to book those budgets.
Some timing between 'twenty, one 'twenty two.
Yeah, the stability of the copper price has been there it seems like that it sounds like maybe you're talking about the stability of what day the ability to operate on the Gulf of regions or zinc as well <unk> as well.
Copper only bud zinc as well right. So the prices there, but you are looking for other factors I guess.
I'm, sorry say again.
I think the price has been accommodating right the price of the commodity is positive. So it looks like you just want more evidence or more evidence of the ability to operate given COVID-19.
Exactly exactly exactly yes.
You'll see we are operating at normal levels today everywhere COVID-19 have non impact of any more but yeah.
You always have these uncertainty about the ecological sectors right.
Imposed by government.
Or what is it.
Policies and things like the consolidation of <unk>.
Our contract with an employee so we need to see more of body normal life, let's put this way.
Thank you.
Thank you.
Again, if you have a question. Please press Star then one.
The next question is from Daniel Nick convey from Ross Port investments. Please go ahead.
Hi, Good day to day, when everyone I have a COVID-19 question I guess.
There's three components to it first.
Is there when you did your forecast for 2021 is there was there much in the way of hangovers from what you had from 2020, what I mean by that is in terms of maintenance catch ups in terms of stripping catch ups.
How much was that a factor in your forecast for 2021.
Second component.
What is it.
You, probably just answered this but what is what's more difficult now.
And your operations book in smelting side and the mining side as a result of Covid, whether it's getting the right resources the right technical skills people cross the border et cetera, both in Brazil.
Brazil and in Peru, and then the third component is.
Is there anything as a result of the crisis that youre actually doing different things.
Actual resulting in some productivity increases.
Thank you.
And thank you for your questions, Mike do you want answering the first one.
About the day.
Yes, yes, please Daniel.
Okay. Thank you for your question about this this cost hangover as you called it.
Actually for the estimates we have for the year is pretty much covering the continuous profit pools that we have in place.
During the day.
These health protocols would be maintained throughout the year.
For the whole year. So we are not considering any circumstance.
<unk> of those protocols due for example to broad vaccination. So these are the additional costs in terms of the cost will be operational side I believe once we had to ramp up in the middle of the year, we came back to the normal normal course of business.
I would add to that the only thing that they actually are.
There is a.
In gum strong flow ASCII Brent is.
Some of the Capex that we had to delay imposed strong given the.
Issuance that we would face with the Kobe.
Some moves sustaining capex that was delayed.
We have the formula will be performing along this year.
Right.
Okay.
Question about the diesel.
I would say our main concern in terms of operations, either in Brazil, and Peru has to do it.
Yeah.
The conditions of all employees and contractors, we set up lots of different protocols than they.
Where and how we operate.
We need to follow those group of goals.
No.
The concern we have is for example, 70 andas.
<unk> site. So we have shifts every 14 days.
The people stay at home for says it.
Prices stay at home for seven days.
So we have to step down when they come in they have to accept it or not.
We are they are after seven days of the idea that the site. So this is a big concern.
Less people available.
Each of our operations, we had net last year. When we were ramping up we are starting to corporation adjusted.
Give an example.
Number.
It was settled into what support we were suppose to do thanks.
Thanks to the site 1200 people.
We were only able to move to page 700, because the other 500, that's the policy.
No.
I would call it.
A major concern we have.
In terms of duration zone.
Could be.
The third question.
Is there anything you're doing differently, yes.
All of our offices you see home office we.
Have the site already that.
We should not have everybody regarding to the office after the pandemic.
We should have.
Part of the team.
Being able to work from home from time to time, but it was not a very regular.
System.
Become.
Revenue ordinary for us.
Moving savings with our real estate costs and.
Also looking at some improvements.
The way, we travel we are avoiding trips.
That will be at the end of the day. Some some say if you're asking me how much you are going to go on in.
Generate we've done that in this number yet.
We are still operating under the pandemic.
I assume.
Yeah.
We have during this time.
Thank you.
Yes.
Thank you.
Thanks for some great answers.
It's just it's kind of surprising that with all the with all the <unk>.
Constraints of last year.
Getting 700 employees the site versus 1300, whatever the number was it.
Some things Werent dropped it.
Kind of a catch up this year, but.
It's a it's pretty impressive.
Things are recovering that smoother.
Good.
Thank you.
The next question is a follow up from Carlos de Alba from Morgan Stanley. Please go ahead.
Yes. Thank you very much Tito revenue should give.
Given where copper price aside and I always feel.
Silver and let alone.
Inc.
Is your cash flow generation.
It's a strong would you consider paying a special dividend or another dividend throughout the year.
Thanks Carlos.
Good day.
Got it.
T.
It's a great question, but our dividend policy currently state that we pay once a year so.
We do not forecast at this point in time to pay anything in addition to the payment that we are announcing now.
All right well hopefully you guys delivered on the top line on your guidance and you saw price with dividends later in the year.
Good luck.
No.
I've always thought was doing that.
Every day language here, let me add something here I guess he is.
Let's assume that price remain at a higher level flow throughout the year and we are able to produce us planting and then you generate more cash we still have to deal with it that was raised last year because of the price is right.
And.
Of course, we want to return to the level of Hu <unk>.
The indebtedness we have before us.
So priority would be to look at the debt.
Manage it.
Alright, let me add and convert thank you very much their levels of leverage that we have before before day.
Yes.
Alright.
Yeah.
The next question is from worse, well cut off from Scotiabank. Please go ahead.
Hi, Good morning, I wanted to ask you about Cerro Lindo.
In my view, it's your biggest and most important asset in the portfolio.
Based on kind of 2019 reserves.
I think that mind it looks like it's going to deplete around 2027, and 28 I'm just wondering if theres going to be a focus on trying to grow those reserves to extend that mine life.
And sort of what kind of focus is that going to have over the next couple of years.
So thanks for your question Alex.
Yes, you are right. So when you lose all are moving assets.
We've seen along the last few years a drop in the grades there.
Which made the production more data because we have the throughput to generate the same levels are low.
When you have before.
In parallel we've been investing.
Have this number here, but we've been investing a significant amount.
Of money drilling exactly.
Expand.
The resources and reserves available there.
If you look back maybe four years ago.
<unk>.
We'll file all life cycle from line by the time it was forecast to be between seven and nine years and.
Good day as you mentioned, we are forecasting EPS of life of mine so.
All of our efforts.
Please.
These offers shops has been when we can work because we are producing cheaply.
Some room.
Some some launching.
We enhanced the potential the potential line.
Mike.
Do you see on that do you see significant upside to the current life of mine or should we think about this as maybe you can maybe you can add a couple more years or do.
We have the.
The difficulty we have has to do with the backdrop is moving.
And dawn.
I've been around right. So you need to develop the mine.
The increase.
Above what you have ahead of you.
So we actually performed two types of reasons. We have this the drilling that follows the growth of the mine all of the roof of the mine.
The external drillings.
Less.
Possibility.
Electrify more mortgage source.
So my.
My deal with several endo should.
That's longer than anybody expected because the area, it's a rich area.
And following that value.
But the big challenge, even facing some years maybe in.
Between five and 10 years will be related to.
I'll pass to Julie generate more.
Run off line.
To keep up with the trading levels of promotions, even the great drop.
Right.
Okay.
Thank you for that color Tito.
Thank you.
Again, if you have a question. Please press Star then one.
There are no more questions in the queue. This concludes our question and answer session now we will hand over to Tito for his final remarks.
Martin Please go ahead.
Okay. Thank you I would like to think so.
Uh huh.
Oh, Okay go ahead, Matt.
Just one second.
I would say as we didn't have a specific question I'll take the opportunity to clarify something on the smelting segment cash costs.
One about the quarter and one about the European impact.
And although the year cash costs.
Idly above the guidance that we gave for the year. It was 4% above it increased much less than proportionately to the zinc price increase which is the factor.
Impacts the most cash.
<unk> costs, which was 17% higher.
Against our initial estimate so we were estimating 99 cents per pound in the zinc price at the end was $1 $16 per ton per pound. So the difference was pretty much the operation cost efficiency, there would have been disclosing.
Disclosing.
And and existing that we are focusing on the second comment is quarter on quarter.
Although on a yearly base share price effects tend to be neutral as we tried to show on slide 16 of our presentation.
Quarterly price.
Quarterly price basis.
Price volatility might cause.
The kind of cash cost variation you saw between the third quarter and the fourth quarter due mainly to mark to market in Q P setting effects.
We have open invoices, both on the side of concentrate per chase and all day.
Net those seats so sometimes when you see this type of variation is not only that the costs have jumped but also this price effect, it's good to have it.
In mind, when we are talking about the quarterly evolution, I think reported opportunity and took place back to you.
Thank you Matt.
Sorry, I forgot.
Glenn It makes it easy statement.
I'd like to thank all of you for being here.
Just saying that.
Different from some of our view of some of our NAV.
We believe that the 2000 per LTE wasn't surprising year for us because based on what we went through.
In the first half of the year when the lockdown into the order book.
The problems, we face per year.
Ends up being a very good year.
England before it needs to be better than <unk>.
And most of the main reasons for that.
A price the price helped a lot the second zone.
So we have to do anything, but also cost reduction and productivity.
Showing that the next away gives them working.
<unk> results for US we are very happy to see that happening.
In the Gulf.
No.
You've been having the Covid assuming factory every body we should have.
Hopefully a more stable.
Efficient year in 'twenty one.
Hum.
Thank you for being here I hope you stay healthy and safe.
Let's move off that server.
<unk> planned to one thank.
Thank you bye bye.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
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