Q1 2021 Hudbay Minerals Inc Earnings Call
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Good morning, ladies and gentlemen, thank you for standing by welcome to the HUD Day Minerals, Inc. First quarter 2021 results conference call. At this time all participants are in listen only mode. Following the presentation, we will conduct a question and answer session.
To join the question queue. You May Press Star then one on your telephone keypad should you need assistance during the conference call you may signal, an operator by pressing star and zero.
I would like to remind everyone that this conference call is being recorded today May 12, 2021 at 830, a M. Eastern time I would now like to turn the conference over to Candace Brule Director of Investor Relations. Please go ahead.
Thank you operator, good morning, and welcome to <unk> 2021 first quarter results conference call.
Hi, based financial results were issued yesterday and are available on our website at Www Dot had day dot com of corresponding Powerpoint presentation is available and we encourage you to refer to it during this call our presenter today of Peter could kill ski had based president and Chief Executive Officer accompanying Peter for the Q&A portion of the call will be.
Steve Douglas, our senior Vice President and Chief Financial Officer Castle, Marr, Our senior Vice President and Chief operating Officer, and Eugene Lee, Our senior Vice President corporate development and strategy.
Please note that comments made on today's call may contain forward looking information and this information by its nature is subject to risks and uncertainties and as such actual results may differ materially from the views expressed today.
For further information on these risks and uncertainties. Please consult the companys relevant filings on SEDAR and Edgar. These documents are also available on our website. As a reminder, all amounts discussed on today's call are in U S dollars, unless otherwise noted and now I'll pass the call over to Peter could kill ski Peter.
Thank you Candice good morning, everyone and thanks very much for joining us.
Before I begin today's presentation I want you to recognize that the COVID-19 situation continues to present, the challenging operating environment for our business units.
While we are encouraged by the recent rollout of vaccines in certain regions. We remain focused on the deeper into our strict COVID-19 with the protocols and procedures to ensure our workforce returns home safely to their families at the end of every shift.
We have recently encountered cases in our operations and our safety protocols and contact tracing efforts of helps to ensure workplace transmission with limited we are proud of our team's strong efforts over the past year, which has allowed our minds to continue to operate safely and efficiently.
In his presentation today I will touch on the past quarter's results followed by the progress we have made on our growth initiatives and overview of our leading organic copper growth pipeline and the recap of the many near term catalysts at HUD based.
Okay.
First quarter consolidated copper production was 24.6 thousand tons, the 10% decrease from the fourth quarter of 2020.
This was primarily as a result of lower mill throughput at Constancia due to a scheduled semi annual mill maintenance shutdown, partially offset by higher copper grades of triple seven and higher copper recoveries at the flame fluff mill.
Consolidated gold production increased by 10% compared to the previous quarter the.
<unk>, a new record for <unk> due to higher gold grades of Triple seven higher gold recoveries of the Flynn from concentrated and higher gold grades at Constancia.
Consolidated zinc production in the first quarter was 8% higher than the fourth quarter due to higher zinc grades and throughput.
Consolidated cash cost per pound of copper produced was $1.04 in the first quarter the increased compared to the fourth quarter due to lower cost of production higher operating costs and lower byproduct credits.
Operating cash sustaining capital royalties.
The <unk> administrative and regional costs consolidated all in sustaining cash cost per pound of copper produced was $2.37, which increased from $2 and 24 sales in the fourth quarter due to the same factors impacting cash costs, but was offset by lower sustaining capital.
Operating cash flow before change in non cash working capital was $91 million during the first quarter the slight increase from the prior period due to higher realized prices offset by lower sales volumes.
Adjusted net loss per share and adjusted EBITDA in the first quarter was six cents per share and $104 million respectively. After adjusting for one of financing charges and the net mark to market loss on financial instruments among other items.
This was relatively unchanged from the fourth quarter as higher realized prices were offset by lower sales volumes.
First quarter, Peru sales were impacted by a delay in the 10000 ton shipments of copper concentrate valued at $20 million for which the payment was received in the first quarter, but did not meet the revenue recognition criteria due to the delayed timing of the shipments into early April.
First quarter of Manitoba sales were impacted by a delay in accessing additional railcars after a strong copper production quarter.
This resulted in the buildup of approximately 5000 tons of copper concentrate in excess of normal operating levels, which is valued at approximately $18 million.
Had both parcels of copper concentrate being sold during the first quarter, we would've realized of approximately $39 million of incremental revenue.
These parcels have since been recognized as revenue and copper concentrate inventory levels have normalized in the second quarter.
First quarter results were also negatively impacted by the realized copper price hedging of our provisionally price copper sales.
We exited the quarter with $311 million in cash and equivalents lower than end of last year, mainly as the result of capital investments as we complete our growth initiatives in Peru, and Manitoba, along with interest payments and bond refinancing fees during the quarter.
Our full year 2021 production and operations cost guidance has been reaffirmed and we are pleased to announce pump of Concho commenced production at the end of April in line with the timeline is incorporated into our guidance and recent updated mine plan.
On slide four you will find the summary of our operating results in Peru during the quarter.
Constancia produced 17.8 thousand tons of copper for 6000 ounces of gold 406000 ounces of silver and 294 tons of molybdenum.
<unk> was lower than the fourth quarter, primarily because of lower throughput from a scheduled mill maintenance program that was delayed from the fourth quarter into the first quarter.
Ore mined during the first quarter was lower than the fourth quarter as mining levels of the optimized for lower mill throughput, while managing the level of contaminants and hardness in the or sense of the mill.
Yeah.
Ore milled during the first quarter was lower compared to the previous quarter due to the plant maintenance shutdown.
Mill's copper grades were relatively consistent with fourth quarter levels, while mills gold grades were higher as we exit higher grade ore from the deep of banks of the pitch.
Recoveries of copper were lower than the previous quarter, but in line with the recently issued Constancia mine plan and gold and silver recoveries remained relatively consistent with the previous quarter.
Unit operating costs in the first quarter were higher than last quarter, primarily due to fewer tonnes of ore milled and increased operating costs related to the planned mill maintenance shutdown and enhance COVID-19 protocols.
The COVID-19 related costs amount to approximately 72 cents per ton in the unit costs. However, even with projected elevate of COVID-19 costs for the balance of the year. We expect the full year unit operating costs to decline to be in line with our 2020 guidance range.
Peru's cash cost was higher in the first quarter compared to the fourth quarter of last year, primarily due to higher milling costs and lower copper production.
Sustaining cash cost for the first quarter improved to $2 36.
Compared to $2.58 in the prior quarter due to lower cash sustaining capital spending partially offset by the same factors affecting cash costs during the quarter.
In early April 2021, we finalize the remaining land user agreement for pump of Concha and gave the full access to the site complete pit development activities.
First production from pump of Concho was achieved at the end of April which is consistent with what we assumed in our annual guidance and recently published mine plan.
Slide five shows real time photos of the start of mining activities of the pump of pension pits of significant positive milestone for both the company and for the community of <unk>.
Turning to slide six I'd like to talk about our updated Constancia mine plan, which we released on March the 29.
This update reflects an increase in copper and gold production from 2022 to 2025 as the higher grades from the pump of conscious deposit into the mine plan.
It incorporates higher grade reserves from the Constancia North pit extension, which contributed to an increase in reserves of 33 million tonnes at a grade of <unk> four 8% copper and 0.115 grams per tonne of gold and extends the higher grade profile to 2028.
This resulted in an increase of approximately 11% and contained copper and 12% contained gold over the prior year's reserves.
With the incorporation of pump of country and Constancia north.
Annual production of Constancia is expected to average approximately 102000 tonnes of copper and 58000 ounces of gold over the next eight years.
An increase of 40% and 367% respectively from 2020 levels.
Since the answer maintains its low cost profile with average copper cash cost of $1 18, and sustaining cash costs of $1.71 per pound over the next eight years.
Moving to the next slide on Manitoba production during the quarter included 28000 tons of zinc.
The $6 7000 tons of copper.
31000 ounces of gold and 291000 ounces of silver.
Production results for all metals were higher than the previous quarter, primarily due to higher head grades and recoveries.
Ore mined at our Manitoba operations during the first quarter was higher than the fourth quarter due to full production levels at the Triple seven mine after the softer periods of completed in the fourth quarter.
Copper and gold grades of Triple seven were higher than the fourth quarter as higher grade remnants stopes of mind is triple seven nears the end of its mine life.
The Lalor mine achieved the increased targeted throughput rate of 4650 tonnes per day during the quarter.
Developments in underground construction activities continue in the lower part of the Lalor mine in order to position us well for consistent gold and copper gold production upon startup of the new Britannia mill in the third quarter.
We had approximately 26000 tons of gold ore stockpiled up from 12000 tonnes at the end of the fourth quarter and this is expected to continue to grow during the second quarter.
The incremental mining activity associated with growing the gold ore stockpile has contributed to elevated unit operating cost during the first quarter.
We continue to see strong performance from the stall mill ore processed during the first quarter was only 3% lower than the record levels achieved during the fourth quarter. Despite the continued stockpiling of lot of ore go the head of the new Britannia mill.
Ore processed at the friend from concentrated increased compared to the previous quarter as a result of a full quarter of triple seven production, but we are not as high as prior periods due to the less of the lalor ore being diverted to Flint plant in order to grow the gold ore stockpiles from the new Britannia mill.
Recoveries of copper gold and silver were higher than the previous quarter due to higher grades.
Unit operating costs increased by 8% compared to the fourth quarter, but remained within the annual guidance range. The.
Increase was primarily due to lower capitalized development at both Lalor and triple seven as well as higher mining activity at Lalor to grow the gold stockpile as I mentioned.
And the total cash cost was negative $1.04 higher than the prior quarter, primarily due to higher mining and G&A costs and lower byproduct credits offset by higher copper production.
Sustaining cash cost was $1 62.
Which was higher than the previous quarter due to the same factors affecting cash costs.
In early April production at the stall mill was suspended for four days as the proportion due to COVID-19 related absenteeism the law.
All of our mine was not affected we were able to utilize spare capacity at the Flint from concentrated during this period and therefore, we do not anticipate any material impact to second quarter production as a result.
The new Britannia refurbishment project continues to track ahead of the original schedule and is nearing completion with approximately 82% of the project completed as at the end of April.
Commissioning of the gold plant is expected in mid 2021 with first gold production expected early in the third quarter.
The new copper flotation facility is on track for commissioning and ramp up in the fourth quarter of 2021.
Operational readiness activities are progressing as planned with underground development of La Rose gold rich lenses, well advanced in preparation for the startup of new Britannia.
We continue to see some COVID-19 related cost pressures on the project capital of estimated new Britannia, which we will continue to manage.
On March 29, we also announced many significant advancements as part of the third phase of our Snow Lake Gold strategy.
The third phase focuses on expansion and further optimization of operations and several of these opportunities were incorporated into an updated mine plan, which is summarized on slide nine.
This enhanced mine plan contemplates an increase in annual gold production from approximately of 150000 ounces to over 180000 ounces. During the first six years of new per Chinese operation the.
The average gold cash cost and sustaining cash costs are expected to be 412, and $788 per ounce respectively over the first six years.
The mine plan enhancements include optimized recoveries and throughput at the store the conversion of additional resources to reserves at La <unk> the <unk>.
Plans to expand <unk> to 5300 tons per day by 2023, and the mining of zinc reserves from the 90 day, one deposit starting in 2026.
These mine plan enhancements optimize the processing capacity in snow Lake in the manner that maximizes the net present value of the operations.
As a result of these initiatives the production of gold copper and silver are expected to increase by 18%, 35% and 27% respectively from 2022 to 2027 compared to the previous mine plan.
Slide 10 shows our consolidated copper and gold production profile incorporating the two updated mine plans for our flagship operations.
These graphs demonstrate that our growth strategy has been successful in significantly increasing near term copper and gold production through.
Through our wealth courthouse investments and pump of contract and the new Britannia mill refurbishment, we expect to begin reaping the benefits of these decisions this year and more fully in 2022 and beyond.
Prudent management of capital is expected to begin paying of this year not only in terms of of growing production and cash flow profile.
So in being the copper focused company with a diversified organic growth pipeline.
We believe we have three of the best undeveloped copper deposits in our portfolio that provide the potential to further grow our medium to long term production profile as summarized on slide 11.
Rosemont is one of our more advanced projects with attractive returns and a 19 year mine life based on our recent feasibility study.
Once the production Rosemont is slated to be the third largest copper mine in the United States. So.
So we have run into a delay with an unprecedented court ruling we are appealing this ruling alongside the United States government and we continue to explore our wholly owned private land in the district adjacent to Rosemont.
In March of this year, we announced our Copperweld discovery, where our 2020 initial drill program intersected high grade copper sulfide and oxide mineralization on a private land at depths much shallower than Rosemont and the.
Photo on this slide you can see the green oxidized copper on the side of the mountain of Copperweld.
We've commenced the larger 2021 drill program to test the limits of these deposits and the potential for a viable open pit operations that couple of wells.
We've recently increased the 2021 budget by approximately $24 million, which includes $14 million for additional exploration drilling and $10 million for engineering studies the.
Pending on the exploration program results, we expect to complete an initial inferred resource estimate before the end of the year and the P. Eight in the first half of 2022.
And in April we published our initial PPA formation, which contemplates of 27 year mine life and production levels that could more than double our production profile.
The acquired this project for $50 million and it is the 100% owned by <unk>.
And the copper price of $3 10 of the after tax NPV using a 10% discount rate is approximately $520 million and the IRR is approximately 40% the.
The valuation metrics are highly sensitive to the copper price and at the price of $3 25 the.
Of the NPV increases to three quarters of the $1 billion and the IRR increases to over 15%.
Jason has a large measured and indicated resource space at $2 2 billion tonnes and has the potential to host high grade satellite deposits on our adjacent land claims similar to the copperweld.
Turning to slide 12, we also have several exploration initiatives in both of our Peru and Snow Lake operations.
In Peru, the Constancia North discovery enhanced the mineral resource estimates through an improvement in the head grade of Constancia.
Measured and indicated copper grades increased two zero to 2% from zero point of one 9% and inferred copper grades increased two 0.3%.
From 0.18%.
Significant portion of the Constancia North resource estimate is classified as inferred due to wide drill spacing, but there remains of the opportunity to upgrade these inferred resources to our higher classification as we complete infill drilling.
There also remains further opportunity to extend the constancia north resource by incorporating steeply dipping of high grade Scone mineralization through of potential underground operation. The mineralization remains open down plunge to the north.
In February of 2021, we commenced drilling on the coincident north highest high grade Scone target located approximately 10 kilometers from Constancia and drilling continues of five holes completed to date.
The discussions continue to progress with the community of which of cargo on the Maria Reyna and kind of Utah property, both of which are located within 10 kilometers of Constancia and we expect to reach an agreement in due course.
We also expect to commence drilling activities of the yogurt property in the coming weeks yoga and ease of copper porphyry target located in northern Peru near the city of true here and in close proximity to existing infrastructure.
Exploration efforts at the Lalor mine in 2020 continued to be successful with the definition of an additional one 8 million tons of mineral resources, increasing total inferred at lalor to $6 2 million tonnes.
The inferred resources have the potential to extend the Lalor mine life beyond the current estimate of 10 years and maintain the 5300 tons per day production level beyond 2027.
Preliminary results from Manitoba, 2021 winter drilling program and the trickle basin in snow Lake indicate that the potential copper gold zone to the 19 of the one deposit exists with one hole intersecting 11 six meters at two 7% copper and three four grams per tonne of gold, which is similar to the net.
The geology at the Lalor deposit.
The review is underway to determine next steps for exploration at 19 of one and whether it will be best conducted from surface ore from underground once development of the deposit has commenced and suitable drove platforms can be established.
We also continue to test other targets that exist within the Chisel basin.
I'll close on slide 13, with the recap of our 2021 catalysts many of which we've touched on throughout the presentation Inc.
Peru, we expect to receive further results from market winter North drilling program on the in the coming months.
We will begin drilling the yoga and property in the second quarter we.
We expect to be advancing the exploration permitting process at the other regional Constancia properties. This year once we reach of community exploration agreement and we intend to complete the tradeoff study for the Constancia North underground operations before the end of the year.
In the medium term, we expect to advance our work on examining all sourcing and copper recovery improvements at Constancia.
In Manitoba, we expect to complete commissioning of the new Britannia gold plant in the coming months and to achieve the first gold pour early in the third quarter.
We have started the work in preparation for the ramp up to 5300 tonnes per day at Lalor and the stall mill recovery improvement program.
We also continue this year of exploration program in the Chisel basin.
In the medium term, we will continue to look at future opportunities for extracting gold from the tailgate store expanding the new Britannia mill beyond 500 tonnes per day, and delineating the reserves and resources in the prospect of Snow Lake Camp.
In Arizona, we look forward to releasing further exploration drilling results to potentially extend the mineralization of copperweld.
Publishing the initial resource estimate before the end of the year and work towards the pega to be released in the first half of 2022.
We also expect to receive a decision from the ninth Circuit Court of Appeals on Rosemont in the second half of the year.
And at Mason, we will continue to compile and interpret historical data on our land package and complete geophysics in preparation for the future drilling program.
We are of disciplined growth focused company and as we look to deliver the next stage of growth at high base of priorities over the medium term will be to unlock value of Rosemont drove the copperweld discovery.
The Constancia regional exploration targets add reserves to the Snow Lake mine plan advanced Mason and exploration pipeline projects and optimize value from snow Lake gold, while remaining vigilant for other opportunities that match, our strategic criteria and never losing focus of prudently managing our balance sheet and with the.
We are now happy to take the questions.
Thank you ladies and gentlemen, we will now begin the question and answer session to join the question queue. You May Press Star then one on your telephone keypad.
The tone acknowledging your request if youre using a speakerphone. Please pick up your handset before pressing any keys.
Withdraw your question. Please press Star then two we will pause for a moment of callers join the queue.
Our first question comes from Rs <unk> of Scotiabank. Please go ahead.
Hi, Good morning could we please get a bit more color on sort of what happened at constancia in the first quarter I realize there was a maintenance shutdown, but the the throughput there still seemed really low.
Unless the maintenance shutdown with over two weeks of not really sure how long the margin and just along those lines are there any other anticipated maintenance shutdown later this year.
Good morning, Austin. Thanks, Thanks for the question to start out of your question, yes, the maintenance shutdown was longer than planned because we deferred it from the call. It the last quarter of last year. So the duration of it certainly would have impacted our results for the quarter, but cash flow, one announced cash flow to provide a little bit more color around.
Yeah.
Good morning.
Certainly the maintenance shutdown was a little bit longer than anticipated by the added work from the quarter also is the longer the ceded.
Some of the logistical reasons Brandon mutual.
Okay.
Not to mention complications with segregating workforces contractors et cetera on site and so some of the work took longer than the.
Under normal circumstances, and obviously impacted.
The days available for throughput the otherwise.
From the beginning the sequencing of the mine, we're mining a little bit harder ores from the lower part of Constancia and so throughput through a little bit down, but Fortunately now we're mining in the top of Ghansham that will offset a lot of that hardness that'll be going through and we expect now to be at normal sort of throughput levels going forward with.
<unk> I believe there is also in Q4 and other scheduled maintenance shutdown later in the year.
In order to.
Your question on the duration was approximately two weeks of the shutdown yes.
Thank you.
Just shifting gears.
When we think about your your medium term growth, whether it be rosemont or copper world.
Is it fair to say that the earliest we could see or we should anticipate investment from.
On the development perspective is probably 22024 or do you see a scenario that you could see early works begin before that.
Okay.
So I think.
Your suggestion is certainly reasonable.
What I would say with respect to Rosemont.
Is that a number of potential outcomes are possible, but if we succeed.
We would be in a position to be exactly where we were back in July of 2019, which could mean that we could effectively be moving into.
Construction of pretty quickly.
I'll remember that back in the <unk> in 2019.
Things that we really had to fight we're focusing on we're obtaining of partner for Rosemont were joining the bank joint venture partner as well as.
We would likely need to just take another look at the estimates in order to be validated in the context of some improvements that we've made of the interim as well as current pricing.
So I think it would be fair to say that if we received a positive decision yes at the.
The Rosemont.
We could be in the field as early as 2000 zone three.
And I would say 2024 at the conservative estimate.
Thank you.
Our next question comes from Jackie <unk> of BMO capital markets. Please go ahead.
Alright, Thanks, I guess the I'll just start by following up on <unk> question.
When do you go about doing a p/e copper world.
Next year I think you said.
How does that factor in with Rosemont are you going to contemplate that pega is the standalone or is that going to be.
Complex between the two operations.
Good morning, Jackie.
The PGA that you're conducting is full of copperweld as a standalone project.
There certainly is the potential for it to the combined with the version of Rosemont, but we are approaching it as a standalone project right now.
Okay, and so a positive decision on Rosemont wood.
As a result in the <unk> going forward with.
With the construction of Rosemont, and then copper worldwide with the sequence in sort of after that is that the right way to think about it.
I think it will be.
We really needed to complete the work on the ERP April copperweld to better understand how sequencing might occur.
So I think what you're saying is a fair assumption, but certainly it is not certain at this point alright. Okay. That's helpful and then shifting over to Peru I know.
You've probably been asked this a million times, but given that we're getting closer to the run off election in Peru.
Can you talk about how.
How is the affecting high Bay if at all at this point does the.
Increase kind of attention to different political views does that change the interactions that you're having with the community and the progress youre, making on getting access to the exploration properties that you have up there.
The Jackie International I think the two.
Team Javier and his team in Peru of doing an extraordinary job of staying out of politics.
In support of contact with the our communities and jumbo railcars in support of those communities.
With respect to the election, I really do think that it's too early to predict the direction that the runoff will take.
Youll recall that the polls in the first part of the election didn't even include Mr. Castillo in the top five candidates.
The game as I've said before if I view, Peru in the context of my personal experience over the past couple of decades.
My theory election is characterized by extremes.
10 years ago. The same thing happened with Avianca commodity who was the left green candidates and he was considered to be Armageddon for the mining industry in Peru, but we saw that all three of the election. He moved to the center and mining continued to be a key driver of the nation's economy and ICM of difference now Mr. Castillo is already beginning to soften the tone if he is elected.
And this is the big if Hebei will work with ease of administration constructively as we always do and we will defend in advance of the interest of our investors and our stakeholders, but I do believe sort of going back to the first part of my answer to you is that the best way to do this is to remain deeply focused on our communities in terms of <unk> and on a common purpose.
And the team is it.
Totally focused on that.
And then the ask from the communities hasn't changed materially with with this sort of background noise.
No no in fact, we are very very solidly engage with the community community and we have a number of agreements with the communities.
Okay. That's really helpful. Thank you very much Peter.
Youre welcome.
Okay.
Our next question comes from Matthew Fields of Bank of America. Please go ahead.
Okay.
Hey, everyone.
Thanks for providing the color on that then shipments that sort of.
Got pushed into the <unk>.
Is it have you been able to sort of think about that.
39 million had been revenue kind of what the EBITDA throughput would have been in the first quarter.
Thanks for the question, Mike why don't I ask Steve Douglas True Eurosport.
It's not a number we really disclose.
But suffice to say.
I will get back to you on the number as to what the calculation would be.
Okay, and then just thinking about the rest of the year, obviously global freight global shipping and challenged right now for a number of reasons is there any reason to believe that this is just the one time issue and.
<unk> will kind of have outsized results because there'll be nothing nothing question the <unk>.
Kind of the thing that you're going to be monitoring for the rest of the year to make sure kind of shipments go out on time and sort of everything that you produced can get sold.
In a reasonable amount of time.
We have no indication that there is.
It will be any change.
We have no indication of the short term of any changes and we expect the.
So do you expect next quarter to go ahead as planned and there is no indication.
The things will change from that beyond the second quarter, and I mean, the ticket's worth, noting and Peter pointed out in his conference call notes, we actually got paid for the shipment in accordance with commercial terms. It was just delayed.
Literally a matter of a few days. So I mean, these logistical hiccups come and go and we definitely aspired of not having them and I think our marketing team does a fantastic job of dealing with a lot of variables.
So absolutely I would reiterate what Peter said that we don't anticipate this occurring again, but that's all subject to.
The vagaries of the front of the areas in which we function.
Alright Fair point and then.
Last one from me you start delivering gold ounces under the prepay agreement next year.
Given the move Cigna.
Significantly and prices.
<unk>.
More so on copper since you signed the gold prepay.
Is there any thoughts of kind of.
Taking advantage of the the good metal prices to kind of maybe mitigate the impact of those ounces.
You know kind of kind of gone away on your cash flow from financing in 2022.
Matt I think that we concluded the agreement at.
Decent price, which is actually not that far off today's price. So right. Now we are not really giving consideration to alternatives with respect to how we make those payments or how we deliver those ounces.
Okay.
Thanks, very much I appreciate it.
Once again, if you have a question. Please press Star then one.
Our next question comes from Lawson Winder of Bank of America. Please go ahead.
Hello, Peter and team good morning, Thanks for the update.
Just a question on Rosemont.
In the event that the the court actually rules against Rosemont I'd like to kind of understand what youre thinking is.
In terms of how to proceed so.
One.
Are you in a position where you could fairly immediately move ahead with some sort of plan that avoids federal lands and.
And then how long would it be before you could submit for those state approvals.
And then secondly would you intend should be to appeal.
Or or just leave it at that.
Good morning, North and look I think thats in the insightful question.
If we were to lose the case, we would certainly.
Sick leave to appeal and the reason why I say that is because this decision not only does it not only affects hard day in rosemont, but at the <unk>.
<unk> of the entire industry in the west of the United States, and possibly the entirety of United States and we have previously said that there are sort of 25 or so of projects.
And billions of tons of copper that of potentially impacted by the so it isn't.
Something that affects the entire industry and we think that appeal an appeal of certainly would be an order and would be certainly appealed.
By the industry and other industry associations.
Now.
I remain pretty confident that we are optimistic that the appeal of will go away, but that's beside the point now.
So if we do appeal of course, we would look at alternative.
Alternatives for going into production I think it is fair to say that the.
The copperweld discovery.
Certainly.
Provide us with an alternative avenue, although a slow of Avenue.
But we continue to look at alternatives with respect of how we might move forward. If we in fact do lose the appeal.
Okay, that's great.
And then.
Maybe if I could just ask on the collective bargaining agreements.
It seems like this is a bit delay I'm just curious what to what you would attribute attribute the delay in getting.
Those contracts finalized and then.
It would be really helpful to get some color on what proportion of each site and the union.
And what job functions are primarily represented by those.
The Union members.
And also I would say that.
In the case of Manitoba.
The more complex environment, given the pending close of the triple seven.
We continue to advance the collective bargaining process day with our unions to work towards.
Concluding.
An agreement that works for everybody.
Ultimately, we and they are focused on the <unk> settlement and we expect to achieve that now to your question of the proportion of personnel, who the unionized in Manitoba the entire workforce is unionized and improve of approximately one third of the workforce is unionized.
And those in Peru are they concentrated in one particular function of it.
Spread around.
And then the spread around.
Okay. That's good.
Great. Thanks for that color and then just one final question I mean, you mentioned the of course, you reiterated the guidance you reaffirm that.
And.
You are confident in meeting that but I did note that you called out the $4 6 million in Q1 of additional costs that I think were unexpected related to COVID-19.
And.
Yes, My question would be how persistent in each of the <unk>.
Consecutive.
The quarters in 2021 could that $4 $6 million Cosby and.
If you were to get $4 $6 million of additional COVID-19 costs in each of Q2, three and four and 2021 would that put the constancia guidance of at risk at all.
I mean.
At the high end of $10 90, the ran the risk of sort of breaching that level.
Yes, and thanks for that.
So we had initially guided towards some two and a half million dollars of quarterly costs with respect of COVID-19. However, with the increased proportion of that we're taking we are now saying that the last quarter was $4 6 million instead of the $2 $5 million run rate that we've experienced the we expect the overall COVID-19 related.
Costs for this year to be of the order of $20 million of $5 million of quarter, but we do not expect those to impact the guidance that we've issued.
Okay Fantastic. Thank you Peter.
Welcome.
This concludes the question and answer session I would like to turn the conference back over to Candace Brule for any closing remarks.
Thank you operator, and thank you everyone for participating today, if you of any further questions. Please.
Please feel free to reach out to our Investor Relations team. This call has now ended you may disconnect your lines.
Okay.
[music].
Okay.