Q1 2021 Hudbay Minerals Inc Earnings Call
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Good morning, ladies and gentlemen, thank you for standing by and welcome to the HUD Bay 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 <unk>.
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 had base 2021 first quarter results conference call.
Hi, based financial results were issued yesterday and are available on our website at Www Dot had day dotcom and a corresponding Powerpoint presentation is available and we encourage you to refer to it during this call. Our presenter today is 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 the 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 company's 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 and 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 wanted to recognize that the COVID-19 situation continues to present, the challenging operating environment for our business unit.
While we are encouraged by the recent rollouts of vaccines and certain region. We remain focused on adhering to our strict COVID-19 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.
And this 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 corporate gross pipeline and the recap of the many near term catalysts at HUD day.
Okay.
First quarter consolidated copper production was 24 point and 6000 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 grade the triple seven and higher copper recoveries at the fleet and fluff mill.
Consolidated gold production increased by 10% compared to the previous quarter the.
Keeping of new records for <unk> due to higher gold grades of Triple seven higher gold recoveries at the clinical and concentrated and higher gold grades at Constancia.
Consolidated zinc production and the first quarter was 8% Hyatt and the fourth quarter due to a higher zinc grades and throughput.
Consolidated cash cost per pound of copper produced was $1 and for since in the first quarter and increased compared to the fourth quarter due to lower cost of production higher operating cost and lower byproduct credits.
Operating cash sustaining capital and royalties.
The <unk> administrative and regional cost consolidated all in sustaining cash cost per pound of copper produced was $2.37, which increased from $2.24 in the fourth quarter due to the same factors impacting cash cost, but was offset by lower sustaining capital.
Operating cash flow before change and noncash working capital was $91 million during the first quarter the slight increase from the prior period due to higher realized prices offset by lowest sales volume.
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 volume.
First quarter of Peru sales were impacted by a delay in the 10000 ton shipments of copper concentrate valued at $20 million for which payment was received and the first quarter, but did not meet the revenue recognition criteria due to the delayed timing of the shipments into early April.
This quarter of Manitoba sales were impacted by a delay and accessing additional railcars after a strong copper production quarter.
This resulted in the buildup of approximately 5000 tons of copper concentrate and 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 have realized approximately $39 million of incremental revenue piece.
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 priced cost of sales.
We exited the quarter with $311 million and cash and equivalents lower than end of last year, mainly as the result of capital investments as we complete our growth initiatives, and Peru, and Manitoba, along with interest payments and bond refinancing fees during the quarter.
Our full year 2021 production and operation cost guidance has been reaffirmed and we are pleased to announce pump of contract commenced production at the end of April in line with the timelines incorporated into our guidance and recent updated mine plan.
On slide four you will find the summary of our operating results and 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 per.
Reduction was low 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 of.
Ore mined during the first quarter was lower than the fourth quarter as mining levels were optimized for low mill throughput, while managing the level of contaminants and hardness in the ore since of the mill.
For mill during the first quarter was lower compared to the previous quarter due to the plant maintenance shutdown.
Sales 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 pits.
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 cost and the first quarter were higher than last quarter, primarily due to fewer tonnes of ore milled and increased operating cost related to the planned mill maintenance shutdown and enhance the COVID-19 protocols.
The COVID-19 related costs amount to approximately 72 cents per ton and the unit cost however, even with projected elevated COVID-19 cost for the balance of the year. We expect the full year unit operating cost to decline to be in line with our 2020 guidance range.
Peru's cash cost was higher and the first quarter compared to the fourth quarter of last year, primarily due to higher milling cost and lower copper production.
Sustaining cash cost for the first quarter improved to $2.36 compared to $2.58 and the prior quarter due to lower cash sustaining capital spending partially offset by the same factors affecting cash cost during the quarter.
And early April 2021 we finalized the remaining land user agreement for pump of Concha and gave the full access to the site complete pit development activities.
The first production for 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 and the pump of pension pits of significant positive milestone for both the company and for the community of Chia riot.
Turning to slide six I'd like to talk about our updated Constancia mine plan, which we released on March the 29th.
This update reflects an increase in copper and gold production from 2020 two to 2025 as the higher grades from the pump of conscious deposit into the mine plan.
Incorporates higher grade reserves from the Constancia and North pit extension, which contributed to an increase in reserves of 33 million tonnes at a grade of zero point for 8% copper and 0.115 grams per tonne of gold and extends the higher grade profile to 2020 eight.
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 Concho, and Constancia and North and Youll production at Constancia is expected to average approximately of 102000 tonnes of copper and 58000 ounces of gold over the next eight years and.
And increase of 40% and 367% respectively from 2020 levels.
The stance and maintains its low cost profile with average copper cash cost of $1.18 and sustaining cash cost 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 six.
$6 7000 tonnes 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.
For minded 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 soft repairs were completed and the fourth quarter.
Copper and gold grades of Triple seven were higher than the fourth quarter as higher grade remnants stopes of mind as triple seven nears the end of its mine life of.
The Lalor mine achieved the increased targeted throughput rate of 4006 hundred 50 tonnes per day during the quarter.
Developments and 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.
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 of his 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 law or go the head of the new Britannia Mill.
For processed at the central and 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 less of the lalor ore being diverted to Flint plant in order to grow the gold ore stockpiles for the new Britannia mill.
Recoveries of copper gold and silver were higher than the previous quarter due to higher grades.
Unit operating cost increased by 8% compared to the fourth quarter, but remained within the annual guidance range and 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 the cost was negative one dollar and four cents higher than the prior quarter, primarily due to higher mining and G&A cost 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.
A lot of ore mined was not affected we were able to utilize spare capacity at the flimflam 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.
The 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 and 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 advancement as part of the third phase of the boss Snow Lake Gold strategy.
The third phase focuses on expansion and further optimization of operations and several of these opportunities were incorporated into and updated mine plan, which is summarized on slide nine.
This enhanced mine plan contemplates an increase in annual gold production from approximately 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 cost 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 stall 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 deposits starting in 2026.
These mine plan enhancements optimize the processing capacity and 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 and significantly increasing near term copper and gold production through.
And through our wealth bolthouse 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, but also 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.
The Rosemont is one of our more advanced projects with attractive returns and a 19 year mine life based on the 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 the 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 a couple of real discovery, where our 2020 initial drill program intersected high grade copper sulfide and oxide mineralization on our private land at depths much shallower than Rosemont and the.
Photo on this slide you can see the green oxidized copper and the size of the mountain and Copperweld.
We've commenced the larger 2021 drill program to test the limits of these deposits and the potential for a viable open pit operation at Copperweld.
We've recently increased the 2021 and 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 and initial inferred resource estimate for the end of the year and the P E and the first half of 2022.
And in April we published our initial P. A formation, which contemplates the 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 and 10 states. 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 a price of $3 25, since the NPV increases to three quarters of the $1 billion and the IRR increases to over 50%.
<unk> has a large measured and indicated resource base 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.
And Peru, the Constancia and North discovery enhanced the mineral resource estimates through and improvement in the head grade of Constancia.
Measured and indicated copper grades increased two zero to 2% from 0.19% and and fed copper grades increased two 0.3% from 0.18% of.
A significant portion of the Constancia and North resource estimate is classified as inferred due to wide drill spacing, but there remains the opportunity to upgrade these inferred resources to our higher classification as we complete infill drilling.
And they're also remains further opportunity to extend the constancia and north resource by incorporating steeply dipping of high grade Scone mineralization through of potential underground operation the.
The mineralization remains open down plunge to the north.
In February of 2021, we commenced drilling on the <unk> North highest high grade Skol and target located approximately 10 kilometers from Constancia and drilling continues of five holes completed to date.
Discussions continue to progress with the community of which of cargo on the Maria Reyna and come 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 Tokyo, and and close proximity to existing infrastructure.
The 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 drill program and the Chisel basin and snow Lake indicate that the potential copper gold feed of zone to the 19 of 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.
And geology at the Lalor deposits.
The review is underway to determine next steps for exploration that 19 of one and whether it will be best conducted from surface ore from underground once development of the deposit has commenced and suitable drill 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 and <unk>.
Peru, we expect to receive further results for market winter North drilling program on the in the coming months we.
We will begin drilling the yoga and property and the second quarter.
We expect to be advancing the exploration of <unk> 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 and North underground operation before the end of the yet.
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 and the coming months and to achieve the first gold pour early in the third quarter.
We have started the work and preparation for the ramp up to 5300 tonnes per day at Lalor and the stall mill recovery improvement program.
We also continue this year's exploration program and the Chisel basin.
And the medium term, we will continue to look at future opportunities for expecting gold from the tails at stall and expanding the new Britannia mill beyond 500 tonnes per day, and delineating new 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.
Published and the initial resource estimate before the end of the year and work towards the P. A to be released and the first half of 2022.
We also expect to receive a decision for the ninth Circuit Court of Appeals on Rosemont and 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 and 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 Hardbake of priorities over the medium term will be to unlock value at rosemont drilled and the copper will discovery.
And the Constancia regional exploration targets and 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're 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, you'll hear of tone acknowledging your request if youre using a speakerphone. Please pick up your handset before pressing any keefe.
Withdraw your question. Please press Star then two we will pause for a moment of callers join the queue.
Our first question comes from our erstwhile Kudo of Scotiabank. Please go ahead.
Hi, Good morning could we please get a bit more color on sort of what happened at Constancia and the first quarter of I realize there was a maintenance shutdown, but the the throughput there still seemed really low.
Unless the maintenance shutdown with over two weeks and not really sure how long the margin and just along those lines are there any other anticipated maintenance shutdown later this year.
Yes.
Good morning, Austin. Thanks, Thanks for the question to two starts out of your question and yes, the maintenance shutdown was longer than planned because we deferred it from the court the last quarter of last year. So the duration of it certainly would have impacted our results for the quarter, but cash flow widen our cash flow to provide a little bit more color around.
Yeah.
Good morning <unk>.
Certainly the maintenance shutdown was a little bit longer than anticipated by the added work from the quarter also is the longer you did some of the logistical reasons for granted and mutual.
Right.
Not to mention the complications with segregating workforces and contractors et cetera on site and so some of the work took longer than the under.
Under normal circumstances, and the obviously impacted.
The days available for throughput the other wise is.
And at the beginning the sequencing of the mine, we're mining a little bit harder ores, and the lower part of Constancia and <unk>.
So the throughput for a little bit down, but Fortunately now we're mining and top of the Ghansham that will offset a lot of that hardness and that'll be going through and we expect now to the at normal sort of throughput levels going forward with respect I believe there is also in Q4 and other scheduled maintenance shutdown later in the year.
And <unk>.
Your question and duration was approximately two weeks of the shutdown yes.
Thank you and.
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 for.
Some of development perspective is probably 22020 for or do you see a scenario that you could see early works begin before that.
Okay.
I think that you know.
And 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 the where back in July of 2019, which could mean that we could effectively be moving into construction and pretty quickly now remember that back in the 20 in 2019.
The thing that we really had to fight we're focusing on we're.
Obtaining of partner for Rosemont for joining us.
The <unk> joint venture partner as well as.
And we would likely need to just the REIT taken another look at the estimates in order to be validated in the context of all of some improvements that we've made and the interim as well as current pricing.
So I think it would be fair to say debt. If we received a positive vote decision.
Cash at Rosemont.
We could be in the field as early as 2000 total free.
And I would say 2020 for it.
The revenue 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 of P. A copper world.
And 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 a.
A complex between the two of operation.
Good morning, Jackie Great question.
The the PGA that free conducting is full of copperweld as a standalone project.
They certainly is the potential for it to be combined with the vision of Rosemont, but we are approaching it as a standalone project right now.
Okay, and so a positive decision on Rosemont.
Well and result in you going forward with.
With the construction of Rosemont, and then copper worldwide, what sequence and sort of after that and is that the right way to think about it.
And I think we will.
We really needed to complete the work on the P April copperweld to better understand how sequencing might occur.
And so I think what you're saying is a fair assumption, but certainly it is not sit and at this point right. 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 runoff election and Peru.
Can you talk about how and how it's affecting high Bay if at all at this point just the increase.
The increase kind of attention to different political views does that change the interactions that you're having with the community and and the progress youre, making on getting access to the exploration properties that you have up there.
The Jackie and in nutshell of I think the.
Team Javier and his team and Peru of doing an extraordinary job of staying out of politics and.
And Mike can support contact with the all communities and jumbo railcar and 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 and the top five candidates. So again as I've said before if I view, Peru, and the context of my personal experience over the past couple of decades, almost every election is characterized by extremes.
10 years ago, the same thing happened with the younger the motto, who was the left me and candidates and he was considered to be Armageddon for the mining industry and Peru, but we saw that after the election. He moved to the center and mining continued to be a key driver of the nation's economy and I see no 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 his administration constructively and we always do and we will defend and advanced the interest of our investors and all 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 and timber mill cost and on a common purpose.
And the team is the.
Totally focused on net.
And the and 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 our 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 the 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 and revenue kind of what the EBITDA throughput would have been and the first quarter.
Thanks for the question, Mike why don't I ask Steve Douglas to Eurosport.
It's not a number we really disclose.
But suffice to say.
You know what we'll 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 onetime issue and <unk>.
<unk> and we'll kind of have outsized results because there'll be nothing nothing question the <unk>.
And 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 and sort of everything that you produced can get sold and a reasonable amount of time.
And then we have no indication that there is a it will be any change of Sydney, we have no indication of the short two of the any changes and we expect the.
And so do you expect mix what is the go ahead as planned and there's no indication of debt.
This will change from that beyond the second quarter, and I mean, the ticket's worth, noting and Peter pointed out and his conference call notes, we actually got paid for the shipment and in accordance with the 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 and not having them and I think our marketing team does a fantastic job of dealing with a lot of variables.
And so absolutely I would reiterate what Peter said debt, we don't anticipate this occurring again, but that's all subject to.
And the vagaries of the front of the areas in which we function.
Alright Fair point and then.
Last one for me and you start delivering gold ounces under the prepay agreement next year.
Given the move Cigna.
Significantly and prices.
Gold.
More so on copper since you signed the gold prepay.
Are there any thoughts of kind of.
Taking advantage of the of the good metal price is to kind of maybe mitigate the impact of those ounces.
You know kind of kind of going away on your cash flow from financing and in 2022.
Matt I think that we concluded the agreement at a at a 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.
Thanks, very much I appreciate it.
Once again, if you have the 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.
And just a question on Rosemont.
In any event that the the court actually rules against Rosemont, and I'd like to kind of understand what your thinking is.
In terms of how to proceed so.
And one.
Are you in a position where you could fairly immediately move ahead with some sort of plan that avoids federal lands and and.
And then how long would it be before you could submit for those state approvals and then secondly would your intention be to appeal or or just leave it at that.
Good morning, North and look I think that's and insightful question.
Our retained if we were to lose the case, we would certainly seek.
Seek leave to appeal.
And the reason why I say that is because this decision not only does it not only of fixed high bay and Rosemont, but it affects the entire industry and the waste and the United States and possibly the entirety of United States and we have previously said that there are sort of 25 with our projects and billions of tons of copper that of potentially.
Impacted by the so you said.
And that's something that affects the entire industry and we think that appeal and an appeal and certainly would be and order and would be certainly appealed.
By the industry and other industry associations.
Sure.
And you know I remain pretty confident that we are optimistic that the appeal of will go away, but that's beside the point now if.
So if we do appeal of course, we would look at alternative alternatives for going into production I think it's fair to say that.
The copperweld discovery.
Certainly.
<unk> and alternative Avenue, although a slow of avenues.
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 as a debt delay and just curious what to what you would attribute and attribute the delay and getting them.
Those contracts finalized and then you know I think it would be really helpful to get some color on what proportion of each site and unionized and and what job functions are primarily represented by those.
And the numbers.
And of course, and I would say debt.
And in the case of Manitoba.
The more complex environment, given the pending close of the triple seven.
But we continue to advance the collective bargaining process day with our unions to work towards.
No.
Concluding.
And agreement that works for everybody.
Ultimately, we and day all focused on the fast 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, and a concentrated in one particular function of it.
Spread around.
And this is spread around.
Okay, that's great and thanks for that color and then just one final question. I mean, you mentioned of course, you reiterated the guidance you reaffirmed that.
And.
And your confidence in meeting that but I did note that you called out for $6 million and Q1 of additional cost.
I think were unexpected related to COVID-19.
And my question would be how persistence and each of the.
Consecutive.
The quarters and 2021 could that for $6 million cost be and you know.
If you were to get for $6 million of additional COVID-19 cost in each of Q2, three and four and 2021 would that put the constancia guidance of at risk at all.
And then take the high end of 10 90, the Randy of risk of sort of breaching that level.
Yes, Los and thanks for that.
So we had initially guided towards some of two and a half million dollars of quarterly cost with respect of COVID-19. However, with the increased precautions that we are 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 and we expect the overall COVID-19 related.
Cost is 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.
You're 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 feel free to reach out to our Investor Relations team. This call has now ended and you may disconnect your lines.
Okay.
Okay.
[music] true.
Okay.
[music].
And.
And.
And.
Yeah.
Okay.