Q2 2021 Ero Copper Corp Earnings Call
Okay.
[music].
Thank you free standing by this is the conference operator, welcome to the ERO copper second quarter results Conference call.
As a reminder, all participants are in listen only mode and the conference is being recorded.
After the presentation, there will be an opportunity to ask the questions.
The join the question queue you May Press Star then 1 on your telephone keypad.
Should you need assistance during the conference call you may signal, an operator by pressing star and zero.
I would now like to turn the conference over to Noel Dunn Executive Chairman of ERO copper for opening remarks.
Please go ahead.
Thank you and good morning, everyone. The news release announcing ear of the second quarter of 2020 once financial results is available on our website.
The financial statements and MD&A for the 3 and 6 months ended June 30 of 2021.
As usual, we will be making forward looking statements on this call that involve risks and uncertainties concerning the businesses operations and financial performance of the company.
We would refer each of our most recent Aif and builds on our website.
On SEDAR and Edgar for a discussion of the risk factors of our business and the potential impact on future performance.
Unless otherwise stated all of the mines are in U S dollars.
Joining me on the call today.
David Streit, and co founder and Chief Executive Officer.
Wet and dry it chief financial Officer.
Marker of Defilippo, President and Courtney Lynn Vice President corporate development and Investor Relations.
While some uncertainty surrounding the path of the COVID-19 Delta virus, clearly still exist and Brazil, we are seeing encouraging signs relative to the case count peaks of mid 2022.
2021.
We're also seeing increased rates of vaccination across our operations and fear.
Or are people are away from work due to suspected exposure.
All the Operability of measures remain in place and for reasons of Prudence, we have no intention of lifting and in the near term.
We are pleased with our operational and financial results and the second quarter and the first half of the year as well as the progress we've made and advancing several strategic objectives.
At the end of the quarter, we announced the $110 million.
The dollar gold streaming transaction with Royal Gold and our Nx Gold mine.
The transaction, which we expect to close and the very near term.
Look some of the value we have long identified and the Nx Gold mine was forming strategic partnership how Youre line is our plans to further develop and organically grow the Nx gold business.
The proceeds from the transaction combined with a record cash balance of $138 million.
It will be used to support our organic growth objectives there.
But ex GSA and and the development of the Boa Esperanza project.
What's the next Gulfstream transaction closes our pro forma cash balance will be approximately $248 million.
And it will be and a net cash position of approximately $80 million give me is giving us.
Excellent balance sheet strength and liquidity to continue to execute on our strategy.
In June we completed the dual listing on the New York Stock Exchange, which we will which we believe over time, it will broaden our shareholder base and enhanced trading liquidity.
We also published out of 2020 sustainability report during the quarter, highlighting our ESG performance is whether the goals and initiatives related to responsible and sustainable mining.
This year, we highlighted the formation of the climate change steering committee comprised of a multidisciplinary team.
Both of the executive and operational levels.
Over the coming years, we expect this group to contribute greatly to further advancing our sustainability strategy, such as studying and emission reduction targets and other performance goals.
And you look ahead, we are bullish on the outlook for copper prices and the need to address climate change accelerates globally.
Well the energy initiatives global electric infrastructure spending and the post pandemic economic recovery are all copper intensive activities.
Furthermore, the realistic analysis and the supply side of copper shows it to be as challenged today as we anticipated it would be when we acquired MTS day in 2016.
And increase the environmental awareness amongst governments and stakeholders only compounds these challenges and all of you.
And I am as excited as ever for what the future holds for our company and I'm grateful to our colleagues for the fantastic work, they do support out of production and organic growth.
Well continue to manage the evolving challenges associated with the COVID-19 pandemic.
I'll now pass the call over to David to provide a brief review and update of our operations after which way and will provide a summary of the company's financial performance.
As usual our team will be available for questions immediately following the call.
Thank you.
I would like to reiterate no sentiment as our team and especially our colleagues and Brazil have worked incredibly hard to advance our strategic objectives, while continuing to deliver strong operating and financial results.
Despite the dynamic operating environment.
During the second quarter, we reported record cash flow from operations of $85.1 million driven by strong performance across each of our operations aided by copper and gold price tailwind.
At the M. CSA money complex, we processed over 550000 tonnes of ore and had an average grade of 2 point of 1.3% copper and achieved the second consecutive quarter of record net metallurgical recoveries, averaging 92, 5% during the quarter.
As expected mill throughput volumes decreased relative to the first quarter.
Due to the first phase of scheduled mill maintenance, which was successfully completed shortly after quarter end.
The impact of more maintenance of copper production was offset by higher than forecast the grades due to a continuation of favorable grade reconciliations and planned stopes as well as supplementary mine tonnes from the value engineering project that seeks to identify and mine higher grade areas within the upper levels of.
The Plum line previously believed to be sterilized.
This program is yet another data point, highlighting the ingenuity and commitment to creating value by our operations team and Brazil supported by our newly created technical services team here in Canada.
We also achieved quarter on quarter increases and both metallurgical recoveries and concentrate grades demonstrating ongoing benefits from the Hikma, we successfully installed last year and <unk>.
<unk> milling capacity generated by the Hikma and helped to mitigate the impact of mill maintenance on throughput volumes during the quarter and that allowed us to fully evaluate the true performance potential of the Hague mill that will go a long way and helping us and the detailed design of returning the overall milk to its original capacity.
The strong operating performance across the M. CSA mining complex contributed to quarterly copper production of 10898 tons of copper and quarterly seaborne cash costs of 72.
Per pound of copper produced.
Bring your copper production for the first half of the year to 23536 tonnes at an average seaborne cash cost of 60 cents per pound.
We recently started phase 2 of planned mill maintenance of M, CSA and tissue and anticipate mill throughput volumes and the third quarter to be similar to those achieved in the second quarter.
While we expect our ongoing value engineering program to continue to provide some supplementary production from the upper levels of the pillar of mine.
Balance we expect the grades will normalize so within our guidance range for the balance of the year.
Yes.
As a result of our strong first half production performance, we are well positioned to achieve our unchanged full year of copper production guidance, albeit towards the higher end of our 42 to 45000 ton range.
Similarly, we are also tracking towards the lower end of our full year seaborne Costco.
Excuse me cash cost guidance range, which remains unchanged at 75 to 80 cents per pound of copper produced.
The Nx gold mine delivered a strong quarter as well.
Using 10000, and 377 ounces of gold and silver and cash costs of $499 per ounce and all in sustaining costs of $660 per ounce the <unk>.
10% quarter on quarter increase and gold production was driven by higher tonnes milled and strong metallurgical performance, which more than offset lower grades mined and processed during the quarter.
While we are tracking ahead of our full year of production guidance range with approximately 19800 ounces of gold produced and the first half of the year and all in sustaining cost of $650 per ounce.
We anticipate modestly lower grades and the second half of the year due to planned mine sequencing and the normalization of recovery rates.
As a result, we are well positioned to achieve the high end of our reaffirmed.
<unk> guidance range.
The range of 34005 hundred 37005 hundred ounces.
And the low end of our unchanged all in sustaining cost range of 875 to $975 per ounce of gold produced.
Our exploration programs, Jim generated exceptional results during the quarter. The continued to validate our exploration driven organic growth strategy.
And the CDR sum of valley, we drilled the best intercept and the Great me the basis and the history of our company.
And the deepening extension of the pillar of mine.
The 67 meter intercept of grading over 9% copper was located beneath the current inferred mineral resource show and highlights the sheer size of the Super pod style of mineralization at depth.
And as drilling within the deepening particularly at depth.
And there's continued to highlight better than expected results. We have initiated the design review of the project, including off shaft and development parameters to review value enhancing opportunities and ensure we are maximizing the value of this incredible deposit.
We're also continuing to make good progress and our regional exploration program.
And are evaluating a number of opportunities that we hope to share and our next quarterly exploration update.
Our exploration results from the Nx Gold mine was also exceptional including and the best hole drilled and the history of the mine.
Located beyond the limit of the current inferred mineral resource.
The results highlight the intrinsic value of the mine.
That we have always recognize it and more broadly speak to the potential of the index excuse me unexplored land package, which remains largely unexplored.
And the weeks ahead, we look forward to releasing the results of our optimization study for the Bowl ex Esperanza project feasibility study as well as of third quarter of exploration results.
I will now turn the call over to Wayne to.
To discuss our financial performance for the quarter.
Thank you David and good morning, everyone.
As David mentioned, our strong operational performance combined with elevated copper and gold prices drove record quarterly cash flow from operations of 85 point and $1 million during the quarter.
All of a cup of sales volumes were down quarter on quarter due to lower production volumes and a high of good finished goods inventory at the end of the quarter.
Cash flow from operations did benefit from the higher metal prices and an $11.6 million reduction and our accounts receivable.
Despite the lower copper production as well as the stronger Brazilian real and that drove higher unit costs compared to the first quarter and.
And CSA delivered and see 1 cash costs of 72 cents per pound of copper produced during the second quarter, resulting in average C..1 cash costs of 60 cents per pound for the first half of the year.
Well ahead of our full year guidance range of 75 to 85 cents per pound of copper produced.
Gold sales were flat quarter on quarter, despite the higher gold production due to a increase and finished goods inventory at the end of the quarter.
Gold C..1 cash costs and all in sustaining costs per ounce produced of course up slightly compared to the first quarter due to the strengthening of the the reality, but we're still ahead of our full year about 40 of the cost guidance.
Adjusted EBITDA for the quarter was $85.5 million, bringing adjusted EBITDA for the first half of the year to a record $172.2 million.
The strengthening of the Brazilian real during the quarter allowed us to Opportunistically settle a portion of about 4 dated foreign exchange derivative contracts.
The resulting in a realized loss of approximately $6 million.
We continue to expect foreign exchange settlements to them to the amount to somewhere between 4 and $6 million per quarter provided the Brazilian real state and it stays relatively range bound at these levels.
Our headline net income for the second quarter was $84 million or 90 cents per fully diluted share.
After adjusting for non cash components, including the unrealized foreign exchange gains.
Adjusted net income was $53.7 million of 58 cents per fully diluted share.
Our balance sheet is the strongest as ever and it has ever been with cash and equivalents of $138 million.
<unk> and less than $20 million of net debt at the end of the quarter.
As Noel mentioned upon the closing of the index Gulfstream, our pro forma cash balance will be approximately $240 million with the net cash position of approximately $80 million.
Well, we intend to maintain strong available liquidity to support our growth projects, we do expect to pay down and meaningful portion of the revolver during the third quarter to reduce ongoing interest payments and the near term.
I'll now hand, the call back to know to share some final comments.
Okay.
Yeah.
Thank you Wayne and everyone, who joined the call today before we open it up to Q&A I'd like again to congratulate the euro team.
And of all colleagues and Brazil for delivering another strong quarter and.
And running out of business, we remained focus on return on invested capital.
And I'm pleased to note the the end of this 6 month period.
Oh I see I was talking to the by Bloomberg has averaged approximately 40%.
Which positions us well versus any other company and our industry worldwide.
And why is this important.
Simply because the company that consistently delivers highly tense on share held as capital kind of 4 to finance growth without diluting those very same share holders with repeated capital calls.
And the oil, creating undue risk by taking on high levels of leverage and its capital structure.
There's 2 of absolutely Paramount and how we run out of business.
We are well positioned to deliver on our full year guidance and.
And look forward to building further momentum with the release of our BOE of Esperanza optimization study.
Thank you for joining the call we will turn it back to the operator to open the line for questions.
Thank you we will now begin the question answer session.
And the question queue you May press. The Star then 1 on your telephone keypad and you were here of tone and acknowledging your request.
We're using a speakerphone please pick up your handset before pressing any keys.
To withdraw your question. Please press the star 2.
And we will pause for a moment of callers join the queue.
The first question comes from Jackie <unk> with BMO capital markets.
Please go ahead.
Thank you very much and congrats on the really strong quarter of your your cash balance is growing.
And especially I guess after the Royal Gold stream transaction closes can you talk a little bit about what your what your plans are for that cash in terms of the growth projects should we see more investment whether it's that and CSA I don't know if that's going to be in and.
And now or and the exploration program or where should we expect some of that should be going to bowl of Esperanza and the certain near to medium term. Thanks.
Thanks, Jackie and.
With respect to the cash balance.
As everybody knows this is a very happy place for us to be and I think through the smart financial engineering, we've done with the Nx gold stream.
We're well placed now to fund not only our growth aspirations within the.
It's the valley, which primarily revolves around right now the deepening project and the sinking of the shaft, but we're also well positioned now to take on Boa Esperanza and.
In terms of of building that mine and and of itself.
And there's no reiterated.
We are extremely highly focused on return on invested capital and.
That means with respect to that how do we add the best and highest value to our shareholders.
While maintaining a capital structure, that's in the best interest and so with the cash that we have now and we will we believe we will continue to grow in the quarters to come.
And Tara and her team will have the ability to move the deepening project forward aggressively while at the same time and started to take on and looking to build Poland now on.
And I'm a little ahead of the the place we have not had board approval for both of them nor has the market has seen the results of the bone study, but we are anticipating that the project will come in and the robust nature and that we are now going to be in the.
<unk> position to be able to fund it.
And maybe just a quick follow up on that.
When do you expect the board approval and what will be decided and does that shortly after the study I think the studies kind of late August early September if I remember correctly. So should we expect on the announcement of a lot. So next months timeframe.
The Jackie we will be releasing it to the marketplace over the course I believe of the next month month and the half.
The board will have reviewed that study of that particularly at a time.
We do know there's some optimization work that we want to do already in terms of the study.
In terms of looking to finalize that early and the new year.
And have a crystal ball in front of me right now so it's difficult for me to be able to number 1 also preempt what our board is going to say, but certainly as a management team we're looking at.
And if everything moves forward and the appropriate manner to start looking to break ground on board and the first half of next year.
Probably the latter half of the pulse of.
That's helpful just to understand from what what the timeline is on that thanks, Thanks, David and maybe if I can ask 1 more question and then I'll, let someone else and the chance.
You you.
Recently, and put an exploration update out and it sounds like you've got a lot of really strong results around your existing mines can I ask on the regional program. So the farther out from your existing <unk>.
Known deposits from known line can you give us a little bit of the color in terms of maybe how aggressively you're looking regionally at this point or what you're seeing there.
Okay.
Well as you know I don't I don't like Orange, Jumpsuits, and conquer too far down that road in terms of and.
Moving any of that.
Types of she felt guy not asking you sales [laughter], what's the like.
I mean, we the.
This last quarterly update did.
It did not have a lot on the regional program.
Yeah, we are at full capacity and our lab with regards to running a drill results through obviously with regards to the discoveries that we made and the deepening and they've got a long way to enhancing nearer term value to us and so they took priority through the lab during the quarter and hence the the.
We did the we are encouraged.
And I would say excited about what we're doing on the regional program. The regional program still I think we have and.
And it moves around 5 to 7 drill rigs, maybe I think maybe even more than that on it.
And I think <unk> be on the lookout towards the end of September beginning of October for exploration update I think we'll have more fulsome.
Information with regards to continuing progress with regards to the regional program.
Okay, that's great and it's helpful. I, just I'm just I'm.
Blinking really broadly for some clarity and wondering if that was still something you guys from pursuing so that's that's really helpful. I will oh, even for somebody on the thank you very much.
Let me, let me just give a.
The fact that we don't necessarily information on the quarterly basis on the regional program does not take away from how important and the regional program is to the company.
And Mike and the team continues to do so.
Fantastic work as I've said in the past with regards to the work that we're doing and the region, it's not that we're not hitting.
We are and it's making sure that we're continuing to get the best return and the drill bit and our regional program. The original program still remains a priority to the company a significant priority of this company and.
So we continue to spend significant amount of time and effort on a regional exploration program and the cortisol Valley. So there are no bones about it and I can't.
And now.
And the regional program is important to us and we're not.
Moving away from that at all.
Thanks, David.
The next question comes from Boris <unk> with Scotiabank.
Please go ahead.
Hi, good morning.
I'm interested in your comments about sort of looking at the the shaft extension project at the <unk> and I'm just wondering whether that could include a scope of of throughput I E are you, considering making making up of Baker.
Paucity of shaft at this point.
And you're really good at reading through the lines they are.
Yes.
Yeah.
And I mean look I mean, when you now of hitting the numbers that we are hitting and the deepening project.
When we released and talked to the market last year, we've talked about what.
And what the size of the profit was the scene that we've improved the plumbing sales mineralization.
And we've gone a long way to converting a lot of the inferred mineralization of already into the measured and indicated.
And I don't think any of us anticipated that we now see the ore body getting larger and higher grade to dip and so.
Fortunately for us as the team that we were able to do the sooner rather than later to give and Thea and her team enough time to evaluate the opportunity now to prior to starting to sink the shaft of how we can optimize that shaft and suddenly they are significant we see.
The opportunities and looking at a potentially wider and deeper shaft than.
And then previously thought.
Can you remind us what the the daily throughput capacity was and the existing plan and.
Perhaps an idea of of how much of that you're thinking that could go bigger.
Or is it.
The existing plan was between about 800001.2 million tons.
Right now of RSP I cant give you the exact capacity of where we think it could go to.
But they are the intrinsic value adds that the shelf can bring in.
Both with regards to the movement of people.
And and the movement of waste that previously were thought to have to go through the ramp and.
And so while we do anticipate potentially some increase.
And production the other value enhancing opportunities that we're seeing now with the shift that the previous share limited us.
In terms of of transportation of materials people.
And and waste that previously had been looked at being brought up the the ramp.
So yeah, I think you can look to and ink.
More of an increase in production and I think where we see big opportunities is in the decrease in operating costs as well.
Do you see it and do you have and expected timeline on when you expect the sort of complete that analysis to to firm up the plans.
Yeah, we will have it done later this year.
Okay, because we're looking at.
And then you're looking for but look we're looking to break ground on the shaft.
And well start and work in September.
In terms of some of the civil awesome and the groundwork that needs to be done with shafts sinking starting.
Early next year, so as we're moving forward with that as you can imagine there's a lot of optimization work going on right now.
Okay Perfect and then just final question I realize the study is not released yet on both of them, but could you at least potentially give us an idea of scale in terms of where that's the.
Sort of what Youre thinking ballpark from a say of tonnes per day type of of.
The number well.
I will reiterate again I do not I do not look good and orange and pretty good today and.
So orange jumpsuits, what my favorite.
The sourced and it would be.
Yeah, It would be of a significant forward looking statements to be able to give you that.
I think what what we can say at the moment and as the.
The work is coming together, we are pleasantly surprised with changes and the resource changes and the reserve.
And and and those types of things so.
Unfortunately I cannot.
I cannot get into that just yet.
Okay.
Thank you very much.
Yeah.
The next question comes from Stefan <unk> with <unk> Securities.
Go ahead.
Great. Thanks, very much guys had a great quarter and of course kind of got my question of the shaft, but just maybe just take it 1 step further just given what you're seeing and the deepening of extension zone and I mean, you mentioned sort of reconsidering the size of it and do you think are you are you pretty comfortable with the the anticipated location of it but you made that change to like I'm. Just again in terms of how long it's going to take the nail down exactly what you want to do.
And with it.
You must have been at the board meeting yesterday.
Hmm.
We are very comfortable with the location of the shaft.
The shaft and the current location is is on the side of the ore body.
And so yeah, we're we're still very very happy that and the location of the shaft helps us with.
With regards to accessing the ore body and the most efficient way possible. So there is no. We don't have any issues with regards to moving of shaft around or anything like that.
In fact, we've just completed.
The the drill test work with regards to the shaft layout that whole went down to over.
14500 meters.
The feedback we've received is excellent rock conditions, and so everybody's geared up now to stop the surface Civil works and order to start looking at erect and the head gear. So that we can start moving forward with the shaft sinking.
Okay, Okay, Great and then each line have you just.
Can you just maybe give us the maybe an update on some of the ore sorting efforts that you know you were working on pretty hard previously like that sort of just sort of chugging along in the background of where you're at with some of that work.
Good question. We are we have been doing some test work with regards to the and 8 deposits through through that are.
Through that system and we are encouraged by the results that we're seeing there that was 1 of the last of ore bodies that we haven't tested with regards to it. So now as we continue to move forward. We are looking at ways. What is the best way to optimize the usage of ore sorting as.
And this is something that we have to continue to reiterate to the marketplace.
The company like Us, where we continue to see opportunities and a number of different areas.
Utilization of for instance ore sorting.
And within that is all related to what is the highest return on invested capital for our shareholders and that sounds a little bit cryptic, but as we continue to develop particularly the of EMEA as district and <unk>.
As you know between the Seriatim of the N E and I and deposits from.
May is itself the south extension.
Now the stump to morph into what we call <unk> 3 we are seeing significant opportunities in terms of how we stage or how we bring in each deposit into production and utilize that ore sorting technology.
So we.
We continue to work on it we continue to optimize it and.
And you know as we continue to do that.
Production plans with regards to how we optimize the changes around because for US as you know the best thing to do going forward is to get the highest upgrade that we can at the lowest losses and so the different deposits of subtle differences between them depending on the variability of <unk>.
Sure.
Great and so we continue to work through that.
In terms of that but on an overall basis ore sorting technology will be implemented into our company over the course of the next 12 to 18 months.
And it will be installed up and the familiar of district and.
<unk> and we will grow that.
Operation in order to optimize the maximum amount of material. We can from the various deposits that we have available to us up there.
Okay, Great got it thanks very much guys.
The next question comes from Bryce Adams with CIBC.
Please go ahead.
Yeah, Hi, there thanks for taking the questions I have 2.
First on the BOE update and a few weeks or in the next month.
Will that include the results of the updated feasibility or it's an update with discussions around the tradeoffs and and the progress made so far just I just wanted to be Crystal clear and then I've got a little confused about the press release.
Yes, no worries price so what it is.
And just a bit of background when we look to update the feasibility study on Boa and we saw a number of areas that we could optimize.
The study.
And so those all being run through and they have had in terms of optimization and some significant changes in terms of how the operation looks.
In terms of its production et cetera.
So with regards to what we released initially and the press release will be related to all of that new information and.
And then obviously 45 days after that we will be releasing the updated technical report, reflecting those changes so with respect to what you are seeking.
In terms of the comparison, we will try and provide as much of that is we can compare to the previous study, but it will be a.
The full release as you would normally expect.
In terms of news of of providing as much detail as we can on the results of the study.
Got it thanks, a lot that is crystal clear now the.
Second question is another clarifying 1 and it's around the grades the MTA site.
Is it coming and they are saying, we should expect lower grades and the second half and net those grades would revert to the guidance of.
1.7 and 5%.
Is that the full year.
And you're saying that the full year Grad should average out to 1.7 block or the second half would be 1.7 and 5.
Well I think the second half will be close to the 175 as you know.
We have had positive grade reconciliation.
During the year.
And from some of the stopes, we've been mining.
The great.
The mining sequence was moved around.
Due to some development issues that we had and.
So we mined stopes that we're gonna be mined and the latter part of the year first before that and we've got positive reconciliation due to great as.
And as we continue to move forward, though as we've highlighted we have the engineering optimization studies, we have availability and stung the identify areas and the upper levels of the mine that were previously thought to be sterilized that have significant great and we'll bring those in as as and when the team feel comfortable to continue the mine.
And I think the best thing we can tell you right now is.
The second half year of grades.
We'll be closer to what we mined at the beginning of the year, what we guided at the beginning of the year.
Okay perfect. That's it from me Thanks, a lot.
Yeah.
Once again, if you have a question. Please press Star then 1.
The next question comes from Dalton Barreto with Canaccord.
Please go ahead.
Thanks, Doug and good morning, guys and day about having senior and of juncture that side I'll try and stay away from those questions too.
Thank you.
[laughter] Mountain.
My first question, just very simply and you still expect to put out of 43, 1 and 1 this year.
No.
Okay.
Yeah and anything more.
Okay, So from where you play.
And that's what we'll talk let's talk about 43, 1 and 1 so 43, 1 and 1 and the requirements of 43.101 are 2 fold number 1 when you are a new publicly listed company on the main board of Toronto Stock Exchange, you are required and I believe a and macro.
From this over the first 3 to 4 years to put a new technical report or 43, 1 and 1 technical report on the on annualized basis.
Thereafter.
The required to put all of a technical report and update if you have a material change.
To your operating.
Patients.
So if you look at our company right now and as we have continued to progress here, we do not anticipate being required to put out of new 43.101 on the <unk> Valley.
Project at the end of this year.
We will be putting up a new technical report obviously on Boa.
And we do not anticipate having to put out and new technical report on the Nx gold.
So what we will be doing is like our peers in the industry, we will be moving to guidance.
And right now, we're evaluating what sort of guidance, we will be providing anticipating right now something and the order of the 3 year forward guidance process.
Ideally, we'd like to be able to provide the market with.
More detailed guidance and longer guidance.
But we need to continue to work to make sure the any guidance, we do beyond the 3 year period.
Is achievable.
And as workable as you know we are a fairly dynamic company and.
In terms of how we continue to move to woods.
Fully utilizing the plant.
M CSA and so obviously, we want to make sure that we are being realistic.
With regards to any guidance that we can provide to the marketplace.
Yeah.
Understood and so would you put that out then early next year or are you still looking at the same time frame kind of late November ish.
I think I think right now the best I can give you is early next year, but we reserve the right to adjust that to later this year.
Got it okay and Sir.
1 is just on your balance sheet and kind of where it stands right now it's in a great position as you said when you look at the company going forward and you look at your internal ROIC calculation is there and optimal debt level, that's the change that you'd like to see.
I'm going to give it over to Wayne and Tom So he is smarter than me.
Hey, Dalton.
I think I think no and I and David would have made it pretty clear that we run the business.
We've been and this business, a long time and and we're all quite a lead the deleverage and so.
Think when we look at it you're never going to see us take on a significant amount of debt I think we would look to be more creative and I think the the and extreme as an example of that create activity and and you know.
Creating creating liquidity for growth projects and are in a very effective manner.
But you know as regards to it and ideal debt level I mean, there's so many factors that come into that right. I mean, I think you have to look at the the market and and the outlook for the medium to long term outlook for the commodities at that point and time and decide what we feel is a.
The comfortable number I think it's fair to say, we are very under leveraged right now, but having said that we you know we are cognizant that we've got some significant growth projects here on the horizon and as soon as we.
We have a better understanding of what that profile of those over the next 2 to 3 years.
I'll look to to put the appropriate capital structure to do that but we will always be will always be very cautious as the team.
Yeah, Let me add let me add to that a little bit.
Yeah, Let me, let me add to that obviously.
I was 1 of the lowest cost producers of copper and the world. We can carry a higher level of leverage and some of our peers of all of high cost producers.
And so when we think about the ROIC.
Basis, and we don't just use our and time of rules views and Bloomberg the shareholders.
Shareholders of pretty Rocky share holders follow this very closely.
We think we're not afraid of issuing equity we're not afraid of borrowing money, but you have to use it the projects could justify the ROI of C. They can generate that high level of return.
Criticism of the mining industry and the path is the people pursue projects the growth and nobody seems to do the math on how much equity of pouring out and how much debt leverage and putting onto your company and then when metal prices turned down and they get and thousands of deep trouble.
So what we know given our cost structure, we can support it.
Fair amount of debt we know.
And I will be fine, but the issue is 1 of the range of opportunities in front of the view of how can you exploit them and still maintain that ROIC discipline because over time companies that have the ROIC the disciplined get rewarded by trading at higher multiples and having stronger shareholder support.
That's great. Thanks, guys and just maybe the 1 last 1 from me that's 1 of the side on the PJM and the person of valley.
Yeah.
It doesn't look like they're associated with some of the at the higher the copper intercepts of what do we stand here in terms of and I understand it.
So the Dalton, it's not necessarily true I think we're still at the learning stage.
With regards to that.
There are certainly we do see mineralization and the loss of news release, when we did put out some of those holes and they seem to be some restart of mineralization associated in and around the deepening project and some of the lenses that we have also found pgm's on the edges of that.
Border these lenses.
I think right now we are still very much and of learning.
Position with regards to the PGM potential of of the district.
We have due to Covid that program is behind schedule in terms of helping us, albeit that our own lab is now.
And <unk> to increase their ability to be able to do sampling internally.
What is of interest to us as there have been some groups.
Who buy concentrate who have shown an interest in.
And a con with respect to potentially PGM.
And we will continue to evaluate that.
As we continue to move forward here, but I think right now.
The way I would look at it I would not be including Pjm's and any valuation of equation.
With respect to the company, but rather that it's a very very interesting opportunity that we continue to try and and.
Get better clarity and learned about.
That's all from me guys congrats.
Thanks, Doug.
The next question comes from grant momentum with Scotiabank.
Please go ahead.
Hi, Thanks, guys, great quarter, and thanks for taking my question I Love those high copper margins.
That being said I think Dalton still kind of.
Still my question on the PGM, but I was just wondering maybe going a step further if there is.
And you're still and the learning process there, but maybe is there of maybe also and even evolved and nickel story going on and the background and the carousel of Delhi.
Yeah.
Nickel still.
Still.
Continues to be why would term the elusive ferry.
We do have some interesting.
The things that we're seeing with respect to nickel.
But again I.
We can't put a finger and the dike so to speak to say Hey, we've got the Eureka moment of nickel I think Mike and the team.
Still forms part of the regional program.
We've commented on this before that we have been evaluating and a couple of nickel opportunities and.
We continue to evaluate those.
And those opportunities and the valley, but nothing yet to be able to say, hey, we can start putting and nickel.
The stream in the plant and the start recovering Nicole.
As much as empty of once the.
We are.
That's the best I can think of that but right now.
No no no that's fair, okay, great and I look forward to those future results congrats.
Yeah.
This concludes the question answer session.
I would like to turn the conference back over to management for any closing remarks.
Thanks, Operator, and again, we can't thank you all of enough to come on the call and.
Listen to us all the analysts who cover our story all of our shareholders, who are on the call and or potential investors. We really appreciate all of your time and your efforts with regards to following our company and we continue to look forward to a great second half of the year and.
And the continued to move forward and the very very exciting copper market.
Thanks, again, everybody and have a good day bye bye.
This concludes today's conference call you may disconnect. Your lines. Thank you for participating and have a pleasant day.
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Yeah.
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