Q2 2021 First Quantum Minerals Ltd Earnings Call
This conference is being recorded so it goes to the homes that don't have as you say.
All participants please standby your conference is ready to begin.
Good morning, ladies and gentlemen, welcome to the first quantum minerals quarterly.
The first call I would now like to turn the meeting over to Ryan Macwilliams director of business development and Investor Relations. Please go ahead, Mr. Mark Williams.
Thank you on Friday, and thank you everyone for joining us today to discuss the second quarter results before we begin I'll draw your attention to the fact that over the course of the call we'll be making.
Making several forward looking statements and as such I encourage you to read the cautionary note that accompanies our most recent MD&A and the related news release as well as those rates of risk factors, particularly to our company, which are detailed in our most recent annual information form and available on our website and on SEDAR.
And the reminded that the presentation, which accompanies.
The conference call is also available on our website.
On today's call Tristan Pascal, our Chief operating officer provide a overview of operations and performance during the quarter and share his perspective on the company's outlook moving forward.
She'll be followed behind US Mayer, our Chief Financial Officer, who will review the financial results.
We'll then wrap things up with an eye to the next quarter and an overview of our key strategic priorities.
After that we'll open up the line to take questions.
With that I'll turn the call over to interest them.
Thanks, Ron and Hello, everyone and welcome to the call.
Q2 was another strong.
Trust of the first quantum of debt reduction remains a key part of the focus and I'm proud to say that we are well on our way to achieving our target of more than 2 billion dollar reduction in gross debt. There was the result of strong operational cash flows and robust commodity prices. The tapering off of the hedging program will further benefit financial results from the remainder of this year.
From Cowen and the expected close of the sale of a 30% stake in the ride on store operations to our new partners postcard for 240 million U S dollars and Q3 will also contribute to our debt reduction program.
Copper production was just shy of 200000 tons in the quarter, an increase of 18% from the same period in.
<unk> 2020. This increase was due primarily to strong production of Cobre, Panama, which was nearly 4 times the rate of the COVID-19 impacted second quarter of 2020.
Cobre, Panama continued with the ramp up to the target throughput rate of 85 million tonnes per annum in 2021 with stronger throughput being somewhat offset by higher maintenance.
During the month of April and slightly lower grades compared to the previous quarter.
The production throughput and mine zone was pleasing with the new production record of approximately 7.5 million tonnes processed in the month of June this.
This resulted in quarterly production of around 82000 tons of copper income contained in concentrate.
Early the.
This month of the government of Panama announced the appointment of a high level Commission of senior government ministers and officials to deliberate on lawn on which sits of fiscal regime cobre, Panama the public acknowledgment of the ongoing discussions and choice transparency and the outcome of the process. We've been speaking about the.
The Minister of Commerce Finance library environments will confirm.
This represented on the commission the company welcome to the appointment of the commission and the opportunity for all stakeholders to resolve this matter in the medium term.
Also on during the Supreme Court ruled on the clarification motions presented by the company to the court in relation to flow 9 decision announced in September 2018, which have not yet come into.
The effect.
The Supreme Court upheld its ruling and the company understands the decision will be enacted once published in the Gazette of the Supreme Court in the near future.
The company's reviewing these developments in the expects the government announced processed the result in a mutually agreed new launch be.
The Institute and approved by the National Assembly.
And the MD of operations that <unk> experienced the week of grades as we go as we guide the 2 in last quarter's report.
Throughput was higher assisted by softer ore and higher availabilities. This resulted in record milling rates during my instead.
The installation of the 14 pit crusher continued as planned with installation in Q3.
Commissioning in Q4.
Will enable the plant to ramp up throughput the 62 million tonnes per annum in 2022.
Thank you saw improved throughput following the end of the dry season at the end of April.
Which was offset with lower grades at the lower grades are anticipated to remain through the balance of this year.
Accepting the change made to consensus guidance in this quarter.
Scheduled smelter shutdown on the consensus you could just planned in June with the smelter coming back online in early July on schedule.
<unk>, Zambia, we are no longer in discussions to sell down the stake in that business. The strong performance of the copper price and.
Continued solid operational performance has meant that the prices off of it bought counterparties.
Too much of a discount to the stronger earnings of the business currently generates.
Nickel production in the quarter was <unk>.
4543 tons of dry bulk while construction of Shoemaker Levy continues to advance with all civil works now predominant.
To reflect the complete.
Pre strip at Shoemaker Levy continues with the first mining area of cleared we look forward to moving on to better quality feed from Shoemaker Levy and anticipate first or delivering the third quarter of 2021.
Cross first quantum all of our established COVID-19 protocols of each of on lines remain.
The place the health and wellbeing of our workforce and the surrounding communities continues to be of priority.
We continue to work closely and support the various levels of government and health authorities in all the regions, we operate from a reduced transmission of the virus and.
And the deal without breaks in the infections as they occur.
In Panama.
Panama The company support the work of the government with aerial transport food medical supplies and other facility based needs, including support of the Gorgas Institute Laboratory testing facilities.
And as the envy of the company has provided COVID-19 testing equipment and treatment on isolation facilities from the community and kidney continues to implement.
<unk> of 19 protective measures across all of our operations.
Vaccination programs and complaint have commenced in most of the host countries for the company's operations in the first quantum is supporting rollout of vaccination programs as appropriate to each country.
Panama the rollout is reasonably strong in by mid July 3900.
The caveat employees had received the first dose vaccination.
The Zambia the rollout was slow to stop it has been increasing steadily in by mid July of 366 employees had received the first of this explanation.
On the ESG, the company's always been committed to extracting resources as responsibly as the Tan and sustainability.
The inability of intrinsic part of first quantum is operations we.
We recognize that mining of the significant impact on the environment and we work as hard as we can to mitigate these impacts and to deliver positive contributions from mining to the communities around us.
Moving on with our commitment to transparency on the ongoing development of the first Quantum's ESG reporting we recently published.
The 'twenty, 2 'twenty environment safety, and social data reports and our tax transparency report, which are both now available on our website.
These years. This year's report highlights of the first on the significant C. O 2 emissions savings realized with some of the industry, leading mining technology, including the use of trolley assist in the in pit crushing and conveying.
At <unk>, which are part of first quantum of approach to place the innovation and operational excellence the core of our business and in our response to climate change.
Also in this year's report, we've expanded SCO to emissions intensity disclosures to reflect the downstream scope 3 emissions.
The emissions on the emissions benefit of are largely.
Hydro power on site smelter in Zambia.
At Cobre, Panama, we are currently evaluating the opportunity to increase our use of renewable power as part of our efforts to reduce emissions intensity. We will continue to provide updates in respect of the energy strategy at Cobre, Panama as these plans become more developed.
The company.
<unk> continues to.
To make progress on our 2021 commitments related to climate change we have commenced their assets to reported in alignment with the task force on climate related financial disclosures framework of program to set tangible and realistic emissions level on carbon intensity targets with an identified pathway to achieve it remains on schedule.
We are making progress on establishing.
An internal carbon price and consequent commodity prices and the valuation of out of new projects.
The company also continues to make substantial physical contributions to the countries in which we operate and during this quarter. We disclosed the of 2020 estimate tax transparency report, which is also now on the website from.
From 2000.
The 20 out of direct tax and economic contributions to our host governments rates close to $1.1 billion U S dollars.
I am proud of what the first quantum team has achieved this quarter and the ongoing improvements we continue to make across the operations much as being done more work remains but I'm excited about what the future holds and look forward to reporting on our progress throughout the year.
<unk>.
With that I'll hand, things over to Hana and it'll be back in the few threatening zone.
Dennis.
Thanks, Jason and good day to everyone.
I would like to direct you to the slide titled Financial overview.
Financial performance in the quarter was driven by strong sales and increased metal price result.
And the significant increase in comparative EBITDA and Nate the earnings as well as the notable reduction in net debt.
Gross profit of $625 million on a comparative EBITDA of 902 million for the quarter.
With significantly higher than the same period in 2020.
<unk> attributable to a record of contained copper in concentrate shipped at cobre, Panama as well as of 37% increase in realized copper price.
Net earnings attributable to shareholders of the company of 100 of $14 million and comparative earnings of $173 million.
Sort.
It isn't a significant improvement on the Q2 'twenty 'twenty.
Net debt decreased during the 6 months period part of 600 of $58 million 2.6 points of 7.5 billion as of June 30th 'twenty 'twenty 1.
Including a 311 billion of reduction in just the second quarter.
With the current strength in the copper price significant further reduction is expected in the second half of this year.
The 1 cash cost of $1.29 per pound.
Cause 9 cents per pound higher than Q2, 'twenty 'twenty driven by lower production of both the Zambian operations as well as at the.
Less cruises.
Capital expenditure in the quarter was $264 million, which includes the costs associated with the consensus smelter shutdown and the construction of shoemaker levy of conveyor and crushing station.
In may of 2021 of the company announced that it is the entity.
2 of binding agreement to sell our 30% equity interest in driving stope for cash consideration of 200 of $14 million to posco.
The company will retain the 70% interest in driving soap and continue to be the operator.
Transaction is expected to be to complete in the third quarter of 2000.
The easy 1.
Turning to the next slide on the quarterly copper unit cash cost.
Total C..1 cost for the quarter of $1.20 non per pound was not since higher than Q2, 'twenty 'twenty driven by the impact of lower grades.
At the Zambian operations and cessation of the open pit mining at the <unk> cruises in August of 'twenty 'twenty cash.
Ray of Panama C..1 of cash cost of $1.25 the P.
<unk> was 47 cents per pound lower than Q2, 2 last year and reflects the significant increase in production.
During the year to date copper production at Cobre, Panama as a result of the non increased copper production guidance for 2021but.
Jean do 5000 tons.
To between 300 and turned on 335000 tons.
All in sustaining cost for the quarter of $1.91.
Strung out on.
Its drilling on cents per pound higher than the comparative quarter.
The increase in all in sustaining cost reflects the higher royalty of 10% in Zambia, following the higher copper price and higher sustaining capex, which includes.
The plant smelter of maintenance shutdown that concern.
1 of our scope of C..1 costs for the sake of second quarter and for the first 6 months of the year have been in the middle of the guidance range. All in sustaining costs has been under pressure, particularly on the second quarter from higher Zambia royalty of rights.
Accordingly, all in sustaining cost guidance has been increased by 10 seconds to allow for higher royalties.
<unk> expense, which for the year to date.
The exceeded prior year levels by the even saying send for the quarter by 12 seats.
Turning to the next slide Q2 summary of financial overview.
Comparative EBITDA of 900 of $2 million.
It was 150.
The St higher than Q2 'twenty 'twenty.
Attributable to 37 of them to see an increase in the realized copper price of increased sales volume of cobre, Panama with near record quarterly production on record contained copper shipped.
The comparative period sales will also significantly affected the.
COVID-19 related.
Restrictions.
Comparative earnings for the second quarter of well under the $73 million, an increase of 2 under the $57 million compared to Q2 'twenty 'twenty.
Basic earnings per share of 20 cents.
And comparative earnings per share of 25 cents of 43 in the city.
6 months, hence higher than Q2, 'twenty 'twenty, respectively.
There's a reduction of net debt as previously mentioned of 3 of 11 billion on the quarter, which brings the total reduction over the last 12 months 2 of the non under a million dollars.
So the reductions remains a key priority.
Happy to explain.
The the same quarter was $264 million, which includes the smelter shutdown at Constancia.
Our full year guidance for capital expenditures and changed at non under $15 million.
Yeah.
The next slide is a significant increase in gross profit.
And it just shows a bit more detail on the gross profit.
Quarter on quarter movement.
With a $494 million increase in Q2 gross profit from improved tomato process and higher contribution from Cobre Panama.
Turning to the next slide on the data and liquidity profile.
Companies need data of $6.75 billion at the end of the quarter has decreased.
The agenda for 900 million on the last 12 months.
The company ended the quarter of $1.8 billion of unrestricted cash on cash equivalents and was on full compliance with all of its financial covenants.
The company signed a bilateral borrowing facility of $175 million on April of 'twenty 1.
Available for 12.
All of months from the date of signing.
Following the upgrade by S&P global ratings on Fitch ratings in April 2 of B credit.
Writing the company outlook remains stable copper prices and demand continued to be of robust.
That's true and has highlighted the tapering off of the hedging program.
Graham will further benefit financial results from the remainder of the year.
Now turning to the copper hedging program outlook.
So what are the 1 quarter of expected copper sales from the next 12 months on aged Edna.
At an average floor price on average ceiling price of $3.16 per pound.
And $3.70 per pound respectively.
This compares to approximately 35% at the end of the first quarter.
Of doing 2.1 with an average flow price an average cheating probably yourself of the 3 year old of 4 and 3 of about 44 respect the per pound respectively.
As of July.
27th 22 into 1.
The company had.
I have of 44000 tons of and more margin copper forward sales contracts at on average price of $2.96 per pound.
With periods of maturity out to the same between 2.1.
In addition, the company had a little bit more than 100 and.
Sales in terms of end of March and zero cost collar sales contracts with maturities to March 'twenty to 'twenty 2.
At the average.
Process of $3.21 per pound to $3.92 per pound.
Company and also the end margin nickel forward sales contract.
50 more than a thousand times at on average price of $7.74.
Saint per pound outstanding with maturity yourself to December of 'twenty 1.
In addition, the company of zero cost nickel of color on margin sale contract for Neil.
Nearly a thousand of 300 tons at an average weighted.
Average.
So a bit of saving 68 per pound to dollar <unk> 58 per pound with maturities out to may of 'twenty 2.
And with that I'll hand, it back over to address them.
Thanks Dennis.
Let me just take a few moments to discuss the path forward.
Price of first quantum as we continue to execute our vision into the future.
The number of key strategic priorities that are underway at the current on and which we believe will help build sustained long term value per shareholders.
On the longer term we of Optionality within the portfolio that we also believe has the potential to listen to music on shareholder value.
But now the current focus about capital allocation approach within the context of the very strong commodity market remains firstly on debt reduction, which is the commitment and strategic focus.
Secondly on execution of brownfield project add incremental value and thirdly on cautiously improving out dividend policy to reward shareholders.
And on Greenfield projects will remain limited, while we deliver on these core focus areas, particularly debt reduction.
I'll take the moment to discuss each of these key strategic thrust in the little more detail first and foremost debt reduction will continue to be the major focus in the near 2 of them as we work towards reaching our goal of reducing our debt on 1 of $2 billion and thanks to strong.
The operational on solid commodity prices.
When we achieve this goal the gross debt will be below $6 billion and on net debt to through the cycle EBITDA ratio will be below 2 <unk>.
Next is brownfield expansion, we are fortunate to have a robust internal pipeline of near mine growth projects without the disposal.
That aims.
Our growth on delivery of the 85 million tonnes per annum target throughput right at Cobre, Panama continues and we remain on track to grow to a 100 million tonnes or more than the 100 million tonnes per annum by the end of 2023 in the.
The mine during Q2, we broke ground at the in pit Crusher Bulks got location for the new Colina pit location and the overall Kulina mine planning.
And part of it remains on track at the process plant of primary screening facility expected to be delivered in Q4, 2022 and upgrades of the process water supply and ball mill 6 are expected to be delivered by Q1.2023.
At the enterprise project in Zambia, the design for the development of the pit has been revised and optimized to support.
Support and accelerate the mine plan.
We're getting early pre stripping in the second half of 'twenty 'twenty 1.
Following potential board approval, which could potentially come later this year.
The majority of the pre strip would be done pulling the style of the dry season on April 2022.
The project has the potential into the at around 30000 tons.
The per annum of nickel production.
The decision on the S..3 expansion of Constancia remains pending as we continue to work with the Zambian government to formulate a framework to move this expansion cohort. There has been limited progress on this through the last quarter given the election processes in Zambia.
We do expect sort of the noise and distraction in this regard in the near.
However, once given the green light.
Great.
<unk>.
Clearly consensus of annual throughput to well over 50 million tons per annum.
And ensure production levels remained strong for more than 20 years.
The last month, we received on mining license for cover the Las Cruces underground, we expect the water concession license.
It might be granted by late 2021, as we continued to make solid progress towards being fully permitted.
Study work continues with the drill program currently underway.
All of this work the company expects to release the National instrument 43, 1 on 1 report with an associated resource in the second half of the year.
Still have a way to go before the <unk>.
It's the way of this project fits into our pipeline, but it's pleasing to see the recent progress.
Next we expect to have an update on guidance around our dividend policy by the start of next year.
Which will include an increase to our current nominal dividend, we will start cautiously once confident on debt reduction targets of being met.
Saudi on the policy will not be of the expense of brownfield growth.
Okay.
At this point as we focus on debt reduction in the brownfield opportunities I just discussed we can take a more measured and cautious approach the greenfield opportunities within our portfolio, most notably tech attack of in Argentina, and the cure in Peru. We are certainly excited by the prospects of these projects.
And this longer term potential the alpha.
<unk> of for example, we recently completed and then on 43, 1 on 1 declaring a maiden mineral reserve of more than $7.7 million tonnes of contained copper.
Before proceeding with investment and construction decision, we would like to further understand the physical environment in Argentina.
On the Lilly Keira, we strong we see strong potential on the project situated in the prolific copper belt in southern Peru. However, at a key of our current primary goal is to continue to work with the local communities who reside in the area where the project is located.
Finally on behalf of the entire company I want to thank our people once again.
The workforce continues to demonstrate the adaptability commitment and resilience and make significant contributions to the success of the business on proud of how our workforce has continued to focus on executing on our sights on sustainable manner in the face of ongoing logistical and operational challenges, resulting from the COVID-19.
Pandemic.
Operator.
Similarly would now be happy to take questions. Thank you.
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Cancel your question at any time by pressing.
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The first question is from <unk> <unk> with Scotiabank. Please go ahead.
Hi, good morning.
The release you disclosed that.
Stand to increase the throughput at Cobre, Panama, the 100 million tons a year.
By the first quarter of 'twenty 3 that was certainly earlier than I was thinking and I'm. Just curious if you plan to complete the rest of the work needed for the expansion at the same time from a of tailings and mining.
Mining perspective or is that is that kind of come later.
Hi, all of US they'll take the question, yes. The that was really in regards to bow mill 6 delivery of that installation in Q1, 2024, and it will be commissioning and ramping up throughout the year.
So really.
The previous guidance, we'd put there remains in place in 2023 that is we expect a day at the 100 million tonnes per annum right.
Throughput rates by the end of the year not necessarily from the end of Q1 does that help.
Okay. So you basically plan to be fully operational at that.
That 100 million tonne throughput rate exiting 'twenty 3 that's the way to think about it.
Yes, yes that is a good way to put it yes, Okay and then just also on Cobra Panama.
It sounds like you're you're getting close to.
Sitting down to negotiate a replacement for law 9 with the government.
The theres been some media reports about government officials.
Asking for higher royalties over the 5 per cent current copper royalty.
Should we anticipate that there could be some give and take in terms of the current terms in order to get a replacement for for law 9 or.
So any color would be would be appreciated.
So all of us.
Yes look I think that's right.
We do expect that there'll be noise around this process given that it's a public process. That's the good thing given that it's a public process. It means that we expect the transparent outcome in.
You know it would lead to a robust and defendable outcome from the government the net sales.
We wouldn't comment on the Minister's comments of the decided that a significant investment was made on the basis of the.
The original loan on physical assumptions.
It's also pleasing to see comments from the Minister earlier this year the Panama.
On my wants to see mining at the forefront of its recovery from COVID-19 coming out from the current situation and also we did see comments from the president.
Of Panama, Lawrence seen out of court T, though yesterday in the National media, which was on the.
That he considered that they can be a win win outcome in the process.
We sit in the aligned with that they will be given take a bit of it can be a win win for the company and the government in terms of of realizing benefits an increasing set of <unk>.
On the country in the company.
Thank you Tristan and then just finally can you give us a sense of timeline for.
The law 9 replacement type of negotiation.
Would the expectation be that Theres something completed by the end of the year or could this take a lot longer.
Yes, I realize that it's been a challenge through.
Through the COVID-19 periods in the prior to.
We were engaged in them that's being held back by just the inability to make fun of advice that is important thing as I stated on previous calls we are having those face to face discussions I think what you should read from this is that there is momentum building.
The what the government headwinds that I can give a bit of background.
Round to some of the comments recently that did have a process on.
On the Panama Canal.
On the Panama Port Commission, and concession and that was around making sure that there was public engagement and so we do see that now the public engagement of these public announcements and that builds momentum around timing, but.
It.
Of these government process. It goes through the negotiation with the administration and then into the National Assembly of.
Those of the steps they remain the same.
But it's challenging to give the timeline around that.
I understand that it would be good to give you a clear picture of it.
So to go through those steps.
Thank you.
Thank you. The next question is from Matthew Murphy with Barclays. Please go ahead of them.
Hi on another 1 on Cobre, Panama was just on on a recent story on the pipeline spill on and should we read anything into that is there a likelihood of.
Anything meaningful in terms of sanctions coming from that.
Yeah. Thanks, Matthew Yes, the median Panama has picked up on on what was really of minus bill and of the smoothed volume of water and slowly slurry rock from the pipeline 2 weeks ago.
Response teams.
In the Scoop protections worked very well and we're confident of the adjacent stream was not impacted beyond the narrow so of of.
Some high suspended solids.
And those were diluted by heavy rains, but nonetheless, the incident, it's regrettable for us and we're working to continue to improve the equipment on the systems involved and also with the ministry of environment in regards to the.
The recommendations for corrective actions.
As I said at the low level of incident.
I think it's really around the noise.
And the processes that are ongoing but it's come the debt.
We've seen those media reports.
Okay. Thanks, and then if I could just ask another 1 on the risk front.
Looking ahead to Zambia on elections.
I mean, it's interesting to me that the mining sector hasn't seemed to become really a lightning rod you know in the in the election of protests, but I'm wondering.
On how we should think about news flow I guess theres, a new budget presents.
Just 60 days after elections, I mean, do you think mining.
It doesn't really come to the floor through all of those.
Yes, Matthew Thanks.
Look the I guess the challenge during the election is at those that's the competition and there's noise in.
And we've seen nationally.
On the elements come up in those discussions at least in terms of the election hearing it.
It's been hard to make progress the ministers are in recess and that means there's on the really the president and the number of key.
Public office all of those that are in position on the momentum that means.
So we can't engage.
To any great extent in terms of outcome there.
And then yes the.
The election is on the 12th of August.
And we will see of budget 60 day thereafter, we expect that the whoever comes back in with the incumbent or otherwise.
Were made to engage.
Particular.
On the IMF process.
And in consolidating the the fiscal position in Zambia.
In terms of how that relates to the mining industry.
The government is now.
Cooperate us or us at CCM up to the major mines in the country.
Subject to ongoing.
But the emphasis in South Africa in regards of the 1 mine but.
A very good picture now of what it has lots of to run and operate the mines.
On the part and parcel of the industry going forward. So we don't see any significant risk there.
Given with the tax rates out of the moments in Zambia, but there is a need.
Qualcomm.
The ongoing engagement and particularly as we look to the S..3 investment that may be the right kind of framework around that investment.
I hope it couple of your question Matthew.
That's perfect. Thank you.
Yes.
Thank you.
Next question is from Jackie price at the Lawsky with BMO capital.
On markets. Please go ahead.
Thanks, very much I think I'm, just sort of follow up on matts question, but in the end.
And then maybe slightly different way of just I guess, maybe Chris if you could clarify in the slide deck presentation I think it says.
The board is looking to make a decision on enterprise by end of 'twenty 'twenty 2.
I think you mentioned earlier, maybe I misheard, you, but I think you said the end of this year.
So maybe if you could just talk a little bit about.
What the timing is I know you guys are working on some pre stripping second half of this year how much activity do you plan to do at enterprise before you make a board decision and.
And maybe if you can just.
Just to clarify like when when do you think you'd need to make a board decision on what you need to see for that decision would be of positive 1. Thank you.
Sure. Thanks, Jackie the.
So the enterprise, we are able to do some preliminary works and as you said that the.
Just some ongoing pre stripping work out there and actually always on the ground. The the week before last and very good to see some preliminary works on going after the.
The rainy season in terms of the decision the lighter this year it will be linked to the board of physical environments in Zambia is just.
We're at launch that this year.
The decision can come and then actually fairly quickly we can be in production. Because this is the brownfields. This is of brownfield projects on diamonds and your Greenfield project given that a lot of the the.
The plant is already standing so the total capital.
Investment is around $90 million and that would number will be reviewed as part of the board approval process and yes, we could we would hope to be able to put that on from the board later this year notwithstanding the preliminary works on going for the full approval.
But it is subject to the situation in Zambia.
For the.
We'll see that.
That feasibility study that Youre planning to update as part of the board approval process as well raise the that'll come out later this year as well.
Yeah.
Yes.
Once we're engaged on the project.
Make sure that there is an understanding of the.
Of the production profile and if we're seeing around the project whether it's the full feasibility study given that it's the Greenfield project will make sure that you've got all the parameters around it that's for sure.
And maybe if I could just ask on the the hedge program. So you mentioned her hand has mentioned that you are sort of tapering of that.
Little bit.
Less of your.
Ah represents the last of your copper sales going forward can you give us the updated guidance in terms of like what you mean.
Do would that hedge program are you still planning to add hedges is there some level of hedging that you are.
Planning to maintain or as we kind of roll the quarters forward over the next year or so should we expect that just the wind down entirely can you just maybe give us an update on what your thinking is with that.
Would you like to take that question sure.
Jackie.
I mean, we we have the.
Th program win.
Once people of building Panama.
Highly levered true you would've seen the leverage come down quite dramatically over the last.
Yeah.
And as we said, we would sort of reduce that the level of activity and you would've seen probably of the H book dropping them off by.
The second over the next 12 months sales in each of the last 3 or 4 quarters.
Our last he just that we have placed with just before the previous quarters.
Conference calls of at the early in.
Early start of this this quarter.
So we haven't had any new pages so on.
I think.
That's probably a good indication of way of meeting.
Great. Thanks, very much the that's all my questions. Thank you congratulations.
Yeah.
Thank you and the next question is from Matthew fields with Bank of America. Please go ahead.
Hey, everyone.
Tim Congrats on the on the strong execution.
I appreciate all of the sort of more specific commentary on debt reduction and capital allocation.
You sort of put in writing and sort of the codified a little bit more than in the past I. Just you know on the balance sheet side.
You've had a few quarters now of very strong cash flow.
You've had the the 175 million bilateral facility come in.
$240 million of cash coming in from Ravensthorpe in the third quarter of my question is why is the revolver fully drawn.
At quarter end.
Hi, Matthew the only to take that question sure.
I met him.
We had a few things.
Sort of in the quarter so.
We had a.
Smelters shut in Zambia on inventory buildup that we just.
To fund as well so that we went through that.
And you know as part of that process and just planning.
<unk>.
We had of drawn under the.
I think what you would see us now.
Sort of managing.
The next question you will always because of when will we take our bonds but.
Yeah.
Once we would look at this now sort of saying we're at the smelter is now the shaft is beyond us its smelter started up.
Early this.
Month again.
So that the inventory has been flowing through in the on the all the cash flows.
Flowing through them.
So what we would see as cash Pasco cash coming in we are also working on the corporate refinancing of it should be done by end of this year and then I think within the next year, we will start the dressing.
<unk>.
Some of those on bond maturity Houston, So you would see some movement I mean, so it was just particular to certain situation on this quarter, but the after you should see improvement of the rule and absolute debt reduction as well.
Alright, well I appreciate that and Billy.
Believe it or not I wanted to ask you about.
It's the bonds.
You you sort of read my mind.
Obviously youre 7 of the quarters are.
<unk> now.
The 6 and a half the callable now too in your cost of new debt would be well below that.
The fixing of have premium the call premium steps.
The refinance on set.
Timber first so you only have to really wait a few days now for a 30 day of redemption notice to get that lower coal price.
Does the does the sort of high amount of cash on the balance sheet from revolver draw of kind of coincide with that you know 'twenty 3 'twenty 4 as being kind of prime targets for of refi.
Down.
In the in the coming weeks here.
Monthly.
And to be opportunistic on in the strict on so I don't want to speculate on the exact timing of as to when we will do it.
I think within the next year's spoke of it.
Good enough response from now.
Okay, great well, thanks, very much and good luck with the rest of it that reduction in the coming year.
Thank you. The next question is from Greg Barnes with TD Securities. Please go ahead.
Thank you Kristen the kind of flip 10 of the Zambian operations of no longer under discussion of the cell damage.
On the business, you're looking at Investor day, the next 3 years.
Yeah.
Price.
For me kind of reassess your view towards Zambia again remember the time that we didn't want to invest now it sounds like you do.
If you're getting a much more comfortable and that was the envy of going forward.
Thanks, Greg.
Right Yeah look.
We've got to get through an election, a Greg and I just want to make the point that we will see noise and <unk>.
The these periods of always vocal and so we do expect some destruction in that but notwithstanding that.
We.
All of those are great assets that we have the Sentinel and consenting.
Between them producing.
Nearly 500000 tons of copper suddenly we'll be at that level.
After the investment of necessary so.
In the longer term, yes, we absolutely are.
The great support of the Zambia.
We think it's the it's a good destination for investment over the longer term, but the you know certainly we do need to get through some short term inter.
The interactions with government on the as I said at the current time, we can't really do that given that ministers of on recess and so but we do see the at.
The election.
Hum.
And at the taught to engage on that because you know these investments are good for Zambia.
Have you had any further the discussions we think the about shifting that's going on in those.
Those discussions.
Selling an interest in all of that.
Yeah.
Do you have a sense.
The Atlanta they stand.
From what they want you know Greg So that's fallen into just the regular conversation that we have each quarter of really over the back of of each quarterly results.
And so it's an ongoing engagements in an ordinary course now.
I mean, no I don't have any insight on understanding as to.
The.
You know their intentions, but what we understand is that they have to you of the investment and they're happy with the the delivery against the strategy.
And you know where the share prices at the moment and so on given where the came in and.
And we were in the sort of in an ongoing engagement price with them at the moment.
Okay great.
Thank you Crystal.
Thanks, Greg.
Thank you.
The next question is from Lawson Winder with Bank of America Securities. Please go ahead.
Hello, Good morning, Thank you for taking.
My call.
I wanted to just.
Ask you a little bit more on the.
The whole lot of tailings spill at Panama and just some comments that were made by the Ministry. So I'm 1 of the comments of what they were looking for maximum sanctions maybe it would help if you could just quantify what that could possibly be I mean.
As of the numbers.
Yeah. Thanks Lawson.
Look.
We can understand that the there's a lot of public.
Our visibility on mining at the moment, given you know the the governments' comments around looking to expand mining we it's our intent to be the you know.
The responsible miners into mine.
Well as we can and be a good corporate citizen in that regard at Sydney, we hold ourselves to the highest environmental standards, we continue to improve the capability of the business.
Incident was pretty minor so the.
The incident itself with less than 12 minutes of alcohols responded within 5 minutes the actual volume of material.
Material was very insignificant it doesn't.
Our estimation of it doesn't reach the level 3.
On it.
It was captured by the <unk> ponds, there was some of the sky. It did create some suspended solids, but its failure on the material and so we would contend that it's fairly minor event and not material.
Not significant but the minister there is quite of public visibility on mining and we need to the heightened responses. We can so we will certainly take all of the preferred.
Vintage of actions to ensure that something like this doesn't happen again.
And that's been improving.
I believe we have lost connection with the speaker.
Hum.
Operator, if we could maybe move on to the next question then.
I apologize it per se.
Speaking.
Cereal Pascal at the lease that has disconnected.
Yeah, but I think let's let's let's wait for it might be to dial in again and then we can maybe move on to the next question. Just on are you still on the line.
Okay.
No he has disconnected.
Alright, let's see if.
Kind of another question that would be.
In the long term.
The next question will be from from Carl Blendon with Goldman Sachs. Please go ahead.
Great. Thanks, guys. Congrats on the strong result, again, a couple of questions of a harness.
On the debt reduction target I, just wanted to make sure I understand that you talked about 2 billion of debt reduction.
We've got to get below 6 billion of total so you're currently at 8.5 and some of that has to do with the revolver draw.
But is it right to assume then that youre looking to reduce debt versus the quarter and by $2.5 billion and if there's any breakdown of bank facilities. Most of the bonds that would be very helpful.
Sure the call and look when we talk about the day production, we look at the net debt number so.
You would have seen I mean, we've made significant progress over the last certainly here in terms of that.
So we well on the way in terms of that and with the.
You know, we will get some proceeds from the minority stake sale in and driving soap as well plus continued stronger cash flows in the second half of the year, we of course much more exposure to the to.
To the upside on the copper price. So that's the pulled all of his long way I think we will probably be.
Go beyond that.
And I don't want to give you exact numbers yet but.
Hmm.
We've got a suite in the amount of brownfields projects that.
It will spend some money on but it's not that significant and in the cash flow generation.
So.
What we'll do is I mean, there will be some reduction on the bonds.
But and get on the next year, we will start reducing debt plus will refund as the bank facility. So the bank facility.
On a sort of $2.7 billion.
Probably about 3 years ago. So so we'll look.
End of the year to replace that probably by a similar amount of from sluggish.
The smaller doesn't mean it doesn't make much of the difference if it's a bit smaller as well.
And of course, we'll use that then to reduce the balance at the banks of being very supportive.
In the Boulder name.
It's sort of tough times as well so we've got a very supportive banking group. The so it's key for us to.
And of retain that sort of credit appetite from the banks in light of that support so we will look at replacing that again.
And then reduce some of the banks, but as of the bone to date, but it is important for us on the long run too.
To access the significant presence on the bond market. So.
There will be some reduction but.
So that will flow through on the next year.
Okay that makes a lot of sense and then different things that we haven't really spoken much about the delta variant of Covid and you've done really well the initial mandated slowdowns to keep the operations running smoothly when you think about.
What that Varian could mean in the.
Some of the areas with lower vaccination rates. How confident you are are you around the the ongoing operations in Africa and in Panama.
Oh, hi on the purchase Jacob.
Okay.
Good stuff so the balance.
Shoot a so as I say of the who the Hell of a question.
And as for your interest.
Apologies for that.
So the question and always in Zambia, the week before last and the.
Certainly the Delta of variance is that it's in South Africa and it's in.
Southern Africa, more broadly and in Zambia.
The third white that was causing has come off from the last fortnight. So what we're saying is is an ongoing reduction of cases and sitting on an ongoing reduction in interest and that includes the testing of.
No.
Some of the testing is not capable of speed.
Continue to rollout at the same high levels.
But what we are seeing and this is also the reduction on the sites I think what this has the third wife has done is increased understanding of increase.
It has board of time because of the MB.
Yeah.
And we are seeing a greater uptake of vaccination.
The challenge.
On the is around delivery of that or vaccine day went to the assisting the government in that regard of outages on the governments that can talk to the primary producers of the vaccine and.
And we do see increased.
On shipments of vaccine to the country and more broadly in Southern Africa, which is good news.
So we do see that.
Yeah.
Challenge it will be a slow.
Progress, but increasing in terms of explanation and and but the numbers have come off of in the interim and the law.
Last few weeks, which is the good song.
I hope the company sufficient.
Yeah, I think it does I don't know maybe all of them.
The kind of extend that to Panama as well.
It sounds like things are more broadly under control, but any color there would be very helpful.
Yeah as I said on the in my comments on the vaccination, it's gone extremely well so.
The number of people that have decided not to take the vaccine. So far is on the 333%.
And really that's you know down too.
Our employees the very progressive and engaged you know part of the solution and you know the uptake the very strong the the <unk>.
Protocol in Panama is that Oh, the 30 eligible for Astrazeneca and so.
Yeah.
The simple thousands of various doses of already thing.
Leave it to our employees and we're supporting a broader.
Vaccination Rollouts in Cologne on Coke life provinces with funding of around what on a half million.
For drive through vaccination centers that have been very successful enrolling at.
The only from across the the regional areas as well as the capital City.
On the third ease in Panama or on the 5 of the protocol and shipments of that that vaccine.
Coming into the country. This month have been deleted and so we do see a pickup in the ember therapies as well which is good.
The probes and the.
That's against the backdrop of a reducing food waste.
On across the country.
Which I think is good news and the plant in Panama. The government's plan is to fully vaccinate by by October.
Thanks, very much of the color on the health and then also on the balance sheet side on this.
Thank you.
Good news. Thank you. The next question is from Abby I go out with Deutsche Bank. Please go ahead.
Yes, Marty just on hand at the thanks, a lot of protocol.
On a couple of questions.
The first 1 is on Capex, so theres been a shift it on in Capex I think the capitalized stripping has gone down but on $40 million.
The total Capex is unchanged the has that been allocated to the.
And the price per project, that's my first question.
Thanks Abbie.
Look the reality is given the labor shortages of at Cobre, Panama has really been in Panama that we've seen that reduction.
In.
In the stripping.
Capitalized stripping so it came down about 40 million that strip ratio of Panama is currently sitting at about point for the plan for the year is 0.66, so we'd like to build up of up in the second half of the year the shortfalls being on on really.
The maintenance Ultrarightist truck operators.
To be able to continue to deliver all of the capital equipment to do that nonetheless, and the outlet challenge I should say as we've been pointing to much Copa which is the nice problem to have but in the particularly on the hanging wall on the north everywhere that we thought was waste is being more mineralized on the rate than originally expected.
The good problem to have.
Is that those maintenance of the strip ratios is not as hard plan on.
That will shift as we get into cleaner and as I said, we've broken ground on the Bulks cut position for the new Colina pit and so that is definitely whilst we're able to command that is why some of it stays waste, which is good news from my wife's perspective. So that's why we do see the.
But we would like to get back to that.
The overall target strip ratio for the year, but in the meantime, we it would be a challenge to catch up with that and so that's why the the total capital of stripping numbers come down for the year.
And that $40 million.
The third.
The thing in Capex has increased so the house.
That'd be sustaining capex on other projects well that $40 million has that been allocated to enterprise.
No.
Price is not taking a significant portion of that.
It will be in <unk>.
Some of the overruns at Ravensthorpe and on.
So the on the other operations, but no it's not allocated to enterprises.
Got it.
On my last question is on Cobra unit cash costs. The thinking the release you mentioned there is still a component of COVID-19 costs incorporate it could you could you could you tell us what what 1 of the.
Also of Lantus.
Yeah. It was running at around $10 million of quarter, if I recall correctly and that relates to the hotel isolation cost items that we went to hotels.
For a period of a week.
Every employee of price to 2 coming on to the thoughts or we see the vaccination program.
And once we get through that and to the right label, we'll be able to stop that and then it's also in just over time and labor costs, because we were able to have less people on site, we are paying above.
Above standard rights the labor that is on sort of.
Got it thank you very much.
Thank you. The next question is from Emily Chang with <unk> of Goldman Sachs. Please go ahead.
Good morning, and thanks for the update today on my first question is just around the capital allocation strategy. So the once you have your $2 billion of current debt reduction achieved you mentioned the cautious approach to dividend.
But is that Pops of framework, we can use to think about how the first quantum would balance shareholder of tons of us as growth. For example, should we expect the payout ratio of some kind of percentage of free cash flow of being returned or do you still perhaps have a preference for a progressive dividend policy instead.
<unk>.
Thanks, Emily I'll make some comments and then maybe hand this will jump in so look that's what we intend to come out with them and as we said towards the end of the year or the next year to the atmel on that more clearly what we are outlined for share holders, who tend to move from the nominal dividend, but as we said it will be a cautious approach and.
More to the cash flow on the business potentially although previously we've linked the 2 comparable earnings and paid out on that basis.
Do you have any more comments on that.
Yes, just on I think it's fair enough.
I wouldn't.
Yeah.
Describe.
Probably.
Definitely not as a progressive dividend policy. So it will be linked to some sort of earnings so cash flow from Asia.
But that will allow the company still to continue with its brownfield expansion in growth ambitions going forward.
Great I appreciate that that's helpful and.
And my second question is just around the loss of Chris says underground.
Scrubbed the option that can you remind us of what the size of the price here any rough estimates of capital cost and.
Anticipated sort of timeline on decisions.
And then sort of following on from that it seems like in terms of sequencing growth at brownfield is certainly ahead of the Greenfield option.
1 of the.
So would it be fair to say that the decision, making timeline around some of your greenfield opportunities of longer dated than sort of the 2 to 3.
3 of plan that you've outlined for the brownfield so far.
Sure Emily Thank you so firstly on cell C. As I said, we our intent.
You have on back with a 43, 1 on 1 that will give you more.
Clarity for the market on the decision on John Gregory you might.
Comment on that further in terms of what that would look like but.
In that we would include the capital.
On the cost estimates and so on on the production profile.
But in the meantime, our CLC does continue to operate.
Based off of reprocessing of initially stockpiles of maintain wings and so really what we would do the the decision around closure on things that definitely being pushed out and what we see as the you know the.
Study, if it's on the underground and the opportunity.
First of all day, we continue to work on and as I said expecting to receive full permitting hopefully by the end of this year it would be good.
Yeah.
And then more broadly on the Greenfield decisions before John Mark comment further the.
Greenfield decision that's right.
Pushed the decisions out on those towards the end of 'twenty 3 'twenty.
94, and the not included in everything on the Brownfield side is included in net capital guidance of around us.
100 million, the Cobre, Panama and there is some capital in 2023 around $200 million guidance.
Is 3.
And then the remainder of his 3 comes through in the following.
<unk> here.
Those timings of history won't change significantly.
But theres no capital and and no decision, we expect on things like Tech attack on the camera in that period. They would come after that period. John did you have any more clarity on on the CLC and the on the 43.1 on 1.
Yes sure interested.
At the moment, we just finalizing.
The delineation drilling program on our intent is to provide an update on the underground.
The resource.
43, 1 on 1.
We have ongoing works technical.
In terms of the water and geotechnical, which means it will be a period before we can actually of nights of reserves.
But our intent is to get of 43, 1 on 1 update produce by the end of this year.
Got it I appreciate the color. Thank you.
Thank you the.
Next question is from the analyst and most of that with Morgan Stanley. Please go ahead.
Hello, Thanks for taking my questions 2 left from my side. The first 1 again on the net debt the reduction that 2 billion target the easiest enough.
Let's say it's 5.
Could it be the case that you may need to bring leverage further down even below levels of you feel comfortable with just before you launch the next major Greenfield project over the next few years.
Because if we look at some of your peers. They are running net cash balance sheet positions and I would say the.
The many investors tend to favor that I'd be interested to hear your thoughts on up on thank you.
Yeah.
Thanks, Tim do you want to take that 1 sure.
<unk>.
Look we state of the day, a reduction of $2 billion.
The that was the talk of it I think.
You will see us.
You run the current numbers Youll see that.
That level of Chi.
The higher touch of reduction that we will achieve within the next year.
So I think if you look at our Greenfield projects.
Well there also.
It's not it's not the amendment.
What's the.
So all day to reduce further from that.
I think it's also important to look at sort of growth state for reduce it and it will reduce probably bought more than the table.
And then it's also important to look at the sort of leverage ratio and what we stated on the past sort of less than 2 Thompson the day to EBIT.
To help with.
We already had a day.
But I think what we'll look at the sort of the longer term copper price.
So if you run the longer term copper price scenario not be you know not extend the above those sort of numbers, so and that will be achievable when we get to the next decision on on.
On a greenfield project.
Okay. That's the that's clear thanks very much for without them. The 1 more question if I may.
You made an interesting comment around the Cobra, Panama and the fact that Youre looking to at least partly a switch of the power mixed the renewables.
On the net interesting because you're just the commission the right.
The coal fired power plant. The couple of years ago. How are you thinking about monetizing that asset could it be the case that you sell more to the power grid in the country or are you thinking of some of the arrangements.
Thank you.
Yeah look we're very happy with the coal fired power station in terms of the way, it's running and the cost of the generation, what we do see though however, the.
The coal fired power station.
<unk> is responsible for perhaps 40% of the C O 2 emissions within the first quantum and so it's right that we look closely.
Got it it wasn't brought that we look at that during construction and commissioning of what was important that we got the power source of alchemy.
We inherited that coal fired power station that was in it was in Macau on us it sitting on the ground and it was the right thing to do to install them and getting them on staff, the but now it's appropriate that we look at that and what we're.
I think initially for the the growth of Cobre, Panama to of $100 million, we're looking at other sources of power, including renewables.
And then we do continue to look at the palace station itself and what options might be available. There I think it's broadly important for Panama.
That they have stability in the grid hydro electricity in the country goes up and down very significantly across the year, because theres no storage of toll run of river hydro in the west of the country.
And so the I'll relaunch on thermal energy, but at this time, particularly from diesel generators in the country.
Some of that's an important consideration.
But all of these things will weigh up any of the deliberations.
And as we've said, we'll come back and explain those later in the year in terms of our strategy around the palace station.
Come back and report more as we have more information for you.
The 2 very clear thank you very much.
Thank you.
Once again, please press star 1 at this time if you have a question. The next question is from edge of tender go out on with BNP Paribas. Please go ahead.
Thank you.
Good morning on good afternoon, just a couple of questions.
And so on on carbon price integration.
Is there any timeline by when you'll be able to conclude and would that then apply to all the projects that the unapproved in your portfolio, including F..3 expansion and so on.
And second just a quick 1 is there any cash tax guidance you can offer for this year. Please.
Thank you.
Thanks to the.
The first question first so the carbon pricing, yes, we will come back by the end of the year in terms of of of how we will approach that within the group what we do see initially we're looking at new projects sort of in particular things like.
First of all of that kind of came up but we are evaluating it against the the other projects from the business, which include the history and we'll just give more color on that as we go forward, but we do have is the number of.
The initiatives within the business to save on C. O 2 and really that's around continuing to push out of productivity and to reduce our emissions.
The intensity against every unit of copper production and Thats important Sentinel already very low down on the curve, but its the higher intensity operations, but which really cobre Panama is the highest the that's most of the point of importance in addressing that.
Most of the need of a nice for us.
Thank you.
Michigan deal, but its really not on.
The carbon pricing, it's much more around the processing stream, which is in particular, the covenants that come through on the <unk> side, but as we go forward will be.
The continuing to reduce the proportion of of oxide later on in the process plant and so it does flow.
Alright so.
So that's just a bit of color there. The second question the tinder sort of could you repeat that 1.
On the Texas, Tristan, but Julia do you of a number on the cash taxes I don't think growth change that much since the day there.
Thanks.
Julia just along the line.
I apologize she has been disconnected.
Just in the I don't think it's changed much from early of the year. When we can have gone on some.
What what you would I mean, I would expect some of that 2.2.
As.
You can appreciate in Panama, we spent all of the better part of $7 billion building. The mine. So it will take a while before we start paying cash taxes of significant cash taxes in Panama that in Zambia with the higher prices on the non deductibility of the royalty what what you would see is that sort of effective tax.
As we increase was the same percentage royalty now.
But that's not the deductible for tax purposes.
So in Zambia, you'll see a slightly higher increase in the of robotics.
Effective tax rate of them.
Okay, that's very clear thank you.
Thank.
Tax rate.
The question is from John Tumazos, the John Tumazos very independent research. Please go ahead.
Thank you very much.
Should we be worried from the minor tailings discharge or the slippage in the strip ratio.
Thank you are the labor shortages of Cobra Panama.
The operations need more attention.
And maybe the it's premature to be focusing his thinking ahead to the fore.
Brownfield and Greenfield capital projects.
Thanks, John No I don't think I don't think that's the case I think that the the management on thought is doing an excellent job under the questions of what the COVID-19, and all of the you know the challenge of continuing the ramp up what we have seen.
Measured against them.
Function in the mine of had been progressing extremely well that is in terms of the capabilities of the capital of equipment to deliver the trucks. Like for example, we look at pool on empty ratios, we look at the Kpis compared to the benchmark. So not all of the operating mines in particular, the Sentinel the help performing against those benchmarks and.
Produced cobre, Panama is exceeding in other areas. We have continued work to do for example on till that.
Time maintenance and.
Android conditions, but in other areas.
We are already doing better than other mines, we compare ourselves to the other benchmarks in the region and the <unk>.
The drawing mines down in the.
In Peru.
Some of them and then in Chile and the.
The suppliers of the irregular regularly and we compare ourselves to the votes and the process plant.
The recovery is performing extremely well, we now have the gold prompts are performing much better off the investment in maintenance on that sort of.
The price.
Of course, it through timings is working extremely well and we're well on track in terms of the phase 2 lift around the timing sandwiches all to get that ready.
Right.
And cope with the current in on Dyson right, but also to have it ready.
The 100 million tonne non deicing right we have regular.
External audit from independent orders.
True and come through and Chick how operations are performing and whether there are required standard and we are very happy with the outcome of that in terms of site management on the thought.
The continued improvement from where we were 18 months of 24 months ago. So we see a.
The leading indicators.
The continued to improve and the site the adherence and so on from the work force from the Pan of mine use kryptonite.
From a good for a new workforce a way of the country has no history of mining, but the developed very quickly and showing a great deal of capability.
The maintenance on the pipeline is an aberration and recovery.
Regretted, but it's very small and minor.
Does need focus and were confident that its getting the focus that the required on this as well.
We were seeing 3 or 4 of these events last year.
So certainly the frequency has.
It has improved it boiled down to a failure on the web.
So that world, we difficult to analyze it does require it.
A higher technical capability of in the T testing in order to examine net world.
To make sure that it has been.
But everything else from our lawn has.
<unk> has been performing exceptionally well up to the improvements last year.
Yearly of problems, we had and so this is the 1 off related to of failure on the world and but again, we will put in place of the corrective actions because it needs to be done. So I hope John that gives you an idea that the the.
The application of management of the application of the operation.
The excellence of the site is already reaching the standard about all of the operations. Although we continue to to lift the standards of those the global benchmarks and we're very happy with the progress in that regard.
Thank you interest and if I could.
Ask you 1 more.
I'm thinking of the history.
Of the 1986, when magma copper hedged 70, which was at or below their breakeven.
Or Oh 4 of 6.1 Phelps Dodge lost a couple of billion dollars because of zero cost collars the price rebounded.
And.
I'm, a little bit tongue in cheek.
But I'm wondering if you're almost trying to trigger a hostile takeover with your hedge practice or your failure to renounce hedging.
Just wanted to call your attention to companies that had similar hedge problems in the past.
Disappeared quickly.
History.
How much did you want to take that call on the hedge book.
On daily.
We made it clear we haven't out of it.
You just the school tests. So we've we've stopped early this quarter.
If you look at the history in the last 3 or 4 quarters.
At Ashford used by 10% in each quarter so of that.
That program.
Was in place, whilst we were spending quite a bit of capital at Cobre, Panama and highly leverage.
As we are as per Panama has ramped up that's H program has rolled off.
And there's much less hedged now so it's less than 25% over the next 12 months.
The sales are hedged and you.
You would see from.
From I think August.
We will participate significantly more on the copper price.
I'm a shareholder.
First thank you.
Thank you. This will conclude the question and answer session I would now like to turn the meeting back over.
William.
Thank you very much to everyone for joining today's call enjoy the rest of the of day and we look forward to speaking to you again with our Q3 results.
Okay.
Thank you. The conference has now ended please disconnect your lines at this time and we thank you for your participation.
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