Q2 2022 Ero Copper Corp Earnings Call
Thank you for standing by this is the conference operator, welcome to the Arrow Coppers second quarter 2022 financial and operating results conference call.
As a reminder, all participants are in listen only mode and the conference is being recorded after the presentation there'll be an opportunity to ask questions to join the question queue. You May Press Star then one on your telephone keypad should you need assistance during the conference call you May signal, an operator by pressing Star then zero.
I'd now like to turn the conference over to Noel Dunn Executive Chairman of Aero copper for opening remarks. Please go ahead.
Thank you and good morning, everyone. The news release announcing Euro second quarter 2022, operating and financial results is available on our website.
As are our financial statements and MD&A for the three months six months ended June 30th 2022.
As usual well 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 you to our most recent yeah, yes available on our website.
SEDAR and Edgar.
For a discussion of the risk factors of our business and the potential impact on future performance.
Unless otherwise noted all amounts are in U S dollars.
Joining me on the call today are David Strang, <unk> co founder and Chief Executive Officer, Matt Good President Wayne.
Dry eye, Chief Financial Officer, and Courtney Lynn, Vice President corporate development and Investor Relations.
Before discussing our second quarter results and the outlook of our business.
I want to remind listeners that last quarter, we announced a rebranding and I renamed the ERO portfolio of operations.
And going forward, we'll be referring to our M. C. S. A mining complexes. The Carryout EBA operations already next goes by we'll be referring to is you haven't seen our operations and our board Esperanza project will now be referred to as it took them out of a project.
Our second quarter from my perspective can be summarized by four main elements.
One while we're still in the early phases of execution on our strategic growth initiatives.
Team's adherence to our capital budget, thus far is noteworthy.
Both projects remain on track and well within contingency estimates, but line item secured to date, representing approximately 70% and 30% of the planned capital expenditures for the deepening and it took them about projects respectively.
Yeah.
We had record operational performance across our assets were set new high watermarks for production developing rates and asset efficiencies a mother of that key metrics during the quarter three.
Three.
We're seeing early signs that input costs are moderating across key consumables, such as diesel deal in explosives and for.
Changes to our concentrate sales channels allocations to reflect a higher proportion of international concentrate sales introduce noise in our topline revenue and accounts receivable, which we'll discuss in more detail in this call.
Looking back on what in retrospect, it looks like an incredibly timely senior notes issuance in early February and it's worth noting that the purpose of this debt offering was to insulate our execution insulate the execution of our growth projects with a strong balance sheet.
The rapid weakening of the couple of prices occurred during the second quarter is exactly the kind of challenges we had in mind when we launched a bond offering at the beginning of the year.
With keep a key growth projects progressing on track and on budget.
Plans for a strong second half of the year highly competitive operating costs and early signs that consumable costs are moderating we are confident not only in the strength of our operating business, but also our ability to execute on our strategy.
The time horizon that looks incredibly bright for Coca.
I will now pass the call over to David to provide an overview of our operational performance and then over to Wayne who will cover ERO second quarter financial performance as always our team will be available for questions immediately following the call.
Thank you know before I get into the details of our quarterly results.
Like to pass along the ERO families condolences to those London family on the passing of Lukas Lundin.
Mr. Lundin was a Titan and thought leader in our industry.
And his leadership and zeal for life will be sadly missed.
Our second quarter results were highlighted by record quarterly copper and gold production following a challenging first quarter.
The color you've operations, we processed over 800000 tonnes of ore during the quarter, an average grade of 1.74% copper.
Resulting in record production of over 12007 hundred tons of copper after mezzaluna logical recoveries of 91, 2%.
The quarter on quarter increase in copper production of over 30% was driven by higher tons processed.
With contributions from the first type of level projects Honeypot stope within the pillar mine.
Which we started mining during the quarter copper grades continues to trend above our full year copper grade guidance of one 6%.
Mining of this area is expected to continue through the remainder of the year and support a continuation of strong copper grades in the third quarter.
As a result, we continue to guide to the high end of our full year copper production guidance of 43 to 46000 tons of copper production.
With production still expected to be roughly equally weighted between the first and second halves.
Yeah.
At El <unk> operations, we achieved a similar jump in production driven by higher tons processed and higher gold grades during the quarter.
Which resulted in record gold production of over 11100 ounces.
Representing a quarter on quarter increase in production of approximately 26%.
We anticipate gold production in the second half of the year to be modestly higher with increased gold grades expected to more than offset lower tonnes processed as compared to the first half of the year.
Despite higher production levels during the quarter, our unit operating costs were affected by changes to copper concentrate sales channels due to operating challenges at our primary domestic smelter as well as the relative strength of the BRL to the U S dollar.
For context, I think is important to note that despite the need to change our concentrate sales channel allocation.
Our operating costs in BRL terms well within.
We're still within.
Budgeted ranges.
However, the average BRL exchange rate during the quarter was $4 92 versus our guidance range, which was set using a 5.3 exchange rate.
At the cable operations seaborne cash costs for the second quarter were $1.24 per pound of copper produced and seaborne cash costs at the <unk> operations was $643 per ounce of gold produced.
If the average exchange rate for the quarter had been this 5.3 that we assumed in our guidance our cost performance would have been at the high end of our full year guidance range or at $1 15 per pound of copper and approximately $600 per ounce of gold.
In addition to a less favorable BRL exchange rate than originally budgeted our all in sustaining costs at the 17 operation of $1169 per ounce of gold produced reflected a higher level of sustaining capital expenditures spent during the second quarter.
Yeah.
Since the end of the second quarter. The BRL has weakened and is currently in line with our $5 three guidance range and while we have observed local pricing of certain consumables moderate the combined influence of unit operating costs in the first half of the year as well as expectations of copper concentrate sales allocations will continued to be weighted towards.
Export sales through the balance of the year, we are raising our full year cost guidance.
At the Kari ball operations I'll see one cost guidance has been increased and widened from original guidance of $1 five to $1 15 per pound of copper produced to $1 20 to $1 35 per pound of copper produced.
And the 17 operations I'll see one cost guidance range has been revised from 500 to $600 per ounce of gold produced to 600 to $700 per.
Her ounce of gold produced and our all in sustaining cost guidance has been increased from 925 to $1025 per ounce of gold produced.
Two 1000 to $1100 per ounce of gold produced.
As it relates to our main growth projects. Our team has done a noteworthy job and remaining on budget.
One relevant and recent example of these efforts with a successful sourcing and purchase.
I'll say pre owned and never used ball mill for AR took them a project significantly reducing costs and a looming eliminating lunn lead time delivery risk.
To date, 22% of our planned capital spend for the took them a project is under contract with another 8% in the final stages of negotiation.
Importantly, this 30% of capital spend is within 6% of our feasibility study estimates well.
Well within contingencies at this stage.
And at our Kariba operations, we made significant progress on the new external shaft with 25% of planned capital now under contract and another 40% of planned capital related to the shaft sinking contract expected to be finalized during the third quarter.
Again, our team has done a remarkable job mitigating the impact of inflation.
The capital spend currently under contract is 10% below our estimates.
And the shafts sinking contract is in line with our planned expenditures.
And in addition to our ongoing construction activities I want to highlight our sustainability strategy. We are currently developing to mitigate the environmental impact of our construction activities, particularly of the took him our project.
So far we have earmarked $1 billion in capital towards these efforts and hope to share more of these sustainability efforts later this year.
I'm also happy to report that we published our 2021 sustainability report last week.
And if you have not had a chance to review the document I would encourage you to do so as it showcases the important and excellent work being conducted throughout our organization.
On the exploration front, we have now completed the drilling campaign to confirm and define the honey pot to project at the Pilar mine and our team is working to update the mineral resource estimate for the zone in order for our new mineral reserves to be defined.
We look forward to updating the market on this projects.
Sorry, we look forward to updating the market on this project towards the end of the year.
We continue to be excited by our exploration efforts at <unk> and evaluating and defining them dip extensions, particularly in the eastern portion of the deposit.
Further our regional exploration program for both nickel and copper is advancing well and we hope to be able to provide more color on our progress in the months ahead.
With that I will now turn the call over to Wayne to review, our second quarter financial results.
Thank you David and good morning, everyone.
As David noted our second quarter results reflect both strong operating performance and external headwinds, including changes to concentrate sales channels at <unk>.
Influence topline revenue unit operating costs and working capital.
Revenues for the quarter were $114 9 million, representing a quarter on quarter increase of $6 million or approximately 6%.
As previously mentioned this includes noise on a revenue line introduced by an unplanned higher allocation of sales to international customers, resulting in a reduction to revenues of $13 million during the period.
We expect the relative proportion of export concentrate sales to remain elevated for the remainder of the car.
Correspondingly higher unit operating cost due to the loss of a domestic tax credits and additional logistics costs associated with export sales.
In addition to influences on revenue, we saw an increase of approximately $19 million in accounts receivable during the period related to these longer payment terms.
It affected our operating cash flows for the quarter, which were $22 $4 million.
Absent these changes to the allocations operating cash flow would have been over $40 million.
With respect to foreign exchange derivative contracts, we reported realized losses during the first quarter of $3 million and an unrealized loss of $1 4 million due to the weakening of the Bureau from approximately $4 75 per U S. Dollar at the end of the first quarter to approximately 5.24 B R. L. A U S dollar by the end of the.
The second quarter.
Prudent capital management undertaken by our teams during the second quarter resulted in deferrals of over $20 million in capital for the year that will not impact key projects.
As Noel mentioned at the outset of this call our balance sheet remains the strongest it has ever been in Australia G is well insulated from commodity price volatility.
In summary, we have a very strong second half of the year plan. Our capital projects are progressing on track and remain in line with feasibility study estimates to date and we are starting to see early signs of consumable cost moderation following several quarters of steady increases.
With that I'll hand, the call back to Noel to share some final comments.
Thank you Wayne and everyone, who joined the call today before we open up the call to Q&A.
I'd like to recognize and thank our colleagues in Brazil.
For the fantastic operating performance a significant progress made on our growth strategy during the quarter.
I will now turn the call back to the operator to open the line for questions.
Thank you we will now begin the question and answer session to join the question queue. You May Press Star then one on your telephone keypad.
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Our first question comes from Dalton Barreto of Canaccord. Please go ahead.
Thanks, Good morning, guys I wanted to start by asking about this provisional pricing noise.
Can you tell us how many pounds were provisionally priced and at what price.
So adult and at the end of the quarter, we had 9600 tonnes of metal electrode provisionally priced and that person that was at $3 70.
Got it Okay, and then I think you guys said, it's yeah youre going to keep seeing this over the course of the year.
Are you going to hedge out the quotation period on a go forward basis.
So delta and that's incorrect.
We will not be seeing this over the remaining part of the year. If you are talking about provisional pricing in terms of some some metric that throws us into.
Hey.
Okay.
What's the word I'm going to use.
Some issues, let's talk philosophically with regards to how this company operates in terms of its concentrate sales.
Firstly, we operate in a way to attempt to sell our material.
On a spot basis.
We're able to do that by way of two methodologies number one in general without domestic customer, where we provide material to them on a weekly basis.
We would love to be able to sell all our material domestically, but these prudence from a management's perspective dictates that we need to have multiple customers with regards to making sure that our sales channels are always open.
With respect to export sales.
We sell material and we're able to sell material on a tender basis and we've put out tenders on a every other month type basis in terms of selling material internationally.
It is somewhat unique in order to do that and we are able to do that due to the high quality of our concentrate as you well know we have no deleterious elements within our concentrate and a concentrate also grades between 32 and 35% copper.
Making it somewhat goldilocks concentrate in terms of the world market.
When we do that there are various mechanisms that come within the play.
Individual contracts that we sign.
On a tender basis.
Some of those have pricing mechanisms built into them from the buyer's perspective.
Some of them require us.
To take into consideration.
Hedging or short term, what we attempt price hedging over the time it takes for that material to travel.
And as you will have seen over the last five years. If you go back through our financials, you will see various adjustments.
On the.
Quarter by quarter basis in terms of the pricing and how adjustments are made depending on what the metal prices doing depending on where our customer does in terms of allowing us to secure pricing. During the time that that material is traveling which is somewhat unique compared to a lot of our peers who have to sell to.
Under long term contract and have very significant price participation.
And pricing look back mechanisms, we do not.
What has happened during this quarter has been unprecedented.
We saw two issues emerge number one our domestic customer as has been highlighted ran into some operational issues and you can review that by looking at their publicly related data.
That's available as they are a public company in Brazil.
The second thing is we saw an unprecedented precedented move in copper prices over a time period, where we saw a two and a half standard deviation movement in the metal price, which I always think or believe is somewhat unprecedented in its caught everybody in the industry.
Surprise.
So with respect to as we look forward to the remaining part of the year.
We will be selling our material.
On a tender basis as we have done over the last five years to international customers, we sell to a number of different customers based upon their competitive nature and the competitiveness of the <unk>.
Tend to.
To us with regards to contract.
And as such we are always looking at the most competitive price bases that we can do with respect to.
How we can move those contracts to what we would term as close to spot sales as possible. That's how we first philosophically operate that's how we will be continuing to do that in the remaining part of the year.
And frankly, we have a lot of interest with respect to people wanting more and more of our concentrate.
And so we're quite comfortable with respect to how it goes forward.
As I said you can go through the previous.
CT as previous years, and see how that pricing adjustments if it could this one just happened to be a significant one in a quarter, where we had two coincident things occurring at the same time as I said, our domestic customers not being able to take material that was allocated to them that required us to move that material internationally.
And at the same time, we were doing that we had this very significant movement in the metal price.
And that's great great. David Thank you for that that's very clear and yes, I do have the historical data, which has my attention been copied by surprise can I switch and ask about the Capex in something you said.
Oh, I'm not bullish so sorry to come off.
You said, it's tracking 6% above budget, which is well within the contingency does that mean that <unk>.
Overall factoring in the contingency you're actually tracking under budget.
Correct.
So what went well so it's an interesting one and internally we have to even with respect to talk Intel Board make sure that the lines, you're you're assigning individual contracts and those individual contracts are being measured against the.
The feasibility study estimate of that particular contract.
And so we have these individual contracts and so what we're doing is amalgamating goes and providing guidance to you with respect to where they are as amalgamated to each other.
Against the budget for those.
Then on top of that you always as you all know you have contingency and we.
I have a contingency estimate on the overall project.
And so.
Just to clarify exactly.
Exactly tell you exactly what you asked.
6% over budget on the contract's been signed to date, but that is still within the contingency of the overall capital for the project.
That's great and then just maybe on the last 3.0 up post the shaft sinking contract being signed I think you said you'd be 70% committed.
And yeah on budget I guess same question on budget before the contingency and then are there any circumstances under which that can change.
We are on budget with respect to the contingency.
As we move through that project and as we move through the Tacoma project all contracts have two variables.
We do not control and like any of our other peers do not control those will be over the time periods as labor rates.
And diesel pricing.
And potentially some other consumable pricing.
So when we look at these numbers, we have tended to take a conservative approach.
With regards to the contract in terms of the estimates we had conservative numbers in our feasibility study, particularly on diesel and particularly on labor.
But as you know labor rates are increasing around the world. We feel that we're comfortable with those now but a project like the deepening project, which is a three and a half to full year project I cannot tell you what those numbers will be in two years. So there is some variation with respect to labor rates and there will be variations.
Related to diesel prices for both projects.
Okay, Great maybe one last quick one and then I'll leave it there.
On exploration I think you said you would provide an update in the months ahead.
I had thought that you had scheduled or potentially tentatively schedule an update for September is that no longer the plan.
No. We never said September the guidance, we have been always be giving us November with regards to coming out with new technical ideally a new technical report on the criticized Ali that would include guidance with regards to honey pot and the influence of honeypot on our future production schedule.
And guidance that we have five year guidance. So we certainly are targeting in November update with respect to that but obviously as we continue to move forward, we have to be mindful with respect to any discoveries that we may make are in the cortisol valley that could result in us notifying the market sooner if.
It is material.
As I said in my notes, we continue Mike and the team from an exploration standpoint, and the regional side of things.
Doing great work out in the field advancing projects.
And we are now in the situation of evaluating them and seeing at what point if.
If any that we may talk to the market sooner than November timeframe, there's no guarantees on that but the projects are advancing.
Really well.
Thanks, David that's all for me.
Our next question comes from Jackie Chris by Lawsky of BMO capital markets. Please go ahead.
Thank you very much and thanks for for this call congrats on a good quarter double already covered most of my questions. So I guess I'll just I'll ask first of all on operating costs. I know you mentioned when you changed your guidance you're experiencing some cost inflation, which is totally.
Expected can you give us a little bit of color, even just qualitatively on the influences of that how much is pure versus maybe are lingering COVID-19 costs versus the impact.
Shipping more internationally do you have a breakdown or or any kind of color on that.
I'm Gonna took a we've got two of those warrants are macro will give you some more.
Granular detail.
But let me talk quantitatively.
Quantitatively on the high level.
We've obviously in the first quarter saw significant cost increases like everybody did related to inflation around the world.
And particularly in our industry and like how P. As we saw significant increases in oil related products as oil prices.
Extremely high we are seeing those mitigating now as we see oil prices continued to decline. We were also seeing mitigation in steel products.
And that's generally been around about nine months lag.
With regards to seeing that come through.
So where we are right now with regards to inflation in and of itself, we don't see significant.
Kicks for the rest of the year right now obviously that can change as the market.
And we move into the second half of the year, but right now we are seeing mitigation in our operating costs related to inflation and that's been borne out by when we look at our costs in reais terms versus budget.
Obviously in the first half of the year, what we did see was an increase in costs and we guided at the end of the first quarter towards the higher end of our costs and as we are.
I stated if you take into consideration our cost they would be at the higher end.
What has changed.
Has been the unfortunate circumstances with a domestic smelter.
And that has moved us to doing more export sales as we look at export sales.
You guys know.
Versus domestic sales, we do see some tax advantages that are included in our seaborne cost because of the relative competitiveness of selling to the pellet premium a smelter versus exports.
That is not linear.
Because depending on market conditions internationally, we have actually seen international sales in the past be better than ourselves to powder NEMA inclusive.
The tax benefits that we would get there.
For the second half of the year, we have taken a prudent view because we will be exporting the majority of our material into the international market that we will not be seeing those tax benefits.
Obviously could change.
Depending on put enough to name a situation on.
And that obviously can also change depending on as we go through a tender process with various sales of concentrates that is a fluid market as well.
What I can tell you on the international sales as we do get a discount to our TCR season versus the prevailing pricing of that material on the world market.
For the second half of the years, that's why we've taken a broader range in the second half of the years because of the impact of our sales to domestic limiting ourselves to a domestic.
The smelter that we've increased the range because we are we are uncertain like everybody else are where the spot TCE aussies will be moving.
Certainly we could argue that there would be a great a tightening of the market in the second half of the year as we see China continued to recover.
Economically, but we cant be for certain so we've just gone and taken a prudent wider.
Wider range, but we do know that those are tax advantages, we get will not be there in the second half of the year from pattern up anymore macro anything Ted Yeah. No I think that's a really good overview, Jackie just to dive in a bit more specifics on the components of our cost structure we.
We are looking at for our business at car you buy approximately 60% of our cost is being represented by variable cost inputs, including transportation to the port for sale within that 60% allocation.
I think the key focus for US is on seven line items that effectively represents 50% of that sort of 30% of the overall cost structure and those are going to be the traditional kind of main inputs for our business obviously diesel.
Moshe and cement our balls for our ball mill other steel products like rock bolting screens as well as some of our primary regions.
Such as CMC, which is you can talk suppression and kind of more qualitatively what we've seen across that basket of line items is multiple months.
Declines or flattening in the rate of increase both of which I think are positive leading indicators going into the second half I would just on top of what David said. Additionally, note that we're not expecting in our guidance ranges that we've put out any significant moderation from these levels. So I think that represents a.
All positive.
Ah as you look to our guidance for the second half of the year again, just looking at month to month declines anywhere from sort of thought the 10% to 15% decreases which is a which is a positive early sign relative to the <unk>.
10% to 20% month to month changes, we've seen for the last nine.
Nine months.
That's super helpful. Thank you if I could ask another question.
Your project Honeypot, it sounds like from the MD&A and from the comments said that test stope, that's been mined it's going really well.
I was just wondering.
You've seen any surprises or anything that you had not expected in the test mining that you've done so far out there.
In the test mining, yes, no there hasn't been overly.
The team is still learning with that I think if anything we saw a little bit more dilution than we would like to have seen from.
From some of the pace that was in the adjacent stope.
That's more of a as a team get comfortable.
And mining the stope.
But on an overall basis.
Appears that we are probably going to get more copper material than we anticipated out of the stope, so that bodes well.
But as I said, we've got this stoping and we've got three other stopes that will be mined next year, they're all similar in terms of of style.
Shape in terms of helping our team.
Get comfortable in terms of their mining mining and mining. These are historic areas as it relates to previously mined stopes adjacent et cetera. So by the time, we're ready to really get going with honeypot to remember these stopes only honeypot. One this was already known in last year's update.
But as we move forward with regards to Hunter part two which is the bigger project that.
We hope to be mining ideally in the next couple of years, starting there I think the team is going to be in a great position with respect to that work.
At that time.
Thanks, that's helpful and congrats again on a great quarter, and really really impressive cost control.
Yes.
Thanks Jackie.
Our next question comes from Bryce Adams of CIBC capital markets. Please go ahead.
Hi, Good morning, all I just have one question remaining and it's related to the deepening project.
I heard the comments on the Capex commitments in the MD&A I was wondering if you had more color on the progress of the scope of works.
If I recall properly.
When we were on site in April in the shop was rained out to one and a half made is that there was a cat left to service the surface and may be the next big task with the concrete collar Oh.
So I was just wondering if you had a project update related to the work completed at the deepening project.
Yeah sure prices market again, just kind of run through some of the physical completion aspects.
On the deepening project. So right now our ramp has completed a level minus 10 66 important to note that the only 10 meters above the the bottom of the shop level. We've got another approximately 70 meters of ramp development to go to get to that level. So that's progressing really well.
You're spot on that raise bore it's been completed 220 meters from surface still at about two meters. While we finished the terrorists work and civil so during the quarter. We completed all the terrorists are the bulk terrorists work.
And as well as the concrete batch plant.
Cooling plant, which was handed over to operations, we've completed the wider houses.
The winder and shop callers.
That pipe and cable box all those surface installation or at least cuts were completed pending the completion of this and that batch plant as I said all of the civil Civils I've taken over on on those initiatives. We also completed the reverse osmosis plant on surface and are in the fifth in the finishing stages that are laid out areas.
In terms of physical purchases that we've made we've purchased and are in the process of upgrading both the thinking band wind around the stage Winder and then we've placed orders and fabrication is in process are expected to start imminently imminently for the sinking rope the real or the headgear steelworks.
The sinking chiefs and the main ropes among others.
Okay, Thanks, Mike and it's a very very good detail there.
Maybe I missed it but on the concrete work with the batch plant now commission that batch plant is going to be busy for the back half of this year, whereas a lot of that correct work on its surface done already.
No that's exactly right right. So with the box plant now completed it wildly hot commissioning underway. We've had at all of the in the bulk terrorists work completed and the box cuts are completed as well. We've now started in Q3 here all the surface civil work. So we will complete the are the foundation for the wider basis the Wiener Bill.
The shaft collar and then also some of the cement for the lay down areas and at the same time underground. We're completing the raise boring the second leg, which goes from that minus 227 level that we're on a plus 227 level. We're at now are down to minus five twenties, that's a 750 meter raise bore.
And then we'll also contemporaries have the underground finish.
Finished the transformer base adopts the subs are et cetera.
Just I just want to jump in.
And then Brian . Thank you for those questions are just for everybody's for context as we continue to move forward here we started this.
Cole with regards to contracts and security of equipment et cetera, as we continue to move forward, we will stop providing updates with regards to completion rates.
To completion et cetera to provide the market with an update as we progress both of these large projects over the course of the next couple of years. So we will also start doing that there's no point in talking about time to completion or completion to date as of yet.
Once we get going on the big aspects of the projects, we will certainly be providing that to you all.
On on a hopefully regular basis through the quarters, yeah, but so far so far things are going really well Bryce and I appreciate the question and the opportunity.
Ted to talk about the progress that the team is making.
On our main projects.
Yep, Thank you, but I appreciate that and good luck with it.
Thank you.
Our next question comes from Stefan <unk> of Cormack Securities. Please go ahead.
Okay fine.
Sorry, I was on mute there.
I'm, sorry, just thinking if.
They continue on with the on the growth side of things, but maybe shifting over to <unk> I know sort of last quarter I think a lot of the work was focused on just getting the roads upgraded post the rainy season and all of that can you just maybe provide a bit more color this quarter and maybe the next quarter are you getting into sort of concrete works in erecting stuff yet or is it still a lot of earthmoving exercises right now.
So where we are is the the first big project that's.
Auto near completion is the construct upgrading of the road into the project area. We're.
We're near complete with regards to the deep edge station project.
Vegetating the mining contract is now on site and the mining contract has now started earthworks and started that process remember the big four.
It was getting the earthwork started was a big.
Sure.
So metric for us because of the rainy season coming later this year happy to say that they are on site. They started work at the waste dump and are looking to move now closer to start some pre stripping activities in and around the pit as with regards to concrete and linked concrete and things like that that has not begun yet.
Okay. Okay, great. Thanks, very much guys.
Yeah.
Uh huh.
Once again, if you have a question. Please press Star then one.
Our next question comes from Bert Whitson.
Of America century investments. Please go ahead.
Hi, yes, thank you for all the detail.
Yeah definitely youre looking for.
The progress on the project level.
Yes, one question on the NASDAQ.
Hey, Jeff.
As far as 2023.
I guess to the extent that you have any visibility how confident are you that.
That will turn out to be the case.
Thompson.
All right.
Kidding.
Mike.
Oh.
Would it make.
Would it make any sense.
Way back.
Any.
On the second half of 'twenty two.
So I guess take advantage of them.
Oh boy.
And also I guess I'm looking for.
I guess that took them all.
You anticipate.
Similar.
And smiles.
I'm just going to market.
Oh, no I was domestic international for that.
Hi, Jackie.
Yeah.
Thank you all for exposure.
Yeah.
Yes.
Okay.
Yeah. Thanks, Thanks for that Brad.
Let's talk generally philosophically.
We are.
We do not want to have overexposure to any one customer.
For any length of time, and I think any of our shareholders would agree that that would be prudent with respect to making sure that we don't have it.
Accounts receivable exposure to any particular company that's too high.
With regards to domestic smelter.
I think where we are right now as they are in a recovery mode. Following.
There.
Unanticipated shift or.
Stop in production and we will continue to monitor that as they continue to get back on their feet.
This particular stage of view with regards to is our exposure to them right now is enough and.
We will move to international how that adjusts next year, we can't give you perfect guidance with regards to that.
He is a unique situation that we have being in by yes, selling to buying company with regards to these tax credits with regards to that and obviously, we work closely with them with regards to their ongoing operations and their wish to have our concentrate in their operations.
Or that took him our project is very different.
Took them off.
As in the north of the country.
We look at if we wouldn't say that we would not sell to pattern up in any of our concentrates from that that competitiveness with regards to the international market and international customers is different up there because the same level of tax credits on available.
To us with regards to took them out as they are with respect to the buy in operations. So at this stage is more than likely that AR to.
Took them off material will be sold 100% internationally.
Great. Thank you so much.
This concludes the question and answer session I would like to turn the conference back over to management for any closing remarks.
Thank you operator, and thanks to everybody coming on the call today.
As you know.
It was available.
If anybody has any additional follow up questions they would like to ask.
Offline.
And we look forward to a third quarter that we feel is going to continue to be a strong one for the team. Our team is executing in all areas with respect to the work all the way from operations through geology to finance and it's a real credit to everybody.
This great team that.
We continue to do well in.
In interesting times.
And with that we will pass along and if we don't talk to you before we'll talk to you.
With us.
Third quarter financials in November thank you everybody.
This concludes today's conference call you may disconnect. Your lines. Thank you for participating and have a pleasant day.
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