Q4 2022 Hudbay Minerals Inc Earnings Call
Good morning, ladies and gentlemen, thank you for standing by welcome to the HUD Bay Minerals, Inc. Fourth quarter 2022 results conference call.
At this time all participants are in listen only mode. Following the presentation. We will conduct a question and answer session to join the question queue. You May Press Star then one on your telephone keypad should you need assistance. During the conference call. You May Press Star then zero I would like to remind everyone that this conference call is being recorded.
Today February 24th 2023 at 830, a M. Eastern time I will now turn the conference over to Candace Brule, Vice President Investor Relations. Please go ahead.
Thank you operator, good morning, and welcome to <unk> 2020 to fourth quarter results Conference call.
Based financial results were issued yesterday and are available on our website at www Dot <unk> dot com a corresponding Powerpoint presentation is available and we encourage you to refer to it during this call.
Our presenter today is Peter could Kelsey <unk>, President and Chief Executive Officer accompanying Peter for the Q&A portion of the call will be <unk>, our senior Vice President and Chief Financial Officer, and Andrea <unk>, Our senior Vice President and Chief operating Officer.
Please note that comments made on today's call may contain forward looking information and this information by its nature is subject to risks and uncertainties and as such actual results may differ materially from the views expressed today.
For further information on these risks and uncertainties. Please consult the company's relevant filings on SEDAR and Edgar. These documents are also available on our website at.
As a reminder, all amounts discussed on today's call are in U S dollars, unless otherwise noted and now I'll pass the call over to Peter could Kelsey.
Thanks, very much Candice good morning, everyone and thank you for joining US 2022 was a year of dedication discipline and delivery for high Bay as we completed our first full year of new Britannia and public Concho operations transitioned our Manitoba operation with a new focus on snow Lake manage through political uncertainty and.
Just a quick constraints in Peru, and committed to further improving our already low carbon footprint.
We were faced with a period of higher input prices and volatile copper prices, but we took measures to reduce our discretionary spending as part of our commitment to disciplined capital allocation and generating free cash flows more.
More than ever we are focused on maintaining a strong safety culture, and our workplace and continued alignment with our local communities.
In this presentation today go.
I'll go into more detail about our achievements and challenges in 2020 to touch on the operating and financial performance of the business and provide an overview of our production and cost outlook as we execute on our key strategic objectives for 2023.
Starting on slide three.
We are proud to have achieved our 2022 consolidated production guidance for all metals and consolidated cash cost and sustaining cash cost guidance in a difficult environment. This was due to the strong ramp up of the new Britannia mill, which successfully increased annual so snow Lake gold production by 46% in its first full year of operations Sim.
Generally in Peru, a full year of production that pump a country helped to bring copper and gold production each by approximately 15% year over year.
In Manitoba 2022 has been a transition year as we closed our triple seven mine in Queensland Metallurgical complex after decades of steady operations.
The Manitoba team continued to focus on integrating the thin float employees and equipment into the snow Lake operations in order to significantly reduce our reliance on higher cost contractors.
We also completed confirmatory exploration drilling at our Flint from tailings facility in 2022, which indicated higher grades and reported from our historical Mill Records. This facility hold in excess of 100 million tonnes of tailings that have been deposited over the span of 90 years, we plan to complete metallurgical test work on the central and <unk>.
To assess the metallurgical recoveries.
Furthermore, our Anderson tailings facility in Snow Lake contains significant amounts of gold deposited over many decades.
Given our enhanced gold processing capacity in snow Lake we are in the early stages of evaluating a similar opportunity to reprocess, the <unk> tailings as well.
Elsewhere in Snow Lake the Lalor expansion beyond 4650 tonnes per day is ongoing and the stall recovery improvement program is well advanced and on track for completion in early 2023.
We also repaid 50% of the gold prepay facility that helped fund our new Britannia mill refurbishment.
In Peru, we announced the signing of an exploration agreement with with Chicago community in August providing access to the Maria Reyna <unk> satellite properties located within trucking distance of Constancia and I'll touch on these opportunities shortly.
Yeah.
In early 2022, we completed an internal positive scoping study at Constancia Naughty, highlighting an inferred mineral resource estimate of $6 5 million tonnes at one 2% copper.
<unk> concluded that the two high grade Scone lenses could be mined by underground methods starting in 2029 to supplement the open pit production.
Later in the year. Our team also completed an initial mineral resource estimate for yogurt and identified a higher grade core.
Jargon is 100% owned copper molybdenum porphyry deposits located in the La Libertad region in northwest in Peru, near the city of Tokyo, and within close proximity to existing infrastructure water and power supply.
More importantly in Peru, we're extremely proud of the team's efforts in maintaining strong operations throughout the year. Despite operating in a challenging environment with heightened inflation recent political changes and logistical challenges.
The team has been able to successfully navigate this environment, while maintaining steady operations and achieving our copper production guidance in 2022.
In the United States, we demonstrated the value at our Copperweld project with the release of the preliminary economic assessment in June .
<unk> outlined the two phased mine plan incorporating the newly discovered deposits along the east deposit formerly known as Rosemont.
Phase one reflect a 16 year standalone operation on private land with average annual copper production of approximately 86000 tons at attractive cash costs of $1 15 per pound.
<unk> generates robust economics with an after tax net present value of $741 million at a 10% discount rate and an internal rate of return of 17% using a copper price of $3 50.
Phase II at Copperweld expands mining activities onto federal land and extend the mine life to 44 years with average annual copper production of approximately 100000 tons.
Projected after tax NPV of the second phase at the time of sanction would be $2 8 billion.
Which demonstrates the significant upside opportunity. This second phase brings to the project.
After the completion of our Pega for Copperweld, we initiated the state level permitting process and received the first of the state permits the mind land reclamation plan in 2022.
We completed the technical work to support the pre feasibility study for copper world, which I'll touch on in more detail later in the presentation.
And in late 2022, as part of our disciplined financial planning, we announced three specific prerequisites, including specific financial leverage targets that would need to be achieved prior to making an investment decision in copperweld.
Finally, we have been rationalizing our noncore asset portfolio and divested our 100% interest in the Lloyds book property in New Mexico, which was acquired through the Maison acquisition in 2018.
And we completed the sale of our equity interest in Fireweed metals, which we received in 2018 in exchange for the sale of our Tom and Jason properties in the Yukon.
Turning to slide four.
We started to see the benefits from our recent brownfield investments through increased production and cash flows in our 2022 results.
Fourth quarter consolidated copper production increased by 20% from the third quarter, primarily due to higher copper grades in Peru.
Consolidated gold production was slightly higher than the third quarter due to a higher gold grades and Peru, which were partially offset by lower lower gold grades in Manitoba.
As I mentioned, we achieved full year consolidated production guidance for all metals annual copper and gold production was on the lower end of the guidance range, primarily due to lower than planned grades in the fourth quarter in Peru, as we implemented short term mine plan changes to mitigate the risks associated with logistical and supply chain.
And disruptions.
<unk> copper cash cost increased from the third quarter levels as a result of lower precious metal sales volumes and continued inflationary cost pressures, partially offset by higher copper production.
Sustaining cash cost also increased from the third quarter due to the same reasons affecting cash costs and higher capitalized exploration slightly offset by lower sustaining capital expenditures.
Operating cash flow before changes in noncash working capital was $109 million during the fourth quarter, reflecting an increase of $27 million compared to the third quarter.
Fourth quarter, adjusted EBITDA was $125 million compared to $99 million in the third quarter.
Results were higher than the prior quarter due to higher copper sales volumes and higher copper gold and molybdenum prices, but partially offset by the temporary buildup of unsold inventory and produce.
In light of the environment in the second half of 2022 with increasing input prices and declining copper prices, we delivered $30 million in discretionary cost reductions across the business through lower growth capital and exploration expenditures.
We exited the year with $226 million in cash and equivalents as well as undrawn availability of nearly $350 million under our revolving credit facilities.
On slide five we summarize our Peru operating results.
During the quarter, we produced 27000 tonnes of copper and 21000 ounces of gold at 21% and 64% increase respectively over the third quarter.
These production increases were due to higher grades and recoveries and the fourth quarter was a record quarter for gold production in Peru.
Full year copper production increased by 15% year over year to 89000 tonnes, achieving the annual guidance.
Full year gold production increased by 16% year over year to over 58000 ounces, but fell short of 2022 guidance. This was due to a short term change in the mine plan, where we prioritize the processing of lower grade stockpiles and shorter haulage distances of ore from the Constancia pit.
This allowed us to reduce our fuel consumption and keep the mill at steady production during a period of nationwide social unrest and road blockades following the change and peruse political leadership in early December despite.
Despite these changes total ore mined during the fourth quarter increased by 7% and total ore mined was slightly higher than the pre quarter.
Unit operating costs in the fourth quarter were 4% higher than the third quarter, primarily due to higher mining costs and continued inflationary pressures.
Full year unit costs were 19% higher than 2021 due to a higher strip ratio higher mining costs and inflationary pressures on fuel consumables and energy costs, partially offset by higher ore milled.
<unk> cash cost in the fourth quarter declined by 20% to $1.34 per pound compared to the third quarter due to higher copper production and higher byproduct credits, resulting from higher grades.
Sustaining cash cost decreased by 15% quarter over quarter, primarily due to the same factors affecting cash costs and lower sustaining capital expenditures, partially offset by higher capitalized exploration.
While we were successful in completing two port shipments in December inventory of approximately 25000 wet metric tons of copper concentrate was unsold at the end of the quarter due to nationwide blockades.
Given that we have been able to continuously operate.
Our concentrate inventories at site reached a peak of approximately 47000 tons in mid February we were able to complete three concentrate port shipments in January and regular transportation of concentrate has resumed since mid February .
We expect to return to normal concentrate inventory levels in the next several months.
As an additional prudent measure intended to ensure positive cash flow generation and continued financial discipline, we expect to extend our existing quotation period hedging program to cover approximately 13000 tons of contained copper in the unsold concentrate inventory to lock in current copper prices.
Moving to the next slide on Manitoba gold zinc and silver production declines during the fourth quarter compared to last quarter, primarily as a result of lower grades at Lalor in line with the mine plan.
Copper production was slightly higher than last quarter.
All year 2022 production in Manitoba was impacted by the planned closure of Triple seven in June resulting in a decrease in copper zinc and silver production, while annual gold production increased by 13% as new Britannia ramped up to full production.
Full year production of all metals in Manitoba achieved the 2020 to annual guidance ranges.
I'll remind at Lalor increased by 6% in the fourth quarter compared to the third quarter, mainly due to the higher production initiatives and the integration of the Finch, one employees and equipment, partially offset by a planned maintenance program at the mine.
We continue to advance several key initiatives to support higher production levels at Lalor, including building long haul inventory, improving stope block fragmentation optimizing the development drift size and focusing on short availability improvements to enable more ore to be hoisted to surface, while reducing inefficient trucking or via the.
The ramp.
The combined snow Lake Mills processed, 5% less or in the fourth quarter due to the employee transition and planned maintenance.
The new Britannia mill continued to achieve consistent production, averaging 1530 tonnes per day in the fourth quarter.
Combined unit operating costs in the fourth quarter were relatively in line with the third quarter full.
Full year combined unit operating costs increased by 27% compared to 2021, reflecting the standalone higher cost structure of snow Lake after the closure of the Triple seven mine and defend front operations in mid 2022.
Manitoba gold cash costs were $922 per ounce in the fourth quarter higher than the third quarter, primarily due to lower byproduct credits and lower gold production.
However, full year 2022 cash costs were $297 per ounce, which was impressively below the low end of the annual guidance range.
Slide seven illustrates the growth in copper and gold production on the back of the $250 million in brownfield investments we delivered in early 2022.
2023 is expected to be another year of meaningful growth with consolidated copper production is expected to increase by 10% in consolidated gold production expected to increase by 30% compared to 2022.
Consolidated copper and gold production is expected to further grow in 2024 as a result of continued higher grades at Pampa Concha and several gold production enhancements in snow Lake.
This is expected to lead to increasing EBITDA and cash flows and we believe our high quality pipeline of attractive development and exploration opportunities will further add to this growth in the medium to long term.
Slide eight highlights the details behind the 2023 consolidated production growth.
In Peru, the mine plan adjustments, we saw in the fourth quarter continued into early 2023 to ensure a steady operation of the plants during the regional logistical challenges.
This is expected to result in more ore being mined from Constancia and less from the pump <unk> pit in the early part of the year.
Despite these changes in a period of higher stripping at Pampa culture 2023 production is expected to be $103 5000 tonnes of copper and 90, 995, 5000 ounces of gold representing year over year increases of 16% and 64% respectively.
In Manitoba 2023 gold production is expected to increase by 18% to 190000 ounces due to a higher gold grades and a 10% increase in ore throughput at the Lalor mine to.
For 2023 mine plan at Lalor reflects higher production from the gold and copper gold zones as those loans are expected to be prioritized over the base metal zones at.
It also reflects a 10% increase in throughput at the new Britannia mill as the mill has been consistently achieving the levels above nameplate capacity.
These mine plan enhancements result in 2023 gold production levels being consistent with the most recent mine plan for snow Lake, but without the full ramp up to 5300 tons per day as we focus on maximizing the value per tonne of ore at lalor.
Year over year zinc production as expected declined by 42% primarily due to the recent closure of the Triple seven mine.
We expect to release 2024, and 2025 guidance next month with our annual mineral reserve and resource update.
We expect our 2024 production guidance to be similar to the previously issued guidance, reflecting a further increase in copper production in Peru and gold production in Manitoba.
Importantly, we now expect mining activities at the pump potential deposit to continue into the first half of 2025, which is expected to increase copper and gold production in 2025 beyond the levels shown in the most recent technical report.
Slide nine summarizes our cost guidance for 2023.
Total expenditures are expected to decline by approximately $65 million compared to last year due to lower discretionary growth capital and exploration spending in 2023.
Peru sustaining capital expenditures are expected to increase year over year, but remained in line with the most recent technical report.
High level of sustaining capital is due to an increase in heavy civil works for the completion of a tailings dam raise in 2023.
Manitoba sustaining capex is expected to be lower than 2022, due to lower equipment spending at lalor and in the mills after the snow Lake transition and ramp up period in 2022.
Total growth capital of $55 million in 2023 includes $10 million for mill recovery improvement initiatives in Peru, and $15 million for the completion of the stall mill recovery improvement project in Manitoba.
We have also allocated $30 million to growth spending in Arizona as we advance permitting economic studies and site works at Copperweld in 2023.
Total exploration expenditures of $30 million in 2023, a 61% lower than 2022 levels do.
Due to our focus on discretionary spending reductions.
Planned exploration activities. This year are focused on areas with high potential for new discovery and mineral reserve and resource expansion.
These initiatives include permitting and drill preparation for the Maria Reyna in Cabo <unk> properties near Constancia Limited drill program at Pampa country to evaluate the potential to add an incremental mining phase of depth and.
The winter drilling program in Snow Lake focused on testing the deep extensions at Lalor.
Copper cash cost in Peru are expected to decline by 26% in 2023 versus 2022, primarily due to higher gold byproduct credits and higher copper production.
Cash cost in Manitoba are expected to increase in 2023 compared to last year as a result of the transition to a primary gold operation with lower byproduct credits after the closure of the Triple seven mine in June 2022.
Consolidated copper cash costs in 2023 are expected to decline by 30% compared to 2022 levels due to the increase in copper production and higher gold byproduct credits from the increasing annual gold production.
Consolidated sustaining cash cost in 2023 are expected to be 18% lower than 2022 levels due to the same factors affecting consolidated cash costs, partially offset by slightly higher sustaining capital expenditures.
Part of the discretionary spending reductions relate to deferred spending at our copper World project.
The reduced year over year spending at Arizona reflects our focus on project derisking activities, including the completion of a pre feasibility study state level permitting and plans for bulk sampling program in 2023 as shown on slide 10.
The majority of the technical work and expenditures related to the pre feasibility study for phase one of Copperweld are now complete the pre feasibility study is expected to support the conversion of the mineral resources to reserves and optimize the layout and sequencing of the processing facilities.
Pre feasibility level engineering, where the main processing facility was completed by year end together with geotechnical and hydro geological site investigation activities.
Metallurgical test work continued into 2023 and the results are being analyzed as part of concentrate leaching tradeoff evaluations.
The pre feasibility study results are expected to be released by the end of the second quarter of 2023.
Copperweld requires only state level permits for phase one.
Late last year, we submitted applications for an aquifer protection permit and an air quality permit to the Arizona Department of environmental quality known as the AAD EQ.
We've been working closely with <unk> and we expect to receive these two remaining permits in 2023.
The other key state permit the mind land reclamation plan was received in 2022.
In January 2023, we received an approved right of way from the state land Department with that will allow for infrastructure, such as roads pipelines and power lines to easily connect between the properties in our private land package.
Upon receipt of the state permits we expect to conduct the bulk sampling program to continue to Derisk. The project by testing, great continuity variable cutoff effectiveness and metallurgical strategies.
<unk>, we intend to initiate a minority joint venture partner process, which will allow the potential JV partner to participate in and help fund the definitive feasibility study activities in 2024.
The opportunity to sanction copperweld is not expected until 2025 based on current estimated timelines and reflects our conservative approach to spending at copperweld over the next two years.
With three P plan for sanctioning copperweld that I mentioned earlier is laid out on this slide.
This plan ensures high Bay will be in the best position to move the project forward with the lowest cost of capital and the highest risk adjusted return on investment.
Turning to slide 11.
Our recently executed surface rights agreement with the community of which Chicago allows for exploration of the Maria Reyna in Cabo retail properties.
<unk> owns the mineral rights to these properties that are located within trucking distance of the Constancia project processing facility and we completed geophysical surveys in area that indicate large scale potential at these properties.
Shortly after the community exploration agreement was completed we commenced baseline environmental and archaeological activities to advance the permitting process for property drilling in the future.
Ground Geophysical survey commenced in the fourth quarter and will continue once the Peruvian social situation improves.
Our geological team commenced surface investigation activities and field evidenced confirms that both <unk> and Maria Reyna host sulphide and oxide rich copper mineralization in sponge hydrothermal ratios and large porphyry intrusive bodies.
Similar to Pampa Concha Cabo Ito is located about five kilometers from Constancia and includes an old open pit mine that was operated by Mitsui until the early 19 nineties.
The U S. Geological survey from 1990 estimated a total resource of 91 million tonnes at two 3% copper for the open pit mine.
Korea Arena is approximately 10 kilometers from Constancia and artisanal mining activity has presence in the high grade areas. These small scale minus reported an average grade of between two and 6% copper in the ore.
Okay.
<unk> Lake we commenced a winter drilling program in January 2023, with four drill rigs testing the down dip gold and copper extensions of the Lalor deposit.
This is the first time, we have completed step out drilling in the deeper zones at Lalor since the initial discovery of the gold and copper gold zones in 2009 and 2010.
One additional drill rig is actively testing of targets to the north of <unk>, which is another highly prospective location next to the main lalor ore body that is thought to be offset by post mineralization faulting.
The first phase of this program includes a total of 12 holes and over 20000 meters of drilling followed by a combination of surface and borehole electromagnetic surveys based on the results from the first phase program as follow up drill program is planned for the winter of 2024.
We are committed to operating in a manner that demonstrates our focus on the environment and we are proud of our already low carbon footprint.
With over 50% of our total energy consumption being from renewable resources, including nearly 100% renewable energy in Manitoba, we are leading emissions rankings amongst peers as seen on slide 12.
We also aligned with the highest industry standards to ensure that we are on a par or ahead of industry expectations. We recognize we have a role in mitigating climate change and in December we were pleased to announce our commitment to achieve net zero greenhouse gas emissions by 2050, and the adoption of an interim target of a 50% reduction.
<unk> in scope, one and scope two emissions by 2030.
We plan to be reporting on material scope three emissions in the near term and continuing to be transparent with greenhouse gas performance data disclosure.
Through our emissions reduction roadmap, we have identified multiple opportunities to achieve further reductions in emissions, including grid decarbonization in Peru fleet and heating electrification and fuel switching in mobile equipment.
We have been reporting greenhouse gas emissions data and performance to the CDP climate questionnaire for more than 10 years.
Our annual sustainability report maps, our CDP responses to the task force on climate related financial disclosures recommendations.
We are also aligned with the mining association of Canada's towards sustainable mining or T. S and protocols at all of our operations with the goal to maintain a strong score of an a or higher for all protocols.
We truly believe that our ESG principles are the foundation of our business and are critical for our long term success.
Slide 13 summarizes our near term cash flow growth in our high quality organic copper pipeline. We believe that copper has the best long term supply demand fundamentals in the sector as global copper mine supply will be unable to meet demand from global decarbonization initiatives.
We have the highest near term copper production growth and the highest leverage to copper among our mid tier base metals peers and.
And we have successfully increased our copper equivalent resources per share by more than three times over the past decade.
For these reasons, we believe <unk> is uniquely positioned to offer attractive copper production growth and long term optionality for investors.
To summarize we are a diversified mid tier copper producer as shown on slide 14, our strong copper and gold production growth in 2023, and leading low cost profile is expected to generate significant near term cash flows. We also have a world class organic growth pipeline offering medium to long term.
Term copper production Optionality.
As you've seen through this presentation, we have several exciting brownfield and greenfield growth opportunities that we intend to advance with our 2023 key strategic objectives.
Our lower discretionary spending in 2023, together with lower year over year cash costs will allow us to generate positive cash flow and advanced our copper development pipeline with minimal capital.
We will continue to Derisk copperweld with several project catalyst expected in 2023, as we prudently advanced our three <unk> plan for Copperweld sanctioning.
In snow Lake it will be a year filled with several milestones as we execute the expansion and ramp up of Lalor beyond 4650 tonnes per day and complete the stall mill recovery improvement program early in 2023 and.
And we will conclude our drilling program to test the deep extension that law with a potential to expand gold mineral reserves and resources.
In Peru, we will continue to progress constancia, leading efficiency metrics by applying smart technologies to continuously improve operating performance, including sensor based ore sorting and milling flow sheet enhancements.
We also aim to further advance the Maria Reyna <unk> satellite properties through exploration permitting.
He will advance our climate change commitments by assessing opportunities that are aligned with global decarbonization goals.
And finally, we will remain vigilant in evaluating growth opportunities that meet our stringent strategic criteria that will reflect sustainable value for the company and our stakeholders and with that we are pleased to take your questions.
Thank you.
Ladies and gentlemen, we will now begin the question and answer session to join the question queue. You May Press Star then one on your telephone keypad.
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Our first question comes from Fahad Tariq of Credit Suisse. Please go ahead.
Hi, good morning, Thanks for taking my question.
Maybe just on the Peru protest situation can you talk a little bit more about like has the transportation of concentrate is it just completely normal now and what about like supply is getting to the mine.
It sounds like it's getting better I'm, just trying to understand is that a normal levels now.
Good morning, and thanks very much for the question, but I think look.
Yes.
The political situation in Peru is an interesting one but it is one that our team has been able to respond to I feel.
In a manner that are entirely consistent with my expectations of the performance. So far so to your point, yes, we concentrate.
Transportation.
It has certainly opened up in the last week or two and we expect that it will continue along those lines. We think that the situation is starting to normalize, but it's a little bit difficult to predict exactly how it will go what I can say, though is that we are closer to our communities than ever and so we will experience an opt in opt in.
In the in the weeks and months ahead of us, but we have extremely strong support from our communities who have actually come out several times in order to sort of moderate.
Activities are protesters who come in from the outside so that's it.
That's a long answer to your question, but I do expect we will have ups and downs, but we will continue we will continue to be able to reduce the inventory that we have at site and progress shipments out of Medtronic.
Okay and then that's helpful. And then maybe just as a follow up.
You see that over the next several weeks.
It's kind of very back to normal in terms of getting supplies to the mind is it possible to reach at the mine plan to kind of go back to what it was previously I E more <unk>.
I think.
It will take time.
I'm, sorry that I didn't really address your question about getting supplies to the mines, but we have been able to consistently get surprised to the mines. The biggest issue has been fueled typically.
And so we've adjusted the mine plan accordingly to be able to address.
Sure.
Any of the fuel bottlenecks.
But to get back to the mine plan as planned in the short term will be a little difficult, but perhaps I can ask andre to elaborate on that a little bit sure sure.
So the amount of fuel.
We're getting into site as well as other consumables has been improving so that's been a positive trend.
We are naturally in the previous mine plan going through a phase of stripping at Papa Concho in the first quarter and with what.
In terms of managing fuel from the late December early January and into February .
Prioritised, our fuel to keep the mill running in public hunches is significantly further than constancia pit and the other and so.
With things started we started getting back to Papa Concho. Just this past week. So as we were seeing our fuel levels go up but its probably a few months.
It is a few months of stripping.
Where we get back into the into the good grades again, so so probably into the next quarter.
At this point so there is no magic scenario to get back and have it like the original plan. It is definitely going to you'll see the grades coming up into Q2.
And we just sort of.
Forward the plan that you would otherwise.
Spect us to be operating against exactly.
Great.
That's helpful. Thank you.
Youre welcome.
Our next question comes from RF swapped out with Scotiabank. Please go ahead.
Hi, good morning.
Mark question for around the same lines in terms of about Peru, and Constancia can you give us an idea on your your updated guidance for 2023, what does that assume with respect to the amount of pop culture or.
That's going into the plants.
I think as <unk>.
Andre sorry morning, Orissa and thanks for the question as Andre said that the next quarter is going to be focused on doing a lot of pre stripping there and we'll be preferentially mining it at constancia.
So I would say that we would push out in March we would start to see the higher grades coming from Pampa country gain.
And then in terms of the volume number.
I'm sorry could.
Could you repeat that.
Sure Yeah in terms of a volume number like should we be anticipating that time.
The tons milled from Papa can change sort of similar to 2022 or could even be less in 'twenty two.
In terms of total metal.
The years back loaded its about.
60% of the metal coming off at the backend of the year.
We're not going to see much public concho or until.
It's offset by about three months.
With where we're at right now because we are just presuming it right now so as we are getting going.
Okay, I don't have the absolute number in front of mirrors that.
But.
It is a reduction of what we forecasted last year.
But it's.
It's comparable in terms of.
I think we are close to last year at this point.
Or is the strategy here.
For some clarity around the guidance range, our guidance range contemplates the midpoint of our guidance range contemplates getting back into public Concho in March and so if you think about the <unk>.
Range.
Possibly from there.
And that's probably the outcome that is.
If you want to model that appropriately.
The way to do it.
Sure.
Okay. Thank you very much.
Our next question comes from Greg Barnes with TD Securities. Please go ahead.
Yes. Thank you, perhaps an easier way to think about this you've shifted 15000 tons of copper production from <unk>.
2023 to 2025 is that effectively what's happened.
I would say in general that's correct Greg.
Around snow Lake and <unk>, and the 5300 tons a day I'm not sure I understand.
Quite what the goal there is now I know you are shifting towards more high grade ore and monitoring new <unk>, but you're still planning to ramp up to 5300 tons a day or not.
Yes, I will let Andre provide a little bit more detail on that but in essence, the 5300 tons per day that we envisaged previously included included utilizing the ramp.
To get a bunch of the ore up.
We find that the costs associated with utilizing the ramp.
Actually squeeze the margins vary significantly are not an efficient use of our time and capital and money and so it is more cost effective to increase production through the shaft.
Yes.
Specific gravity of the.
The gold ore is lower so it means that you have to ship more volume up the after shots our efforts at the moment are really focused on in.
Enhancing production through the shaft, but we will still move towards 5300 tons per day Andre do you care to expand on that sure. So so Greg.
We are committed to increasing production. So the so the plan for next year is about an 8% increase over last year's production to differential that Peter was speaking to is the goal. There is a little bit later, and so maintaining where we're at right now the plan, which saw around 47 is already an 8% increase in volume movement.
So as we move forward into next year like Peter said.
It's inefficient to help the ramp I think in January we hold the 18000 tons and its a two hour round trip and our scoops are waiting for the trucks to come back and so we put a real heavy focus on getting more up the shaft. There's a current bottleneck is the short term bottleneck that we're working through right now.
We don't have a crusher underground lawler.
Grammar Muck through Grizzlies, and gold or is harder and so so we're we're working through a process to improve the grizzly design.
Better flow through there. So if you can imagine we're shipping 18000 tons up the hill at two hours.
Chip.
One hour a return trip from the stopes, we could easily double that production from 18 to 36 without it without increasing our fleet and the lake which is aligned with increasing to the to that end goal of 5300 tonnes per day, we're hitting it on days right now so we're hitting it on on.
On multiple days per months, but working through some of those little nuances.
Help us get to that level.
Yes.
So how does this change or does it change the production profile.
From Laidlaw.
Entirely clear.
So the production profile is continuing to ramp up through the course of this year. So by the end of the year, it's probably in the range of 4700 tonnes per day at the same time, while we're working on in there.
They're complementary so so we're also we're focused on cash right and so we're working on improving our dilution at the same time and sending less waste to surface and so obviously that counters production, but improves cash and so.
We're trying to get better grades up from the mine and moving less waste, which is aligned with our greenhouse growth.
While increasing throughput we have all the people in place to produce more and right now we're working through there's about five different process improvement things that are complementary in the complement each other in terms of improving our development getting the rig drilled inventory in place as we are increasing up to about 200000 tons.
<unk>.
Broken glass of raw material and removing that bottleneck at the Grizzlies, which allows us to use our trucks and improve the productivity of the store. So we're working on all those.
As we resolve those we will.
We'll have a better view on.
What is our final state what will be the $53 52 to 54, we're working we're working through that right now.
Okay.
Okay. Thank you.
Our next question comes from Stefan <unk> of Cormack Securities. Please go ahead.
Okay. Thanks, guys, just obviously great to see that you didn't necessarily exploration that calculator and Marine Arena can you just remind us what the in terms of actually getting drills into the ground there.
Permitting to be done there from an exploration point of view is that something that we could anticipate in 2024 is even longer winded than that.
Hi, Steven Thanks for that.
Yes, I certainly do think that you could expect here in 2024, so where we are right now as you've sort of done the surface.
Or the.
Environmental baseline work that's required to make.
Submit applications for those permits.
We have now.
We've submitted those applications or on the point of submitting those applications to the next thing that follows us.
The review of the applications by the government as well as the Consulta Previa process. So we expect to I mean, it takes time, but we expect to get those permits.
In roughly a year. So so certainly we would expect that right about this time next year, we would be.
We would have those permits but in the Meanwhile.
Additional surface.
Investigations continue.
Okay great.
There's still a fair bit of just sort of drill target definition to be done to really fine tune that anyways.
Yes, we've done a fair amount of that already we have.
Really the focus on our side has really been to see do we do sort of a much bigger drill program focused on the entire property or do we look for sort of focus on a smaller area that would act as a sort of a high grade.
Substitute or supplement to pump a culture of down the road. So those are the kinds of things that we are reflecting on but as far as the definition is concerned we're pretty advanced okay. Great. Great and then maybe just a very question I'm not sure how much you can actually say, but.
Answer to that one of the last slides. Thank you sorry that you continue to evaluate and execute on.
With opportunities looking outside the current portfolio are you seeing a lot of opportunities that may compete with some of the internal organic growth stuff Youre doing right now or is the focus really on sort of what you laid out in the presentation with the existing projects.
Yes look I mean.
So I think one of the things that I've been fairly consistent about is that I believe that we have an extremely skilled team when it comes to <unk>.
Highly efficient operations and World class development of projects and we do feel that we can create value from both operating and development stage assets.
We have this tier one development portfolio.
I've always said that we'd like to find the cash flowing operation assay operating asset that adds to our portfolio to diversify our business, but as I've also said those opportunities are extremely scarce.
But we always continue to look for them and we will see what happens.
Okay, great well, thanks, very much guys.
Our next question comes from Lawson Winder of Bank of America Securities. Please go ahead.
Thank you operator, and good morning, Peter Andre and Eugene Nice to hear from you all.
Concha mine plan change.
Can it possibly be taken as a positive and sensitive.
Moves out the copper production profile longer term and then there is also the constancia underground at our consideration what can you tell us about potential 2026 copper production from Peru could it and it will be similar.
<unk> 2025 as opposed to the drop off in production that was contemplated in the last life of mine study.
Good morning Nathan.
Thanks for the question the first part of it is yes.
I think you can take that as a positive.
The second part.
Is that one.
And potentially as the featured any moving to Constancia and <unk>.
And I think that.
So it maintains it maintains grades.
At least it maintains production.
But it is over time it does start to too.
To decline, but to your point is 2026, you should sort of see is continuing at a rate of about 100000 tons per year.
Okay.
So if I was to add to that we're also working on a number of other process improvement projects. So in our capital you would have seen that we were deferring the pebble crusher and one of them. We were planning a trial early this quarter around around rejecting titles from the mill, which are typically around one 5%.
And so we're looking at a trial of using it like a variable cutoff, where you increase the mine throughput reject the pebbles and get a much higher grade through the plant and so we're looking at that test in the near future and that is an opportunity for us to try to maintain.
Up in the 100000 tons per year of <unk>.
Copper post public Concho as well, we've been seeing some successes with a shovel.
So in terms of selectively removing waste from it.
From the ore at the at the face.
And we are.
The results to date have been looking promising it's still in the testing phase and we're looking to.
Put aside probably 50 60000 tons of material that we want to run through the mill and just verify that the grades that we're sorting our in line, but the combination of those those two projects bode well for us 2% better grade to the mill than what the current life of mine plan shows.
Okay. Thanks for that Bob.
And then with the cash cost guidance would you be able to help us.
By providing what the cost per ton assumptions are underlying those for both Peru and Manitoba.
Provided in the past.
Hi license at Eugene here.
Yes.
We have evolved in our in our cost guidance.
In prior years, you would notice that we provided operating unit cost guidance and then last year, we added cash cost guidance.
In an effort to streamline the multitude of metrics that we guide to we reverted to kind of one metric per mine in terms of cost guidance, though.
Cash cost per pound and in Peru, and cash cost per ounce of gold in Manitoba.
The unit cost and we will continue to report in our financials on a quarterly basis.
And.
They are roughly in line for 2023 as projected.
Where we're trending so approximately $12 a ton in <unk>.
In Peru, and approximately $200.
$200 Canadian per tonne in Manitoba.
Be it kind of a rough guide to what you got to sell similar levels, but we're going to ask.
So it kind of stopped providing specific guidance for that while continuing to report.
Okay, well that that there is very helpful. Oh, sorry go ahead I'll note that the cash cost guidance for 2023 is.
Lower than that in 2022, so I think the story would be that we're producing more copper in Peru, more gold in Manitoba and at a lower cash cost.
And a testament to the team's focus on cost efficiencies and despite the inflationary environment.
Yes, that's fantastic thanks, very much again, and thank you Peter and Andre.
Okay.
Once again, if you have a question. Please press Star then one.
Our next question comes from Dalton Barreto of Canaccord. Please go ahead.
Thanks, Good morning, Peter and team I wanted to start with just clarifying a couple of things that I heard earlier on the Q&A here Andre.
Andre So is it your intention to get to 5300 tonnes per day at Lalor at some point in time and if so when.
Okay.
Thanks for the question.
So the intention is is to get to the right number. So so we're optimizing a variety of scenarios and the goal is to make more cash out of out of Manitoba and so.
In terms of the capital for Manitoba, I think we're spending with $75 million on capital development, a key focus that we're working on in the next year is trying to reduce our <unk>.
Development costs by almost 20%, which will go right to the bottom line and improve the economics for future projects.
The mine itself, we had the labor and pleased to to move the material. So that's why we're running it at a little bit higher cost and where we're at right. Now is there are some bottlenecks at Cree.
<unk> up on us that we weren't anticipating particularly the fragmentation of the Google.
The fragmentation isn't bad by mining standards.
But because the orders so hard when we're putting it through the breakers, it's causing delays on our trucks.
And the delays on the trucks are translating to delays in its focus because we signed load our trucks and so what ends up happening is that right now through the hauling into surface to keep production going and so we think probably within the next.
There are two.
We're going to be at a stage, where we solve that bottleneck at the shaft.
We will start to see improvements in terms of our overall throughput going growing up the mine at a lower cost at the same time, we are balancing off the development in place to to have the drill rooms that are drill inventory we had.
Quite a.
Turnover of people if you will over the last six months with the transition of people from Flint plant to slowly and.
As well as within our management almost 50%.
It's quite a significant training exercise and so they are very skilled.
Miners the ones that are there are development layers for sure and so all of those processes are going on and so it will be towards the end of the year that you start seeing it like I said.
On the previous call.
We're definitely hitting them on days that we've seen days over 6000 tons per day and the key is we have to get that reliably and balanced in our process.
It will be towards the end of this year and probably into the next two to get to that peak level. If you will but it is a combination on.
It's not just chasing tons as we're chasing value in cash and so at the same time, while we're asking for more we're asking them to blast lasse to just mine the good stuff.
Here, Greg Gould and avoid dilution and save on tailings cost and milling cost in the late so so it's a balanced conversation we'll have a better view on that as we go into the next quarters.
Yes.
Milton.
Okay.
To that you'll notice that our plan for this year and our results in an increasingly.
<unk> guidance versus last year. This was planned last year and Thats due to some of these efficiencies as Andre talked about we're going to be running new brittania now above 600 tonnes per day, which is above nameplate and so optimizing the infrastructure, we happen to maximize that both production and at the lowest cost.
Maybe to reference a question that worst asked earlier today.
I want to clarify that we will be our plan is to mine public concha and increased tonnage of public content. This year, even in this base case would be about.
Somewhere around $50 to 60% more ore mined at pump a contra in 2023, then in 2022, even with the delays that we've noted to the logistics.
Thanks, that's helpful, but just.
Kind of put a pin in law I'd and so.
It sounds like you're focusing on the goal at the expense of in Arcata sank in overall tons.
At what point in time do you is that sustainable fish line and what point in time do you think you'll come up with the right answer.
So the answer is a sustainable the current resource base is more gold and base metals.
So in terms of that.
The balance right and right now that's why we're doing this fall.
Great recovery improvement programmer around getting better gold recoveries and copper recoveries because.
Today, we're producing more gold than what new Brit can handle even though I think in January peak close to 800 tons per day.
In terms of throughput at.
Denver tenure, so we're going to we're trying to push the limits here, but the challenge of our phase III now is we have a surplus of <unk> relative to these metals. So so it's not a sustainability question.
But in terms of in terms of the overall as we as we drive and increase our unit rates and bring our development costs down.
It makes it easier to develop some of those those base metal ores, because they are less margin than the globals.
Okay. Thanks, and then one more clarification on the mine plan at Constancia, Peter I thought I heard you say that.
Kind of post 2025 pump content youre going to move into Constancia in Mauritania and keep the production model reached a staggering 100000 tons, but I thought.
In Norway, I wasn't going to come online until call. It 2029, just wondering if you could square that away from me.
So the 2029, one would be underground.
But we would be going into constancia not in 'twenty three the open pit part of it in 2026.
Thank you and then maybe just one last one from me I just wanted to switch gears to top overall.
The PFS that you're Gonna Ashish published by the end of Q2 I'm. Just wondering have you guys decided on what your base case flow sheets can it be isn't going to be the same as the PPA, we talked in the past, but maybe a modular approach just wondering what youre going to present as your base case.
Yes, sorry.
Now we've completed all the engineering.
For all the cost estimates for a variety of different.
Treatment scenarios, whether it's shifting cline, whether it's whether it's the albion or some different pressure leaches and so with all the costs in place and the engineering completing right now we're going through the optimization of what makes the most sense. So so we're honing in on what what is the right number for us from.
Capital for the financials analytics. So we don't have that answer right, yet and thats that.
Optimization process that we're going through feeding into getting it by the end of Q2.
And to be sure that we are highly focused on.
Minimizing the capex and maximizing simplicity.
I think that we mentioned to you previously that we have.
<unk> modular rise.
Some of this stuff said the question really is is I think your question is probably aimed more at the sulfide.
Leaching process and whether we are likely to implement that so we're taking a hard look at that because there's a lot of value potentially in it and then the question remains is if we do it to what extent do we do it and we're working we're working all of those things at the moment.
Thanks, Peter and then maybe just one more on copper world.
On the site visit we talked about the opportunity to maybe bring phase two for given your understanding of what the permitting required.
Are you devoting any resources there any capital right now towards fast tracking what's ahead of them.
No. We are not we just believe that there is massive optionality there because like I said I think in my remark that this $2 $8 billion of NPV available to us upon a decision or upon sanction, but we are dedicating absolutely zero time and effort and expense on that right now with a focused solely on phase one.
Great Thats all from me guys. Thank you.
Thank you.
This concludes the question and answer session I would like to turn the conference back over to Candace Brule for any closing remarks.
Thank you operator, and thank you everyone for participating today do you have any further questions feel free to reach out to our Investor relations. Thank you and have a great day.
This concludes today's conference call you may disconnect. Your lines. Thank you for participating and have a pleasant day.
Yes.
Yes.