Q2 2023 First Quantum Minerals Ltd Earnings Call

July 26, 2023

Thank you for standing by this is the conference operator welcome to the first quantum Minerals Ltd second quarter 2023 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 would now like to turn the conference over to Benita told director Investor Relations. Please go ahead.

Okay.

Thank you Damian and thank you everyone for joining us today to discuss our second quarter results.

Oh, the call, we will be making forward looking statements and as such I encourage you to read the cautionary note that accompanies this presentation, our MD&A and the related news release.

As a reminder, the presentation that's available on our website and that all dollar references are in U S dollars unless otherwise noted.

On today's call will be treated in Pascal, our chief Executive officer with opening remarks, followed by really gotten horse, our chief operating officer, who will provide an overview of our operations.

Ryan Mcwilliams, our Chief Financial Officer.

View, our financial results and will then wrap things up after which we will open up the line to take questions.

With that I will now hand, it over to Tristan.

Yeah.

Thank you Vanessa and thank you everybody for joining us on our conference call today to discuss our second quarter results.

After what was a challenging start to the year. It is pleasing to report improvements in the second quarter, which Rudy will speak to in his review of operations.

As a result of our focus on productivity and cost to which we continue to seek to improve our second quarter EBITA of $568 million increase from the first quarter. Despite the weakness in the copper price, which Ron will provide more details in his financial review.

Overall, I'm pleased with our second quarter results without three largest operations hitting daily production record during the period.

And I am confident that our three main operations will set up well for the remainder of the year.

We do expect a stronger performance in the second half of the year and we remain comfortable without going although production will likely be at the bottom end of the range.

I would like to give an update on the concession contract in Panama.

As you're aware, we reached an agreement with the government Panama earlier this year.

Since this agreement the concession contract has successfully gone through the public consultation process in April and has been signed by both the government and the NPSA in June .

It is currently under normal course review with a national controller, which is the final stage before the contract is presented to the National Assembly.

We do expect endorsement from the National controller in short order and continue to expect the concession contract to be put in front of the National Assembly in the currently just food.

The Cobra Panama team continued to work closely with government to support the passage of the contract into law.

For the mutual benefit to Cobre, Panama and the people of Panama.

Before I hand over the call to Rudy to review operational results I would like to highlight that during the quarter, we published out 2022 ESG report.

Which was our seventh annual report on our sustainability performance.

Following the publication of this report we hosted our inaugural virtual ESG day that Atlanta, a practical and pragmatic approach on a number of ESG areas that are key to our business.

I'm very proud of the work, we do a cross sell business and the commitment of all our operations to the surrounding communities and their equipment to produce copper in a safe and responsible manner.

If you were unable to attend this event I encourage you to review the replay which is available on our website.

And with that I would like to hand.

I would like to hand, the call over to Rudy.

Yeah.

Thank you Justin.

After a difficult first quarter.

It is pleasing to see operations back on track in the second quarter with essentially all of achieving its highest monthly production for the year at night.

And corporate sentiment can change you choose the same records in June .

Total copper production for the second quarter.

It was approximately 187000 tons up over 48000 tons from the first quarter.

Grades increased at each of our three largest operations and throughput improved at both cobre, Panama and central.

That's called me about them all the operation delivered a strong performance in the second quarter with copper production of just over 90000 tons.

8% higher than the first quarter as grades improved and mill throughput continues to ramp up towards the 100 million tonnes per annum rate.

Our concern she copper production of approximately 35000 tons.

Well, it's nearly 6000 tons higher than the first quarter.

Production during the second quarter focused on mining capex at elevated benches that have historically had higher grades.

As a result guidance across all three circuits were higher quarter over quarter.

During the quarter, we encountered harder ore and the minor living area with high carbon content, which impacted crushing and milling rates.

This is being embraced by blending with softer ores from stockpile and by continued acceleration of ore from the mine 15 and 17 areas.

Sentinel reported a couple of production of 54000 tons in the second quarter, approximately 18000 tons higher than Q1.

Well money activities continued to be impacted by excess water from the heavy rains in the first quarter.

By midnight operation.

Operations steadily improved once it but we'll see what it does.

Today by allowing operations to regain access to higher grade ore.

Overall it was good to see an increase in production in the second quarter and we expect to see these improvements continue over the remainder of the year.

Which just amortization the guidance section of his closing remarks.

Thank you and I will now hand, the call over to Ryan to review the financials.

Thank you Rudy.

The copper price averaged $3.84 per pound in the second quarter down 5% from Q1.

This fall was as a result of the weak global industrial activity and accompanying recession concerns as interest rates continue to rise.

I know that this broader demand softness was balanced by reasonable electric grid and electric vehicle spending, particularly in China.

As such commodities like copper, which are tied to the energy transition outperformed traditional industrial commodities.

Despite the weak copper price in the second quarter total revenue increased 6% from Q1.

This was driven by increased copper sales of 27000 tons due to the higher production, which really described.

Sales were lower than production during the quarter, partly due to inventory levels returning to normal following a low Q1 as well as the timing of shipments, which will catch up over time.

As can be seen on slide 15, copper cone cash costs of $1.98 per pound were 12% lower than Q1.

This decrease was driven by higher production and lower fuel and explosive costs in the quarter.

This was partially offset by higher maintenance costs and lower byproduct credits due to the lower gold grades at Cobre Panama.

Our cost generally fall into three categories.

The first category include costs directly linked to commodity markets, such as fuel freight and explosives.

This category makes up roughly 25% of all costs and is an area, where we have seen strong cost improvements through the first half of this year.

The second category includes items, such as grinding media and reagents with a cost basis, partially linked to commodity prices holds into the cost space, but with a lagging effect.

These make up roughly 15% of all costs and improvements so far have been muted due to this lagging effect.

The last category includes labor services and fixed costs.

These these fixed costs include items, such as electricity are generally based on multi year contracts and items such as treatment charges, which are priced with annual contracts.

These costs make up roughly 60% of our cost base and it is in this category with costs remain sticky.

This is similar to what we're seeing in inflation globally as core CPI remains above broader CPI emissions.

Slide 16 highlights of Q2, EBITDA increased by 10% to $568 million driven by higher revenues.

Net earnings attributable to shareholders increased to $93 million and adjusted earnings per share increased to 12 cents.

Moving on to our balance sheet.

During the quarter, we announced the offering of our first Standalone a T S and you know this.

One $3 billion issuance resulted in a 50% increase in our weighted average debt maturity.

The proceeds were used to pay down $970 million in the existing revolving credit facility and $300 million redemption of the company's outstanding 2025 senior notes.

This provides us with the continued strong liquidity buffer, which is important given the global macro uncertainty.

Our net debt decreased by $130 million to $5, six 5 billion due to higher EBITDA and favorable working capital movements.

Also during the quarter. It was pleasing to see the government Zambia reached $6 $3 billion of debt restructuring deal with external government creditors. This unlocks another tranche of IMF funding and is expected to benefit the fiscal and monetary environment in Zambia, and therefore sovereign credit rating.

Benefits, Zambia, and first quantum as an improvement in the Zambian rating decreases the country risk components of our corporate credit rating.

Lastly, our continued confidence in our underlying business has led to the declaration of an interim dividend of eight cents per share based on a 15% of cash flow dividend policy. This will.

We paid off in September 19th.

And that brings the finance Tech center in and I'll now hand, the call back to Kristen.

Thanks, Ron.

As Rudy noted the second cortisol production improvements and we are well set up.

For this to continue in the second half of the year.

At Cobre, Panama. The C. P 100 expansion project is ramping up well already achieving brief periods at full design capacity and on track to exit the year at a consistent rate of 100 million tonnes per annum.

In addition, we continue to expect grades to continue to improve over the course of the year and as such we are maintaining our copper production garden, Chicago, Panama at 350 to 390000 tons.

Construction of the moly plant is progressing well with completion and commissioning expected by the end of 2023, the first molybdenum concentrate production in the first quarter of 2024.

That concern she second quarter started to see the benefits of changes in mining fleet deployment and mining on the upper elevations of 915, and 17, which have had historically high grades.

As well our extensive drilling campaign has allowed for better visibility of the mining areas as well as the grades in their stockpiles.

We continue to expect copper production to be we know guidance range of 130 to 150000 tons, albeit the bottom end of the range is more likely.

Production will remain at these lower levels until the S. Three expansion project comes online in 2025.

Overall procurement for this project is approximately 33% committed several long lead items are on track for delivery in the coming weeks, including the first hole trucks and the construction works are already underway are expected to accelerate into next year.

We are confident that we remain on schedule for first production from the S. Three expansion in the second half of 2025.

Yeah.

At Sentinel with the groundwater now under control, we have already begun accessing the higher grade ore at the bottom of the pit.

Well, we have to deploy the drilling contractor for July to work alongside our own drill rigs to increase stocks are broken material.

We expect milling rights and grades to continue to improve for a stronger second half of the year. However, taking into account the challenges we encountered in the first quarter production for the year will likely come in at the lower end about guidance range of 260 to 290000 tons.

Yeah.

At enterprise and important milestone was achieved with first production of nickel concentrate achieved in the second quarter as.

As well the process plant temporarily demonstrated nameplate capacity during the quarter.

The remaining focus will be to ramp up to commercial production over the remainder of this year and with full ramp up in 2024.

Yeah.

At the Los Crucis on the Grand project, well all necessary permits are now in place for project approval Technical and study work continues the project continues to be evaluated taking into account the current economic conditions and the company's debt reduction objectives.

This brings to an end my prepared remarks, however, before I open the lines for Q&A I would like to take this opportunity to commend all the teams at our operations during the first quarter each operation faced its own unique challenges and the team swiftly responded bringing the operations back on track.

This has resulted in improved second quarter and I believe places the company in a position for a stronger second half of the year.

With that we will be happy to take questions now thank you.

Thank you well now begin the analyst question and answer session analysts are permitted to ask one question and one follow up and they are welcome to rejoin the queue. If they have more kids.

He joined the question queue Press Star then one on your telephone keypad, you'll hear a tone acknowledging your request if youre using a speakerphone. Please pick up your handset before pressing into Q.

To withdraw your question. Please press Star then two.

My first question is from all that work it out with Scotiabank. Please go ahead.

Hi, good morning.

<unk> is around set no.

Maybe walk us through what.

What gives you confidence that that operation can still meet the low end of.

Got into your expectations for this year just based on the weak first half.

Sure well, let me give you the high level and then really can can jump in with some detail.

So as we sit on the last call, we still had water in the pit in Sentinel really towards the end of April and into early may So what we've seen so far this quarter and the production result.

54000 tons reflects really a strong operation from the two months of May and June and July we saying that we're very much on track.

As we sit in the first quarter call the lack of access to the lower areas of the pit really meant that we were focused on lower grade areas in the phase two area of the pit and now and we were on site just in the last couple of weeks.

The working areas are the benches and the roads and now in very very good condition, particularly in the bottom of the pit and we now have very good grades.

So up to one 1.5% copper and in the bottom of the pit and that was always.

Tended to come out this year, it's just that the proportion the sequence across the year is now shifted so we will see the majority of that in the second half Rudi do you want to add anything to that.

Oh, just could just and the important thing is that as we as we said at the end of the first quarter.

Pre stripping all the stripping those areas associated with high grade was already done and its just a matter of getting rid of the water.

We will release additional.

Highlights, it's seeing very positive results into the first month of the third quarter.

We have absolutely no reason not to be positive about.

The production that's coming out of a seem to know for the remainder of this year.

So it certainly is as far as preparations are concerned for the upcoming wet season in November .

Additional.

Bumping capacity has been employed.

Last year, we couldn't pump any of the contact water to our to the environment without seeing the necessary neutralization.

Principally been removed by installing a facility to pump all of that water to the process plant. So we won't have any any restrictions and bumping all today.

And the efforts at all.

Turning up the the northern wall full sitting is up between 24 has progressed exceptionally well so unless there is absolutely no reason for us.

Not to believe that we will get through this year.

The old older shovels or hold down.

Things are looking good day.

Okay. Thanks, Rudy and just as a follow up those changes that you've made with respect to water treatment does that suggest that you expect a more balanced profile next year with respect to production through the first half of the year versus second.

It's exactly that.

Okay.

The next question is from Jackie principles, Kim with BMO capital markets. Please go ahead.

Thank you very much actually Oh, that's my first question is a follow up to Orange question.

In the Ah in the MD&A that you put out last night.

Are you talking about fragmentation issues that tried and and that you're deploying a contractor.

To help with some of the drilling and mining can you talk a little bit about how you expect.

That contractor well well impact the costs.

Oh, and I guess that enterprises, well and are you seeing it in the release that you're expecting that will start in July can you talk about.

How long do you expect that contract there will be a good.

0.4.

Rudi do you want to take that one.

Yeah no worries.

Hi, Jackie.

Yeah, it should be.

<unk>.

We decided to go the route of additional buildings in the central pit and has really brought not only to give.

The operations and opportunity.

To get ahead of some broken stocks.

We are planning to utilize the additional three rigs for a period of about six to nine months and then we will let them go.

It's really just to help.

<unk> fleet. It come ahead of the game, where we lost a bit of opportunity with it last year or the beginning of the year. When it was quite weak and we couldnt get those little leagues in.

And I did as.

As far as costs are concerned the contracted as the broad themes on drilling at some of the rights and in some cases slightly lower cost than ourselves. So we don't expect to see any real increase in drilling cost, but what is more important is that we will see a substantial increase in broken stuck.

Which will allow for the more efficient seeding of the crushes.

The millennials, which is essential.

Thanks, very much really appreciate that and maybe as a second question.

Can can I ask.

If you can comment at all on that progress in.

In the Panamanian government, a Panamanian National Assembly to approve your your proposed changes to the mining code.

Do you have any sense on when.

When that comes up in the in the debate or discussion or or when we might expect to see a resolution on that thanks.

Thanks, Jackie I'll take that one yeah.

Contract is currently sitting with a national controller.

And that's an administrative process to validate the Kansas signature bond the government on the contract that was signed and that's the last step before going to the National Assembly.

The current sitting of Parliament commence on the fifth of July and our understanding is that in the last three four weeks I think.

Working on the establishment of the various committees. So the finance committee and so on and the processes that the contract goes into the committee for reading and then it passes from the committee into into the full house and the National Assembly. So that's the sequence. We believe is Susan <unk>.

And by the National Controller, which we believe will happen in short order.

Then going into the National Assembly read by the Committee and then put the bites and invoicing in the house.

So there's no reason to expect that when that.

As we said in this current sitting of Parliament.

Yeah.

The next question is from Ralph Cassini with eight capital. Please go ahead.

Okay.

Thanks, operator, good morning.

Two questions. The first one is on the Cobra Panama It looks like just a shade under 92 million tonnes per annum is the run rate as the average for Q2 just wondering.

Where you are as they are at the exit rate of Q2 or even in today's terms interest you know how closer are we to getting to 100 on a steady state basis, even before the year end target.

Yes, thanks, Ralph So really that's the combination question at the front end of the circuit around the efficiencies generated by the screening plant and that's the focus and the optimization.

Work, that's going on we're very very happy with the.

The the contribution that ball mill six is already making the process water upgrades have since.

Since the last of year.

End of last year has meant that even at these higher throughput rates, we've seen very good recoveries.

And so it really is around the optimization of that screening plants with secondary and pebble crushing.

So that's going well, we have seen a day's way, we exceed the normal throughput rights and that target of 100 million tonnes per annum and it's now a matter of a streaming that sequence together and alongside.

Grade coming out of the out of the pit, we do see variations across the pit some areas are harder than others. Some are more confident than others.

And also we have areas, where this clay content that you have.

As an impact on on that screening part so that that's why the optimization.

As important and it takes that time, and we're very confident of hitting that 100 million tonne per annum.

We are not saying that we will achieve that anytime soon but if we do that then that would be a bonus but at this stage. We we continue to hold to what we said which is by the end of the year.

Yeah got it thanks, and if I can ask a second question maybe for Ryan.

On the Zambia IMF deal you talked about corporate credit advantages and just wondering if you're seeing some of those savings on the recent senior notes refinancing where you're seeing that savings on the jurisdictional component on the terms of those notes because that's something that we can infer from some of the rates that we're seeing on those coupons for that refi.

Yeah, Hi, Ralph So this is the first time, we've issued notes that are at better rates than what the JP Morgan high yield indexes.

Indexes, but I think that's driven by a combination of factors, it's driven by the more than $2 billion in debt reduction over recent years, it's driven by the constructive relationship non tastes of the government of Panama and its driven by the fact that we're on track with all brownfield projects certainly the dynamic in Zambia and the positive part that the government has.

Deliver that IMF deal and continues to make progress in part of the district that restructuring is part of it.

There's still more work to go there with the government and we hope we think that will help in the future, but I'd say the Zambia piece is a part of it but it is together with other factors that helped that bond issuance.

Okay.

The next question is from walnuts my smaller with Morgan Stanley . Please go ahead.

Hello, Thanks for taking my questions. So the first question is on concerns. She did you mention in the MD&A and in the prepared remarks.

How about the processing challenges due to the ore hardness and the fact that you had to use a stockpiled material.

Is this something you expect to persist in the second half of the year.

Yeah.

Really you can say it really doesn't go ahead Rudy.

Yeah, Yeah absolutely.

<unk>.

Hey.

Currently we are exploring some very hard.

Material and in the main living area of the pit.

Yeah.

And it is offset by mining as we stated in the MD&A and also Nicole linear by going up into <unk>, 17, and 915, where we have some higher grade and they see a.

Good material.

But also.

The strategy with our Ace III coming on.

And in a year and a half T. As time has always been to also incorporate all stockpiles.

And when we have the advantage to use those stockpiles and offset some some throughput issues through the crushers and the most by using those stockpiles will continue to do so we have drilled those stockpiles in the last six months and we now know quite well we.

With the great ease in those stockpiles, where there isn't any guidance. So it's not just a haphazard feeding the stockpiles it actually from spud of the strategy.

It's working well it's consensus at the moment.

Okay, great. Thanks for that and just a follow up on the corporate bond them of Frisco, the talks or what's the when does the current legislative terminal C Nashville Assembly and.

Hi, young so its first of October when the current Tim.

And.

The next question is from Chris Let's FEMA.

So Linda Tsai from Jefferies. Please go ahead.

Hey, Thanks, guys for taking my question. So I have a bit of a bigger picture question regarding your strategy and how that might change if commodity prices change or it seems like strategy now is delever the balance sheet.

And conservative approach to growth.

But you obviously have a pretty big organic growth pipeline, what if we have a period, where copper prices go a lot higher than people expect how does your strategy change because if we think about your project pipeline. The Gronya and Akira are kind of tied up with community relations work that you need to do.

Tokotoko this fiscal stability that you need to focus on before you can really start putting a lot of capital there. So what happens to cash flow. If you can delever more quickly.

In the event of higher copper prices, you develop a squishes underground, but what about beyond that is a capital returns or is there anything you can do in the portfolio to accelerate some of the investments and then I have a follow up question to that as well.

Sure Chris. Thank you I mean, the first thing to say is look we we certainly understand that.

The structural shape of the copper market and and the challenges on supply to what looks like.

Stronger and stronger demand in the future, but as Brian said in his comments in the near term. We also need to plan and it seems in the last few days that the outlook is improving but certainly would make prudent sense to plan for.

Downturn over recessional continued challenges on inflation. So I look at first responsibilities to deliver and not to get ahead of ourselves on that in terms of making sure. The plan for this year is in solid place and into next year and certainly that's the focus as Rudy has sit out there but yeah.

Beyond that we believe that first quantum is an enviable.

Brent Brownfield and Greenfield portfolio, and certainly has the team in order to be able to put those into play if.

If we do see and that rosy scenario comes to bear you know, we have the assets and the capability to deliver that but we would only do that as we said many times from a position with our balance sheet is in a strong position. So we did set out our capital allocation policy.

It's in the presentation and sets out pretty clear are the focus on on improving the balance sheet.

And then investing in the business, but also making.

A return to shareholders well to check in that upside if it if it does come to bear.

And then Conversely in a weaker market what levers would you pull to make sure the business stays structurally intact.

Thanks, Chris Yeah look I think that's an important question as I said, it's really around delivery on the plan.

If we do see significant compression you know what we would say is Ron sit out in terms of our cost structure. We would expect you know some of those more sticky elements to pull back as well that and margin. We've noted the resilience of the copper price even as you know during this challenging time.

And we would see.

Seek to push hard on our supply and our cost control if things get really squashed, then we would be looking at and how we are spending capital in the business and that would be the next lever to pull but in the meantime, as I said, it's really ran delivery on a production plan.

Revenue and copper generation is what gets us there and achieve the balance sheet deleveraging that we want to see and the need to.

The next question is from Greg Barnes with TD Securities. Please go ahead.

Yes. Thank you Tristan just a comment from you around the risks.

As the concession agreement in Panama. It goes through the National Assembly in these various committees.

Can the committees or do they have the power to change some of the terms of the agreement or is this more of a formality.

Yeah, Greg I wouldn't cite the formalities, but the processes that the committees through the reading and then it goes from the comedian to the full house, but no. There's no. It's just a yes or no.

Right.

You know the detail of that in terms of the various deputised OS and so on and so where that would lawn you know that's part of what the government is focused on the government and the company are aligned in terms of the PR effort and moving that forward, but it is a democratic process I would say that we're confident but it is.

A democratic process.

But everything that we're seeing at the moment gives us reason to believe that we expected would pass and we would like to see that in your future.

Okay.

Just a follow up question also on co pay but for Ryan.

Youre hedging on the coal for the power plant comes to an end at the end of this year, what's the thinking around protecting the coal price beyond 2023.

It will Sydney.

Consider future coal hedges the current hedge program has been successful in semi protected the costs around power generation.

Al.

Guidance for next year assumes a coal price of around $150 a ton and that's what's embedded in the C. One costs, if we're able to get a lot of coal prices. It's been more recently in the spot market.

You'll see better than expected cost coming out of Cobra and Conversely, if the coal prices are about $150 it'll move the other way.

It is a discussion with the suppliers and I think that'll just be will go into those commercial discussions if there's essential contract for us and then to put in place will put it in place. If there's not we're also comfortable buying coal off the spot market.

Time coal does become a smaller portion of the cost of that Greg as we move to renewables have already got that expansion project part by renewables and disclose that by 2030 will be fully off coal. So it's an important question, but of less importance with time.

The next question is from Ed Brucker with Barclays. Please go ahead.

Thanks for taking the question today My first one was just on the recent a recent new deal historically, you've waited Ah.

Till it to refi bonds really kind of 12 months ahead of when they mature.

So just wanted to get your thoughts on why you're proactive now what was the rationale coming to market are for that bond, especially in the context, where where our rates are right now.

Sure.

So we'd actually redeemed $850 million of the 'twenty 'twenty four is before the end of the first quarter and we drew from the revolver.

To fund that redemption to so effectively to some extent. This most recent redemption was partly for the 2025 $300 million, but the other way to think about it is the majority the balanced 1 billion most of that actually went to the 'twenty 'twenty four is with which we had recently redeemed so fairly consistent strategy.

With what we've done previously.

Got it and then.

Look Ronny acquisition.

With small and and you know I'd say prudent there's some capex on the backend but yeah.

It seems like there.

And the capital allocation plan, there's and organic projects that you could look at I just wanted to get your thoughts on a more acquisitions.

In the near I guess or a medium term are how large are looking or if it's more of a an afterthought.

So we tried a fairly consistent approach to acquisitions, where we monitor opportunities out there through the prism of where can we add value to a situation where do we have the skills experiences from what we've done before to unlock value in Sydney with Laguardia, It's a challenging project, but we think they're learnings from within our business that.

You can apply to it for the benefit of both us and Rio Tinto and we will continue with that approach and that means opportunities might come up and we might do acquisition suddenly if no opportunities come up we're very comfortable not doing any acquisitions given the strong.

Pipeline that trusted mentioned, but where we do them. It's generally going to be focused on where can we take our existing skills and capabilities to unlock value traditionally in copper projects for investors.

The next question is from Bryce Adams with CIBC. Please go ahead.

Thanks for the call several questions already on the production front. My question is on cost performance, you're now guiding to the high end of causes for this year should we be expecting that cost pressure.

Impact the outlook for 'twenty, four and 'twenty 'twenty five.

Or or not at this stage.

Yeah, Hi, Bryce.

Main reason to guide towards the top end of course is because we're guiding towards the low end of production. So the main driver. There is just less units of production embedded in that C. One cost guidance, particularly where we've seen lower gold production through the first half of this year.

Well, we'll go through our planning process for next year Sydney in some areas as we noted we've seen things like the oil price come down versus what we had in all.

For this year in the next two years, so that would be a tailwind as we think about costs in the outer years.

But we will do that work for the balance of this year and then put out that guidance in early next year.

Okay. Thanks, the follow up is just to clarify on the on the Panama National Assembly did you say or did I hear they're sitting until October 1st or October 31st.

Hi, Brian Yes first of October October the first.

Okay. Thanks, so much.

The next question is from Dalton Barreto with Canaccord. Please go ahead.

Thanks. Good morning, everybody just one question for me trusted in the past, you've said that you'd like to add a third leg of production somewhere.

You know in addition to Panama, Zambia, I guess I'm, just wondering is that still a priority and then do you think it can come from your existing pipeline do you think you'll have to look externally for it. Thank you.

Yeah.

Thanks Dalton.

The the continued rationale to diversify.

<unk> and Zambia operations in Panama, and the third leg would continue to diversify that.

We think that's prudent in terms of the volatility of our earnings but also in terms of the share price and so on as well.

Hum.

The Greenfield pipeline that we have is very competitive I'm, particularly excited about the deal with Rio Tinto that we expect to find laws very soon thing to look the Grand acquisition.

And that is a world class ore body, one of the largest unexploited copper ore bodies in the world, but that will take some time to go through the validation studies in order to deliver that project in the meantime, we are looking and continue to look closely at Tucker Tucker in Argentina, and I was there during the quarter.

On the ground just to understand the value of the project, but also the country and the appetite for the investment that it might have as it comes up to the elections in October .

There's always questions around Argentina will be answer biology in China. The project is in good standing and it's really about you know the the administration that goes forward as to what how they see investment into the country, but.

But we do think that there's a strong pull for copper in the country and we know it.

The level of other projects and other opportunities for Argentina in that regard and that would be very strong for the country, given where the economies at the moment.

So those are very competitive, but as Ron said you know we do look at other opportunities elsewhere from time to time, but we do think we also have the people that can deliver those projects in the near term.

Yeah.

That's great. Thank you Tricia.

Okay.

This concludes the question.

And answer session I'd like to turn the call back over to Tristan Pascoe for closing remarks.

Thanks, So for thank you everyone for joining us today, and I would like to wish you all an enjoyable and restful summer I look forward to the next update with our third quarter results.

This concludes today's conference call you may disconnect. Your lines. Thank you for participating and have a pleasant day.

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