Q1 2024 Ero Copper Corp Earnings Call
Yes.
Operator: Thank you for standing by. This is the conference operator. Welcome to the Ero Copper First Quarter 2024 Operating and Financial Results Conference Call. As a reminder, all participants are in listen-only mode, and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. To join the question queue, you may press star then 1 on your telephone keypad. Should you need assistance during the conference, you may signal an operator by pressing star then 0. I would now like to turn the conference over to Courtney Lynn, Senior Vice President of Corporate Development, Investor Relations, and Sustainability. Please go ahead.
Thank you for standing by this is the conference operator, welcome to the ERO copper first quarter 'twenty 'twenty four operating and financial results Conference call. As a reminder, all participants are in listen only mode and the conference is being recorded.
Courtney R. B. Lynn: After the presentation, there will be an opportunity to ask questions.
Operator: She joined the question queue. You May Press Star then one on your telephone keypad should you need assistance. During the conference you may signal, an operator by pressing Star then zero.
Operator: I would now like to turn the conference over to Courtney Lynn Senior Vice President of corporate development Investor Relations and sustainability. Please go ahead.
Courtney R. B. Lynn: Thank you, operator. Good morning, and welcome to Ero Copper's first quarter earnings call. Our operating and financial results were released yesterday afternoon and are available on our website, as are our financial statements and MD&A for the three months ended March 31st, 2024. On the call with me today are David Strang, Eros Co-Founder and Chief Executive Officer, Makko DeFilippo, President and Chief Operating Officer, and Wayne Drier, Chief Financial Officer. We will be making forward-looking statements that involve risks and uncertainties from which actual results may differ materially.
Courtney R. B. Lynn: Thank you operator.
Courtney R. B. Lynn: Good morning, and welcome to Arrow Copper's first quarter earnings call, our operating and financial results were released yesterday afternoon and are available on our website as are our financial statements and MD&A for the three months ended March 31st 2024.
Courtney R. B. Lynn: On the call with me today are David Strang, <unk> co founder and Chief Executive Officer, Mark Oki, Filippo President and Chief operating Officer, and Wayne Drier Chief Financial Officer.
Courtney R. B. Lynn: We will be making forward looking statements that involve risks and uncertainties actual results may differ materially.
Courtney R. B. Lynn: We would refer you to our most recent annual information form, available on our website, CDAR and EDGAR, for a discussion of the risk factors of our business and their potential impact on future performance. As a reminder, and unless otherwise noted, all amounts are in U.S. dollars. I will now pass the call over to David Strang.
Courtney R. B. Lynn: We would refer you to our most recent annual information form available on our website SEDAR and Edgar for a discussion of the risk factors of our business and their potential impact on future performance.
David Maxwell Strang: As a reminder, unless otherwise noted all amounts are in U S dollars I will now pass the call over to David strength.
David Maxwell Strang: Thank you, Courtney, and thank you everyone for joining us today. We've had a great start to 2024, driven by the strong execution of our growth strategy coinciding with highly favorable market conditions for copper and gold. During the quarter, copper prices rallied to their highest levels in nearly two years, fuelled by rising demand expectations, while the supply outlook remains extremely constrained, as evidenced by our recent treatment and refining charge negotiations, where we locked in two-year TCRC terms in the low teens on roughly a third of our projected concentrate production. At the same time, due to macro and geopolitical uncertainty, gold prices hit all-time highs.
David Maxwell Strang: Thank you Courtney and thank you everyone for joining us today.
David Maxwell Strang: We've had a great start to 2024, driven by the strong execution of our growth strategy coincide with highly favorable market conditions for copper and gold.
David Maxwell Strang: During the quarter copper prices rallied to their highest levels in nearly two years.
David Maxwell Strang: Why do you think demand expectations, while the supply outlook remains extremely constrained.
David Maxwell Strang: As evidenced by our recent treatment and refining charges negotiations when we locked into your TCE Aussie term in the low teens and roughly a third of our projected concentrate production.
David Maxwell Strang: At the same time due to macro and geopolitical uncertainty gold prices hit all time highs.
David Maxwell Strang: These positive trends in both copper and gold markets arrive at an opportune time, as we are on track to reach our highest annual production levels ever. This includes anticipated contributions from the Tukama project, which is now approximately 97% complete. I'm also happy to share that commissioning at Tucum is advancing ahead of schedule, and as a result, we are narrowing our projected timeline for initial production to early Q3-24. While Makko will delve into more detail on our progress at Tokoma, I want to express my deepest gratitude to our team on the ground, which just marked over 5 million hours of work completed with zero lost time injuries. This is an incredible achievement, and I commend our leadership team at Tukama'a for the strong safety culture built over the past two years.
David Maxwell Strang: These positive trends in both copper and gold markets arrived at an opportune time.
David Maxwell Strang: As we are on track to reach our highest annual production levels ever.
David Maxwell Strang: This includes anticipated contributions from that took them a project, which is now approximately 97% complete.
David Maxwell Strang: I'm also happy to share that commissioning of two class advancing ahead of schedule and as a result, we are narrowing our projected timeline for initial production to early Q3 'twenty four.
David Maxwell Strang: While macro will go into more detail on our progress that took about I want to express my deepest gratitude to our team on the ground, which just marked over 5 million hours of work completed with zero lost time injuries.
David Maxwell Strang: This is an incredible achievement and I commend our leadership team it took them off of a strong safety culture built over the past two years.
David Maxwell Strang: As we rapidly approach an important inflection point in our consolidated copper production profile, I'm also pleased to report that our Giavantina operations are on track to deliver record gold production again this year. In fact, during the first quarter, we produced 18,234 ounces, representing an increase of nearly 5,800 ounces, or approximately 47%, compared to the first quarter of 2023. This increase is attributable to the successful completion of the NX-60 Growth Initiative last year as well as higher-than-expected gold grades, which averaged over 16 grams per ton during the period.
David Maxwell Strang: As we rapidly approach an important inflection point in our consolidated copper production profile I'm also pleased to report our <unk> operations.
David Maxwell Strang: On track to deliver record gold production again this year in fact during the first quarter. We produced 18234 ounces, representing an increase of nearly 5800 ounces or approximately 47% compared to the first quarter of 2023.
David Maxwell Strang: This increase is attributable to the successful completion of the Nx 60 growth initiative last year as well as higher than expected gold grades, which averaged 16 grams per ton during the period.
David Maxwell Strang: This performance also resulted in unit operating costs for the quarter that were below our full-year guidance. More specifically, C1 Cash Cross averaged $395 per ounce in the quarter versus our 2024 guidance range of $550 to $650 per ounce. And all-in sustaining costs per ounce averaged $797 versus a full-year range of $1,050 to $1,150 per ounce. Given the continuation of positive grade reconciliations.
David Maxwell Strang: This performance also resulted in unit operating costs for the quarter that were below our full year guidance.
David Maxwell Strang: More specifically he will.
David Maxwell Strang: Cash costs averaged $395 per ounce in the quarter. This is up 2024 guidance range of 550 to 650.
David Maxwell Strang: Yes.
David Maxwell Strang: And all in sustaining costs per ounce averaged $797 versus a full year range of 1050 to $1150 per ounce.
David Maxwell Strang: Given the continuation of positive grade reconciliations and additional visibility into minable grades for the remainder of the quarter from in the ore development channel samples, we are raising our 2024 gold production guidance from 55 to 60000 ounces.
David Maxwell Strang: Additional visibility into mineable grades for the remainder of the quarter from in-ore development channel samples, we are raising our 2024 gold production guidance from 55 to 60,000 ounces to a range of 60,000 to 65,000 ounces. Consequently, we are guiding to the low end of our full year gold C1 cash cost and all-in sustaining cost guidance. With gold prices continuing to hit all-time highs, we are well positioned to deliver record operating margins and cash flows at $0.17.
David Maxwell Strang: So a range of 60 to 65000 ounces.
David Maxwell Strang: Consequently, we are guiding to the low end of our full year gold C. One cash cost and all in sustaining cost guidance.
David Maxwell Strang: With gold prices continuing to hit all time highs, we are well positioned to deliver record operating margins and cash flows. It's 17 of this year.
David Maxwell Strang: At our Caraiba operations, our performance during the quarter was largely in line with our expectations. From a strategic execution standpoint, we made good progress at the new external shaft, where we remain on schedule to reach a projected depth of approximately 600 meters by year-end. Upon our anticipated project completion at the end of 2026, this shaft is expected to reach a depth of over 1.5 kilometers, making it the second deepest shaft in South America.
David Maxwell Strang: At our <unk> operations.
David Maxwell Strang: Four months during the quarter was largely in line with our expectations.
David Maxwell Strang: From a strategic execution standpoint, we've made good progress with new external shift where we remain on schedule to reach a projected depths of approximately 600 meters by year end.
David Maxwell Strang: Paul now anticipated project completion at the end of 2026. This shift is expected to reach a depth of one five kilometers, making it the second deepest shaft South America.
David Maxwell Strang: From an operational standpoint, we started to see the positive impact of the recently completed Caloriba Mill expansion during the quarter, with tons processed up over 5% compared to Q4 at approximately 853,000 tons. This increase in mill throughput partially offset a planned decrease in mined and processed copper grades that was compounded by delays in underground development during the period. As a result, a higher portion of oil was mined from lower grade stokes than planned, resulting in average process copper grades of 1.0.
David Maxwell Strang: From an operational standpoint, we started to see the positive impact of the recently completed cudahy. The mill expansion during the quarter tons processed up over 5% compared to Q4 at approximately 853000 tons.
David Maxwell Strang: This increase in mill throughput, partially offset a planned decrease in mind.
David Maxwell Strang: And proceeds copper grades that was compounded by delays in underground development during the period.
David Maxwell Strang: As a result.
David Maxwell Strang: The portion of ore was mined from lower grade stopes than planned.
David Maxwell Strang: Resulting in average processed copper grades of one.
David Maxwell Strang: 0.08% and production of 8,091 tons after recoveries of approximately 88%. At the same time, we benefited from the sale of copper concentrate inventories carried over from the fourth quarter, resulting in copper tons sold being nearly 1,400 tons higher than tons produced during the quarter. With respect to full year production, we are reaffirming our guidance range of 42,000 to 47,000 tons, with production expected to be weighted towards the second half of the year
David Maxwell Strang: 0.08% and production of 8091 tons after recoveries of approximately 80%.
David Maxwell Strang: At the same time, we benefited from the sale of copper concentrate inventories carried over from the fourth quarter, resulting in carpet tons sold being nearly 1400 tons higher than tons produced during the quarter.
David Maxwell Strang: With respect to full year production, we are reaffirming our guidance range of 42 to 47000 tons.
David Maxwell Strang: With production expected to be weighted towards the second half of the year.
David Maxwell Strang: Conversely, our copper C1 cash costs, which averaged $2.30 per pound produced during the quarter, are expected to decrease throughout the year due to projected sequential increases in copper grades and production over the next three quarters. As a result, we are reaffirming our full year of cost guidance at CARIBA of $1.80 to $2.00 per pound. It is worth noting that there is potential for unit costs to improve further as we continue to lock in more favorable concentrate treatment and refining charges than we had assumed in our guidance.
David Maxwell Strang: Conversely.
David Maxwell Strang: <unk> cash costs, which averaged $2.30 per pound produced during the quarter are expected to decrease throughout the year due to projected sequential increases in copper grades and production over the next three quarters.
David Maxwell Strang: As a result, we are reaffirming our full year cost guidance of cutting your budget of $1 80 to $2 per pound.
David Maxwell Strang: It is worth noting that there is potential for unit cost to improve further as we continue to lock in more favorable concentrate treatment and refining charges than we had assumed in our guidance.
David Maxwell Strang: Before I pass the call to Makko for a deeper dive into project execution, I will share a few highlights of our first quarter financial performance. As mentioned, we experienced a fortunate culmination of high copper and gold prices. Record production operating margins at Chaventina and the sale of copper concentrate inventories carried over from the last year at Calaiba. Collectively, these factors drove solid first quarter cash flow from operations of $17.2 million and adjusted EBITDA of $43.3 million. I'll now hand the call over to Makko, after which Wayne will provide more detail on our first quarter financial results.
David Maxwell Strang: Before I pass the call to macro for a deeper dive into project project execution I will share a few highlights of our first quarter financial performance.
Makko: As mentioned, we experienced a fortunate culmination of higher copper and gold prices record production operating margins at <unk> and the sale of copper concentrate inventories carried over from last year.
Makko: Collectively these factors drove solid first quarter cash flow from operations of $17 $2 million and adjusted EBITDA.
Makko: $43 3 million.
Makko: I'll now hand, the call over tobacco, after which Wayne will provide more detail on our first quarter financial results.
Makko DeFilippo: Thank you, and good morning all. As we turn the corner towards the finish line on the construction phase of the Chukuma project, I want to reiterate what David said and recognize our site leaders, our operational teams, and our third-party partners on the Chukuma Project for their continued commitment to safety. Since greenlighting the Chikama Build, our top priority as an organization has been to deliver the project safely. While we have had many successes at Tucumba over the past few years, I speak for all of us here at Aero in saying that our performance on safety is what we are most proud of.
Makko: Thank you and good morning all.
Makko DeFilippo: As we turn the corner towards the finish line on the construction phase that you come out project I want to reiterate what David said and recognize our site leaders our operational teams our third party partners for their continued commitment to safety.
Makko DeFilippo: Seth Green lighting that you come up with our top priority as an organization has been to deliver the project safely.
Makko DeFilippo: While we have had many successes to come out over the past few years I speak for all of US here at Arrow, and saying that our performance on safety and what we're most proud of.
Makko DeFilippo: Whether looking at our safety record, reaching 97% physical completion this quarter, achieving key commissioning milestones ahead of schedule, or with the line-of-sight visibility we now have on our unchanged $310 million capital cost estimate, to put it simply, we are finding a lot to celebrate at Tukumaw these days. Looking at where we are at in terms of conditioning and production sequencing for the balance of the year, we have continued to make excellent progress towards the start of operations.
Makko DeFilippo: When looking at our safety record, reaching 97% physical completion next quarter, achieving key commissioning milestones ahead of schedule with a line of sight visibility. We now have on our unchanged $310 million capital cost estimate to put it simply we are finding a lot to celebrate two commodities days.
Makko DeFilippo: Looking at where we're at in terms of conditioning and production sequencing for the balance of the year. We have continued.
Makko DeFilippo: To make excellent progress towards the start of operation.
Makko DeFilippo: Following the successful completion and ramp-up of our crushing, screening, and conveyance systems earlier this year, we've been able to focus all of our attention on the systematic completion of our milling, flotation, and filtration systems in order to commence integrated commissioning. With the recent completion of our freshwater intake system, as well as the conclusion of major mechanical and subcomponent commissioning steps, we're out the process plan. We expect to initiate integrated commissioning just prior to the end of the quarter.
Makko DeFilippo: Following the successful completion and ramp up of our crushing screening and conveyance systems earlier. This year, we've been able to focus all of our attention to the systematic completion of our milling floatation and filtration systems in order to commence integrated commissioning.
Makko DeFilippo: With the recent completion of our freshwater intake system as well as the conclusion of major mechanical and sub chemo component conditioning steps throughout the process plant, we expect to initiate integrated conditioning just prior to the end of the quarter.
Makko DeFilippo: On the mining side at Tooth and Moth, which is already in full operational mode, our cumulative operational performance remains well ahead of schedule, despite strong rains during the second half of March. We ended Q1 with approximately 36,000 tons of ore in a run-of-mine stockpile and an additional 160,000 tons of stripped ore in the mine, ready to be blacked. With the rainy season well behind us, a significant amount of sulfide ore available for processing, and new commissioning milestones being reached on a daily basis, we are in an excellent position to achieve first concentrate production in early Q3 and reach commercial production, which we define as 80% of nameplate capacity by the end of the third quarter.
Makko DeFilippo: On the mining side at <unk>, which is already in full operational mode. Our cumulative operational performance remains well ahead of schedule. Despite strong range during the second half of March.
Makko DeFilippo: We ended Q1 with approximately 36000 tonnes of ore and a run of mine stockpile and an additional 160000 ton strip door in the mine ready to be blocked it.
Makko DeFilippo: With the rainy season, while behind US a significant amount of sulphide ore available for processing and <unk>.
Makko DeFilippo: New commissioning milestones being reached on a daily basis, we are in an excellent position to achieve first concentrate production in early Q3 and reach commercial production, which we define as 80% of nameplate capacity by the end of the third quarter.
Makko DeFilippo: At our CARIBA operations, while the quarter had slightly lower grade mined and processed versus our expectations due to development delays in a polar mine, since the beginning of the second quarter, we've made strong progress on development and production, and we are reaffirming our full-year production guidance. As it relates to the construction of the new shaft for the Polar Mine, also at our Kariv operations, shaft sinking continues to progress as planned, and we remain on track to achieve our target depth of approximately 600 meters by Europe.
Makko DeFilippo: Our car <unk> operation, while the quarter had slightly lower grades mined and processed versus our expectations due to development delays and a pillar mine.
Makko DeFilippo: Since the beginning of the second quarter, we have made strong progress on development and production and we are reaffirming our full year production guidance.
Makko DeFilippo: As it relates to the construction of the new shaft for the pillar mine also at our Caribe operations shafts sinking continued to progress as planned and we remain on track to achieve our target depth of approximately 600 meters by Europe.
Makko DeFilippo: In terms of specific milestones on this project, it's worth highlighting that we successfully and safely concluded the second and longest raised bore segment of the shaft at the end of April. At its finished length of approximately 720 meters, the segment set a new record for the longest raised bore ever completed in Brazil.
Makko DeFilippo: In terms of specific milestones on this project, it's worth highlighting that we successfully and safely concluded the second longest raise more segment of the shaft at the end of April.
Makko DeFilippo: At its finish length of approximately 720 meters. The segment has set a new record for the longest raise bore ever completed in Brazil.
Makko DeFilippo: Underground development and infrastructure installations required for the ore handling system of the shaft, including our pressure chamber, conveyance levels, as well as ore and waste silos, are progressing on schedule, and the project continues to remain on track for shaft handover to operations in Q4 of 2026. Lastly, we had an incredibly strong start at our Javacina operations during the first quarter, which has been well covered by data. If there are any specific questions on the progress at Javancina, I'd be happy to address those in our management Q&A. I will now turn the call over to Wayne to discuss our financial results.
Makko DeFilippo: Underground development and infrastructure installations required for the ore handling system, the shack, including our crusher chamber conveyance levels as well as ore and waste silos are progressing on schedule and the project continues to remain on track for shaft handover of operations in Q4 of 2026.
Wayne: Lastly, we had an incredibly strong start at our Java Ciena operations during the first quarter, which has been well covered by David.
Wayne: First any specific questions on the progress that <unk> seen it I'd be happy to address that and our management Q&A.
Makko DeFilippo: I'll now turn the call to Wayne to discuss our financial results.
Wayne Drier: As David highlighted, our financial results for the quarter reflected several positive factors. These included rising copper and gold prices, record production and margins at the Chaventina operations, and the sale of copper concentrate inventories carried over from the fourth quarter at the Kariba operations.
Wayne: Thank you Marco.
Wayne: As David highlighted our financial results for the quarter reflected several positive factors. These included rising copper and gold prices record production and margins at the 17 or operations and the sale of copper concentrate inventory carried over from the fourth quarter at the <unk> operations.
Wayne Drier: In addition, a favorable move in foreign exchange led to a realized gain on our foreign exchange hedges of $2.1 million that contributed to first quarter cash flows from operations of $17.2 million, an adjusted net income attributable to the owners of the company of $16.8 million, or 16 cents per share on a diluted basis. Subsequent to quarter-end, we elected to take advantage of another favorable move in the exchange rate and added a layer of zero-cost collars for the second half of this year with floor and ceiling rates of $5.15 and $5.62, respectively.
Wayne Drier: In addition, a favorable moves in foreign exchange led to a realized gain on our foreign exchange hedges.
Wayne Drier: $2 $1 billion that contributed to first quarter cash flows from operations of $17 $2 million and adjusted net income attributable to the owners of the company of $16 8 million or <unk> <unk> per share on a diluted basis.
Wayne Drier: Subsequent to quarter end, we elected to take advantage of another favorable move in the exchange rate and added a layer of zero cost collars for the second half of this year with floor and ceiling rates of 515 and $5 62, respectively.
Wayne Drier: The Real has since strengthened against the US dollar, falling back to a rate of approximately $5.05 yesterday. As at the end of last month, the total notional value of our foreign exchange derivative position for the remainder of 2024, including both zero-cost collars and forward contracts, was a little over $250 million. These hedges cover nearly all of our real denominated operating expenses and the majority of our major project capital expenditures for the remainder of the year and have a weighted average floor and ceiling of 502 and 538, respectively.
Wayne Drier: The real has strengthened against the U S dollar falling back to a rate of approximately $5 five yesterday.
Wayne Drier: As at the end of last month, the total notional value of our foreign exchange derivative position for the remainder of 2024, including both zero cost collars and Ford contract was a little over $250 million.
Wayne Drier: These hedges cover nearly all of our real denominated operating expenses and the majority of our major project capital expenditures for the remainder of the year and have a weighted average floor and ceiling of 502 and $5 38, respectively.
Wayne Drier: Of the total hedge program, approximately $65 million is allocated for major project capital expenditures with a weighted average floor and ceiling of 510 and 523, respectively. The quarter saw a significant decrease in our capital expenditures, with expander tucuma quickly winding down as we approach initial production.
Wayne Drier: Of the total hedge program approximately $65 million is allocated for major project capital expenditures with a weighted average floor and ceiling of 510 and $5 23, respectively.
Wayne Drier: The quarter saw a significant decrease in our capital expenditures will expand it took them out quickly winding down as we approach initial production.
Wayne Drier: As a result, we ended the quarter with a total liquidity position of $156.7 million, including $51.7 million in cash and cash equivalents, plus $105 million of undrawn availability under our Senior Secured Revolving Credit Facility. We have also entered into a $50 million non-priced copper prepayment facility subsequent to the quarter end. This facility provides cost-effective capital in a favorable physical copper market, particularly in light of persistently high interest rates. The repayment of the facility is structured over 27 equal monthly installments of 272 metric tons of copper beginning in October 2024.
Wayne Drier: As a result, we ended the quarter with a total liquidity position of $156 $7 million, including $51 7 billion in cash and cash equivalents plus.
Wayne Drier: $105 million of Undrawn availability under our senior secured revolving credit facility.
Wayne Drier: We have also entered into a $50 million.
Wayne Drier: Non priced copper prepayment facility subsequent to the quarter end.
Wayne Drier: This facility provides cost effective capital and a favorable physical coupled market, particularly in light of persistently high interest rates.
Wayne Drier: The repayment of this facility is structured over 27 equal monthly installments of 272 metric tons of copper beginning in October 2024.
Wayne Drier: Should the market value of the copper delivered in any given month exceed $2.1 million, we will receive a repayment for the excess amount. I will now pass the call back to David to share some closing thoughts.
Wayne Drier: Should the market value of the copper delivered in any given month exceed $2 $1 million, we will receive a repayment for the excess amount.
Wayne Drier: I will now pass the call back to David to share some closing thoughts.
David Maxwell Strang: Thank you, Wayne, and thank you everybody who joined the call today. Before we proceed to the Q&A session, I want to extend my deepest gratitude to our teams in Brazil and Canada for their continued commitment and hard work in executing on both our operating plan and our organic growth strategy. I look forward to our third quarter earnings call, when I expect to discuss the ramp-up of production underway at Tokamak. Now, I will hand the call back to the operator to open the line for questions.
David: Thank you Wayne and thank you everybody who joined the call today.
David Maxwell Strang: Before we proceed to the Q&A session I want to extend my deepest gratitude to our teams in Brazil, and Canada for their continued commitment and hard work in executing on both our operating plan and our organic growth strategy.
David Maxwell Strang: I look forward to our third quarter earnings call when I expect to discuss the ramp up of production underway and took them out.
David Maxwell Strang: Now I will hand, the call back to the operator to open the line for questions operator.
Operator: Thank you. We will now begin the question and answer session. To join the question queue, you may press star, then 1 on your telephone keypad. You will hear a tone acknowledging your request. If you are using a speakerphone, please pick up your handset before pressing any key. To withdraw your question, please press star, then 2. Today's first question is from Gordon Lawson with Paradigm Capital. Please go ahead.
Speaker Change: 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, you will hear a tone acknowledging your request.
Gordon Lawson: If you were using a speaker phone please pick up your handset before pressing any keys to it.
Gordon Lawson: Your question. Please press Star then two.
Operator: Today's first question is from Gordon Lawson with paradigm capital. Please go ahead.
Gordon Lawson: Good morning, and thanks for taking my questions. So, starting with Kariba, to hit 2024 guidance, is it reasonable to model nearly 4 million tons of throughput for the year, and what average grade would you be expecting for the remainder of the year here?
Gordon Lawson: Hey, good morning, and thanks for taking my questions. So starting with Kariba to hit the 2024 guidance is it reasonable to model nearly 4 million tonnes of throughput for the year.
Gordon Lawson: And what average grade would you be expecting.
Gordon Lawson: For the remainder of the year here.
Gordon Lawson: Yeah.
Speaker Change: Great Great question. Thanks for thanks for that yet, but I think the.
Gordon Lawson: If you look at what we accomplished in Q1 in terms of our cadence on production for the year in terms of copper we are expecting our production to be second half weighted.
David Maxwell Strang: I think it's reasonable to assume that we'll be slightly below that 4 million ton target, like our original guidance for the year was just below that, given the ramp-up of our mill expansion circuit in Q1. And we anticipate grades being obviously slightly higher through the full year, but around 1.2 to 1.3% for the full year.
Gordon Lawson: I think it's reasonable to assume that will be slightly below that 4 million ton target like our original guidance.
David Maxwell Strang: Guidance for the year was just below that given the ramp up of our mill expansion circuit in Q1.
David Maxwell Strang: We anticipate grid.
David Maxwell Strang: Being obviously slightly higher through the whole year, but around one point to two to one 3% in the full year.
David Maxwell Strang: Okay. Okay. Yeah, that works out here. And just looking ahead, so there's been a lot of significant success and exploration at Kareba and reading what's going on at Pilar right now. So, I'm just curious if there are other expansions being evaluated further down the pipeline.
David Maxwell Strang: Okay.
David Maxwell Strang: Okay.
David Maxwell Strang: Yeah that works out here.
David Maxwell Strang: And just looking ahead, so theres been a lot of significant excellent exploration that's pretty button.
David Maxwell Strang: Reading whats going on a pillow right now so I'm just curious if there are other expansions.
David Maxwell Strang: Evaluated further down the pipeline.
David Maxwell Strang: Yeah, you know we do have, and we've been open with regard to a number of ore bodies that we've identified in the northern part of the project and the property. We are evaluating longer-term opportunities, and nothing imminent, but certainly in the longer term opportunities in order to try and extract value from those ore bodies, which may include, in the longer term, the potential to construct a second concentrated plant in the north, but that's very preliminary right now.
David Maxwell Strang: Yeah.
David Maxwell Strang: We do have and we've been open with regards to a number of ore bodies that we've identified in the northern part of the project.
David Maxwell Strang: We are evaluating longer term and nothing imminent, but certainly in the longer term opportunities in order to try and extract value from those those ore bodies.
David Maxwell Strang: Which may include.
David Maxwell Strang: Longer term with the.
David Maxwell Strang: Pension to construct a second concentrate plant in the north.
David Maxwell Strang: But that's very preliminary right now where we stand overall with regards to our operations that cutting Iba is our focus now is purely on getting the shaft completed which will allow us to then access very high grade material and the deepening project.
David Maxwell Strang: Where we stand overall with regard to our operations at Kataiba, the focus now is purely on getting the shaft completed, which will allow us to then access very high-grade material in the deepening project and then further take us back to the position that we've always wanted to be in and have been, which is one of the lower cost producers of copper in the world by accessing these high-grade ore bodies to depth in the Palau mine.
David Maxwell Strang: And then Phil to take us back to the position that we've always wanted to be in and.
David Maxwell Strang: And has been is one of the lower cost producers of copper in the world by Axis access in these high grade ore bodies to depth in the Bolivar mine.
Gordon Lawson: Thank you very much.
Speaker Change: Okay. Thank you very much I appreciate it.
Operator: Thank you. The next question comes from Orest Wowkodaw with Scotiabank. Please go ahead.
Speaker Change: Thank you. The next question comes from Aurist Wildcat, all with Scotiabank. Please go ahead.
Orest Wowkodaw: Good morning. Questions for Makko around the Tukoma ramp-up and completion here. I mean, you're guiding to a startup in early July, so we'll call it two months from now. What would you consider to be sort of the big critical path items that need to happen in order to achieve that timeline?
Orest Wowkodaw: Good morning, a question for Mako around to come a ramp up in completion here I mean, you're guiding to startup in early July so call. It two months from now what does it what.
Orest Wowkodaw: What would you consider to be sort of the big critical path items that.
Orest Wowkodaw: Need to happen in order to achieve that timeline.
Makko DeFilippo: Yeah, great, great question, Orest. Look, I think, you know, if you strip it all down and you look at what needs to happen between now and July, I'd say we're in the final, the home stretch, which, you know, I would define as electrical installations, automation, and some of the minor piping like compressed air, you know, reagent pipelines, etc. So if you look at the project holistically from a critical path perspective, we really are down to the final straws.
Makko DeFilippo: Yeah, Great question, So look I think.
Makko DeFilippo: If you.
Makko DeFilippo: Trip it all down.
Makko DeFilippo: You look at what needs to happen between now and July I'd say, we're in the final the homestretch switch.
Makko DeFilippo: I would define as.
Makko DeFilippo: Electrical installations automation and some of the minor piping like compressed air.
Makko DeFilippo: Reagent pipelines et cetera. So if you take a if you look at the project alerts a week from our critical path perspective, we really are down to the the <unk>.
Makko DeFilippo: Final a final straw.
Makko DeFilippo: And we continue to make excellent progress on those initiatives. So, you know, in terms of our progress on, I would say, non-critical path piping, also the automation circuits that we're putting in, electrical cabling, and instrumentation, that's really where our focus is for the next two months.
Makko DeFilippo: And we continue to make excellent progress on those initiatives. So you know in terms of.
Makko DeFilippo: Our progress on Noncritical path piping are also the automation circuits that we're putting in.
Makko DeFilippo: Electrical cable and instrumentation, that's really where our focus is for the next the next two months.
David Maxwell Strang: Just to add to that, I mean, where we are right now, we are already running water through the filtration, I mean, through the flotation circuits in the Jamison cells. We're in the process of turning the mill on. As we've previously put in, all dry commissioning has been completed, and we are all now sitting on the run-of-mine stockpile. And so, really, as Makko's pointed out, we're really down to the final little straws here.
Speaker Change: Okay and then just.
David Maxwell Strang: To add to what I mean, where we are right now what we are already running water through the filtration that mean through the flotation circuits in the Jameson cells.
David Maxwell Strang: We're in the process of tuning the Midland as we've previously put in all dry commissioning has been completed and we have now sitting on the.
David Maxwell Strang: Well of course or stockpile, the running the run of mine stockpile.
Makko DeFilippo: And so really as Michael pointed out that we're really down to the final little stores here we're.
David Maxwell Strang: We're looking forward to turning on the tailings filtration plant over the course of the next couple of weeks and then moving as aggressively as we can towards full running of the wet circuit over the course of the next three weeks.
David Maxwell Strang: We're looking forward to turning on the tailings filtration plant over the course of the next couple of weeks and then moving as aggressively as we can towards full full running after the wet circuit over the course of the next three weeks.
Orest Wowkodaw: Thanks, David. Just following up, I think I heard you hope to exit Q3. I think that's 80% of throughput. I mean, that's a pretty quick ramp up if we're talking startup in early July. What are you seeing that gives you that kind of confidence in terms of a compressed ramp up schedule?
Speaker Change: Thanks, David just following up I mean earlier you you mentioned that you hope to exit Q3, I think I heard it 80% of throughput.
Speaker Change: Well I mean, that's a pretty quick ramp up if we're talking to start up in early July.
Orest Wowkodaw: Like what are you seeing that gives you that kind of confidence in terms of compressed ramp up schedule.
Makko DeFilippo: Yeah, Orest, I don't think, to be honest, I don't think it's that compressed. I mean, I think we've given ourselves a better runway on the early Q3 startup. I think the other thing I would point to is that, you know, we're commissioning these independent systems again on a daily basis here. So, if you look at our flotation system, you know, or, as Dave mentioned, our Jamison cell, our filtration systems are being run, and they've been designed independently.
Speaker Change: Yes, I do.
Orest Wowkodaw: To be honest I don't think its that compressed I mean, I think we give ourselves a bit of runway on on the early Q3 startup I think the other thing I would point to is that we are commissioning these independent systems.
Makko DeFilippo: Again on a daily basis here. So if you look at our flotation system.
Speaker Change: Got it.
Makko DeFilippo: As Dave mentioned, our JV since all of our filtration systems.
Makko DeFilippo: Ron it's been designed independently. So I mean, there's a lot of activity happening that gives us gives us comfort in the timeline.
Makko DeFilippo: So, I think there's a lot of activity happening that gives us comfort in the timeline. But if you look at our total ramp-up schedule, obviously, we have a relatively, I would say, you know, standard ramp-up rate to achieve 80%. We're not forecasting Achieving 100% nameplate capacity for about nine months is our total ramp-up curve. So said differently, I think in the initial phase, I think we're in really good shape to achieve that 80% nameplate.
Makko DeFilippo: But if you look at our total ramp up schedule, obviously, we have a.
Makko DeFilippo: A relatively.
Makko DeFilippo: I would say.
Makko DeFilippo: Standard ramp up rate to achieve 80%, we're not forecasting.
Makko DeFilippo: Achieving 100% nameplate capacity for about for about.
Makko DeFilippo: Nine months as our total ramp up curve so.
Makko DeFilippo: Said differently I think in the initial phase I think we're in really good shape to achieve that about 80% nameplate. Obviously the ramp up will continue over that over that nine month period.
Makko DeFilippo: Obviously, the ramp-up will continue over that nine month period. But I don't think that our ramp-up curve is, well, I know for a fact, after looking at many different projects that our ramp-up curve is right in the middle of the fairway.
Makko DeFilippo: But I don't think that our ramp up curve is.
Makko DeFilippo: Well I know for fact in looking at many different projects that our ramp up curve is right in the middle of a haircut.
Orest Wowkodaw: Okay, thank you. Just one final question, if I could. I remember the current mine plan for Takuma obviously has very high copper production in the first two years or so. I'm wondering if you're seeing anything on the exploration side that could potentially extend that high grade, sort of high production level for longer beyond 2026 and maybe what the timeline might be to see an updated mine plan around that? Thanks, Orest.
Speaker Change: Okay. Thank you and just final question, if I could I remember at the current mine plan for Tacoma, Obviously has very high copper production in the in the first two years and so I'm wondering if you're seeing anything on the exploration side that could potentially extend that high grade sort of high production.
Orest Wowkodaw: Level for longer beyond 2026, and maybe what the timeline might be to see an updated mine plan around that.
David Maxwell Strang: Thanks, Orest. Good question.
Speaker Change: Thanks, Chris Good question.
David Maxwell Strang: So, if you remember, we do currently have a small underground resource with regard to below the current pit, which is very high grade in nature, very similar to the grades that we've been mining the first couple of years. Mike and the team, for those who don't know, Mike Richard, Chief Geologist, and the team are ramping up and getting ready to bring the rigs back in to continue to drill out the underground extension option with a view that we'll start supplementing when we start seeing the higher grade decline from the open pit, that we'll start supplementing that lower grade, as we mine, with higher grade from the underground operation.
David Maxwell Strang:
Orest Wowkodaw: So with respect to if you remember we do have a.
David Maxwell Strang: Currently small underground resource with regards to below the current pit, which is a very high grade nature are very similar to the grades that we will be mining in the first couple of years.
David Maxwell Strang: Mike and the team and for those who don't know Microsoft Chief geologist and the team are ready are ramping up and getting ready to bring the rigs back in to continue to drill out the underground extension option with the view that we will start supplementing.
David Maxwell Strang: When do we start seeing the higher grade decline from the open pit that will start supplementing that lower grades as we mined with higher grade from the underground.
David Maxwell Strang: As it stands right now, we've got time to be able to do that over the course of the next 18 months to two years, and greater clarity will come out with regard to that mine plan over that time period. This is a constant moving target with regard to Tokamai. There's only so much that we can take on at any one time, but certainly the rigs are getting ready to come back in the third and fourth quarters with a view to drilling out additional underground resources that can be looked at to be mined.
David Maxwell Strang: Operation as it stands right now.
David Maxwell Strang: Got time to be able to do that over the course of the next 18 months to two years and greater clarity will come out with regards to that mine plan over that time period. So.
David Maxwell Strang: This is a constant moving moving target with regards to took them out is only so much that we can take on at any one time.
David Maxwell Strang: Certainly the rigs are getting ready to come back in in the third and fourth quarter with a view to drilling out additional underground resources that can be look to be mind I'd look at it kind of something similar to what we've done at <unk>.
David Maxwell Strang: I'd look at it as something similar to what we've done at Vimeos in terms of size operation, potentially down the road, and then, as I said, supplementing the grades from the underground option at that time. Thanks.
David Maxwell Strang: In terms of size operation.
David Maxwell Strang: Tinsley down the road.
David Maxwell Strang: As I said supplementing the grades from the underground option at that time.
Speaker Change: Thanks very much.
Operator: Thank you. The next question comes from Craig Hutchison with TD Bank. Please go ahead.
David Maxwell Strang: Thank you. The next question comes from Craig Hutchison with TD Bank. Please go ahead.
Craig Hutchison: Hi, good morning, guys.
Craig Hutchison: Just a question on Coreba with regard to the comment that there were some delays in underground development required to access the scheduled high-grade stopes. Is that now behind you guys, or are there some issues that might creep into Q2? So we, you know, as I said in the call here, coming out of Q1 and early Q2, we've seen strong development rates and also production. So we think that's largely behind us here.
Craig Hutchison: Just a question on <unk> with regards to the comment that there were some delays in them.
Craig Hutchison: Land development required to access the scheduled high grade Stopes is that now behind you guys or is there some issues that might creep into Q2 as well.
Speaker Change: Yeah. Thanks, Craig we don't see those issues creeping into Q2.
Craig Hutchison: I'd say, you know relative to where we thought we'd be on development and some of these high grade stopes.
Craig Hutchison: Variety of factors contributed to that.
Craig Hutchison:
Craig Hutchison: In terms of equipment availability.
Craig Hutchison: Primarily so we as I said in the call here coming out of Q1 and early Q2, we've seen strong.
Craig Hutchison: It's strong development rates and also production. So we think thats largely behind us here.
Speaker Change: Okay great.
Craig Hutchison: Okay, great. And just in your opening remarks, I think that they said that you've seen some favorable concentration authority terms. I don't know if you guys can speak to some of those terms and kind of what your exposure is for in terms of.
Craig Hutchison: And just in your opening remarks, I think as David said that you'd seen some favorable concentrate offtake terms I don't know if you guys can speak to some of those terms and kind of what your exposure is for in terms of pricing for off take in the back half of this year.
David Maxwell Strang: Pricing for offtake in the backup this year. Thanks.
Speaker Change: Yeah. Thanks, Craig.
Speaker Change: So we are.
Speaker Change: We've been taken advantage of.
David Maxwell Strang: What I love people know in the marketplaces, the the favorable Tcf's key terms.
David Maxwell Strang: We've entered into two contracts so far, and they will be kicking in from May onwards, this month onwards, two-year contracts for about a third of our production. Obviously, we don't want to go into too much detail because it's unfair to all parties involved, but in general, the terms are in the low teens. We are looking to strengthen that portfolio right now with regard to an additional tender that we're about to enter into with various suppliers, and we're waiting to receive those tender offers over the course of the next couple of weeks to further enhance that and increase the total amount that we have exposed at some of these lower But on an overall basis, two years for about a third of our production beginning in May in the low teens if you're looking to model.
Speaker Change: We then into two contracts. So far are they will be kicking in from May onwards. This month onwards are two year contracts for about a third of our production. Obviously, we don't want to go into too much detail because it's unfair to all parties involved but in general the terms of our in the low teens.
David Maxwell Strang: We are looking to strengthen that.
David Maxwell Strang: Portfolio right now with regards to an additional tender that we're about to enter into with the.
David Maxwell Strang: Various suppliers and we're waiting to receive those.
David Maxwell Strang: The tender offers over the course of the next couple of weeks.
David Maxwell Strang: To further enhance that and increase the total amount that we have exposed at some of these lower TCE aussie rates, but on an overall basis two years for about third of our production beginning in may in the low teens. If you look at the model.
David Maxwell Strang: One last question for me. I know you guys are excited about the Furnace project. Any kind of color in terms of when you guys will be able to finalize a definitive agreement?
Speaker Change: Okay, that's great.
Speaker Change: One last question for me I know you guys are excited about the <unk> projected any kind of color in terms of when you guys be able to finalize the definitive agreement.
David Maxwell Strang: Yeah, we're down to Deepak Handal, our Lower Chief Counsel is here, and he's down to the nitty-gritty with regards to the last couple of comments between ourselves and Vale. So that agreement is imminent with regard to signature. This is, you know, with regard to making sure that this agreement is done correctly. This is a template with regard to a lot of things that we're hoping to work with Vale on in the future, so we all want to make sure, both on our side and Vale's side, that we get this right.
David Maxwell Strang: Yes.
David Maxwell Strang: We're down to Deepak Handout, Laurie <unk>, Chief Counsel, who is here and.
David Maxwell Strang: He is down to the Nitty gritty with regards to the last couple of comments between ourselves and Bali.
David Maxwell Strang: So that that agreement is imminent with regards to signature.
David Maxwell Strang: This is with.
David Maxwell Strang: With regards to making sure that this agreement is done correctly.
David Maxwell Strang: As a template with regards to a lot of things that we're hoping to work with Huawei in the future. So we all want to make sure both from outside and body side that we get this right.
David Maxwell Strang: I am happy to say that we have signed a core sharing agreement with Vale that now allows us to move all of the core for the furnace project into the core shack for the project, and that will allow us to immediately move as aggressively as we can to put together a 43-101 compliant mineral resource estimate that we hope that we'll be in a position to share with the market sometime in the third quarter this year.
Deepak Handal: I am happy to say that we have signed with Vale a cost sharing agreement that now allows us to move all of the core.
David Maxwell Strang: For the <unk> project into the core shack for the project and that will allow us to immediately move as aggressively as we can to put together a 43 101 compliant mineral resource estimate that we hope that we'll be in a position to share with the market sometime in the third quarter. This year.
Craig Hutchison: That's a great point. Thanks, guys.
Speaker Change: That's great. Thanks, guys.
Operator: Thank you. The next question comes from Stefan Ioannou with Cormark Securities. Please go ahead.
Speaker Change: Thank you. The next question comes from Stefan <unk>.
Stefan Ioannou: With core Mark Securities. Please go ahead.
Stefan Ioannou: Douglas Goldstein, CFP®, is the director of Profile Investment Services and the host of the Goldstein on Gelt radio show. He is a licensed financial professional in both the U.S. and Israel. Securities offered through Portfolio Resources Group, Inc., Member FINRA, SIPC, MSRB, NFA, SIFMA. Accounts held by National Financial Services, LLC. Member NYSE & SIPC, a Fidelity Investments company. His book Building Wealth in Israel is available in bookstores, on the web, or can be ordered at www.profile-financial.com.
Stefan Ioannou: Yeah. Thanks, very much guys. Just wondering we spoke with with with the the positive grade reconciliation, we're continuing to see it 17 or is there any thought of maybe going in and doing some additional drilling ahead of production to really nail down your mine plan or I mean I appreciate its vein. So maybe it's the plan just to continue mining Internet kept what you get.
Makko DeFilippo: Yeah, great, great question. I think, you know.
Stefan Ioannou: Yes, great Great question, So if I'm looking I think.
Makko DeFilippo: Yeah.
Makko DeFilippo: The uniqueness of the Javits Chamber Party and where we're at now, I think... One of the things we talked about last quarter was the restriction on search ellipses. So, you know, we'd have to go back and check exactly how much infill drilling we'd be required. But I think for right now, the approach that we've taken is, as Dave mentioned, we are doing development ahead of the head of mining.
Makko DeFilippo: The uniqueness of the Japanese narrow body and where we're at now I think.
Makko DeFilippo: One of the what we talked about last quarter was the restriction on search are lifted so.
Makko DeFilippo: We'd have to go back and check exactly how much infill drilling we'd be required but I think for right now the approach that we've taken is as Dave mentioned.
Makko DeFilippo: We are doing development ahead of the head of mining, so where we have channel standpoint.
Makko DeFilippo: So where we have channel sampling and we have a high degree of confidence in the grades continuing, we've assumed now flow through our four-year production result, but I'd say that, you know, in general, if you go back, you know, several years, the reconciliation against our long-term model to the short-term has been really good. So, you know, in terms of going in and drilling out in detail and incurring that additional cost, given where we are and where we see the positive reconciliation heading, at least for the next few levels, I'm not sure that that expense is warranted at this stage.
Makko DeFilippo: And we have a high degree of confidence in me.
Makko DeFilippo: Integrates continue we've assumed now flow through our full year production results.
Makko DeFilippo: But in general if you go back.
Makko DeFilippo: Several years the reconciliation against our long term model to short term has been really good so.
Makko DeFilippo: In terms of it going in and drilling out in detail in it.
Makko DeFilippo: During that additional cost given where we're at and where we see the positive reconciliation cutting at least for the next few levels I'm not sure that that expenses warranted at this stage.
David Maxwell Strang: I think Stefan, just to add to that, I mean, the zone that we're encountering here is not particularly wide, and so it's fortuitous that we've hit it, five or six holes into it. As Makko said, the constraints on top cutting and search ellipses around holes have been conservative in this area. And I think it's the best thing just to continue to do and just take it as a happy opportunity right now for as long as it continues to give it to us. Certainly, if we're in a situation next year and we're already, and we continue to see this, we may have to rethink that strategy.
Speaker Change: Yes, I think Stefan just to add to that I mean the zone.
David Maxwell Strang: We are encountering here.
Speaker Change: He is not particularly wide.
David Maxwell Strang: And so as for churches that we've hit it we've got five.
David Maxwell Strang: Five or six holds into them as macro said the constraint on top cutting in.
David Maxwell Strang: In search ellipses around holes.
David Maxwell Strang: <unk> been conservative in this area and I think it's the best thing just to continue to do and just.
Speaker Change: It is a happy opt.
David Maxwell Strang: Opportunity right now for as long as it continues to give it to US certainly if we're in the situation.
David Maxwell Strang: Next year, and we're already and we've continued to see this we may have to rethink that strategy, but right now as Michael said, it's really not worth.
David Maxwell Strang: Trying to drill out this this zone and try and add it into a resource or reserve estimate.
Stefan Ioannou: Okay, I got it. Yeah, it sounds like it's very nice to have, but not necessarily a must-have, so it's, it's, uh...
Speaker Change: Got it and it sounds like it's very nice to have but not necessarily at my past. So it's it's a correct yeah yeah.
Speaker Change: Maybe one other one for me just on the Gorilla exploration with Arrow I mean, obviously nickel is still something we always think about in the background is there any more updates there I know there was talk of that's still trying to secure some property positions before you sort of really push even harder on is that still the case or.
David Maxwell Strang: Yeah, yeah, we're, we're, we're. We continue to do work on nickel, albeit not at the same rate as we did early last year. I've asked the team to take a step back and do that because, as I've mentioned in the past, over the last six to eight months, the nickel opportunity has become a lot bigger than we ever thought it would become. And with that, I think we have to be cognizant and disciplined with regard to how we go about evaluating all of these target areas and what we do in terms of going about that.
Speaker Change: Yep Yep.
Stefan Ioannou: Where.
David Maxwell Strang: We continue to do work on nickel.
David Maxwell Strang: Not at the same rate as we had done early last year I've asked the team to take a step back and do because as I've mentioned.
David Maxwell Strang: In the past over the last six to eight months.
David Maxwell Strang: The Mako opportunity has got a lot bigger than we ever thought it would.
David Maxwell Strang: Become and with that I think we have to be cognizant and disciplined with regards to how we go about evaluating all of these target areas and what we do in terms of going about that.
David Maxwell Strang: A lot of this is predicated right now on the government auction process. I'm happy to say the government has given us notification that it will imminently start that process, and we hope to see that and be able to give the marketplace more insights into how the auction has gone, et cetera, in the third quarter.
David Maxwell Strang: This is predicated right now with regards to the government auction process I'm happy to say the government has given this notification that imminently start that process.
David Maxwell Strang: And we hope to see that and be able to give the marketplace more.
David Maxwell Strang: Insights into how the auction has gone exceptionally in the third quarter.
David Maxwell Strang: Certainly, the opportunity set for nickel sulfide exploration is significant, but we just need to be super smart with regard to how we approach this right now, because I think you could really go and blow your brains out in terms of trying to attack this too quickly. Mike and the team are evaluating a number of different things with regard to surface geochemistry work, ground-based EM analysis, et cetera, to see if there are ways that we can shortcut this process as opposed to having to drill significant amounts of holes to try and identify opportunities in nickel sulfide.
David Maxwell Strang: But certainly the opportunity set on nickel sulphide exploration is significant.
David Maxwell Strang: But we just need to be Super smart with regards to how we approach. This right now because I think you could really gun and blow your brains out.
David Maxwell Strang: In terms of trying to attack this so.
David Maxwell Strang: To quickly and so Mike and the team are evaluating a number of different things with regards to surface geochemistry work with regard to ground based analysis.
David Maxwell Strang: Analysis et cetera to see if there are ways that we can shortcut this process as opposed to having to drill significant amounts of pulp to try and identify opportunities in nickel sulphate, so very much a work in progress.
David Maxwell Strang: So, very much a work in progress, and certainly one that we continue to evaluate and will continue to work on. But right now, the priority remains for us Tukama. Getting Tukama done, obviously, for NAS, is such a big growth opportunity for us that really provides a great future for us as a copper mining company. And as and if nickel continues to develop, we will continue to follow it on a needs-based basis.
Speaker Change: And certainly.
David Maxwell Strang: One that we continue to evaluate and we'll continue to work on but right now the priority remains for US is to come out and it took them a done obviously for US is such a big growth opportunity for us that are that really provides great future for us as a copper mining company and adds and if nickel.
David Maxwell Strang: <unk> to develop so we will continue to follow it.
David Maxwell Strang: On a needs basis.
Stefan Ioannou: Okay, great. That's very helpful. Thanks, guys.
Speaker Change: Okay, great great. That's very helpful. Thanks, guys I appreciate it.
Operator: Thank you. As a reminder, to ask a question, you may press star, then 1. The next question comes from Connor McKay with Ventum Financial. Please go ahead.
Speaker Change: Thank you as a reminder to ask a question you May Press Star then one.
Connor Mackay: Next question comes from Connor <unk> with Ventana financial Please go ahead.
Connor McKay: Hi guys, thanks for taking my question this morning. Just along the same vein as the first question asked here, I was just wondering approximately when are you expecting to hit that full 4.2 million ton per annum run rate at Cariba?
Connor Mackay: Hi, guys. Thanks for taking my question this morning.
Connor Mackay: Just along the same vein as the the first question asked here I was just wondering approximately when are you expecting to hit that.
Connor Mackay: For a $4 2 million tonne per annum run rate.
Speaker Change: You bet.
Makko DeFilippo: Yeah, great, great question. Look, I think for us at Cariba, obviously, you know, we've completed the mill expansion. Here we have the honeypot in production in the upper levels of the mine, which I would classify as the whole, you know, the whole complex. The deepening is in production as well. Those increased production rates up to 4.2 will be closed this year when the dust settles. But in terms of getting over 4 million tons, that's really going to be a post-shaft completion when we have the two-mile system complete at Polar Mine.
Connor Mackay: Yeah, Great Great question look I think for profit Caribe.
Makko DeFilippo: Obviously, we completed the mill expansion.
Makko DeFilippo: Here, we have.
Makko DeFilippo: Any part in production in the upper levels of the model classify as a whole the whole complex. The deepening is in production as well and see those increased production rates up to 4.2 would be closed this year at the when the dust settles, but in terms of getting over 4 million tonnes, that's really going to be.
Makko DeFilippo: A poll shaft completion.
Makko DeFilippo: When we have to see my assistant complete at Pilar mine so.
Makko DeFilippo: So, you know, as I said, if you look at our throughput estimate for this year, it's going to be up significantly relative to prior years. But achieving the full mill capacity, as I said, it's really, it's really longer term when we have both shafts operating.
Makko DeFilippo: As I said, if you look at our throughput.
Makko DeFilippo: Estimate for this year, it's going to be up significantly relative to prior years.
Makko DeFilippo: Giving the full mill capacity as I said, it's really it's really longer term when we have both shops operating.
Connor McKay: And then just one more quick one on TUCMA, with the transition into operations from construction and, you know, getting into the first full year of production next year, what kind of levels of sustaining capital should we be expecting, particularly in relationship to the most recent technical report, which, you know, I imagine there's some level of inflation that needs to be factored in there at this point.
Speaker Change: Awesome. Thanks for that and then just one one more quick one on <unk>.
Connor McKay: With the transition into a into operations from construction and getting into the first full year of production next year.
Connor McKay: What what kind of levels of sustaining capital should we be expecting particularly in relationship to the.
Connor McKay: The most recent technical report, which I imagine, there's some level of inflation that needs to be factored in there at this point.
Makko DeFilippo: Yeah, look, in the first year of operations, I wouldn't anticipate much in the way of sustained capital at all, really. I mean, obviously, we're, we will be continuing to do some stripping during the year. But if you look at, you know, the ratio, our strip ratio in the first year is still really low. So I would anticipate that most of that will be expensed in the first year. So we don't get into meaningful pushbacks until later on in the line of life when we'll incur additional sustaining costs related to stripping.
Speaker Change: Yes look in the first year of operations I wouldn't anticipate much in a way of sustaining capital at all really I mean, obviously we're.
Makko DeFilippo: We will be continuing to do some stripping during the year, but if you look at it.
Makko DeFilippo: The ratio of our strip ratio in the first year is still really low so I would anticipate that most of that is expense in the first year or so.
Makko DeFilippo: We don't get into meaningful pushback until later on in the mine life will incur additional sustaining costs related to related to strictly so it's going to be.
Makko DeFilippo: So it's going to be a small amount. I don't have the exact number off the top of my head here. We can follow up with a call afterward to give you the specifics. But it's going to be very small.
Speaker Change: As a small amount I don't have exact number off the top of my head here, we can follow up on that.
Makko DeFilippo: To call out to work to give you the specifics, but it's going to be very small.
Connor McKay: I appreciate it. Thank you very much.
Speaker Change: I appreciate it thank you very much.
Operator: Thank you. This concludes the question and answer session. I would like to turn the conference back over to David Strang for any closing remarks.
Connor McKay: Thank you. This concludes the question and answer session I would like to turn the conference back over to David Strang for any closing remarks.
David Maxwell Strang: Thank you, operator. And again, thanks to everybody for coming on the call. We really appreciate everybody's interest in our company. We look forward to talking to you all again in August, when we hope to be having more detailed and granular conversations with regards to which the exact day is that we're going to actually hit commercial production, and we'll be happily talking to you about how Tukama is coming on schedule and the concentrate sales that we've started to make at that time. So thanks again, everybody, and we look forward to talking to you again, as we said, in August. Enjoy your summer. Thank you.
David Maxwell Strang: Thank you operator, and again, thanks to everybody for coming on the call. We really appreciate everybody's interest in our company.
Operator: This brings to an end today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.
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Background Music: We look forward to talking to you all again in August.
Background Music: We hope to be having a more detailed and granular conversations with regards to which the exact days that we're going to actually hit commercial production.
Background Music: And we will be heavily talking to you about.
Background Music: How to come out as coming on schedule and the concentrate sales that we've started to make at that time.
Background Music: So thanks again, everybody and we look forward to talking to you again as I said in August enjoy your summer. Thank you.
Background Music: This brings to an end today's conference call you may disconnect your lines.
Background Music: For participating and have a pleasant day.
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