Q2 2024 Ero Copper Corp Earnings Call

and David Strang.

Operator: Welcome to the Ero Copper 2nd 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 call, you may signal an operator by pressing star then zero. If you are participating through the webcast, you can submit a question in writing by using the form in the lower section of the webcast screen. [inaudible] Please go ahead.

Operator: Welcome to the Ero Copper second quarters 2024 operating and financial results conference call. As a reminder, upper suspents are listen-only mode, and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. To join the question to you, you may press star, then one on your telephone keypad.

Speaker Change: Thank you for standing by. This is the conference operator. Welcome to the Ero Copper 2nd quarter 2024 Operating and Financial Results conference call.

Speaker Change: 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.

Operator: Shouldn't you just distance during the conference call? You may signal an operator by press and start the zero.

Speaker Change: To join the question queue, you may press star then 1 on your telephone keypad.

Speaker Change: Should you need assistance during the conference call, you may signal an operator by pressing star then zero. If you are participating through the webcast, you can submit a question in writing by using the form in the lower section of the webcast screen.

Operator: If you're for speeding through the webcast, you can submit a question in writing by using the form in the lower section of the webcast screen.

Courtney Lynn: I would now like to turn the conference over to Courtney Lynn.

Courtney Lynn: Can you invite the President of Corporate Development, Investor Relations, and Sustainability? Please go ahead.

Speaker Change: 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 Lynn: Thank you, operator.

David Strang: Good morning and welcome to Ero Copper's second quarter earnings call. Our operating and financial results were released yesterday afternoon and are available on our website. As our financial statements in MDNA for the three and six months and the June 30th, 2024.

Courtney Lynn: Thank you, Operator. Good morning, and welcome to Ero Copper's second 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 and six months ended June 30, 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 Lynn: Thank you, Operator.

Courtney Lynn: Good morning and welcome to AeroCopper's second quarter earnings call.

Speaker Change: 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 and six months ended June 30, 2024.

David Strang: On the call with me today, are David Strang, Ero's co-founder and chief executive officer, Makko DeFilippo, president and chief operating officer, and Wayne Dryer, chief financial officer. We will be making forward-looking statements that involve risks and uncertainties, from which actual results may differ materially. We would refer you to our most recent annual information form available on our website, Seedar and Edgar, for a discussion of the risk factors of our business and the potential impact on future performance. As a reminder, and unless otherwise noted, all amounts are in US dollars.

Speaker Change: On the call with me today are David Strang, ERO's Co-Founder and Chief Executive Officer, Makko DeFilippo, President and Chief Operating Officer, and Wayne Drier, Chief Financial Officer.

Speaker Change: We will be making forward-looking statements that involve risks and uncertainties from which actual results may differ materially.

Courtney 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.

Speaker Change: 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.

David Strang: I will now pass the call over to David Strang. Thank you, Courtney, and thank you everyone for joining us today. Before we discuss our second quarter results, I want to acknowledge what a challenging week this has been for our organization. As announced earlier this week, one of our colleagues at the Category of Operations was fatally injured in an incident involving a light-duty pickup truck on surface. And another of our colleagues remains in critical condition. We are providing full support to the families and co-workers of the individuals involved during this incredibly difficult time.

Speaker Change: As a reminder, and unless otherwise noted, all amounts are in U.S. dollars. I will now pass the call over to David Strang.

David Strang: Thank you, Courtney, and thank you, everyone, for joining us today. Before we discuss our second quarter results, I want to acknowledge what a challenging week this has been for our organization. As announced earlier this week, one of our colleagues at the Kariba Operations was fatally injured in an incident involving a light-duty pickup truck on the surface, and another of our colleagues remains in critical condition. We are providing our full support for the families and co-workers of the individuals involved during this incredibly difficult time. Out of respect for those affected, we do not plan to discuss the incident further.

David Strang: Thank you, Courtney, and thank you, everyone, for joining us today.

David Strang: Before we discuss our second quarter results, I want to acknowledge what a challenging week this has been for our organization.

Speaker Change: As announced earlier this week, one of our colleagues at the Kariba Operations was fatally injured in an incident involving a light-duty pickup truck on surface.

Speaker Change: And another of our colleagues remains in critical condition.

Speaker Change: We are providing our full support to the families and co-workers of the individuals involved during this incredibly difficult time.

David Strang: Out of respect for those affected, we do not plan to discuss the incident further. Safety is a non-negotiable aspect of our operating philosophy, and we remain unwavering in our commitment to this mission.

Speaker Change: Out of respect for those affected.

David Strang: Safety is a non-negotiable aspect of our operating philosophy, and we remain unwavering in our commitment to this mission. With that said, we will now turn our focus to discussing updates from our second quarter. During the quarter, the Tukamak project was awarded its operational license and achieved first concentrate production at the end of June. In mid-July, we achieved production of the first salable copper concentrate at an above-designed target concentrate grade. While Makko will discuss our ramp-up schedule in greater detail.

Speaker Change: We do not plan to discuss the incident further.

Speaker Change: Safety is a non-negotiable aspect of our operating philosophy and we remain unwavering in our commitment to this mission.

David Strang: With that said, we will now turn our focus to discussing updates from our second quarter. During the quarter, the Tukama Project was awarded this operational license and achieved first concentrate production at the end of June. In mid-July, we achieved production of first scalable cup of concentrate at a bub design target concentrate great. While Mako will discuss our ramp-up schedule in greater detail, I can share that the Tukama Plant continues to perform well, and we remain on track to reach commercial production levels by the end of the third quarter. As we advance towards doubling cup of production next year, we continue to execute on our longer term growth strategy.

Speaker Change: With that said, we will now turn our focus to discussing updates from our second quarter.

Speaker Change: During the quarter, the Tukamak project was awarded its operational license and achieved first concentrate production at the end of June .

Speaker Change: In mid-July, we achieved production of first salable copper concentrate at above-designed target concentrate grades.

David Strang: I can share that the Tukamak plant continues to perform well, and we remain on track to reach commercial production levels by the end of the third quarter. As we advance towards doubling copper production next year, we continue to execute on our longer-term growth strategy. These efforts were highlighted by the announcement last week that we signed a definitive earning agreement with Vale Base Metals on the Furness Copper Project in the Karayas Mineral Province. This agreement aligns with the terms outlined in our previously signed binding term sheet detailed in our press release on October 30th, 2023.

Speaker Change: While Makko will discuss our ramp-up schedule in greater detail, I can share that the Tukama plant continues to perform well, and we remain on track to reach commercial production levels by the end of the third quarter.

Speaker Change: As we advance towards doubling copper production next year, we continue to execute on our longer-term growth strategy.

David Strang: These efforts were highlighted by the announcement last week that we signed a definitive earning agreement with Vale-based metals on the Furnace Copper Project in the Karyas mineral province. This agreement aligns with the terms outlined in our previously signed binding term sheet detailed in our press release on October 30, 2023. Earlier this year, we commenced baseline environmental studies, core re-logging, and validation programs at Furnace in support of an inaugural NI 43-101 resource estimate, which we expect to publish later this year. In parallel, we have continued to compile and update the extensive work previously completed on the project by Vale, which includes significant metallurgical, geotechnical, environmental, process design, and site planning studies.

Speaker Change: These efforts were highlighted by the announcement last week that we signed a definitive earning agreement with Vale Base Metals on the Furnace Copper Project in the Karayas Mineral Province.

Speaker Change: This agreement aligns with the terms outlined in our previously signed binding term sheet, detailed in our press release on October 30th, 2023.

David Strang: Earlier this year, we commenced baseline environmental studies, core re-logging, and validation programs at FERNAS in support of an inaugural NI 43-101 resource estimate, which we expect to publish later this year. In parallel, we have continued to compile and update the extensive work previously completed on the project by Vale, which includes significant metallurgical, geotechnical, environmental, process design, and site planning studies. With the definitive agreement now in place, we expect to initiate our first exploration campaign later this year.

Speaker Change: Earlier this year, we commenced baseline environmental studies, core re-logging, and validation programs at FERNAS in support of an inaugural NI 43-101 Resource Estimate.

Speaker Change: which we expect to publish later this year.

Speaker Change: In parallel, we have continued to compile and update the extensive work previously completed on the project by VALLE, which includes significant metallurgical, geotechnical, environmental, process design, and site planning studies.

David Strang: With the definitive agreement now in place, we expect to initiate our first exploration campaign later this year.

Speaker Change: With the definitive agreement now in place, we expect to initiate our first exploration campaign later this year.

David Strang: Before I turn the call over to Makko and Wayne, I will touch briefly on our operating results at Kareiba and Javentina, as well as financial results for the quarter. At Kareiba, we continue to see the benefit of our mill expansion completed late last year, reflected in quarterly throughputs, with tons processed up 12.2% quarter on quarter and 17.9% compared to Q4 2023. This higher throughput volume offsets slightly lower process copper grades compared to the first quarter, resulting in a 9.6% increase in copper production of 8,867 tons in concentrate. While we had success in catching up on development of high grade stoves at the Palau mine in April and May, mining from these high grade stoves came later in the quarter than planned.

David Strang: Before I turn the call over to Makko and Wayne, I will touch briefly on our operating results at Cariba and Javentina, as well as our financial results for the quarter. At Caraiba, we continue to see the benefit of our mill expansion, completed late last year, reflected in quarterly throughputs with tons processed up 12.2%, quarter-on-quarter and 17.9% compared to Q4 2023. This higher throughput volume offsets slightly lower processed copper grades compared to the first quarter, resulting in a 9.6% increase in copper production of 8,867 tons in concentrate.

Speaker Change: Before I turn the call over to Makko and Wayne, I will touch briefly on...

Speaker Change: on our operating results at Cariba and Javentina, as well as financial results for the quarter.

Speaker Change: At Caraiba, we continue to see the benefit of our mill expansion, completed late last year, reflected in quarterly throughputs with tons processed up 12.2%, quarter-on-quarter, and 17.9% compared to Q4 2023.

Speaker Change: This higher throughput volume offsets slightly lower processed copper grades compared to the first quarter, resulting in a 9.6% increase in copper production of 8,867 tons in concentrate.

David Strang: While we had success in catching up on the development of high-grade stopes at the Pilar Mine in April and May, mining from these high-grade stopes came later in the quarter than planned, and one high-grade stope in particular experienced higher-than-planned dilution. When combined with lower milled grades of vimaeus due to mine sequencing and a higher proportion of mill feed from the cerubeum open pit, processed copper grades averaging 1.03% for the quarter. With respect to our C-1 cost,

Speaker Change: While we had success in catching up on development of higher-grade stopes at the Pilar Mine in April and May, mining from these high-grade stopes came later in the quarter than planned, and one high-grade stope in particular experienced higher-than-planned dilution.

David Strang: And one high grade stope in particular experienced higher than planned dilution. When combined with lower milled grades at Vermeer's due to mine sequencing and a higher proportion of mill feed from the Serbian OpenTit, process copper grades averaging 1.03% for the quarter. With respect to our C1 costs, we are starting to see the impact of persistent tightness in the copper concentrate market, which has led to some of the most favorable treatment in refining terms we have ever seen. Over the last several months, we capitalized on these dynamics by entering into longer-term contracts with our copper concentrate customers.

Speaker Change: When combined with lower milled grades of vimaeus due to mine sequencing and a higher proportion of mill feed from the Suribeme open pit, processed copper grades averaging 1.03% for the quarter.

David Strang: We are starting to see the impact of persistent tightness in the copper concentrate market, which has led to some of the most favorable treatment and refining terms we have ever seen. Over the last several months, we capitalized on these dynamics by entering into longer-term contracts with our copper concentrate customers. We secured a blending treatment charge of just over $5 per ton and a $0.05 refining charge on 100% of our consolidated copper production, including both Karaiba and Tukama, from May through the end of the year.

Speaker Change: With respect to our C1 costs,

Speaker Change: We are starting to see the impact of persistent tightness in the copper concentrate market, which has led to some of the most favorable treatment and refining terms we have ever seen.

Speaker Change: Over the last several months, we capitalized on these dynamics by entering into longer-term contracts with our copper concentrate customers.

David Strang: We secured a blending treatment charge of just over $5.00 per tonne and a 5 cent refining charge on 100% of our consolidated copper production, including both Karieba and Tukama, from May through the end of the year. By comparison, our copper concentrate treatment and refining charges every nearly $80.00 per tonne and 8 cents per pound from January through April of this year. This significant reduction in our treatment charges, as well as the strengthening of the dollar against the Brazilian reaction, contributed to lower copper C1 cash costs of $2.16 per pound of copper produced during the second quarter.

Speaker Change: We've secured a blending treatment charge of just over $5 per ton and a $0.05 refining charge on 100% of our consolidated copper production, including both Karaiba and Tukama, from May through the end of the year.

David Strang: By comparison, our copper concentrate treatment and refining charges average nearly $80 per ton and 8 cents per pound from January through April of this year. The significant reduction in our treatment charges, as well as the strengthening of the dollar against the Brazilian re-issue, contributed to lower copper C1 cash costs of $2.16 per pound of copper produced during the second quarter. This decrease in unit operating costs, coupled with copper prices that hit all-time highs during the period, drove increased gross profit margins at Caraiba compared to the first quarter.

Speaker Change: By comparison, our Copper Concentrate treatment and refining charges average nearly $80 per ton and $0.08 per pound from January through April of this year.

Speaker Change: This significant reduction in our treatment charges, as well as a strengthening of the dollar against the Brazilian reaction, contributed to lower copper C1 cash costs of $2.16 per pound of copper produced during the second quarter.

David Strang: This decrease in unit operating costs, coupled with copper prices that hit all-time highs during the period, drove increased growth profit margins at Karibah compared to the first quarter.

Speaker Change: This decrease in unit operating costs, coupled with copper prices that hit all-time highs during the period, drove increased gross profit margins at Karaiba compared to the first quarter.

David Strang: Our Javentina operations also saw another exceptional quarter with an expansion in growth profit margins during the second quarter, reflecting a continuation of elevated grades and record gold prices, which have rallied even higher in the third quarter. Gold production is Javentina with 16,555 ounces, with tons processed up 6.9% quarter on quarter and gold grades continuing to trend above long-term block model grades. As a result, unit operating costs remained below budget, with C1 cash costs and oil and sustaining costs coming in at $428 and $842, respectively, per ounce of gold produced.

David Strang: Our Giabantino operations also saw another exceptional quarter with an expansion in gross profit margins during the second quarter, reflecting a continuation of elevated grades and record gold prices, which have rallied even higher in the third quarter. Gold production is at Javentina with 16,555 ounces, with tons processed up 6.9% quarter-on-quarter, and gold grades continuing to trend above long-term block model grades. As a result, unit operating costs remain below budget, with C1 cash costs and oil and sustaining costs coming in at $428 and $842, respectively, per ounce of gold produced.

Speaker Change: Our Giabantino operations also saw another exceptional quarter with an expansion in gross profit margins during the second quarter, reflecting a continuation of elevated grades and record gold prices, which have rallied even higher in the third quarter.

Speaker Change: Gold production is Javentina with 16,555 ounces, with tons processed up 6.9% quarter-on-quarter, and gold grades continuing to trend above long-term block model grades.

Speaker Change: As a result, unit operating costs remain below budget with C1 cash costs and oil and sustaining costs coming in at $428 and $842 respectively per ounce of gold produced.

David Strang: The combination of solid production across our operations and strong market tailwinds resulted in second quarter operating cashflow of $14.7 million and adjusted EBIDA of $51.5 million. As we look to the second half of the year, we expect consolidated copper production to increase sequentially each quarter, driven largely by the ramp up it took a month. We also expect higher mind and process grades at Karibah to result in higher production and contribute to lower unit operating costs in the second half of the year. While we are reaffirming all of our copper production cash cost guidance ranges, we are now guiding to the lower end of our copper production guidance range for Karibah.

David Strang: The combination of solid production across our operations and strong market tailwinds resulted in second quarter operating cash flow of $14.7 million and adjusted EBITDA of $51.5 million. As we look to the second half of the year, we expect consolidated copper production to increase sequentially each quarter, driven largely by the ramp-up that took him.

Speaker Change: The combination of solid production across our operations and strong market tailwinds resulted in second quarter operating cash flow of $14.7 million and adjusted EBITDA of $51.5 million.

Speaker Change: As we look to the second half of the year, we expect consolidated copper production to increase sequentially each quarter, driven largely by the ramp-up at Tukama.

David Strang: We also expect higher mines and process grades at Karahiba to result in higher production and contribute to lower unit operating costs in the second half of the year. While we are reaffirming all of our copper production and cash cost guidance ranges, we are now guiding to the lower end of our copper production guidance range for Kadahiba. At Javantina, we expect mined and processed gold grades to remain above budget in the second half of the year based on channel sampling from development drives.

Speaker Change: We also expect higher mines and process grades at Karahiba to result in higher production and contribute to lower unit operating costs in the second half of the year.

Speaker Change: While we are reaffirming all of our copper production and cash cost guidance ranges, we are now guiding to the lower end of our copper production guidance range for Kadahiba.

David Strang: As Javentina, we expect mind and process gold grades to remain above budget in the second half of the year based on channel sampling from development drives. While grades should remain elevated, they are projected to decrease relative to the second quarter, leading to slightly lower production and higher unit costs in the second half compared to the first half of 2024. However, due to strong year-to-date operating cost performance, full year unit operating costs are now projected to be lower than we had originally budgeted, and we are reducing our full year gold C1 cash cost guidance by $100 to a range of $450 to $550 per ounce of gold produced.

Speaker Change: At Javantina, we expect mined and processed gold grades to remain above budget in the second half of the year based on channel sampling from development drives.

David Strang: While grades should remain elevated, they are projected to decrease relative to the second quarter, leading to slightly lower production and higher unit costs in the second half compared to the first half of 2024. However, due to strong year-to-date operating cost performance. Full year unit operating costs are now projected to be lower than we had originally budgeted, and we are reducing our full year gold C1 cash cost guidance by $100 to a range of $450 to $550 per ounce of gold produced.

Speaker Change: While grades should remain elevated, they are projected to decrease relative to the second quarter, leading to slightly lower production and higher unit costs in the second half compared to the first half of 2024.

Speaker Change: However, due to strong year-to-date operating cost performance, full-year unit operating costs are now projected to be lower than we had originally budgeted.

Speaker Change: And we are reducing our full year gold C1 cash cost guidance by $100 to a range of $450 to $550 per ounce of gold produced.

David Strang: We are also lowering our all-in-sustaining cost guidance by $150 to a range of $900 to $1,000 per ounce of gold produced.

David Strang: We are also lowering our all-in-sustaining cost guidance by $150 to a range of $900 to $1,000 per ounce of gold. I'll now pass the call to Makko, after which Wayne will provide more detail on our financial results.

Speaker Change: We are also lowering our All-in-Sustaining Cost Guidance by $150 to a range of...

Makko DeFilippo: And now pass the call to Mako, after which Wayne will provide more detail on our financial results. Thank you and good morning, everyone. As Javent mentioned, the ramp-up of Tukama is advancing well. We successfully produced first concentrate in late June, and by mid July, in line with our internal target dates, achieved a pivotal milestone of producing first saleable copper concentrate. Our primary focus during this first phase of ramp up was to stabilize material flow rates throughout the process plan and produce a quality concentrate at near-design recovery. Well, early in our ramp up, we've been extremely pleased with the performance of the plant thus far.

Speaker Change: $900 to $1,000 per ounce of gold produced.

Speaker Change: I'll now pass the call to Makko after which Wayne will provide more detail on our financial results.

Makko DeFilippo: Thank you and good morning everyone. As David mentioned, the ramp-up of Tucumá is progressing well. We successfully produced our first concentrate in late June and, by mid-July, in line with our internal target dates, achieved a pivotal milestone of producing our first saleable copper concentrate. Our primary focus during this first phase of ramp-up was to stabilize material flow rates throughout the process plant and produce a quality concentrate at near-design recoveries. While early in our ramp-up, we've been extremely pleased with the performance of the plant thus far. As noted previously, we've been able to achieve above-design concentrate grades while maintaining recovery. Transitioning into August, our primary priority will shift to steadily increasing throughput volumes while maintaining concentrate quality and recovery rate.

Makko DeFilippo: Thank you, and good morning, everyone. As David mentioned, the ramp-up of Tucumá is advancing well. We successfully produced first concentrate in late June , and by mid-July, in line with our internal target dates, achieved a pivotal milestone of producing first saleable copper concentrate.

Makko DeFilippo: Our primary focus during this first phase of ramp-up was to stabilize material flow rates throughout the process plant and produce a quality concentrate at near-design recoveries.

Makko DeFilippo: While early in our ramp-up, we've been extremely pleased with the performance of the plant thus far. As noted previously, we've been able to achieve above-design concentrate grades while maintaining recoveries.

Makko DeFilippo: As noted previously, we've been able to achieve above design concentrate grades while maintaining recoveries. Transitioning into August, our primary priority will shift to steadily increasing throughput volumes while maintaining concentrate quality and recovery rates. Based on our performance to date, we are on the right track to achieve commercial production levels. Which we define is 80% of design bill capacity and 80% of design recovery rates by the end of the third quarter.

Makko DeFilippo: Transitioning into August , our primary priority will shift to steadily increasing throughput volumes while maintaining concentrate quality and recovery rates.

Makko DeFilippo: Based on our performance to date, we are on the right track to achieve commercial production levels, which we define as 80% of design mill capacity and 80% of design recovery rates by the end of the third quarter. On the mining side, we continue to make strong progress during the quarter, completing the mines pre-strip phase in April well ahead of schedule. By the end of June, we had approximately 460,000 tons of ore sitting on our Ruddoff Mine stockpile and another 44,000 tons grading above 2% copper blasted in the mine available for transport.

Makko DeFilippo: Based on our performance to date, we are on the right track to achieve commercial production levels, which we define as 80% of design mill capacity and 80% of design recovery rates by the end of the third quarter.

Makko DeFilippo: On the mining side, we continue to make strong progress during the quarter, completing the mine's pre-strip phase in April well ahead of schedule. By the end of June, we had approximately 460,000 tons of ore sitting on our rut of mine stockpile and another 44,000 tons trading above 2% copper blasted in the mine available for transport. Given the strong pace, we've been able to maintain on mining rates, as well as the early completion of pre-stripping and the build of run-of-mine and crushed ore stockpiles. We've increased our capitalized ramp-up expenditures, guidance for Tuchema to reflect the additional two and a half months of mining and silvery costs associated with the early run rates of our crushing, conveyance, and screening systems, as well as costs associated with the now fully operational laboratory on site.

Makko DeFilippo: On the mining side, we continue to make strong progress during the quarter, completing the mines pre-strip phase in April well ahead of schedule.

Makko DeFilippo: By the end of June , we had approximately 460,000 tons of ore sitting on our Ruddoff Mine stockpile and another 44,000 tons grading above 2% copper blasted in the mine available for transport.

Makko DeFilippo: Given the strong pace we've been able to maintain on mining rates, as well as the early completion of pre-stripping and the build of run-of-mine and crushed ore stockpiles, we've increased our capitalized ramp-up expenditures guidance for Tucumán to reflect the additional two and a half months of mining, ancillary costs associated with the early run rates of our crushing, conveyance, and screening systems, as well It is worth noting that TCMA's growth CapEx guidance range update reflects a revised tax position resulting in approximately $12 million of capitalized taxes that have been deemed to be non-recoverable.

Makko DeFilippo: Given the strong pace we've been able to maintain on mining rates,

Makko DeFilippo: as well as the early completion of pre-stripping and the build of run-of-vine and crushed ore stockpiles.

Makko DeFilippo: We've increased our capitalized ramp-up expenditures guidance for Tucumá to reflect the additional two and a half months of mining, ancillary costs associated with the early run rates of our crushing conveyance and screening systems, as well as costs associated with the now fully operational laboratory on site.

Makko DeFilippo: It is worth noting that Tuchema's growth capex guidance range update reflects a revised tax position, resulting in approximately 12 million of capitalized taxes that have been deemed to be non-recoverable.

Makko DeFilippo: It is worth noting that TCMA's growth CapEx guidance range update reflects a revised tax position resulting in approximately $12 million of capitalized taxes that have been deemed to be non-recoverable.

Makko DeFilippo: With the Tuchema construction complete and a ramp up underway, we will be shifting the focus of our Tuchema engineering and project execution team to the Fernos project. Over the last few months, working closely with the valid base metal team, we've transferred approximately half of the 90,000 meters of historical core to our core logging facility in Parapueba and commenced re-logging, re-sampling, and validation work programs. As David mentioned, we expect to publish a main resource estimate on the project incorporating this work later this year, as well as kick off our Phase I drill program.

Makko DeFilippo: With the Tukamak construction complete and ramp-up underway, we will be shifting the focus of our Tukamak Engineering and Project Execution Team to the Furnace Project. Over the last few months, working closely with the Valley Base Metals team, we've transferred approximately half of the 90,000 meters of Historic Drill Corps to our core logging facility in Parapuebas and commenced re-logging, re-sampling, and As David mentioned, we expect to publish a main resource estimate on the project, incorporating this work later this year, as well as kick off our Phase I drill program.

Makko DeFilippo: With the Tukamak construction complete and ramp-up underway, we will be shifting the focus of our Tukamak Engineering and Project Execution Team to the Furnace Project.

Speaker Change: Over the last few months, working closely with the valley-based metals team, we've transferred approximately half of the 90,000 meters.

Speaker Change: of Historic Drill Corps to our Corps Logging Facility in Parapuebas and commenced re-logging, re-sampling, and validation work programs.

Speaker Change: As David mentioned, we expect to publish a main resource estimate on the project, incorporating this work later this year, as well as kick off our Phase I drill program.

Makko DeFilippo: At Kariba, shaft syncing is progressing on schedule to achieve our target depth of 600 meters by year-end. During the quarter, we successfully connected the main shaft with the interface between the first and second raised bore legs, and civil works for the third raised bore leg of the shaft commenced on schedule. Raised boring of the third leg is underway, and we expect to continue through your end. In parallel, we have continued to advance underground infrastructure in support of the deepening project, including development and underground support related to the shafts or handling and conveyant systems, as well as the underground crusher chamber.

Makko DeFilippo: At Kariba, shaft sinking is progressing on schedule to achieve our target depth of 600 meters by year-end. During the quarter, we successfully connected the main shaft to the interface between the first and second raised-bore legs, and civil works for the third raised-bore leg of the shaft commenced on schedule. Raise boring of the third leg is underway, and we expect to continue through year end. In parallel, we've continued to advance underground infrastructure in support of the deepening project, including development and underground support related to the shaft's ore handling and conveyance systems, as well as the underground crusher chamber. The project continues to remain on track for shaft handover to operations in Q4 of 2026. I will now turn the call over to Wayne to discuss our financial results.

David Strang: At Cariba, shaft sinking is progressing on schedule to achieve our target depth of 600 meters by year-end.

Speaker Change: During the quarter, we successfully connected the main shaft with the interface between the first and second raised-bore legs, and civil works for the third raised-bore leg of the shaft commenced on schedule.

David Strang: Rays boring of the third leg is underway and we expect to continue through year-end.

David Strang: In parallel, we have continued to advance underground infrastructure in support of the deepening project.

Wayne Drier: including development and underground support related to the shaft's ore handling and conveyance systems as well as the underground crusher chamber. The project continues to remain on track for shaft handover to operations in Q4 of 2026. I will now turn the call to Wayne to discuss our financial results.

Makko DeFilippo: The project continues to remain on track for shaft handover to operations in Q4 of 2026.

Wayne Drier: I will now turn the call to Wayne to discuss our financial results. Thank you, Marco. As Dave highlighted, our quarterly financial results reflect a combination of solid operating results and favorable market dynamics that drove an increasing gross profit margins across our operations. This resulted in higher adjusted EBITDA of $51.5 million, and adjusted net income attributable to the owners of the company of $18.6 million, or $0.18 per share on a diluted basis when compared to the first quarter of 2024. The favorable market conditions we experienced during the second quarter included a strengthening of the US dollar against the real, causing the exchange rate to increase from 501 on March 31 to 555 on June 30.

Wayne Drier: Thank you, Makko. As Dave highlighted, our quarterly financial results reflect a combination of solid operating results and favorable market dynamics that drove an increase in gross profit margins across our operations. This resulted in higher adjusted EBITDA of $51.5 million and adjusted net income attributable to the owners of the company of $18.6 million, or 18 cents per share on a diluted basis when compared to the first quarter of 2024. The favorable market conditions we experienced during the second quarter included a strengthening of the U.S. dollar against the real, causing the exchange rate to increase from 501 on March 31st to 555 on June 30th.

Wayne Drier: Thank you, Makko. As Dave highlighted, our quarterly financial results reflect a combination of solid operating results and favorable market dynamics that drove an increase in gross profit margins across our operations.

Wayne Drier: This resulted in higher adjusted EBITDA of $51.5 million and adjusted net income attributable to the owners of the company of $18.6 million or $0.18 per share on a diluted basis when compared to the first quarter of 2024.

Wayne Drier: The favorable market conditions we experienced during the second quarter included a strengthening of the U.S. dollar against the real, causing the exchange rate to increase from $5.01 on March 31st to $5.55 on June 30th.

Wayne Drier: While this move has benefited our operating costs and capital expenditures, it resulted in non-cash unrealized foreign exchange losses, primarily related to the translation of US dollar denominated into company debt in Brazil, for which the functional currency is the real. With respect to the cash settlement of foreign exchange derivatives, we recognized a loss of 1 million for the quarter, but a net gain of 1.1 million for the first half of the year. Our liquidity position at the end of the quarter remains strong at approximately $170 million.

Wayne Drier: While this move has benefited our operating costs and capital expenditures, it resulted in non-cash unrealized foreign exchange losses primarily related to the translation of U.S. dollar denominated intercompany debt in Brazil, for which the functional currency is the real. With respect to the cash settlement of foreign exchange derivatives, we recognized a loss of $1 million for the quarter, but a net gain of $1.1 million for the first half of the year Our liquidity position at the end of the quarter remains strong at approximately $170 million.

Wayne Drier: While this move has benefitted our operating costs and capital expenditures,

Wayne Drier: It resulted in non-cash unrealized foreign exchange losses primarily related to the translation of U.S. dollar denominated intercompany debt in Brazil, for which the functional currency is the real.

Wayne Drier: With respect to the cash settlement of foreign exchange derivatives, we recognized a loss of $1 million for the quarter, but a net gain of $1.1 million for the first half of the year.

Wayne Drier: Our liquidity position at the end of the quarter remains strong at approximately $170 million. With construction of the Tukoma project now complete and production ramping up, our cash flow profile and liquidity position are expected to strengthen significantly through the second half of the year.

Wayne Drier: With construction of the Tukuma project now complete and production ramping up, our cash flow profile and liquidity position are expected to strengthen significantly through the second half of the year.

Wayne Drier: With construction of the Tukuma project now complete and production ramping up, our cash flow profile and liquidity position are expected to strengthen significantly through the second half of the year. With that, I'll pass the call back to David to share some closing thoughts.

David Strang: With that, I'll pause the call back to David to share some closing thoughts. Thank you, Wayne, and everyone 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. In particular, I would like to thank Mako for his outstanding leadership on the senior management team in terms of moving the company forward in terms of getting Tukuma to where it is today. It is always a team effort, and I certainly don't want to pick out one individual in particular, but I think at this point that is warranted.

David Strang: Thank you, Wayne, and everyone 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. In particular, I would like to thank Makko for his outstanding leadership on the senior management team in terms of moving the company forward and getting Tokoma to where it is today.

Wayne Drier: With that, I'll pass the call back to David to share some closing thoughts.

David Strang: Thank you Wayne and everyone 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.

David Strang: In particular, I would like to thank Makko for his outstanding leadership on the senior management team in terms of moving the company forward, in terms of getting Tokoma to where it is today.

David Strang: It's always a team effort, and I certainly don't want to pick out one individual in particular, but I think at this point that is warranted. We are well positioned to achieve both record copper and gold production this year and look forward to continuing this growth journey over the coming quarters. Now, I will hand the call back to the operator to open the line for questions. Operator.

David Strang: It's always a team effort, and I certainly don't want to pick out one individual in particular, but I think at this point that is warranted.

David Strang: We are a well-positioned to achieve both record copper and gold production this year and look forward to continuing this growth journey over the coming quarters.

David Strang: We are well positioned to achieve both record copper and gold production this year and look forward to continuing this growth journey over the coming quarters. Now I will hand the call back to the operator to open the line for questions. Operator.

Operator: Now, I will hand the call back to the operator to open the line for questions.

Operator: Operator?

Operator: We will now begin the question and answer session. To join the question Q, you may first start in one on your telephone keypad. You hear a tone and knowledge in your request. If you are using a speaker phone, please pick up your handset before pressing any keys. Should we draw your question, please press star, then choose. If the part fading through the webcast, you can submit a question in writing by using the forms in the lower section of the webcast range.

Operator: 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'll hear a tone acknowledging your request. If you're using a speakerphone, please pick up your handset before pressing any keys.

Speaker Change: 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'll hear a tone acknowledging your request.

Speaker Change: If you're using a speakerphone, please pick up your handset before pressing any keys.

Operator: To withdraw your question, please press star then choose. If you are participating through the webcast, you can submit a question in writing by using the forms in the lower section of the webcast frame. If there isn't sufficient time to respond to written questions, management will respond by email in the coming days. The first question comes from Orest Wowkodaw with Scotiabank. Please go ahead.

Speaker Change: To withdraw your questions, please press star then choose.

Speaker Change: If you are participating through the webcast, you can submit a question in writing by using the forms in the lower section of the webcast frame.

Operator: If there is insufficient time to respond, written questions management will respond by email in the coming days.

Speaker Change: If there is insufficient time to respond, written questions management will respond by email in the coming days.

Orest Wowkodaw: The first question comes from RS Welkundal with Skillshare Bank. We need to go ahead. Oh, hi.

Speaker Change: The first question comes from Orest Wowkodaw with Scotiabank. Please go ahead.

Orest Wowkodaw: Oh, hi, good morning, everybody. Congratulations on getting to the finish line. I was wondering if we could get some a little bit more color in terms of how the ramp-ups are going from Makko specifically, like what you're seeing in terms of recoveries and throughput in these early days.

Orest Wowkodaw: Good morning, everybody. Congratulations on getting Tukuma to the finish line.

Orest Wowkodaw: Oh, hi, good morning, everybody. Congratulations on getting to come to the finish line.

Makko DeFilippo: I was wondering if we can get some a little bit more color in terms of how the ramp up is going from Mako specifically, like what you are seeing in terms of recoveries and throughput in these early days. Thanks, Horist. Yeah, look, I think it's probably a bit too early to talk specific details on recovery and constant grade. I guess at a general level, given we're through a couple weeks since we achieved saleable concentrate, but what I can tell you is that based on the fee grades that we're seeing, which, as you can imagine, during this first couple weeks of ramp up here are low.

Orest Wowkodaw: I was wondering if we can get some a little bit more color in terms of how the ramp up's going from Makko, specifically like what you're seeing in terms of recoveries and throughput in these early days.

Speaker Change: Thanks, Orest. Yeah, look, I think it's probably a bit too early to talk specific details on recovery and concentrate grade. I guess at a general level, given we're through a couple weeks since we achieved saleable concentrate,

Makko DeFilippo: and concentrate grade. I guess at a general level, given we're through a couple weeks since we achieved saleable concentrate, but what I can tell you is based on the feed grades that we're seeing, which, as you can imagine, are low. Obviously, we want to save some of that extremely high-grade material for when things are better, our recoveries have improved, and throughput rates are higher.

Speaker Change: But what I can tell you is that based on the feed grades that we're seeing, which as you can imagine during this first couple of weeks of ramp up here are low, obviously we want to save some of that extremely high-grade material for when things are, recoveries have improved and throughput rates are higher.

Makko DeFilippo: Obviously, we want to save some of that extremely high-grade material for when things are recoveries have improved and throughput rates are higher, but based on the grades that we've seen so far, I can say that our concentrate grades are quite a bit above what we're expecting. If you look at the expectations in the feasibility curve and our recovery rates are near design targets. So just slightly below, given the grades that we're feeding at, in terms of throughput volumes, we've been able to steadily increase so far to about 40 to 50% of the design throughput capacity, which, given the performance we're seeing on recovery and concentrate grades, is a good sign. Or, to put that into context, we're about halfway through to our 80% commercial production level in terms of middle throughput.

Speaker Change: But based on the grades that we've seen so far, I can say that our concentrate grades are quite a bit above what we were expecting if you look at the expectations in a feasibility curve.

Makko DeFilippo: But based on the grades that we've seen so far, I can say that our concentrate grades are quite a bit above what we were expecting, if you look at the expectations in the feasibility curve. And our recovery rates are near design targets, so just slightly below, given the grades that we're feeding at. In terms of throughput volumes, we've been able to steadily increase so far to about 40 to 50 percent of the design throughput capacity, which given the performance we're seeing on recovery and concentrate grades is a good sign. To put that into context, we're about halfway through to our 80 percent commercial production level in terms of mill throughput.

Speaker Change: And our recovery rates are near design targets, so just slightly below, given the grade that we're feeding at. In terms of throughput volumes,

Speaker Change: We've been able to steadily increase so far to about 40% to 50% of the design throughput capacity, which, you know, given the performance we're seeing on recovery and concentrate grades, is a good sign, or, you know, to put that into context.

Speaker Change: We're about halfway through to our 80% commercial production level in terms of mill throughput.

Wayne Drier: That's impressive to hear. Just a question for Wayne around this on the counting side. Should we expect no financials related to come on until you reach that commercial production, or should we be modeling effectively since the start of, I guess, the start of Q3?

Wayne Drier: That's impressive to hear. Just a question for Wayne around this on the accounting side. Should we expect no financials related to Chukwuma until you reach commercial production, or should we be modeling effectively? Since the start of, I guess, the start of Q3, I'm just wondering how the third quarter's gonna shape up from an accounting perspective.

Speaker Change: That's impressive to hear. Just a question for Wayne around this on the accounting side.

Speaker Change: Should we expect no financials related to KUKAMA until you reach that commercial production? Or should we be modeling effectively since the start of Q3? I'm just wondering how the third quarter is going to shape up from an accounting perspective.

Wayne Drier: I'm just wondering how the third quarter is going to shape up from the counting perspective. So, in the third quarter, because we're now generating or expect to generate revenue with our first sales, we will be expanding some of the costs; that's the requirement under the new accounting guidelines that came in a few years ago. But until we hit commercial production, it's only a portion of those costs that ultimately get expensed. And that's a direct ratio. So until we reach the 80% throughput and recovery, a portion of the costs will be expensed and a portion of the costs will be capitalized.

Wayne Drier: Sure. So, Orest, in the third quarter, because we're now generating, or expect to generate revenue with our first sales, we will be expensing some of the costs. That's the requirement under the new accounting guidelines that came in a few years ago. But until we hit commercial production, it's only a portion of those costs that ultimately get expensed. And that's a direct ratio.

Speaker Change: Sure.

Wayne Drier: Orest, in the third quarter, because we're now generating or expect to generate revenue with our first sales, we will be expensing some of the costs. That's the requirement under the new accounting guidelines that came in a few years ago.

Wayne Drier: But until we hit commercial production, it's only a portion of those costs that ultimately get expensed, and that's a direct ratio. So until we reach the 80 percent throughput and recovery, a portion of the costs will be expensed and a portion of the costs will be capitalized.

Wayne Drier: So until we reach the 80% throughput and recovery, a portion of the costs will be expensed, and a portion of the costs will be capitalized. And as it relates to the mining costs specifically, all costs will go into inventory, and all waste costs will be capitalized until we declare commercial production. So, in essence, you will see some expenses against Tukumar NQ3, assuming we make sales, which is our expectation, but it will be significantly less than the steady state which we would expect to see in Q4.

Wayne Drier: And as it relates to the mining costs in specifically, all costs will go into inventory. All waste costs will be capitalized until we declare commercial production. So, in essence, you will see some expenses against took them in Q3, assuming we make obviously sales, which is our expectation, but it will be significantly less than obviously the steady state, which we would expect to see in Q4.

Wayne Drier: And as it relates to the mining cost specifically, there all costs will go into inventory, all waste costs will be capitalized until we declare commercial production.

Speaker Change: In essence, you will see some expenses against Tukumar NQ3, assuming we make obviously sales, which is our expectation, but it will be significantly less than obviously the steady state which we would expect to see in Q4.

David Strang: Okay, and then one quick one if I could just on the big picture. So with Tucuman now ramping up, your free cash flow is going to significantly improve. Is the focus, the focus for 2025, is that going to be on deleveraging the balance sheet, or should we expect expenditures to ramp up for exploration around FERNAS and other endeavors?

Orest Wowkodaw: Okay, and then one quick one if I could just on the big picture. So with two come of now wrapping up, your free cash flow is going to significantly improve. Is the focus, the focus for 2025, is that going to be on the leveraging the balance sheet or should we expect expenditures to ramp up for exploration around for NASA and other endeavors? Thanks, Horace. With regards to the second part of your question, with our commitments to to furnace, we don't expect our overall exploration budget to materially change from what it currently is.

Speaker Change: Okay, and then one quick one if I could just on the big picture.

Speaker Change: So with Tucoma now wrapping up, your free cash flow is going to significantly improve.

Speaker Change: The focus for 2025, is that going to be on deleveraging the balance sheet, or should we expect expenditures to ramp up for exploration around FERNAS and other endeavors?

David Strang: Thanks, Orest. With regard to the second part of your question, with our commitments to FERNAS, we don't expect our overall exploration budget to materially change from what it currently is. There may be some reallocation of some exploration from some of the other projects that we have been working on to FERNAS, so we don't expect a big, material change in exploration expenses with regard to that. But the focus is obviously to de-lever the balance sheet, and that is going to be the prime focus of Wayne and his team as we move into 2025. Perfect.

Speaker Change: Thanks, Orest. With regards to the second part of your question,

Speaker Change: With our commitments to Furness, we don't expect our overall exploration budget to materially change from what it currently is.

Orest Wowkodaw: There may be some reallocation of some exploration from some other projects that we had been working on to to furnace, so we don't expect a big material change in exploration expenses with regards to that, but the focus is obviously to deliver the balance sheet and that is going to be the prime focus of Wayne and his team as we move into 25. Perfect. Thank you.

Speaker Change: There may be some reallocation of some exploration from some of the other projects that we had been working on to Furnace, so we don't expect a big material change in exploration expenses with regards to that. But the focus is on Furnace.

Speaker Change: Obviously, to de-lever the balance sheet, and that is going to be the prime focus of Wayne and his team as we move into 2025.

Operator: Thank you.

Grace Adams: The next question comes from Grace Adams with TIVC Capital Markets. Please go ahead. Thanks, David and Tim. Appreciate the update here today. First question is, can you confirm if there was a seismic event at Cariba late last week, like a small earthquake in the region? And then I don't want to, I'm not trying to link it to the fatality, but were those two events distinctly separate from each other?

Speaker Change: Perfect, thank you.

Bryce Adams: The next question comes from Bryce Adams with TIBC Capital Markets. Please go ahead.

Speaker Change: The next question comes from Bryce Adams with TIBC Capital Markets. Please go ahead.

Bryce Adams: Thanks, David and team. I appreciate the update here today. The first question is, can you confirm if there was a seismic event at Kariba late last week, like a small earthquake in the region? And then I don't want to...

Operator: I'm not trying to link it to the fatality, but were those two events distinctly separate from each other?

Bryce Adams: Thanks David and team, appreciate the update here today.

Bryce Adams: The first question is, can you confirm if there was a seismic event at Kariba late last week, like a small earthquake in the region? And then I don't want to, I'm not trying to link it to the fatality, but were those two events distinctly separate from each other?

Makko DeFilippo: Thanks, Bryce.

Makko DeFilippo: Thanks, Bryce. This is Makko.

Makko DeFilippo: This is Mako. Yeah, look, you know, the carrier operations, like most active mining operations that are operating deep underground, has seismic events. We have a micro seismic monitoring system that we has been in place since we started the company in 2017. The two events are completely unrelated.

Bryce Adams: Thanks, Bryce. This is Makko. Yeah, look, you know, the curb operations, like most active mining operations that are operating deep underground, has seismic events. We have a micro-seismic monitoring system that we

Speaker Change: has been in place since we started the company in 2017. The two events are completely unrelated.

Makko DeFilippo: Okay, thanks. So then initial assessment goes. Okay.

Makko DeFilippo: Can you, and so the seismic event was it, was it a bigger than typical one, or are there any impacts on site from that? Yeah, Bryce, look, we did have a seismic event. I'd say that in terms of its, it's, it's magnitude. It, it was in line with our expectations and what we've seen his story.

Speaker Change: Okay, thanks. As far as our initial assessment goes. Okay, so the seismic event, was it a bigger than typical one or are there any impacts on site from that?

Makko DeFilippo: Yeah, look, you know, the curb operations, like most active mining operations that are operating deep underground, have seismic events. We have a micro seismic monitoring system that has been in place since we started the company in 2017. The two events are...

Makko DeFilippo: Okay. Thanks. As far as our initial assessment goes, okay. And so the seismic event was a bigger than typical one, or are there any impacts on site from that?

Bryce Adams: Yeah, Bryce.

Makko DeFilippo: Yeah, Bryce. Look, we did have a seismic event. I'd say that in terms of its magnitude, it was in line with our expectations and what we've seen historically. We did, as a matter of protocol, evacuate the mine temporarily so that our geotechnical team could do a full assessment of all operating levels, and we've since returned to operations.

Bryce Adams: Look, we...

Bryce Adams: We did have a seismic event. I'd say that in terms of its magnitude, it was in line with our expectations and what we've seen historically.

Makko DeFilippo: We did, as a matter of protocol, evacuate the mind temporarily so that our geotechnical team could do a full assessment of all operating levels. And we've returned to operations. Okay, thanks.

Speaker Change: We did, as a matter of protocol, evacuate the mine temporarily so that our geotechnical team could do a full assessment of all operating levels, and we've returned to operations.

Grace Adams: Now second with Cariba, you mentioned the high grade started to come through in late in Q2.

Bryce Adams: Okay, thanks. Sticking with Kariba, you mentioned the high grade started to come through late in Q2. What are your grade expectations for the second half of the year? What's in that mine plan? And then how confident are you in that plan?

Speaker Change: Sticking with Kariba, you mentioned the high grade started to come through late in Q2. What are your great expectations for the second half of the year? What's in that mine plan and then how confident are you in that plan?

Makko DeFilippo: What, what are your great expectations for the second half of the year? So what's in that mind plan? And then, how confident are you in that plan? So, Bryce, you mean took them out, correct? You meant you said Cariba. Yeah, I meant Cariba, actually. Like the grades have been lower in the first half. I thought you meant. Yeah, yeah, yeah. Some high grade, very large in Q2. Yeah, there was a, there's high grade. So, as we mentioned in the first quarter call, we mine a combination of low and high grade stokes. The high grade stokes typically are 30 to 40% of our total stokes that we mine.

David Strang: So Bryce, you mean Tokamak, correct?

Bryce Adams: Yeah, I meant Kareeba, actually, like the grades have been lower in the first half. I thought you mentioned there were some high grades very late in Q2.

Speaker Change: Sir Bryce, you mean Tukamak, correct? You said Kariba.

Speaker Change: Yeah, I meant Kareeba actually, like the grades have been lower in the first half. I thought you mentioned there was some high grade very late in Q2.

David Strang: Yeah, there was this high grade. So, as we mentioned in the first quarter call, we mine a combination of low and high grade stokes. The high-grade stopes typically are 30 to 40 percent of the total stopes that we mine. And so when we get those, it's always about trying to make sure that we mine them as efficiently as possible and as carefully as possible. We ran into dilution in one of these super-high-grade stopes with some overbreak on one of those, so we didn't get the same grades as we were expecting.

Speaker Change: So, as we mentioned in the first quarter call, we mine a combination of low and high-grade stokes.

Speaker Change: The high-grade stopes typically are 30% to 40% of our total stopes that we mine.

Makko DeFilippo: And so when we get those, it's always about trying to make sure that we mine them as efficiently as possible and as carefully as possible. We ran into dilution in one of these super high grade stokes with, with some over break on one of those. So we didn't get the same grades as we were expecting. Typically, these high grade stokes can run anyway between 3 and 5% on average grade. And we have them scattered amongst that production for the rest of the year. Our expectation with respect to the rest of the year is that proportion of high grade stokes to low grade stokes leads more to the high grade stokes.

Speaker Change: And so when we get those, it's always about trying to make sure that we mine them as efficiently as possible and as carefully as possible. We ran into dilution in one of these super high-grade stopes.

Speaker Change: with some over break on one of those so we didn't get the same grades as we were expecting.

David Strang: Typically, these high-grade stopes can run anywhere between three and five percent on average grade, and we have them scattered amongst our production for the rest of the year. Our expectation with respect to the rest of the year is that the proportion of high-grade stopes to low-grade stopes leans more to the high-grade stops, hence the reason the expectation of higher grades will be coming through.

Speaker Change: Typically, these high-grade stopes can run anywhere between 3% and 5% on average grade, and we have them scattered amongst our production for the rest of the year. Our expectation with respect to the rest of the year is that proportion of high-grade stopes to low-grade stopes.

Makko DeFilippo: And hence the reason expectation of high grades will be coming through.

Speaker Change: leans more to the high-grade stops and hence the expectation of higher grades will be coming through.

Grace Adams: All right, I appreciate that that's all for me.

Bryce Adams: Alright, I appreciate that. That's all for me. Many thanks.

Grace Adams: Many thanks.

Speaker Change: Alright, I appreciate that. That's all from me. Many thanks.

Dalton Baretto: The next question comes from Dr. Burrito from Kenneth Card. Please go ahead. Thanks. Good morning, guys. And David, I agree with you. Marco, great job on the two come up construction and ramp up here. I'm wondering if you're starting to think already about two years from now when the grade started to come off fairly significantly. And I'm just wondering what the thinking is there today around sort of backfelling that. Thanks. Thanks, Dalton.

Operator: The next question comes from Dalton Baretto from Connor Corp. Please go ahead.

Speaker Change: The next question comes from Dalton Baretto from Connor Corp. Please go ahead.

Dalton Baretto: Good morning, guys. And David, great to see you. Makko, great job on the Tukumo construction on ramping up here. I'm wondering if you're already thinking about two years from now when the grades start to come off, you know, fairly significantly. And I'm just wondering what the thinking is there today around sort of backfilling that. Thanks.

Dalton Barreto: Thanks, good morning guys and David, great with you Makko, great job on the Tucumán construction on ramp up here.

Dalton Barreto: I'm wondering if you're starting to think already about two years from now when the grades start to come off, you know, fairly significantly. And I'm just wondering what the thinking is there today around sort of backfilling that. Thanks.

David Strang: Thanks Dalton, thanks for taking away our happy moment and enjoying starting the lineup. Yeah, we're already on top of that. We actually, as you may or may not remember, for those who don't know the story as well, going back longer term, we do have an underground resource at Tukama. It is contained in terms of a portion of that is contained in our resource estimates that you can find in our 43-101 report for the project.

David Strang: Thanks for taking away our happy moment and enjoying the starting to mine up. Yeah, we're already on top of that. We actually, as you may or may not remember, for those who don't know the story as well, going back longer term. We do have an underground resource at Tokama. It is contained in terms of a portion of that is contained in our resource estimates that you can find in our 43-101 report for the project. We have now mobilized the drill rigs to come back in. We're now believe in September. The rigs will be turning, and we're now in the process of continuing to drill and continue the drilling of the underground resource.

Speaker Change: Thanks, Dalton. Thanks for taking away our happy moment and enjoying it.

Speaker Change: starting the mine up.

Speaker Change: Yeah, we're already on top of that. We actually, as you may or may not remember, for those who don't know the story as well, going back longer term, we do have an underground resource at Tukama. It is contained in terms of a portion of that.

Speaker Change: It's contained in our resource estimates that you can find in our 43-101 report for the project.

David Strang: We have now mobilized the drill rigs to come back in. We're now, I believe in September, the rigs will be turning, and we're now in the process of continuing to drill and continue the drilling of the underground resource. Ideally, what we would be in a situation where, by 2027, we want to reasonably aggressively drill the underground resource and be in a position to start supplementing or replacing some of the lower-grade material in the open pit with some higher-grade material from the underground mine that we hope will be able to be developed over that time period.

Speaker Change: We have now mobilized the drill rigs to come back in. We are now, I believe in September , the rigs will be turning and we are now in the process of continuing to drill and continue the drilling of the underground resource.

David Strang: We're now in the process of continuing to continue the drilling of the underground resource.

David Strang: Ideally, what we would be in a situation would be, is by 2027, we want to reasonably aggressively drill the underground resource, is being in a position to start supplementing or replacing some of the lower grade material and the open pit with some higher grade material from the underground mine that we hope that will be out to be a developed over that time period. It's early days with regards to that process, so I wouldn't be adjusting any models. But you did ask, and so this is the plan that we want to do in terms of the work work here, start to work towards that development plan.

Speaker Change: Ideally, what we would be in the situation would be is by 2027.

Speaker Change: We want to.

Speaker Change: reasonably, aggressively drill the underground resource.

Speaker Change: is being in a position to start supplementing.

Speaker Change: or replacing some of the lower grade material in the open pit with some higher grade material from the underground mine.

David Strang: It's early days with regard to that process, so I wouldn't be adjusting any models, but you did ask, and so this is the plan that we want to do in terms of the work here, start to work towards that development plan. That's the best I can tell you right now. Probably in the fourth quarter or end of the year, we'll be in a better position to start discussing how the results of the drill program are going.

Speaker Change: that we hope that will be able to be developed over that time period. It's early days with regards to that process, so I wouldn't be adjusting any models. But you did ask, and so this is the plan that we want to do in terms of the work here is start to work towards that development plan.

David Strang: So that's the best I can tell you right now; probably in the fourth quarter, end of the year, we will be in a better position to start discussing how the results of the drill program are going.

Speaker Change: That's the best I can tell you right now, probably in the fourth quarter, end of the year we'll be in a better position to start discussing how the results of the drill program are going.

Dalton Baretto: Thanks, David. And then just sticking with drill rigs here, I wonder if we can get an update on exploration in the Karayba camp, and if there's any change in strategy following some new personnel additions you've just made. Well, that was cryptic.

Dalton Baretto: Thanks, Dave. And then just sticking with drill rigs here. I wonder if we can get an update on exploration in the Caraba camp and if there's any change in strategy following some new personnel additions you've just made. Well, that was cryptic.

Dave: Thanks Dave and then just sticking with drill rigs here. I wonder if we can get an update on exploration in the Caraiba camp and if there's any change in strategy following you know some new personnel additions you've just made.

David Strang: Well, that was cryptic. For those who don't know, a gentleman named Mike Hawking has joined our team, joined Mike's team. For those who know Mike, it needs no introduction. For anybody who doesn't know Mike, Mike Hawking is one of the great up-and-coming GEOs in our business, and we're really, really happy that Mike has joined our team. Mike and the two Mikes are working with our team with regard to the exploration programs in and around Karaiba.

David Strang: For those who don't know, a gentleman named Mike Hawking has joined our team, and to join Mike's team, for those who know Mike, he needs no introduction. For anybody who doesn't know Mike. Mike Hawking is one of the great up-and-coming geos in our business, and we're really, really happy that Mike has joined our team. Mike and the two Mikes are working with our team with regards to the exploration programs in and around Karayba. We are working primarily in and around, continuing to develop material in the Palau mine in and around the project Honeypot. We continue to do work up in the Vermeer's area with regards to continue to look at what we call the UG4 deposit type, which is a deposit that has been identified between Vermeer's and Sarayama, and then, of course, we continue to do work out at a lower rate than previous on nickel in the general district.

Speaker Change: Well, that was cryptic. For those who don't know, a gentleman named Mike Hocking has joined our team, and to join Mike's team, for those who know Mike, he's...

Speaker Change: It needs no introduction for anybody who doesn't know Mike. Mike Hawking is one of the great...

Speaker Change: Up-and-coming GEOs in our business and we're really really happy that Mike has joined our team. Mike and the two Mike's

David Strang: We are working primarily in and around, continuing to develop material in the Palau mine, in and around the... Project Honeypot. We continue to do work up in the Vermeus area with regard to continuing to look at what we call the UG4 deposit type, which is a deposit that has been identified between Vermeus and Surrey EMA. And then, of course, we continue to do work, albeit at a lower rate than before, on nickel in the general district.

Speaker Change: We are working with our team with regards to the exploration programs in and around Karaiba. We are working primarily in and around continuing to develop material in the Palau mine, in and around the area.

Speaker Change: Project Honeypot.

Speaker Change: We continue to do work up in the Virmais area with regards to continue to look at what we call the UG4 deposit type, which is a deposit that has been identified between Virmais and Surrey EMA.

Speaker Change: And then of course we continue to do work, albeit at a lower rate than previous, on nickel in the general district.

Gordon Lawson: Great.

Gordon Lawson: Thanks. The next question comes from Gordon Lawson with Faraday Capital. Please go ahead.

Speaker Change: Great, thanks.

Operator: The next question comes from Gordon Lawson with Faradigm Capital. Please go ahead.

Speaker Change: The next question comes from Gordon Lawson with Faradig Capital. Please go ahead.

Gordon Lawson: Good morning, everyone. Can you just provide a little color on the current mining rates at Palau versus Verme Lawson? How the grades are expected to compare through 2024? Yeah, sure. So thanks for the question. I'd say, you know, our target for the second half of the year at Palau continues to be around the levels that we've been achieving through the first half, the higher here in Q2 and Q3, as we've increased some effort on development of additional steps. You know, we've been averaging close to 150,000 tons a month for Palau, and we expect those rates to increase here in Q3.

Gordon Lawson: Good morning, everyone. Can you just provide a little color on the current mining rates at Pilar versus Romelos and how the grades are expected to compare through 2024?

Gordon Lawson: Good morning, everyone. Can you just provide a little color on the current mining rates at Pilar versus Romelos and how the grades are expected to compare through 2024?

Operator: Yeah, sure. So thanks. Thanks for the question.

Makko DeFilippo: I'd say, you know, our target for the second half of the year at Polar continues to be around the levels that we've been achieving through the first half. Vermeos will be consistent in terms of its contribution to our plan. I'd say that the mining rate is a little bit different at Vermeos. What you see, you know, what you see in terms of mill throughput is what's transported to the plant. We are looking at ways to potentially increase those volumes in the second half of the year by adding an additional transport shift, given the performance that Vermeos has shown to date.

Speaker Change: Yeah, sure. So thanks. Thanks for the question.

Speaker Change: I'd say, you know, our target for the second half of the year at Polar continues to be around the levels that we've been achieving through the first half.

Speaker Change: A bit higher here in Q2 and Q3 as we've increased some effort on development of additional stopes.

Speaker Change: You know, we've been averaging close to 150,000 tons a month for Polar.

Makko DeFilippo: We are seeing increases into Q3, and we expect those increases to continue into Q4 as well. So I'd say that the second half in terms of mining rates from Palau are expected to increase, of Vermeos will be consistent in terms of its contribution to our plan. I'd say that the mining rate is a little bit different from Vermeos. What you see in terms of the mill throughput is what's transported to the plant. We are looking at ways to potentially increase those volumes in the second half of the year heard by adding additional transport shift, given the performance that Vermeos has had to date.

Speaker Change: And we expect those rates to increase here in Q3. We are seeing increases into Q3, and we expect those increases to continue into Q.

Speaker Change: So, I'd say that the second half in terms of mining rates from Pillar are expected to increase.

Speaker Change: Barbados will be consistent in terms of its contribution to

Speaker Change: Our plan, I'd say that the...

Speaker Change: The mining rate is a little bit different at Vermeos. What you see, you know, what you see in terms of mill throughput is what's transported to the plant. We are looking at ways to potentially increase those volumes in the second half of the year by adding an additional transport shift, given the performance that Vermeos has had to date.

Gordon Lawson: Okay, thanks. For the open pit, is it still reasonable to assume we're on a half a million tons a year?

Makko DeFilippo: Okay, thanks. For the open pit, is it still reasonable to assume we're on a half million tons a year? Are you talking about the Serbine? Serbine pit? Yeah, that's right.

Speaker Change: Okay, thanks. For the open pit, is it still reasonable to assume we're on a half a million tons a year?

Makko DeFilippo: Uh, are you talking about the Serbian pit? Yeah, that's right. No, we're mining about 800,000 tons of sulphur a year from the Serbian pit.

Speaker Change: Are you talking about the Serbian pit? Yeah, that's right. No, we're mining about 800,000 tons a year from Serbian.

Makko DeFilippo: No, we're mining about 800,000 tons a year from Serbine. Okay, thank you very much.

Gordon Lawson: Okay. I'm just switching over to Javantina.

Makko DeFilippo: So, Mr. Schumord, as Janthina, I'm just hoping that some of the veins that have been talked about in the past, how close or how far into the Matina and Jent Antonio veins are we now mining, and if you can comment on any drawing progress in terms? Yeah, happy to. Cent Antonio has been the basis of operations for the last four or five years, so we're quite ways into it. And Matina, we entered the Matina vein last year. With respect to what we're seeing, and I'll just reiterate much of we went into any detail in the first quarter call, we've always known through the center of the Cent Antonio vein structure, particularly as it is in depth, that there were significantly higher grades.

Speaker Change: for the four-year. Okay, thank you very much.

Gordon Lawson: Just looking at some of the veins that have been talked about in the past. How close or how far into the Matina and San Antonio veins are we now mining? And if you can comment on any drilling progress on the front.

Speaker Change: We're switching over to Javintina.

Speaker Change: Just looking at some of the veins that have been talked about in the past.

Speaker Change: How close or how far into the Matina and San Antonio veins are we now mining and if you can comment on any drilling progress in the front.

Makko DeFilippo: Yeah, happy to. San Antonio has been the basis of operations for the last four or five years, so we're quite a ways into it. And Metinia, we entered the Metinia vein last year. With respect to what we're seeing, and I'll just reiterate, I'm not sure if we went into any detail in the first quarter call.

Speaker Change: Yeah happy to. San Antonio has been the basis of operations for the last four four or five years so we're quite ways into it and Metinia, we entered the Metinia vein last year.

Speaker Change: With respect to what we're seeing and I'll just reiterate I'm not sure if we went into any detail in the first quarter call.

Makko DeFilippo: We've always known through the center of the San Antonio vein structure, particularly as it went to depth, that it was significantly higher grade. The zone isn't particularly wide, it's probably 30 to 40 meters wide, and we historically had maybe four or five holes of the total drill database that intersected that zone. What has come to pass as we've been mining is, and due to resource calculations, historically, particularly using the Krieger methodology, you know, you top cut your gold grades.

Speaker Change: We have always known through the center of the San Antonio vein structure, particularly as it went to depth.

David Strang: The zone isn't particularly wide; it's probably 30 to 40 meters wide, and we historically had maybe four or five holes of the total drill database that intersected that zone. What has come to pass, as we've been mining, is obviously that zone is due to resource calculations historically, particularly using the creaking methodology. You know, you top-cut your, your, your, your gold grades. And so what we have now seen is that, that zone remains and has remained for the last 12 to 18 months consistent with regards to elevated grades against the historical resource and reserve estimate.

Speaker Change: There were significantly higher grades. The zone isn't particularly wide, it's probably 30 to 40 meters wide, and we historically had maybe four or five holes of the total drill database that intersected that zone.

Speaker Change: What has come to pass as we've we've been mining is obviously that zone is

Speaker Change: And due to resource calculations, historically, particularly using the Kriegen methodology,

Makko DeFilippo: And so what we have now seen is that that zone remains, and has remained for the last 12 to 18 months, consistent with regard to elevated grades against the historical resource and reserve estimates. So we now have a bill. Some would call it a quandary; what do you do?

Speaker Change: You know, you top cut your gold grades, and so what we have now seen is that that zone remains and has remained for the last...

Speaker Change: 12 to 18 months consistent with regards to elevated grades against the historical resource and reserve estimate.

David Strang: So we now have a bit of, some would call it a quandary. What do you do? From our perspective, we think it's not the time or the money to start drilling out the zone in more detail to try and upgrade the resource, but rather keep it as such and try and give as much guidance as we can from the development work that we do, and then the sampling for that. So, as we mentioned previously on the call today, we now have visibility through the end of the year from development drives and sampling of those development drives that we will continue to see these elevated grades, head cent Antonio through the end of the year.

Makko DeFilippo: From our perspective, we think it's not worth the time or the money to start drilling out the zone in more detail to try and upgrade the resource, but rather keep it as such and try and give as much guidance as we can from the development work that we do and then the sampling for that. So, as we mentioned earlier on the call today, we now have visibility through the end of the year from development drives and sampling of those development drives that we will continue to see these elevated grades at San Antonio through the end of the year. Exploration drilling continues, both down-dip and lateral extensions of the San Antonio vein, and we continue to see similar grades that we've released historically with regard to the work that we've done there.

Speaker Change: So we now have a bill.

Speaker Change: Some would call it a quandary, what do you do?

Speaker Change: From our perspective, we think it's not worth the time or the money to start drilling out the zone in more detail to try and upgrade the resource, but rather keep it as such and try and give as much guidance as we can from the development.

Gordon Lawson: Okay, that's excellent. Thank you very much.

Speaker Change: So as we mentioned previously on the call today, we now have visibility through the end of the year from development drives and sampling of those development drives that we will continue to see these elevated grades at San Antonio through the end of the year.

David Strang: Exploration drilling continues both down dip and lateral extensions of the Cent Antonio vein, and we continue to see similar grades that we've released historically with regards to that work that we've done there.

Speaker Change: Exploration drilling continues, both down dip and lateral extensions of the San Antonio vein, and we continue to see similar grades that we've released historically with regards to that work that we've done there.

David Strang: Okay, that's excellent. Thank you very much.

Speaker Change: Okay, that's excellent. Thank you very much.

Stefan Ioannou: The next question comes from Stefan. You knew with Corona security, please go ahead. Yeah, thanks very much, and then most of my questions have been answered. Let me just circling back on Bryce's question about the grade at Kareba, the head grade being lower, sort of for the first half of the year. Can you just, just, just to clarify, was that done an issue of delusion of the higher grade stopes, or just getting into enough high grade stopes to bring the grade up? Yeah, we ran into a couple of issues that happened in the first quarter. We got behind on some of the development.

Stefan Ioannou: The next question comes from Stefan Ioannou with Cormark Securities. Please go ahead.

Speaker Change: The next question comes from Stefan Ioannou with Cormark Securities. Please go ahead.

Stefan Ioannou: Thanks very much. Most of my questions have been answered. Circling back to Bryce's question about the grade at Carreba, the head grade being lower for the first half of the year, just to clarify, was that then an issue of dilution of the higher grade stopes or just getting into enough high grade stopes to bring the grade up?

Stephan Yanu: Thanks very much. Most of my questions have been answered. Circling back on Bryce's question about the grade at Carreba, the head grade being lower for the first half of the year, just to clarify, was that then an issue of dilution of the higher grade stopes or just getting into enough high grade stopes to bring the grade up?

David Strang: Yeah, we ran into a couple of issues in the first quarter. We got behind on some of the development. So we mined a high proportion of lower grade stokes to higher grade stokes. [inaudible] With regard to some of the work that we did there, and that resulted in dilution of the stope. Bear in mind, when we start getting into grades that are 4, 5, 6 percent, we're going to start seeing that material become quite friable, and some of the wall rock surrounding it remains that way as well.

Speaker Change: Yeah, we ran into a couple, there's a couple of issues that happened. In the first quarter we got behind on some of the development, so we mined a high proportion of lower grade stopes to higher grade stopes.

Makko DeFilippo: So we mined a high proportion of lower grade stokes to higher grade stokes during the first quarter, and that was the problem there. We've subsequently worked on that with regards to accelerating our development work and are getting back on schedule with regards to that. However, as we were mining some of the higher grade stokes in the second quarter, so one in particular, which was a quite important stoke for us in the second quarter, we encountered some over break, some significant over break with regards to some of the work that we did there, and that resulted in dilution of the stoke.

Speaker Change: during the first quarter. And that was the problem there. We've subsequently

Speaker Change: We've worked on that with regards to accelerating our development work.

Speaker Change: and are getting back on schedule with regards to that.

Speaker Change: However, as we were mining some of the higher-grade stokes in the second quarter, one in particular, which was a quite important stoke for us in the second quarter, we encountered some overbreak, some significant overbreak.

Makko DeFilippo: Bear in mind, when we start getting into grades, the four, five, six percent, that material becomes quite friable, and some of the war rocks surrounding it remains that way as well. So when we do get into these very high areas, as much as we try to be as careful as we can be with regards to our blocking patterns, etc. On occasion, not all the time, on occasion, we will see over break occurring and dilution occur. Now the interesting thing about it, the dilution was actually coming in around about 1.2 percent copper. So it was still, you know, reasonable copper grades by our expectation. On that stoke, it was to have grades significantly higher coming into the mill than that lower grade.

Speaker Change: With regards to some of the work that we did there and that resulted in the dilution of the stoke.

Speaker Change: Bear in mind, when we start getting to grades that are 4, 5, 6 percent,

Speaker Change: That material becomes quite friable and some of the the wall rock surrounding it

David Strang: So when we do get into these very high areas, as much as we try to be as careful as we can be with regards to our blasting patterns, etc., on occasion, not all the time, on occasion, we will see overbreak occur, and dilution occur. Now the interesting thing about it is that the dilution was actually coming in around about 1.2% copper. So it was still, you know, reasonable copper grades, but our expectation on that stope was to have grades significantly higher coming into the mill than that lower grade. So, ultimately, we would recover all of that copper material.

Speaker Change: remains that way as well. So when we do get into these very high areas, as much as we try to be as careful as we can be with regards to our blocking patterns, etc.

Speaker Change: On occasion, not all the time, on occasion we will see over break occurring and dilution.

Speaker Change: Now, the interesting thing about it, the dilution was actually coming in around about 1.2% copper, so it was still reasonable copper grades, but our expectation on that stope was to have grades significantly higher coming into the mill than that lower grade.

Makko DeFilippo: So ultimately, we will recover all of that copper material. Unfortunately, it's just not going to be at the same highest grade as we expected to come out in the second quarter. As we've gone into the third quarter, we have seen some of the stokes that we've targeted in terms of higher grade come into production. In general, we've had a pretty good start to the third quarter.

David Strang: Unfortunately, it's just not going to be at the same highest grade as we expected it to come out in the second quarter. However, as we've gone into the third quarter, we have seen some of the stopes that we've targeted in terms of higher grade come into production. In general, we've had a pretty good start to the third quarter, albeit with regard to the accident last week. We did shut operations for three days as a result of the investigation, but also with respect to the families and allowing our workforce to attend the funeral of our colleague. So we've had a reasonably good start to the third quarter, and we expect August and September to continue on track. That's super helpful, and then maybe just one sort of...

Speaker Change: Ultimately, we will recover all of that copper material.

Speaker Change: Unfortunately, it's just not going to be at the same highest grade as we expected.

Speaker Change: to come out in the second quarter.

Speaker Change: As we've gone into the third quarter, we have seen some of the stokes that we've targeted in terms of higher grade.

Makko DeFilippo: albeit with regards to the accident last week, we did shut operations for three days as a result of the investigation, but also with respect to the families and allowing our workforce to attend the funeral of our colleague. So we've had a reasonably good start to the third quarter, and we expect August and September to continue on track. Okay, great. That's super helpful.

Speaker Change: Come in to production. In general, we've had a pretty good start to the third quarter.

Speaker Change: Albeit with regards to the accident last week, we did shut operations for three days as a result of the investigation, but also with respect to the families and allowing our workforce to attend the funeral of our colleague.

Speaker Change: So, we've had a reasonably good start to the third quarter and we expect August and September to continue on track.

Operator: 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.

Wayne Drier: And then maybe just one sort of housekeeping question that my apologies I missed that you mentioned, the TCs are locked in kind of for the rest of your down at like five bucks a ton.

Speaker Change: Okay, great. That's super helpful. And then maybe just one sort of housekeeping question, and my apologies, I missed it. You mentioned the TCs are locked in kind of for the rest of the year, down at like five bucks a ton. What was the number you said it was prior to that that you were sort of seeing?

Wayne Drier: What was the number you said it was prior to that, that you were sort of seeing? 80. Okay, great.

Wayne Drier: Thanks very much; you guys. Yeah.

Operator: All information on this website is purely information and should not be used as the sole basis for making financial decisions. The opinions rendered herein are those of the guests and not necessarily those of Douglas Goldstein, Profile Investment Services, Ltd., or Israel National News.

Speaker Change: Eighty. Eighty. Okay, great. Thanks very much, guys. Yeah. Yeah.

Dalton Baretto: Once again, if you have a question, please start in one. The next question comes from Dalton, Burrito from Canada card. Please go ahead. Thanks for taking my follow up, guys. Dave, with the earning agreement on Furnash not behind you, are you able to give us a sense, in terms of broad strokes, what this project looks like? And then sort of timeline to first production post the resource?

Operator: Once again, if you have a question, please press star, then 1. The next question comes from Dalton Baretto from Kennecott. Please go ahead.

Speaker Change: Once again, if you have a question, please press star, then 1. The next question comes from Dalton Baretto from Kennecott. Please go ahead.

Dalton Baretto: Thanks for taking my follow-up guys. Dave, with the earning agreement and furnace now behind you, are you able to give us a sense in terms of broad strokes of what this project looks like, and then you know sort of a timeline to first production post the resource?

Dalton Barreto: Thanks for taking my follow-up guys. Dave, with the earning agreement and furnace now behind you, are you able to give us a sense in terms of broad strokes what this project looks like and then you know sort of timeline to first production post the resource?

David Strang: Dalton, I am going to allow the resource to speak for itself when we come out with it. In preparation for that, and hopefully, that resource comes out before next time we all have a chat in terms of the quarterly, is that we think that is a good starting point.

David Strang: Dalton, I'm going to allow the resource to speak for itself when we come out with it in preparation of that. And hopefully that resource comes out before next time that we all have a chat in terms of the quarterly, is that we think that's a good starting off point. Vale has done a great job with regards to identifying and drilling out a very, very large area. And it's our job now to identify and take a slightly different approach from what they did. As you may or may not know, they took an approach of looking at it from an open pit mine perspective.

Speaker Change: Dalton, I'm going to allow the resource to speak for itself when we come out with it.

Speaker Change: In preparation of that, and hopefully that resource comes out before next time that we all have a chat in terms of the quarterly, is that we think that's a good starting off point.

David Strang: Valais did a great job with regard to identifying and drilling out a very, very large area, and it's our job now to identify and take a slightly different approach from what they did. As you may or may not know, they took the approach of looking at it from an open pit mine perspective. We see opportunity to look at Furnace as an underground mine. That requires us to do some more infill drilling on what we see as a very high-grade zone in the center of the deposit, as well as to do work in terms of extending the deposit to depth below the valley floor.

Speaker Change: Valle has done a great job with regards to identifying and drilling out a very, very large

Speaker Change: And it's our job now to identify and take a slightly different approach from what they did. As you may or may not know, they took an approach of looking at it from an open-pit mine perspective.

David Strang: We see opportunity to look at Furnash as an underground mine. That requires us to do some more info drilling on what we see as a very high-grade zone in the center of the deposit, as well as doing work in terms of extending the deposit to depth below the valley floor. So, with respect to that, yeah, I mean we wouldn't have done this deal if we weren't excited about it. I don't think Valley would have done the deal with us, you know, had they've not seen that we have something to bring to the project in terms of some of our underground mining experience.

Speaker Change: We see opportunity to look at Furnace as an underground mine. That requires us to do some more info drilling on what we see as a very high-grade zone in the center of the deposit, as well as doing work in terms of extending the deposit to depth below the valley floor.

David Strang: With respect to that, yes, we wouldn't have done this deal if we weren't excited about it. I don't think Valais would have done the deal with us had they not seen that we had something to bring to the project in terms of some of our underground mining experience. I think the opportunity to work with Valais Base is a great one for us, and we hope this is the beginning of a greater, longer-term relationship with the company.

Speaker Change: So, with respect to that...

Speaker Change: Yeah, I mean, we wouldn't have done this deal if we weren't excited about it. I don't think Vale would have done the deal with us.

Speaker Change: You know, had they not seen that we have something to bring to the project in terms of some of our underground mining experience. And I think, you know, the opportunity to work with Valley Base.

Ralph Profiti: And I think, you know, the opportunity to work with Valley base is a great one for us. And we hope this has been of a greater, longer term relationship with the company. Okay, great.

Speaker Change: It's a great one for us and we hope this is the beginning of a greater longer-term relationship with the company.

Wayne Drier: Thanks. The next question comes from Ralph Profiti with eight capital. Please go ahead. Thanks, operator.

Dick: Okay, great. Thanks, <expletive> .

Operator: The next question comes from Ralph Profiti with 8 Capital. Please go ahead.

Dick: The next question comes from Ralph Profiti with 8 Capital. Please go ahead.

Ralph Profiti: Thanks, Operator. Wayne, the strategy around the Brazilian Real, from the MD&A, you capped out at around 5.38, and this morning we're sitting at 5.7. Just wondering if the philosophy around hedging the currency was more to do with Tacoma or Kenya. You know, at this point, to be maybe, say, financially opportunistic.

Wayne Drier: Wayne, describe to you around the preserving rail. From the MDNA, you capped out at around 5.38, and this morning we're sitting at 5.7. Just wondering if the philosophy around hedging the currency was more to do with Tacuma or Kenya, you know, at this point, be maybe say financially opportunistic. Yeah, good observation. I think that the way you sort of cultured exactly that. I mean, the hedges we had in place were certainly front-end weighted this year, and it really was to protect the significant capital spend. I think now that we're past that, we will be a little bit more opportunistic.

Ralph Profiti: Thanks, Operator.

Dick: Wayne, the strategy around the Brazilian Royale from the MD&A you capped out at around 5.38 and this morning we're sitting at 5.7.

Ralph Profiti: Just wondering if the philosophy around hedging the currency was more to do with Takuma or Kenya, you know, at this point be maybe, say, financially opportunistic?

Wayne Drier: Yeah, good observation. I think that the way you sort of couched it is exactly that.

Speaker Change: Yeah, good observation. I think that the way you sort of cast is exactly that. I mean, the hedges we had in place were certainly front-end weighted this year, and it really was to protect the significant capital spend.

Wayne Drier: I mean, the hedges we had in place were certainly front-end weighted this year, and it really was to protect the significant capital spend. I think now that we're past that, we will be a little bit more opportunistic. We're obviously seeing significant weakness here in the BRL. We do take advantage of that at times, and I would say that we will look to basically give ourselves some downside protection, but it gives us as much capital as possible so that we're not paying away.

Speaker Change: I think now that we're past that, we will be a little bit more opportunistic. We're obviously seeing significant weakness here in the BRL. We do take advantage of that at times. And I would say that, you know...

Wayne Drier: We're obviously seen significant weakness here in the BRL. We do take advantage of that at times, and I would say that, you know, we will look to basically give ourselves a corner that gives ourselves some downside protection. But it gives us as much gap as possible that, you know, we're not paying away. But obviously, at those kind of levels, we're at today, the benefit that we see through our operating costs and our local costs on the ground, you know, are very, very significant. So we always look at that, we balance that out, and then try and be opportunistic.

Speaker Change: We will look to basically give ourselves a collar that gives us some downside protection.

Wayne Drier: But obviously, at the kind of levels we're at today, the benefit that we see through our operating costs and our local costs on the ground is very, very significant. So we always look at that, we balance that out, and then try and be opportunistic. So I think certainly going forward, I don't think you're going to see us have as heavy a foreign exchange derivative program. It'll be a little bit more o

Speaker Change: It gives us as much cap as possible so that, you know, we're not paying away. But obviously, at those kind of levels we're at today...

Speaker Change: The benefit that we see through our operating costs and our local costs on the ground, you know, are very, very significant. So we always look at that, we balance that out, and then, you know, try and be opportunistic. So I think, certainly going forward, I don't think you're going to see us have as heavy a...

Wayne Drier: So I think certainly going forward, I don't think you're going to see us have as heavy a foreign exchange derivative program. It'll be a little bit more opportunistic.

Speaker Change: foreign exchange derivative program. It'll be a little bit more opportunistic.

Wayne Drier: Dr. Thank you.

Wayne Drier: Dr. Thank you. And just a quick follow up.

Wayne Drier: And just a quick follow-up. What's the grade of that stockpile at Tacuma? I believe you had that crystal or sort of, you know, early around the sequence to get around 440,000 tons at 2% copper.

Speaker Change: Thank you. And just a quick follow-up, what's the grade of that stockpile at Takuma? I believe you had that crushed ore sort of, you know, early around the sequence to get around 440,000 tons at 2% copper. Just wondering, is the stockpile grade similar?

Wayne Drier: Just wondering, what is the stockpile grade similar? Sorry, just to clarify that it's 44,000 tons at 2% that's in the mine. The overall stockpile for 60,000 tons has been broken up into various grades. So the average is right around 1%. We have low grade, high grade mixed in that, mixed in that 460,000 tons of stockpile to sitting in our run-on-minor. Is that clear? Yeah. Yes.

Wayne Drier: What's the grade of that stockpile at Takuma? I believe you had that crushed ore sort of, you know, early around the sequence to get around 440,000 tons at 2% copper. Just wondering, what is the stockpile grade similar?

Wayne Drier: Sorry, just to clarify the number, it's 44,000 tons of 2% that's in the mine. The overall stockpile of 460,000 tons has been broken up into various grades, so the average is right around 1%. We have low-grade and high-grade mixed in that 460,000 tons of stockpile that's sitting in our run-of-mine yard.

Speaker Change: Sorry, just to clarify the number, it's 44,000 tons of 2% that's in the mine. The overall stockpile of 460,000 tons has been broken up into various grades.

Speaker Change: So the average is right around 1%. We have low-grade, high-grade mixed in that 460,000 tons of stockpile that's sitting in our run-of-mine yard.

Ralph Profiti: Yes, thank you for that, Clare; I appreciate it.

Wayne Drier: Thank you for that clear.

Orest Wowkodaw: I appreciate it.

Speaker Change: Is that clear? Yes. Thank you for that, Claire.

Orest Wowkodaw: Next question comes from Oris Wakadal with Scotia Banks. Please go ahead. Thanks for taking a quick follow-up. Notice that your total cap-backs guidance is pretty much unchanged, but you did increase Tacuma by about 20 million, corresponding with the stockpile. And you may be speaking to sort of what's driving the increase at Tacuma and then what you're cutting back at Cariba? Yeah, thanks. Thanks, Oris. So maybe starting first with Tacuma. I think you pointed out, obviously, one of the things that we've mentioned in terms of these tax, the impact on the non-recoverable taxes, the taxes that we deemed non-recoverable, which is about 12 million.

Operator: The next question comes from Orest Wowkodaw with Scotiabank. Please go ahead.

Speaker Change: Yep.

Speaker Change: The next question comes from Orest Wowkodaw with Scotiabank. Please go ahead.

Orest Wowkodaw: Thanks for taking a just a quick follow-up. I noticed that your total CapEx guidance is pretty much unchanged, but you did increase Takuma by about 20 million and corresponding with a decline at Kariba of 20 million. Can you maybe speak to sort of what's driving the increase at Takuma and then what you're cutting back at Kariba? Yeah, thanks. Thanks, Orest.

Orest Wowkodaw: Thanks for taking a just a quick follow-up. Notice that your total CapEx guidance is...

Orest Wowkodaw: [inaudible]

Wayne Drier: So maybe starting first with Tukumar, I think you pointed out, obviously, one of the things that we've mentioned in terms of the impact on the non-recoverable taxes, the taxes that we deem non-recoverable, which is about $12 million. There is an additional $4 million associated with the increase in capitalized ramp-up, particularly around mining and some of the early work, the acceleration of mining that has continued into Q2 faster than we expected, and then the ancillary costs associated with that ramp-up, which includes building, you know, running our primary crusher, secondary crusher, tertiary crushing screening systems, and getting our laboratory up and running full capacity to support that increase in mining operations.

Operator: Yeah, thanks. Thanks, Orest.

Speaker Change: Yeah, thanks. Thanks, Orest. So maybe starting first with Tukumar, I think you're you pointed out obviously the one of the things that we've mentioned

Speaker Change: In terms of the impact on the non-recoverable taxes, the taxes that we deem non-recoverable, which is about $12 million.

Orest Wowkodaw: The additional 4 million associated with the increase in capitalized ramp-up, particularly around mining and some of the early work, the acceleration of mining that has continued into Q2 faster than we expected. And then the auxiliary costs associated with that ramp-up, which includes building, you know, running our primary crusher, secondary crusher, tertiary crushing screening systems, and getting our laboratory up and running full capacity to support that increase in mining operations. So there's a few things that go into that 4 million dollar bucket, but that gets us to 16 million. We gave ourselves a bit of flexibility given the accounting treatment on the range that we increase, but we're feeling pretty confident with our overall capital assessment at Tacuma at this stage.

Speaker Change: There's an additional $4 million associated with the...

Speaker Change: The increase in capitalized ramp-up, particularly around mining and some of the early work, the acceleration of mining that has continued into Q2 faster than we expected, and then the ancillary costs associated with that ramp-up, which includes

Speaker Change: building, you know, running our primary crusher, secondary crusher, tertiary crushing screening systems, and getting our laboratory up and running full capacity to support that increase in mining operations.

Wayne Drier: So there are a few things that go into that $4 million bucket, but that gets you to $16 million. We gave ourselves a bit of flexibility given the accounting treatment on the range that we increased, but we're feeling pretty confident with our overall capital assessment at Tukumar at this stage.

Speaker Change: So, there's a few things that go into that $4 million bucket, but that gets us to $16 million. We gave ourselves a bit of flexibility given the accounting treatment on the range that we increased.

Wayne Drier: At Kariba, the largest reduction in capital came from synergies associated with some of the tailings management that we do. So, as you know, we use a co-disposal system where we allow tailings to dry fully in our co-disposal piles, and then we move those dried tailings to a permanent storage facility. We had another project running in parallel associated with the closure of our oxide heat bleach pile, and we've been able to recognize versus our budget a pretty significant savings in using that material from the dried tailings co-disposal as the base for our oxide pile closure.

Orest Wowkodaw: In the at Carriva. The largest reduction in capital came from Synergy's associated with some of the tailings management that we do. So, I think, as you know, we use a no-disposal system where we allow tailings to dry fully in our co-disposal piles, and then we move those dry tailings to a permanent storage facility. We had another project running in parallel associated with the closure of our oxide heap-leach pile, and we've been able to recognize versus our budget a pretty significant savings in using that material from the dried tailings co-disposal as the base for our oxide pile closures.

Speaker Change: But we're feeling pretty confident with our overall capital assessment at Tucumal at this stage. In the...at Cariba...

Speaker Change: The largest reduction in capital.

Speaker Change: came from synergies associated with some of the tailings management that we do. So I think as you know, we use a co-disposal.

Speaker Change: system where we allow tailings to dry fully in our in our co-disposal piles and then we move those dried tailings to a permanent storage facility.

Speaker Change: We had another project running in parallel associated with closure of our oxide heat bleach pile.

Speaker Change: And we've been able to recognize, versus our budget, a pretty significant savings in using that material.

Speaker Change: from the dried tailings co-disposal as the base for our oxide pile closures. That's probably the biggest. There's other items in there, of course, but the biggest single item is the synergies related to integrating those two projects, which we have worked on in the first half of the year.

Wayne Drier: So that's probably the biggest. There are other items in there, of course, but the biggest single item is the synergies related to integrating those two projects, which we worked on in the first half of the year.

Orest Wowkodaw: That's probably the biggest; there's other items in there, of course, but the biggest single item is the Synergy's related to integrating those two projects, which we have worked on in the first half of the year. Thanks very much.

Speaker Change: Thanks very much.

Operator: Days concludes the question and answer session.

Operator: This concludes the question and answer session. I would like to turn the conference back over to David Strang for any closing remarks.

David Strang: I would like to turn the conference back over to David Strang for any closing remarks. Thank you, operator, and thanks to everybody for attending the call today. We really appreciate the questions and the detailed nature of them all.

Speaker Change: This concludes the question and answer session. I would like to turn the conference back over to David Strang for any closing remarks.

David Strang: Thank you, operator, and thanks to everybody for attending the call today. We really appreciate the questions and the detailed nature of them all. We look forward to seeing many of the analysts who are on the call today in September during our analyst visit, in which we will be visiting both Tukumar as well as Karaiba. And with that, we hope you all enjoy the rest of your summer and look forward to talking to you again in November about our third quarter. Earnings call. Thanks again. Thank you, Operator.

David Strang: Thank you, operator, and thanks to everybody for attending the call today.

Operator: We look forward to seeing many of the analysts who are on the call today in September during our analyst visit, in which we will be visiting both Tukama as well as Karayiba. With that, we hope you all enjoy the rest of your summer and look forward to talking to you again in November on our third quarter earnings call. Thanks again. Thank you, operator.

Speaker Change: We really appreciate the questions and the detailed nature of them all. We look forward to seeing many of the analysts who are on the call today in September during our analyst visit, in which we will be visiting both Tukumar as well as Karaiba.

Speaker Change: And with that, we hope you all enjoy the rest of your summer and look forward to talking to you again in November on our third quarter.

Speaker Change: Earnings call. Thanks again. Thank you, operator.

Operator: This brings to an end today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.

Operator: If you're an end to today's conference call, you may disconnect your lines.

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