Q2 2024 Capstone Copper Corp Earnings Call
Operator: Good afternoon, ladies and gentlemen, and welcome to Capstone Copper's Q2 2024 results conference call. At this time, all lines are in a listen-only mode.
Good afternoon, ladies and gentlemen, and welcome to Capstone Koppers Q2, 2024 results conference call. At this time all lines are in a listen only mode. Following the presentation. We will conduct a question and answer session. If at any time during this call. The required immediate assistance. Please press star zero for operator.
Operator: Good afternoon, ladies and gentlemen, and welcome to Capstone Cooper's Q2 2024 Results Conference Call. At this time, all lines are in a listen on the board.
Operator: Following the presentation, we will conduct a question-and-answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on Thursday, August 1, 2024. I would now like to turn the conference over to Jerrold Annett. Please do so.
Operator: Following the presentation, we will conduct a question-and-answer session.
Operator: If at any time during this call, you require immediate assistance, please press star zero for the operator.
Sure.
Operator: This call is being recorded on Thursday, August 1, 2024.
This call is being recorded on Thursday August one 2024, I would now like to turn the contracts over to Gerald Bennett. Please go ahead.
Jerrold Annett: I would not like to turn the conference over to Jerrold Annett; please go ahead. Thank you, Operator. I'd like to welcome everyone to Capstone Coopers Q2 2024 conference call. Please note, through the news release and regulatory filings announcing Capstone Cooper's 2024 second quarter financial and operational results are available on our website and on Cedar Plus. If you are logged into the webcast, we will advance the slides of today's presentation, which are also available in the investor's section of our website.
Speaker Change: Thank you operator.
Jerrold Annett: I'd like to welcome everyone to Capstone Copper's Q2 2024 conference call. Please note that the news release and regulatory filings announcing Capstone Copper's 2024 second quarter financial and operational results are available on our website and on CDAR+.
Gerald Bennett: I'd like to welcome everyone to Capstone Koppers Q2, 2024 conference call. Please.
Speaker Change: Please note that the news release and regulatory filings announcing capstone Copper's 2024 second quarter financial and operational results are available on our website and on SEDAR plus.
Jerrold Annett: If you're logged into the webcast, we will advance the slides of today's presentation, which are also available in the investors section of our website. I'm joined today by our CEO, John MacKenzie, our President and COO, Cashel Meagher, our Chief Financial Officer, Raman Randhawa, our Senior Vice President, Risk, ESG, and General Counsel, Wendy King, and our Senior Vice President, Technical Services, Peter Amalukson, is also available for the Q&A period of this call.
Speaker Change: If you're logged into the webcast, we will advance the slides with today's presentation, which are also available in the investors section of our website.
Jerrold Annett: I'm joined today by our CEO, John McKenzie; our president and COO, Casual Mar; our chief financial officer, Raman Randhawa; our senior vice president, RISC, ESG, and General Counsel, Wendy King; and our senior vice president, technical services, Peter Amelunxen, who is also available for the Q&A period of this call. Following our brief remarks, there will be an opportunity for questions. Please note that comments made on the call today will contain forward-looking information within the meaning of applicable securities laws. This information, by its nature, is subject to risks and uncertainties, and actual results may differ materially from the views expressed today.
Speaker Change: I'm joined today by our CEO, John Mckenzie, our President and COO Castle Maher.
Speaker Change: Our Chief Financial Officer, Robin Randhawa, our senior Vice President risked ESG in General Counsel when do King.
Speaker Change: And our senior Vice President Technical services the services, Peter Ammo looks and is also available for the Q&A period of this call.
Jerrold Annett: Following our brief remarks, there will be an opportunity for questions. Please note that comments made on the call today will contain forward-looking information within the meaning of applicable securities laws. This information, by its nature, is subject to risks and uncertainties, and actual results may differ materially from the views expressed today. For further information on the risks and uncertainties pertaining to our business, please see Capstone's most recent filings, which are available on our website and on CDAR Plus. And finally, I'll just note that all amounts we will discuss today are in U.S. dollars unless otherwise specified. Now, I'll turn the call over to John MacKenzie.
Speaker Change: Following a brief remarks, there will be an opportunity for questions. Please note that comments made on the call today will contain forward looking information within the meaning of applicable securities laws. This information by its nature is subject to risks and uncertainties and actual results may differ material materially from.
Speaker Change: The views expressed today.
Jerrold Annett: For further information on the risks and uncertainties pertaining to our business, please see Capstone's most recent filings, which are available on our website and on Cedar Plus.
Speaker Change: Further information on the risks and uncertainties pertaining to our business. Please see capstone <unk>. Most recent filings which are available on our website and on SEDAR plus.
Jerrold Annett: And finally, I'll just note that all amounts we will discuss today are in US dollars, unless otherwise specified.
Speaker Change: And finally I will just note that all amounts we will discuss today are in U S dollars.
Speaker Change: Yes, otherwise specified.
John MacKenzie: Now, I'll turn the call over to John McKenzie. Thank you, Gerald. And good morning to those dialing in from Australia.
Speaker Change: Now I will turn the call over to John Mckenzie.
John Mckenzie: Thank you Charles.
John Mckenzie: And good morning to those dialing in from Australia.
John MacKenzie: Thank you, Jerrold, and good morning to those dialing in from Australia. We're pleased to present our second quarter 2024 results and achievements, starting with slide five.
John MacKenzie: We're pleased to present our second quarter 2020 poor results and achievements. Starting with slide five, our operations performed well during Q2 with consolidated copper production of around 41,000 tons at consolidated C1 cash costs of $2.84 per pound. We've had a solid first half of 2024, achieving our H1 production guidance while slightly exceeding our cost guidance by two cents. We're particularly pleased with our Pinta Valley encasement performance, and importantly, our months of early development project ramp-up remains on track and on budget. We've produced first saleable copper concentrates during the second quarter as planned, and our team is focused on achieving sustainable production and design run rate levels.
John Mckenzie: We're pleased to present, our second quarter 2024 results and achievements.
John Mckenzie: Starting with slide five.
John MacKenzie: Our operations performed well during Q2, with consolidated copper production of around 41,000 tonnes at consolidated C1 cash costs of $2.84 per pound. We've had a solid first half of 2024, achieving our H1 production guidance while slightly exceeding our cost guidance by two cents. We're particularly pleased with our Pinsa Valley and Cozumel performance, and importantly, our Monteverde Development Project ramp-up remains on track and on budget. We produced the first saleable copper concentrates during the second quarter as planned, and our team is focused on achieving sustainable production at design run rate levels.
John Mckenzie: Our operations performed well during Q2 with consolidated copper production of around 41000 tons at consolidated cone cash costs of $2 84 per pound.
Speaker Change: We've had a solid first half of 2020 for achieving our H one production guidance while.
John Mckenzie: Slightly exceeding our cost guidance by <unk> <unk>.
Speaker Change: We are particularly pleased with our Pennsylvania, and <unk> performance and importantly, our months of any development project ramp up remains on track and on budget.
John Mckenzie: We produced first saleable copper concentrates during the second quarter as planned and our team is focused on achieving sustainable production at design run rate levels.
John MacKenzie: Castle will provide more details on this a bit later in the presentation. As a result, we are reiterating our consolidated 2024 operating guidance. Although we note the production is trending below the midpoints, our costs are correspondingly trending towards the upper end, largely due to a two-month delay in reaching a sustainable 20,000 ton per day operating rates at Montess Blancas. On the corporate side, our net debt was largely unchanged at $741 million as at June 30th.
John MacKenzie: Cashel will provide more details on this a bit later in the presentation. As a result, we are reiterating our consolidated 2020 Operating Guidance. Although we note that production is trending below the midpoints, while costs are correspondingly trending towards the upper end, largely due to a two-month delay in reaching a sustainable 20,000 tonne per day operating rate at Montes Blanco. On the corporate side, our net debt was largely unchanged. $741 million as of June 30th. Our balance sheet is in excellent shape as we ramp up Monteverde ahead of our next leg of growth. And turning to slide six.
John Mckenzie: We will provide more details on this a bit later in the presentation.
John Mckenzie: As a results we are reiterating our consolidated 2024 operating guidance. Let me note that production is trending below the mid points, while costs are correspondingly trending towards the upper end largely due to a two months delay in reaching a sustainable 20000 tonnes a day operating rates at months of Splunk.
John Mckenzie: On the corporate side, our net debt was largely unchanged at $741 million.
John Mckenzie: As of June 30th.
John MacKenzie: Our balance sheet is in excellent shape, as we ramp up Monteverde, a hit of our next leg of birth.
Speaker Change: Our balance sheet is in excellent shape as we ramp up months of Ed <unk>.
John Mckenzie: Good.
John MacKenzie: In turning to slide six, yesterday we released an updated feasibility study for our Sons of Domingo projects. This marks a major step towards the creation of a world-class district in the Asakama region of Chile, with Sons of Domingo positioned 35 kilometres from Monteverde. At Sons of Domingo, we've optimized the mine plan, updated the capital and operating cost estimates, and incorporated all experience gained throughout the engineering construction of our nearby Monteverde development project. The 2024 feasibility study significantly enhances the mine's economics, backed by low capital intensity and first quartile costs. A construction decision and the integration of Sons of Domingo represents the next phase of our transformational growth, as you become a leading, long-life, and low-cost copper producer.
John Mckenzie: And turning to slide six.
John MacKenzie: Yesterday, we released an updated feasibility study for our Santo Domingo project. This marks a major step towards the creation of a world-class district in the Atacama region of Chile, with Sunset Domingo positioned 35km from Monteverde. At Sunset Domingo, we've optimized the mine plan, updated the capital and operating cost estimates, and incorporated all experience gained throughout the engineering and construction of our nearby Monteverde Development Project. The 2024 Feasibility Study significantly enhances the mine's economics, backed by low capital intensity and first quartile costs.
John Mckenzie: Yesterday, we released an updated feasibility study for a sensitive projects.
John Mckenzie: This marks a major step towards the creation of a world class District, and the <unk> region of Chile with.
John Mckenzie: The subsidy Domingos positioned 35 kilometers from months of Ed.
John Mckenzie: At Sunset Domingo, we've optimized the mindset.
John Mckenzie: <unk>, the capital and operating cost estimates.
John Mckenzie: And incorporated all experienced gains throughout the engineering construction nearby months have added development projects.
John Mckenzie: The 2020 full feasibility study significantly enhances the mine's economics.
John Mckenzie: By low capital intensity and first quartile costs.
John MacKenzie: The construction decision and the integration of Sunset Domingo represent the next phase of our transformational growth as we become a leading, long-life, and low-cost copper producer. We now intend to progress with the assessments of the optimal financing structure for the project, which may include bringing in a minority partner at the project level. Our team is committed to pursuing best practices in safety and environmental management.
John Mckenzie: The construction decision and the integration of sensor Domingo represents the next phase of our transformational growth.
John Mckenzie: As you become a leading long life and low cost copper producer.
John MacKenzie: We now intend to progress with the assessment of the optimal financing structure for the project, which may include bringing in a minority partner at the project level. In parallel, we will also continue to advance the detailed engineering on the projects. Our team is committed to pursuing best practices in safety and environmental management, as well as continued engagements with all stakeholders as we progress our growth plans. As part of the Sons of Domingo release yesterday, we also announced the acquisition of Cera Norte, which is a concrete example of our district consolidation strategy.
John Mckenzie: We now intend to progress with the assessments of the optimal financing structure for the project.
John Mckenzie: This may include bringing in a minority partner at the project level.
John Mckenzie: In parallel we will also continue to advance the detailed engineering on the projects.
John Mckenzie: Our team is committed to pursuing best practices and safety and environmental management as well as continued engagements with all stakeholders as we progress our growth plans.
Speaker Change: As part of the sensor Domingo released yesterday, we also announced the acquisition of <unk>, which is a concrete example of our district consolidation strategy.
Raman Randhawa: And with that, I'll pass over to Rowan for our financial results. Thank you, John. We are now in Slide 7. In Q2, we record copper production of 40.9,000 tons and copper sales of 39.7,000 tons. LME copper prices during the quarter averaged $4.42 per pound, up over 15% compared to 383 per pound in Q1. Our real-life copper price of $4.53 per pound was slightly above the LME average price. And we realized strong gross margins of $1.69 per pound, equivalent to 37% margin.
John Mckenzie: And with that I'll pass over to Robin for our financial results.
Robin: Thank you John we are now on slide seven.
Ramanpreet Randhawa: In Q2, we recorded copper production of 40.9000 tons and copper sales of 39.7000 tons.
Robin: In Q2, we recorded copper production of 49000 tons and copper sales of $39 7000 tons.
Robin: Copper prices during the quarter averaged $4 42 per pound up over 15% compared to 383 per pound in Q1.
Robin: Our realized copper price of $4 53 per pound was slightly above the <unk> average price and we realized strong gross margins of $1 69 per pound equivalent to 37% margin.
Raman Randhawa: We expect a large step change in our consolidated unit costs in the second half driven by our Mantle Verdi Development Project, which is currently ramping up and will represent our lowest cost production in the portfolio. Adjust the EBITDA in Q2 of 123.1 million increased by 54% were over quarter in 186% year over year, largely due to higher copper prices and lower cost.
John Mckenzie: We expect a large step change in our consolidated unit costs in the second half driven by our mental Verde development project, which is currently ramping up and will represent our lowest cost production in the portfolio.
John Mckenzie: Adjusted EBITDA in Q2 of $123 1 million increased by 54% quarter over quarter, and 186% year over year largely.
John Mckenzie: Largely due to higher copper prices and lower cost.
Raman Randhawa: Moving on to slide 8. On the left-hand side, we summarize for available liquidity, which as of June 30th, 2024, was $539 million, which includes $139 million of cash and short-term investments, and $400 million of on-drawing amounts on our $700 million corporate revolving credit Chief. Our liquidity position was largely unchanged compared to Q1, and our balance sheet is in good shape during the ramp-up of MBDP ahead of our next phase of growth. During the quarter, the last of our low-price copper hedges that were entered into as a requirement of our Mental Verity Project Finance Facility rolled off, and so we are now fully unhedged and stand to benefit from full copper price exposure.
Speaker Change: Moving onto slide eight.
John Mckenzie: On the left hand side, we summarize our available liquidity, which as at June 32024, It was $539 million, which includes $139 million of cash and short term investments and $400 million of undrawn amounts under $700 million corporate revolving credit facility.
Speaker Change: Our liquidity position was largely unchanged compared to Q1 and our balance sheet is in good shape. During the ramp up of MVP ahead of our next phase of growth.
John Mckenzie: During the quarter the last of our low price copper hedges that were entered into it as a requirement of our mental Verde project finance facility rolled off.
John Mckenzie: And so we are now fully unhedged and stand to benefit from.
John Mckenzie: Full copper price exposure.
John Mckenzie: Okay.
Raman Randhawa: The chart on the right-hand side of the page illustrates our EBITDA sensitivity at various copper prices. It is very exciting that we are now in the cusp of the light blue bar, which represents EBITDA of 1 to 1.3 billion at copper prices between 4 to 450 per pound, with MBDP at 4 run rates. The EBITDA generation associated with Mental Verity will enable us to focus on generating free cash flow to deliver our balance sheet and be below 1 times net leverage at spot copper prices, which then provides a strong platform from which to advance our future growth pipeline in terms of the Mental Verity Optimize and Sano Domingo.
John Mckenzie: The chart on the right hand side of the page illustrates our EBITDA sensitivity at various copper prices.
John Mckenzie: It is very exciting that we are now at all now on the cusp of the light Blue bar, which represents EBITDA of 1% to $1 3 billion, a copper prices between $4 to $4 50 per pound.
John Mckenzie: <unk> at full run rates.
John Mckenzie: The EBITDA generation associated with mental Verde.
John Mckenzie: It enabled us to focus on generating free cash flow to delever, our balance sheet and be below one times net leverage as spot copper prices.
John Mckenzie: Which then provides a strong platform from which to advance our future growth pipeline in terms of the manto vary optimize and Santo Domingo.
Cashel Meagher: Now hand it over to Cashwell for the operations review. Thanks, Ron. We are now in slide 9. Pinto Valley produced 15,994 tonnes copper at a C1 cash cost of $2.46 per pound during Q2, which are very competitive compared to similar grade copper mines in the USA. The production for the performance was above the high end of our first half guidance range, while our cash costs were below the guidance range. Proof-foot average 55.4 thousand tonnese per day quarter, the highest level since Q1 2022, and we still see room for improvement.
Cash: Now I'll hand, it over to cash flow for the operations review.
Cash: Thanks, Ron we're now on slide nine.
Cashel Meagher: Thanks, Raman. We're now on slide nine. Production performance was above the high end of our first half guidance range. We are also celebrating 50 years of operations at Penza Valley, which is a tremendous accomplishment. Cozumin Mine delivered another solid quarter, producing 6,152 tonnes of copper at C1 cash costs of $1.74, resulting in lower grades and recovery. During the quarter, we continued to execute on our plan to unlock a consistent 20,000 tonnes per day capacity in the back end of the plant.
Cash: Pinto Valley produced 15994 tonnes of copper at a <unk> cash costs of $2 46 per payable pound during Q2.
John Mckenzie: Which are very competitive compared to similar grade copper mines in the USA.
Speaker Change: Production for the performance was above the high end of our first half guidance range.
John Mckenzie: Our cash costs were below the guidance range.
John Mckenzie: Throughput averaged 55 4000 tonnes per day quarter, the highest level since Q1 2022 and.
John Mckenzie: And we still see room for improvement.
Cashel Meagher: We are also celebrating 50 years of operations at Pinto Valley, which is a tremendous accomplishment, with over a billion tonnese resource. And our plans regarding district consolidation, we believe Pinto Valley will continue operating for generations to come. Moving to slide 10. Cosum in mind delivered another solid quarter, producing 6,152 tonnese copper at C1 cash cost of the $1.74 per payable pound. For the first half of the year, Cosum and performed favorably relative to our H1 guidance for both production and costs. Our mental slancosacet is highlighted on slide 11. Total sulfide and cathode production yielded 10,070 tonnes of copper at C1 cash costs of $3.38 per payable pound.
John Mckenzie: We are also celebrating 50 years of operations at Pinto Valley, which is a tremendous accomplishment with over 1 billion tons of Tony's resource.
John Mckenzie: And our plans regarding district consolidation, we believe into valley will continue operating for generations to come.
John Mckenzie: Moving to slide 10.
Speaker Change: In mind delivered another solid quarter, producing 6152 tons of copper at <unk> cash costs of $1 74.
John Mckenzie: Per payable pound.
John Mckenzie: For the first half of the year Cozman performed favorably relative to our <unk> guidance for both production and costs.
John Mckenzie: Our mental blancos asset as highlighted on slide 11.
John Mckenzie: Total sulfide and cathode production yielded 10078 tons of copper at <unk> cash cost of $3 38 per payable pound.
Cashel Meagher: Production from the sulfides in Q2 was disappointing, despite record throughput, as we experienced a localized geotechnical issue which impacted mine sequence in the quarter, resulting in lower grades and recoveries. Grades and recoveries are expected to pick back up in Q3. During the quarter, we continued to execute on our plan to unlock a consistent 20,000 tonnes per day capacity in the back end of the plant. The photos on the right of the slide from July highlight the installation of the fourth positive displacement tailings pump and the surge tank. I am pleased to report that yesterday we completed the final installation and tie-in of the new infrastructure shown, and we will now be ramping up to name plate capacities.
John Mckenzie: Production from the sulfides in Q2 was disappointing despite record throughput as we experienced the localized geotechnical issue, which impacted mine sequence in the quarter.
John Mckenzie: Resulting in lower grades and recoveries grades.
John Mckenzie: Grades and recoveries are expected to pick back up in Q3.
John Mckenzie: During the quarter, we continued to execute on our plan to unlock a consistent and 20000 tons per day capacity in the backend of the plant.
John Mckenzie: The photos on the right of the slide from July highlight the installation of the fourth positive displacement tailings pump and the surge tank.
Cashel Meagher: I am pleased to report that yesterday we completed the final installation and tie-in of the new infrastructure shown, and we will now be ramping up to nameplate capacity. In my experience, challenges of this nature rarely occur. This instance was a fabrication error not identified in the vendor's QA-QC process. The one month delay also allowed us to perform more testing in the flotation area in advance of copper production. Turning to slide 17.
John Mckenzie: I am pleased to report that yesterday, we completed the final installation and tie in of the new infrastructure shown and we will now be ramping up to nameplate capacities.
Cashel Meagher: While this does represent about a two-month delay relative to our previous expectations, this tie-in work completed by the end of July provides for a high level of confidence that throughput rates will increase in the second half of the year.
John Mckenzie: While this does represent about a two month delay relative to our previous expectations. This tie in work completed by the end of July provides for a high level of confidence that throughput rates will increase in the second half of the year.
Cashel Meagher: Now onto Mensilverde on slide 12. Q2 2024 oxide production was 8,663 tonnies of copper in Capote at C1 cash cost of $3.68 per payable pound. Importantly, we produced first saleable copper concentrate from Mensilverde development project during the second quarter and recorded 58 tonnies of copper sulfide production with our Q2 results. The project is on track, and the budget is unchanged. Burning to slide 13, we have shown a close-up photo of the SAG and Volumil at MBDB. In my view, our commissioning and ramp-up progress to date has gone well. First saleable copper concentrate production in Q2 occurred closer to the end of the quarter than we anticipated.
John Mckenzie: Now onto <unk> on slide 12.
Speaker Change: Q2, 2020 for oxide production was 8663 tonnes of copper in cap out at sea, one cash costs $3 68 per payable pound.
John Mckenzie: Importantly, we produced first saleable copper concentrate from mental Verde development project during the second quarter and recorded 58 tons of copper sulfide production with our Q2 results the.
John Mckenzie: The project is on track and the budget is unchanged.
John Mckenzie: Turning to slide 13, we have shown a close up photo of the Sag and ball mill at MVP.
John Mckenzie: In my view, our commissioning and ramp up progress to date has gone well for.
John Mckenzie: First saleable copper concentrate production in Q2 occurred closer to the end of the quarter than we anticipated. This was driven by a one month impact due to a faulty motor for the Sag mill.
Cashel Meagher: This was driven by a one-month impact due to a faulty motor for the signal. Fortunately, a critical spare was available; the work to replace the motor and continue with ramp-up took close to a month. In my experience, challenges of this nature rarely occur. This instance was a fabrication error not identified in the vendor's QAQC processes. The remaining motors were retested and validated. Since restarting the operation, post the replacement of the motor, we have been very pleased with the performance of the circuit. The one-month delay also allowed us to perform more testing in the rotation area in advance of copper production.
John Mckenzie: Fortunately our critical spare was available the work to replace the motor and continue with ramp up to close to a month.
John Mckenzie: And my experience challenges of this nature rarely occur. This instance was a fabrication are not identified in the vendors QA QC processes.
John Mckenzie: The remaining motors for re tested and validated.
John Mckenzie: Since restarting the operation post the replacement of the motor we have been very pleased with the performance of the circuit the.
John Mckenzie: The one month delay also allowed us to perform more testing in the flotation area.
John Mckenzie: In advance of copper production in.
Cashel Meagher: In July, we have already started to see daily throughputs above the nameplate capacity, and we expect to continue ramping up to sustained design throughput rates within the third quarter. On slide 14, we show the flotation tanks at MBDB. On a positive note, our copper flotation circuit is operating well, and we look forward to ramping up the recovery curve.
John Mckenzie: In July we have already started to see daily throughput above the nameplate capacity and we expect to continue ramping up to sustained design throughput rates within the third quarter.
John Mckenzie: On slide 14, we show the flotation tanks at MVP.
John Mckenzie: On a positive note our copper flotation circuit is operating well and we look forward to ramping up the recovery curve.
John MacKenzie: Turning to slide 15. Yesterday, we announced the results of our updated feasibility study at CentroDomingo, which is 35 kilometers down the road from Mental Verde. I encourage everyone to watch the video linked at the bottom of the page. It does an excellent job highlighting the project while also showcasing our district vision at Mental Verde CentroDomingo. Turning to slide 16. The mine plan presented today at CentroDomingo represents the next major step for Capstone in the evolution of the world-class MBSD district. Having recently completed construction at our Mental Verde development project, we have an experienced mine build team that will gradually transition to SD.
John Mckenzie: Turning to slide 15.
John Mckenzie: Yesterday, we announced the results of our updated feasibility study at Santa Domingo, which is 35 kilometers down the road for mental Verde.
John Mckenzie: I encourage everyone to watch the video link at the bottom of the page. It does an excellent job highlighting the project while also showcasing our district vision at <unk> Center Domingo.
John Mckenzie: Turning to slide 16.
John Mckenzie: The mine plan presented today. It's ended Domingo represents the next major step for Capstone and the evolution of the World Class <unk> District.
John Mckenzie: Having recently completed construction at our mental Verde development project, we have an experienced mine build team that will gradually transition to SD.
John MacKenzie: The study has been designed with a focus on execution and operability, and it outlines an after tax and PV of 1.7 billion and an IRR of 24%. Turning to Slide 17, the feasibility study for Senate Domingo outlines an actionable investment opportunity with an attractive rate of return and a short payback period. With a capital cost of $2.3 billion, we believe the mine is positioned favorably with a capital intensity of around $22,000 per tonne. The production profile for Senate Domingo is outlined on slide 18. Senate Domingo will produce an average of 106,000 tonne to copper over its first seven years and features of very low C1 cash costs driven by the high quality iron or magnetite concentrate byproduct.
John Mckenzie: This study has been designed with a focus on execution and Operability and it outlines an after tax NPV of $1 7 billion and an IRR of 24%.
John Mckenzie: Turning to slide 17.
John Mckenzie: The feasibility study percenter, the mango outlines in actionable investment opportunity with an attractive rate of return and a short payback period.
John Mckenzie: With a capital cost of $2 $3 billion. We believe the mine has positioned favorably with a capital intensity of around 22000 per ton.
John Mckenzie: The production profile percent of Domingo as outlined on slide 18.
John Mckenzie: Santa Domingo will produce an average of 106000 tons of copper over its first seven years.
John Mckenzie: And feature a very low cone cash costs, driven by the high quality iron ore magnetite concentrate byproduct.
John MacKenzie: On a co-product basis, costs in the $1.50 per pound range over the life of the mine are very competitive, turning to slide 19. Over time, we plan to further augment these base case numbers with additional opportunities, including unlocking cobalt production in the district, processing Sense of Domingo's oxides at Mental Verde, and continuing to explore the district to improve our understanding of the longer term potential. The plan presented today sets the stage for two major processing centers in our world class, Mental Verde, Senate Domingo district, plus the recently acquired Sierra Norte property.
John Mckenzie: On a co product basis costs, and $1 50 per pound range over the life of the mine are very competitive.
John Mckenzie: Turning to slide 19.
John Mckenzie: Over time, we plan to further augment these base case numbers with additional opportunities, including unlocking cobalt production in the district.
John Mckenzie: Processing sensitive Ngos oxides at Mento Verde.
John Mckenzie: And continuing to explore the district to improve our understanding of the longer term potential.
John Mckenzie: The plan presented today sets the stage for two major processing centers.
John Mckenzie: In our World class mental Vert <unk> Santo Domingo District, plus the recently acquired Sierra Norte take property.
Wendy King: Now over to Indie King for the sustainability review. Thank you, Cashel. We're now on slide 20 with the review of our sustainability highlights for Q2. At Pinto Valley, we signed a letter of commitment for the Copper Mark with a goal to achieve the award by June 2026. We look forward to Pinto Valley replicating the success we've seen at Mantle's Blankos and Mantle Verde with respect to the copper mark assurance process. At Mantle Verde, we received a circular value certificate from AZAA, a still recycling company, recognizing our contributions to a circular economy and our care for the environment.
John Mckenzie: Now over to Wendy King for the sustainability review.
Wendy King: Thank you <unk>, we're now on slide 20, with a review of our sustainability highlights for Q2.
Speaker Change: At Pinto Valley, we signed a letter of commitment to the copper market with the goal to achieve the award by June 2026.
Speaker Change: Look forward until valley replicating the success, we've seen at Madison blackouts and massive their day with respect to the copper market <unk> process.
John Mckenzie: And then severity we've received a circular value certificate from Ace at a a sale recycling company recognizing our contributions to circular economy and our care for the environment.
Wendy King: In 2023, Mantle Verde's impact numbers included transforming 2,681 tons of scrap metal into valuable resources, contributing to the creation of 2,281 tons of green steel, and avoiding emitting 3,991 tons of CO2 equivalent into the atmosphere.
John Mckenzie: In 2023, Monteverdi impact numbers included transforming 2681 tons of scrap metal into valuable resources.
Speaker Change: Contributing to the creation Thats 2281 tons of Green scale.
John Mckenzie: And avoiding emitting 3991 tons of cotwo equivalent into the atmosphere.
Wendy King: One of capstone Sustainable Development priorities is biodiversity. Low mobility species relocation is a key feature of responsible biodiversity management. Cozeman has trained 100 employees on what to do in the case of snake encounters and to keep both the snakes and humans safe.
Speaker Change: One of Capstone sustainable development priorities is biodiversity.
Speaker Change: Hello mobility species relocation is a key feature of responsible bias diversity management.
Speaker Change: <unk> has trained 100 employees on what to do in the case of sneaking counters and to keep both the stakes in humans.
John MacKenzie: And with that, I'd like to pass it back to John. Thanks, Randy. Turning to slide 21. With outlined, our sector leading growth plans and some of the additional upside within our portfolio. As can be seen, we expect MVP, at its full run rate, to bring us to a consolidated annual production level of around 260,000 tons of copper at costs around $2 per pound. We plan to release a feasibility study from our months of area optimised projects this quarter, which is a low risk brown field expansion that we think will unlock another 20,000 times of copper, with a highly attracted capital efficiency of around $7,500 per tonn of annual production.
Speaker Change: And with that I'd like to pass it back to John.
John Mckenzie: Thanks Randy.
John Mckenzie: Turning to slide 21.
John Mckenzie: We've outlined our sector, leading growth plans and some of the additional upsides within our portfolio.
John MacKenzie: Some of the additional upside within our portfolio, the ability to unlock cobalt in our Monteverde-Sanso Domingo district. Meanwhile, the world is going to need an enormous amount more copper going forward. At Capstone, we believe we're extremely well-positioned to become a leading, long-life, and low-cost copper producer, playing an important role in supporting the world's decarbonization efforts.
Speaker Change: As can be seen we expect MVP at its full run rates to bring us to a consolidated annual production level of around 260000 tonnes of copper at costs around $2 per pound.
Speaker Change: We plan to release, a feasibility study for a months of Ada optimize projects this quarter, which is a low risk brownfield expansion that we think will unlock another 20000 tons of copper with a highly attractive capital efficiency of around $7500 per ton that's annual production.
John MacKenzie: We release the feasibility study for Sons of Domingo, which defines the next phase of our transformational growth and will take us up to around 400,000 tonnes of copper production per annum at even lower costs. Beyond that, we have further upside across our portfolio, with another low risk brown field expansion opportunity at months as blunquers, the ability to unlock cobalt in our months of area Sons of Domingo district, and the potential developments of a world-class district around our Prince of Alimine in Arizona. Turning to slide 22, we highlight the timelines for some of the studies that I've mentioned, and for other milestones as we execute on our growth plans.
Speaker Change: We released the feasibility study for sensor Domingo, which defines the next phase of our transformational growth.
Speaker Change: And will take us up to around 400000 tons of copper production per annum at even lower costs.
John Mckenzie: Beyond that we have further upside across our portfolio with another low risk brownfield expansion opportunity at months as bronchus, the ability to unlock cobalts in a months of EDA as sensitive Bingo district.
Speaker Change: And the potential development of a world class districts around the absence of any bonds in Arizona.
John Mckenzie: Turning to slide 22.
Speaker Change: We highlight the timelines for some of the studies that I've mentioned.
Speaker Change: The other milestones as we execute on our growth plans.
John MacKenzie: Pulling a copper production growth profile, like what we have at Capstone, doesn't happen overnight. At months of area, we were ramping up to name plate levels. The decision to grow production was taken nearly nine years ago. Looking across the industry, the pipeline of copper projects is smaller than it's been at any time in the past 25 years. Meanwhile, the world is going to need an enormous amount more copper growing forward. At Capstone, we believe we're extremely well positioned to become a leading, long-life, and low-cost copper producer, playing an important role in supporting the world's decarbonisation efforts.
Speaker Change: Moving our corporate production growth profile once we have a capstone doesn't happen overnight.
Speaker Change: What months are added we will be ramping up to nameplate levels. The decision to go production was taken nearly nine years ago.
Speaker Change: Looking across the industry the pipeline of copper projects is smaller than it's been at any time in the past 25 years.
Speaker Change: Meanwhile, the world is going to need an enormous amounts more copper going forward.
Speaker Change: At Capstone, we believe we're extremely well positioned to become a leading long life and low cost copper producer.
Speaker Change: Playing an important role in supporting the world's decarbonization efforts.
Operator: And with that, we're now ready to take questions. Thank you.
Speaker Change: And with that we are now ready to take questions.
Speaker Change: Thank you ladies and gentlemen, we will now begin the question and answer session should you have a question. Please press star followed by the number one on your Touchtone phone.
Operator: Please, gentlemen, we will now begin the question and answer session. Should you have a question, please press star followed by the number one on your touch-tone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press star followed by the number two. If you're using a speaker phone, please slip the handset before pressing any keys. One moment, please, for your first question.
Mr Han: You will hear a prompt Mr Han discipline right.
Speaker Change: If you wish the decline from the polling process. Please press star followed by the number too.
Speaker Change: If youre using a speakerphone please lift the handset before pressing any keys one moment. Please for your first question.
Horace Waokodau: Your first question comes from the line of Horace Waokodau from Scotia Bank. Your line is now open. Thanks, and good afternoon. It's nice to hear that the ramp up that Mesa Verri is going as expected to date. Given the release of the technical report on San Diego, John, I'm curious to hear what milestones need to happen for you to see that project moving forward from a sanctioning decision. The languaging in the releasing that suggests you weren't sure if you wanted a partner, and I'm just curious if where you think balance sheet in terms of leverage needs to be and sort of where your current thoughts are, delaying 100% versus bringing a partner in.
Speaker Change: Your first question comes from the line of RF spoke Codell from Scotiabank. Your line is now open.
Speaker Change: Thanks, and good afternoon.
Speaker Change: Nice to hear that the ramp up that Manto vary is going as expected to date.
Speaker Change: Given the release of the technical report.
Speaker Change: The Santo Domingo.
Speaker Change: John I'm curious to hear what.
John Mckenzie: Stone's need to happen.
Speaker Change: For you to see that project moving forward from a sanctioning decision the language in the release seem to suggest you Werent sure. If you wanted a partner and I am just curious if.
Speaker Change: Where you think the balance sheet in terms of leverage needs to be and sort of where your current thoughts are going 100% versus bringing a partner it.
Larissa: Yeah. Thanks Larissa.
John MacKenzie: Thanks, Horace. I think that's a really good question. I would say we've got a partner at Monteverde. I think it's been a great experience. The partner, aside from bringing in some financing, actually tends to bring in a lot of other partners. You know, great areas of value as well.
Speaker Change: So it's a really good question.
Speaker Change: I would say.
Speaker Change: We've got a partner at months of Ed I think it's been a great experience.
Speaker Change: And as a partner aside from sort of bringing in some financing actually tends to bring in a lot of other.
Speaker Change: Great areas of value as well and so I would say for sensor Domingo a base case.
John MacKenzie: in great areas of value as well. And so I would say for Sunset Domingo, our base case remains to seek a 30% partner at Sunset Domingo. You know, we'll need to sort of evaluate the benefits of doing that throughout that process. The idea would then be from that point on to, and that would probably be sort of early in the new year, to commence with the project financing process for Santo Domingo. You know, during that period, we'll probably be placing certain sort of long lead time orders that help to lock in both the cost and the schedule of the project.
John MacKenzie: And so I would say for Sunsetamingo our base case remains to seek a 30% partner at Sunsetamingo. We intend to, as soon as the full technical report is out, to commence with that process. And, you know, we'll need to sort of evaluate the benefits of doing that throughout that process. The idea would then be from that point on to, and that would probably be sort of early in the new year, to commence with the project financing process for Sunsetamingo. And that would then put us in a position to take a sort of final investment decision towards the back end of next year.
Speaker Change: <unk> remains two to seek a 50% partner at.
Speaker Change: At Sunset Domingo.
Speaker Change: We intend to as soon as the full technical report is outs to commence with that process.
Speaker Change: Sure.
Speaker Change: We'll need to sort of evaluate.
John Mckenzie: The benefits of doing doing that throughout that process.
Speaker Change: <unk>.
Speaker Change: The idea would then be from that point and so on to.
Speaker Change: That would probably be sort of early in the new year to commence with the project financing process full for sensor Domingo.
Speaker Change: And that would then put us in a position to take a final investment decision.
Speaker Change: Towards the back end of next year.
John MacKenzie: So, you know, during that period, we'll be progressing some work as well at Sunsetamingo. I think, you know, best practice in terms of taking a full investment decision is to have, for example, detailed engineering at sort of around to at least 30% advancement. We'll probably be placing certain sort of long lead time orders that helps to lock in both the cost and the schedule of the project. So, you know, there are a number of steps that we'll be looking to take. And then ultimately, the final decision will also be sort of taking a look, obviously at, you know, our internal sort of balance sheet position.
Speaker Change: So.
Speaker Change: During that period.
Speaker Change: We will be progressing some work as well it sounds of Domingos.
Speaker Change: I think.
Speaker Change: Best practice in terms of of taking a full investment decision is to have for example diesel engineering, it's sort of around to at least 30% advancement.
Speaker Change: We'll probably be placing certain set of long lead time orders that helps to lock in both the cost and the schedule of the project.
Speaker Change: So there were a number of steps that we will be looking to take and then ultimately the final decision will also be sort of taking a look obviously, it's it's.
Speaker Change: Our total balance sheet position.
John MacKenzie: You know how a cash flow generation has gone, what the sort of net debt position is at the time, and obviously taking a bit of a look at the kind of macro environment. And taking that all into account will sort of guide us towards what is the optimal timing to take that sort of go-ahead decision that Sunsetamingo.
Speaker Change: How our cash flow generation.
Speaker Change: It has gone well.
Speaker Change: <unk>.
Speaker Change: Our net debt position as at the time, and obviously taken a bit of a look at the kind of macro environment and taking that all into accounts will sort of guide us towards what is the optimal timing to take.
Sunset Domingo: That sort of go ahead decision that Sunset Domingo.
Dalton Barreto: Thank you. Your next question comes from the line of Dalton Barreto from Canaccord. Your line is now open. Thanks. Good afternoon, John and team.
Speaker Change: Thank you.
Speaker Change: Your next question comes from the line of Dalton Barreto from Canaccord. Your line is now open. Thanks.
Unnamed Questioner: Good afternoon, John and team. I was wondering if we could get a little bit more color on the Manta Verde sulfides ramp-up. Maybe talk a little bit more about, you know, how sustained you're seeing the run rates close to our design and maybe a little bit of color on the recoveries as well.
Dalton Barreto: Good afternoon, John and team I was wondering if we could get a little bit more color on the mantelboard sulfide.
John MacKenzie: I was wondering if we could get a little bit more color on the man to bird a self-byte ramp up. Let me talk a little bit more about, you know, how sustained you're seeing the run rates close to our design and maybe a little bit of color on the recoveries as well. Thank you.
Speaker Change: Sulfides ramp up let me talk a little bit more about how sustained do you seeing the run rates close to or at design and maybe a little bit of color on the recoveries as well. Thank you.
Cashel Meagher: Certainly, and I'll ask Castle to respond to that question. What's the ramp up going right? We had that interruption that we mentioned during course all here with respect to the signal motor. So that was unfortunate. Obviously, we had a critical spare for it. So what we did is we found a way to test with the vendor. All the other owners were pretty certain we're in good position now to continue building sort of sustainably. The real color on the ramp up has happened here in this month that just passed. West in July. The way I would describe it is we were milling sort of at throughput rates almost four half the time.
Speaker Change: Yes, certainly it all I'll ask.
Kessel: Kessel to respond to this question.
Kessel: Hey, Bill.
Kessel: Look the ramp ups going rates.
Kessel: We had that interruption that we mentioned during the course, all here with respect to the segment motor.
John MacKenzie: Thank you all for your attention during the course of the call here with respect to the Sag Mill motor. That was unfortunate. David Radclyffe, Stefan Ioannou, Craig Hutchison, Cashel Meagher, Wendy King, Jerrold Annett, John MacKenzie, Ramanpreet Randhawa, Alexander Terentiew, Dalton Baretto, Bryce Adams, Capstone. The real color on the ramp-up has happened here in this month that just passed. The way I would describe it is that we were milling sort of at throughput rates for almost half the time.
Speaker Change: So that was unfortunate.
Kessel: Okay.
Kessel: Obviously.
Speaker Change: Sure.
Speaker Change: We had a critical spare for it.
Speaker Change: So what we did is we found a way to test with the vendor.
Speaker Change: We're pretty certain we're positioned now to.
Speaker Change: To continue.
Speaker Change: Billing.
Speaker Change: Sustainably.
Speaker Change: The real color on the ramp up has happened here in this month that just passed in July and what the way I would describe it is we were milling sort of that throughput rates.
Speaker Change: <unk>.
Speaker Change: Half the time, we had things we had to fix.
Cashel Meagher: We had things we had to fix. We had to reduce milling rates or that sort of thing, but that's a really good sign. That's what you expect in your first sort of run of the mills at full speed with full charge. So that went really well. And, unfortunately, too, we were producing concentrate through that whole period. So that's very encouraging. So if you think we've got a bit of a leg out of optimizing the recovery curve going forward. As with these things, after a certain number of hours of running, when you first commission and you run through the ramp up, you need to take down the plant to fix and correct punch list items and items that are required for warranty assurances by the various OEM vendors.
Speaker Change: To reduce.
Speaker Change: Milling rates or that sort of thing, but thats a really good sign that that's what you expect in your first sort of run through the mills at full speed with full charge.
Speaker Change: So that went really well.
Speaker Change: Fortunately, we were producing concentrate through that whole period.
Speaker Change: That's very encouraging.
Speaker Change: So we think we've got a bit of a leg up.
Speaker Change: Optimizing the recovery curve going forward.
Speaker Change: And as with these things after a certain number of hours of running.
Speaker Change: When you first commission check run through the ramp up you need to take down the plants to fix and correct punch list items and items that are required for warranty assurances by the various OEM vendors. So we're going to probably do that that'll be probably a week to two weeks in the month.
Cashel Meagher: So we're going to probably do that. That'll be probably a week to two weeks in the month of August that we'll do that. But otherwise we're unfettered. There's really nothing in our way now to continue with the ramp-up at full capacity. The mind's been waiting, and it's ready. And that's what we intend on doing. And we will cost right now on the quality of the plant's performance, which is to increase its recovery.
Speaker Change: In August we will do that but otherwise we're unfettered theres really nothing in our way now to continue with the ramp up at full capacity. The mine has been waiting and it's ready.
Speaker Change: And that's what we intend on doing and we will concentrate now on the quality of the plant's performance, which is to increase recoveries.
Dalton Barreto: That's great. Thanks for that.
Speaker Change: That's great. Thanks for that casual and then sticking on the operation operating theme.
Dalton Barreto: Casual. And then yes, sticking on the operation operating theme. It's been pleasantly surprising to see a Pinto Valley string together such good quarters in a row. And I'm just wondering, you know, pop, do you think that that 55,000 ton per day rate is sustainable on a go forward basis and whether you can push that a little bit. Thanks. Oh, yeah, don't you know, we love seeing Pinto Valley run without interruptions. You know, we put together an asset, asset integrity framework. And we're starting to yield results from it. And really Pinto Valley is the proof is ahead in that process of implementation.
Speaker Change: It's been pleasantly surprising to see panto valley's strength together two such good quarters in a row now.
Speaker Change: I'm just wondering.
Speaker Change: Do you think that that 55000 ton per day rate is sustainable on a go forward basis, and whether you can push that a little bit.
John MacKenzie: Yeah, we love seeing Pinto Valley run without interruptions. You know, we put together an asset
Speaker Change: Oh, yes, yes.
Speaker Change: Love seat missile Valley run without interruptions, we put together an asset.
Speaker Change: Asset integrity framework, and we are starting to yield results from it and really pencil valleys furthest ahead in that process of implementation and we're starting to see it and as you will note will be just announced.
Cashel Meagher: And we're starting to see it. As you well know, we just announced, you know, this 50 years of operation at Pinto Valley requires special care and maintenance. And now we have systems, process, and management in place to do that. So we're encouraged by what we see in the runway rate. And the team itself is telling us there is capacity to do a little more. So we'll encourage and give them the resources required so that they can achieve that going forward.
Speaker Change: 50 years of operation at Pinto Valley.
Speaker Change: Requires special care and maintenance and now we have systems process of management in place to do that so we're encouraged by what we see in the runway rate and the team itself is telling US there is capacity to do a little more so we will.
Speaker Change: Courage and give them the resources required so that they can achieve that going forward.
Dalton Barreto: That's great. And if I can just squeeze one last one. And on Santa, I mean, congratulations on that study, by the way. One of my big concerns with the project has always been the drop up in the corporate rates. And so seeing this year in Northay acquisition makes a ton of sense. And I'm just wondering, you know, either with other sort of local likes that you can purchase or on your property. How many more tons do you think you can add around, you know, that 0.4% copper grade? Yeah, that's a good question. And I think we're kind of spoiled for choice.
Speaker Change: That's great and then if I can just squeeze one last one in on Santa Domingo Congratulations on that study by the way.
Speaker Change: One of my Big concerns for the project has always been the drop off in the copper grades and so seeing this year in Norway acquisition makes a ton of sense and I'm just wondering.
Speaker Change: Either with other sort of Lookalikes that you can purchase or on your property.
Speaker Change: How many more tons do you think you can add around that 4% copper grade.
Speaker Change: Great.
Speaker Change: Yes, it's a good question.
John MacKenzie: You know, I think we're kind of spoiled for choice. And you know, when you start seeing the decline in grades in Santo Domingo, you're talking sort of, you know, eight, nine, 10 years out. And between now and then, we've obviously got to approve the project, we've got to build the project. So you're really talking a period that's sort of somewhere in the range of kind of at least 10 to 12 years from now before we're really seeing any drop off in grade.
Speaker Change: I think we're kind of spoiled for choice.
John MacKenzie: And you know, when you start seeing the decline in grade in Santa Domingue, you're talking sort of, you know, 8, 9, 10 years out. And between now and then, we've obviously got to approve the project. We've got to build the project. So you're really talking a period that's sort of some in the range of kind of at least 10 to 12 years from now before, you know, we're really seeing any drop-off in grade. And you know, we've got enormous exploration potential on our own property. You know, more than half of the month of a year, these areas sort of along the Atacama faults is unexplored.
Speaker Change: And when you start seeing the decline in grade insensitive bingo, you're talking sort of.
John MacKenzie: Eight 910 years out and between now and then we will obviously go to approve the project we've got to build the project. So you're really talking a period thats somewhere in the range of kind of at least 10 to 12 years from now before we really seeing any drop off in grade.
Speaker Change: <unk>.
John MacKenzie: And, you know, we've got enormous exploration potential on our own property. More than half of the Monteverde lease area, sort of along the Atacama Fault, is unexplored. You're probably aware that we've put together a budget to commence some exploration work there. That's, um, you know.
John MacKenzie: And.
John MacKenzie: We've got enormous exploration potential on our own property.
Speaker Change: More than half of the months of it at least.
Speaker Change: <unk> sort of along the SOCOM assaults is unexplored.
John MacKenzie: You're probably aware that we've put together a budget to commend some exploration work there. and I think we're quite confident that we're going to be expanding our own resource space over time, whether that's on our sons of Domingo property or our months of heirter property, or as you point out, the district itself has multiple what I would call stranded tetalite deposits that I believe we can at times of our choosing look to pick up and convert sort of these operations from sort of 20 years life to sort of 30, 40, 50 years life. So I don't see really any constraints in that district on in terms of resource potential, and I'll say sort of we've obviously done the acquisition of Serenorta that's got a historical sort of resource there about 100 million tons.
Speaker Change: You're probably aware that we've we've put together a budget to commence some some exploration work there.
Speaker Change: And I think we are quite confident.
John MacKenzie: We are going to be.
Speaker Change: Expanding sort of.
Speaker Change: Our own resource space.
John MacKenzie: Over time, and whether that's on a Sunday Domingo property with a months have added property or as you point out the.
Speaker Change: The district itself.
Speaker Change: <unk> has multiple what I would call sort of stranded settle on deposits.
John MacKenzie: Thats.
Speaker Change: I believe we can.
John MacKenzie: I believe we can. 20 years of life to sort of 30, 40, 50 years of life. The opportunity here is that time is on our side. We've got at least 10 to 12 years to really be thinking about what is the best way of utilizing the infrastructure that we will have built in this district. And that infrastructure, we're going to have two processing centers, two desalination plants, a port, electrical substations, a vast resource base on our own current property, and a lot of exploration potential. It gives us multiple options in terms of how we look to extract value going forward.
Speaker Change: At times of our choosing look to pick up and converts some of these operations from sort of.
Speaker Change: So AMC is lost to sort of steady $40 $50 loss.
John MacKenzie: So I don't see really any constraints in that district on in terms of resource potential.
Speaker Change: And those spaces.
Speaker Change: You've obviously done the acquisition of <unk>, let's say that's.
Speaker Change: <unk>.
Speaker Change: Let's go to historical.
Speaker Change: Resources on 100 million tonnes.
John MacKenzie: We need to see sort of what comes out of our internal drilling programs, and the opportunity here is that time is on our side. We've got at least sort of 10 to 12 years to really be thinking about what is the best way of utilising the infrastructure that we will have built in this district, and in that infrastructure, we're going to have two processing centres, two desalination plants, a port, electrical substations, a vast resource space on our own current property, a lot of exploration potential. You know it gives us multiple options in terms of how we look to extract value going forward.
Speaker Change: We need to see sort of.
John MacKenzie: What comes out of our internal drilling programs and.
Speaker Change: The opportunity here is that time is on our side. We've got we've got at least sort of 10 to 12 years to really be.
Speaker Change: Thinking about <unk>.
John MacKenzie: What is the best way.
John MacKenzie: Utilizing the infrastructure that we will have built in this district and that infrastructure, we're going to have two processing centers.
John MacKenzie: Desalination plants ports electrical substations.
John MacKenzie: A vast resource based on our own current property.
John MacKenzie: A lot of exploration potential.
John MacKenzie: It gives us.
John MacKenzie: Multiple options in terms of how we look to <unk>.
Speaker Change: Value going forward.
Dalton Barreto: That's great. Thanks, John. That's all for me.
Speaker Change: That's great. Thanks, John that's all for me.
Dalton Barreto: Thanks, Totten.
Speaker Change: Thanks Nelson.
Ralph Profiti: Your next question comes from the line of Ralph Trophiti from 8 Capital. Your line is now open. Thanks, operator. John, I'm wondering how might the 2.15 billion CapEx at Centre de Bingo fluctuate with some of the desalination options that are currently being looked at, everything from sort of the boot strategy which is the default to potentially expanding existing desalination capacity. Just wondering whether Capstone sees itself as a builder, a partner, or even a capital provider on some of these options and how that may affect both the CapEx and the operating cost. Yeah. Yeah, look, those are good questions and maybe just taking a small step backwards is obviously we have a desalination plant at Montevere who've got a huge amount of space around it and it is slightly closer to Montevere and Centre de Bingo than the Centre de Bingo port site is.
Operator: Your next question comes from the line of Ralph Profiti from 8th Capital. Your line is now open.
Ralph <unk>: Your next question comes from the line of Ralph <unk> from eight capital. Your line is now open.
Ralph Profiti: Thanks, operator.
Ralph Profiti: John I am wondering how.
Operator: Mike.
Ralph Profiti: $2 5 billion Capex, that's entered the Bengals fluctuate with some of the desalination options that are.
Speaker Change: Currently being looked at everything from the boot strategy, which is the default.
Speaker Change: Potentially expanding existing desalination.
Ralph Profiti: <unk> capacity, just wondering whether capstone sees itself as a builder of partner or even a capital provider on some of these options and how that may affect both the capex and the operating costs.
Operator: Yeah.
Operator: Yes.
Ralph Profiti: Good questions.
John MacKenzie: And maybe just taking a small step backwards is obviously that we have a desalination plant at Monteverde. We've got a huge amount of space around it, and it is slightly closer to Monteverde and Santo Domingo than the Santo Domingo port site is. However, that...
Ralph Profiti: And then maybe just taking a small step backwards as obviously, we have a desalination plants at months of it we've got a huge amount of space around it and.
Speaker Change: It is slightly closer two months of it in terms of Domingos Nissan's Domingo port scientists.
John MacKenzie: Okay.
John MacKenzie: However, that desal plant is not currently permitted to provide the additional water that's needed for Centre de Bingo. So we did take the decision to proceed in our base case with the Centre de Bingo port plus desalination plant. that retains our position as being sort of a fully permitted, construction-ready project. And you know, the incremental capital cost is not really terribly meaningful because if we were to expand the month of ad-e plant, we would in any case need to put in a new pipeline sort of into the sea, we'd need to sort of build a new sort of facility, a reverse osmosis facility.
Speaker Change: That diesel plants is not currently permitted to.
Speaker Change: To sort of.
Speaker Change: To provide the additional water thats needed for Sunset Domingo.
John MacKenzie: So we did take the decision to proceed in our base case with the Santo Domingo port plus desalination plot. And, you know, the incremental capital cost is not really terribly meaningful because if we were to expand the Montevideo plant, we would, in any case, need to put in a new pipeline sort of into the sea. We'd need to sort of build a new sort of facility, a reverse osmosis facility. So the basic difference between the two sites is a few additional kilometers of piping between where we are at the Santo Domingo port and the Montevideo port.
Speaker Change: So we did take the decision to proceed in a base case.
John MacKenzie: The Sunset Domingo ports, plus desalination plant.
John MacKenzie: Thats retains our position as being sort of fully permitted construction ready projects.
John MacKenzie: And the.
John MacKenzie: The incremental capital cost is not really terribly meaningful because.
John MacKenzie: If we were to expand the months have added plant, we would in any case needs to put in a new pipeline sort of into the sea we'd need to build a new.
Speaker Change: So the facility a reverse osmosis facility. So the basic difference between the two sites as a few additional kilometers of piping between where we are it's Sunday Domingo ports and in the months of airport.
John MacKenzie: So the basic difference between the two sites is a few additional kilometers of piping between where we are at Sunsort of Mingo Port and the month of Ad-e Port. So, as you pointed out, we've opted to go on a sort of boot-up contract on the construction of the diesel plant. Clearly, what we've incorporated into that is the, and you know, we've spoken to quite a few different providers. So you know, it's really just a question of what is the split we want to do between what we put into capital versus what we put into operating cost.
John MacKenzie: So, as you pointed out, we've opted to go on a sort of boot-up contract for the construction of the desal plants. Clearly, what we've incorporated into that is the, and we've spoken to quite a few different providers. So, you know, it's really just a question of what is the split we want to do between what we put into capital versus what we put into operating costs. Another alternative would be to see whether we wish to, in the interim, permit an expansion to our Monteverde diesel plant. But I didn't. Cashel, do you want to add any numbers to that in terms of, you know, what the differences would be? I don't think... Cashel Meagher Yeah, I think just, you know...
Speaker Change: So as you pointed out we've also to go into sort of boots up contracts on the construction of the diesel pumps.
Speaker Change: Clearly what we've incorporated into that is.
John MacKenzie: <unk>.
Speaker Change: And we've spoken to quite a few few different providers.
John MacKenzie: So.
Cashel Meagher: It's really just a question of what is the split you want to do between what we've put into capital versus what we put into operating cost.
John MacKenzie: And you know, I think you've obviously seen our base case, and we think that's an attractors scenario. The another alternative would be to see whether we wish to in the interim permutant expansion to a month of ad-e diesel plant. But I didn't catch what you want to add any numbers into that in terms of, you know, what the differences would be. I didn't think- Yeah, I think just, you know, it's becoming an efficient and regular business now, chilly or the specialized companies to build and run these diesel plants because they're required not only for industry, but for communities.
Cashel Meagher: And I think.
Speaker Change: You've obviously seen a base case, and we think thats.
John MacKenzie: <unk>.
Speaker Change: Another alternative would be to see whether we wish to and the interim permits an expansion to our months of EDA diesel trucks.
John MacKenzie: <unk>.
Speaker Change: But other than that.
John MacKenzie: Kessel, you want to add any numbers into that in terms of what the differences would be.
Cashel Meagher: I think I think just.
Speaker Change: It's becoming inefficient and regular business now Chile four.
Cashel Meagher: The specialized companies to build and run these diesel plants because they are required.
Cashel Meagher: For industry for communities and so there is quite a competitive industry and Thats why were very confident in the boot type contract, but an equivalent sort of build would be in the order.
John MacKenzie: And so there's quite a competitive industry, and that's why we're very confident in the boot type contract. But an equivalent sort of build would be in the order of an additional capital to our current estimate of two, three hundred.
Cashel Meagher: Additional capital to our current estimate of two to three years.
John MacKenzie: Yes.
Speaker Change: Got you that's very helpful. Thanks, John.
John MacKenzie: That's very helpful. Thanks, John. And you know, you'd obviously get that, you'd obviously get that back again in the all picks side because you're basically going to be sort of paying off that capital. But I think the, you know, obviously the companies that are putting together these diesel plants tend to have a pretty low cost of capital. They effectively utilities. So, you know, it's fairly close, I would say, in terms of, you know, one option versus the other. Roger, yeah. Thanks, John.
John MacKenzie: That's very helpful. Thanks, John and Cashel. Cashel Meagher You'd obviously get that back again on the OPEX side, because you're basically going to be sort of paying off that capital. But I think the
Cashel Meagher: And you would obviously get that you'd obviously, you get that back to get in the in the Opex side.
Cashel Meagher: Because you're basically going to be sort of paying off that capital, but I think the.
John MacKenzie: And obviously the companies that are putting together. These diesel plans tend to have a pretty low cost of capital.
Speaker Change: Fix of the utilities.
John MacKenzie: So it's.
Speaker Change: It's fairly close I would say in terms of.
Speaker Change: One option versus the other.
Cashel Meagher: Gotcha. Yeah. Thanks, John. And, you know, Cashel, if I could swing it back to you on Montos Blancos, and I appreciate the sort of line of sight to getting to 20,000 tons a day. I guess my concern a little bit is the grades and the recoveries, which are quarter over quarter or were lower than what I was expecting. I was wondering if you could just maybe give me a little hand on looking at how that second half of the year looks.
Speaker Change: Got you yeah, Thanks, Sean and casual if I could swing it back to you on.
Cashel Meagher: And, you know, Tashel, if I could swing it back to you on Montel's Blankos. And I appreciate the sort of line of sight to getting to 20,000 times a day. I guess my concern a little bit is on the grades and the recoveries, which sort of quarter of a quarter or we're lower than what I was expecting. I was wondering if you could just maybe give me a little hand on looking at how that second half of the year looks. Yeah, so the second half is looking better than the first half. We had, like we mentioned in the phone call itself.
Speaker Change: Muscles, Blancos and I appreciate.
Cashel Meagher: Sort of line of sight to getting to 20000 tonnes a day I guess my concern a little bit is on the grades and the recoveries, which sort of quarter over quarter were lower than what I was expecting I was wondering if you could just maybe give me a little hand on looking at.
Cashel Meagher: That said second half of the year looks.
Cashel Meagher: Yeah, so the second half is looking better than the first half. We had, like we mentioned in And so, going forward, now we have that area available to us again. And so, we'll make up the balance in the second half. And certainly, we're really happy with the way the work has gone, although it's a little late, as we mentioned, a month or two late. But the back end of the plant for the tailings delivery system with the pumps and tanks is all complete now, and they're starting to ramp up to get to 20,000 tons again. We see ourselves recovering here.
Cashel Meagher: Yes, so the second half is looking better.
Cashel Meagher: We had like we mentioned in.
Speaker Change: Phone call itself, we had a bit of an interruption due to achieve a technical issue and we had to switch out our sequencing levels.
Cashel Meagher: We had a bit of an interruption between geotapental issuing and to switch out or sequencing a little. So, we went into an area of the mine that was going to be more blended in with what was happening. It was the type of war then when you lose one area and you have the mine higher volume in another area. And that type of war was supposed to be blended in as per the mine plan for Montel's Blankos. and so going forward, now we get that area available to us again, and so we'll make up the balance in the second half, and certainly we're really happy with the way the work has gone, although it's a little late, as we mentioned the month or two late, but the back end of the plant for the tailings delivery system with the pumps and tanks is all complete now, and they're starting to ramp up to get to the 20,000 times again, so we see ourselves recovering here in the area.
Cashel Meagher: So we went into an area of the mine that was going to be more blended in with what was happening with the type of bore than when you lose one area you have to mine higher volume in another area and that type of bar was supposed to be blended in as per the mine plan <unk> blancos.
Cashel Meagher: So going forward now, we get that area available to us again and so.
Cashel Meagher: We'll make up the balance in the second half.
Cashel Meagher: And certainly we're really happy with the way the work has gone although it's a little late as we mentioned a month or two late but the backend of the plant for the tailings delivery system with the pumps and tanks is all complete now and they're starting to ramp up to get to 20000 tons again, so we see ourselves.
Cashel Meagher: Recovering here.
Cashel Meagher: For the year.
Cashel Meagher: Thanks very much. Thanks, Elf.
Cashel Meagher: Okay.
Cashel Meagher: Thanks very much.
Speaker Change: Thanks Al.
Craig Hutchison: I said a reminder. If you have a question, please press star one on your telephone keypad. Your next question comes from the line of Craig Hutchison from DD Cabin. Your line is now open. Good afternoon, guys. Just with regards to your guidance and cash cost guidance from Monteverde, was the original expectation to be commercial production in Q3, and just kind of curious when you think you would be a commercial production, and is there a risk to your guides just given that one month away because it's discussed earlier. Look, our guidance takes into account where we stand today in terms of our knowledge of what we're observing in terms of the month of air ramp up.
Speaker Change: As a reminder, if you have a question. Please press star one on your telephone keypad.
Speaker Change: Your next question comes from the line of Craig Hutchison from TD carbon your line is now open.
Unnamed Questioner: Good afternoon, guys. Just with regard to your guidance, cash cost guidance for Monteverde, was the original expectation to be commercial production in Q3?
Speaker Change: Hi, good afternoon guys.
Speaker Change: Just with regards to your guidance and cash cost guidance or Monteverdi was the original expectation to be in commercial production in Q3.
Speaker Change: And just kind of curious when you think you'd be in commercial production and is there a risk to your guidance just given that one monthly as discussed earlier.
Unnamed Questioner: Yes.
Unnamed Questioner: Look our guidance takes into accounts.
Speaker Change: Where we stand today in terms of our knowledge of the what we are observing in terms of the months of where they ramp up.
John MacKenzie: I think cash will describe where we're very comfortable with how it's looking and how it's proceeding.
Speaker Change: Cashflow described we are very comfortable with how its looking and how it's proceeding.
Raman Randhawa: I might just pass you across to Raman just in terms of how we're thinking about the switch to commercial production from what would have previously been kept a lot. Yeah, it would be very similar to like the guidance that doesn't the one month doesn't change it, so commercial production would be like 75% of main plate capacity. Is the test, and we should kind of hit that in Q3 there, so Q3, kind of September issue, probably is when we actually officially start reporting C1, so that kind of fits in with the guidance we gave before of Q3.
Speaker Change: I am not just possibly across the two robin just in terms of.
Speaker Change: How we're thinking about.
Speaker Change: The switch to commercial production.
Unnamed Questioner: From what would have previously been capitalized.
John MacKenzie: Yeah, I think it would be very similar, Craig, to the guidance that doesn't, the one month doesn't change it, so commercial production would be like 75% of main plate capacity is the test, and we should kind of hit that in Q3 there, so Q3, kind of September-ish, is when we actually officially start reporting C1, so that kind of fits in with the guidance we gave before about Q3. Thank you.
Speaker Change: It will be very similar to like the guidance. It doesn't the one month doesn't change and so commercial production will be like 75% of nameplate capacity as a test and we should kind of hit that in Q3. There. So Q3 kind of September ish, probably is when we actually officially start reporting to <unk>, so that kind of fits in with the guidance we gave before of Q3.
John MacKenzie: Great.
Craig Hutchison: Thank you for. Okay, great.
Craig: Thank you for okay.
Speaker Change: Okay, great and just on incentive bingo you guys are proposing to produce through different products.
Craig Hutchison: And just on says a mingo, you guys are proposing to produce three different products of, you know, management type from 62% to 67. I just wonder if you've had some preliminary offtake discussions or sent samples off overseas, just kind of get a sense of what the demand is and if you could provide any color in terms of any feedback you may have had on that at this point. Thanks. Yeah, so there has been, there certainly have been discussions with off-takers. You know, there's been a huge amount of first, first of all, test work, and I think, you know, this latest, this update to the feasibility, I think also involves fairly material improvements to the, to the iron circuits actually.
Speaker Change: Magnetite from 62% to 67% I, just wonder if <unk> had some drilled.
Speaker Change: Preliminary offtake discussions are sent samples off overseas, just kind of give a sense of what.
Speaker Change: What the demand is and if you could provide any color in terms of any feedback you may have had on that at this point.
John MacKenzie: Yes.
John MacKenzie: There has been, certainly have been discussions with off takers, you know, there's been a huge amount of first of all test work, and I think this latest update to the feasibility study, I think also involves fairly material improvements to the iron circuits, actually. So I think we've got a lot more confidence in, you know, our ability to produce each of those products. I'll just pass you over to Peter Ameluksen, just to give a little bit further comment on the kind of iron ore and the...
Speaker Change: There has been there's certainly have been discussions with off takers.
Peter Ameluksen: Theres been a huge amount of physical test work and I think this latest.
Peter Ameluksen: Update to the feasibility I think.
Peter Ameluksen: Also involves fairly <unk>.
Peter Ameluksen: Material improvements to the.
Peter Ameluksen: Two the iron circuits actually so I think we got a lot more confidence.
John MacKenzie: So I think we, we've got a lot more confidence in, you know, our ability to produce each of those products.
John MacKenzie: Sure.
Peter Ameluksen: Our ability to produce each of those each of those products.
Peter Amelunxen: I'll just pass you across to Peter. Emma looks and just to just to give a little bit further comments on the kind of iron ore and the salability. Yeah, thanks, John. We have produced samples and have been tested at respected international labs and share those results with potential off takers. And we do, we do have quite high confidence that we will be able to make the grades that we are setting forth in our technical document. I should note, though, that the way we've configured our concentration circuit, we will be producing only two grades at a time.
Peter Ameluksen: I'll just pass it across to Peter on the looks and just to just to give a little bit further comments on the kind of iron ore in the sale ability.
Peter Ameluksen: Yes, yes, thanks, John we have produced.
John MacKenzie: <unk>.
Peter Amalukson: and had them tested at respected international labs and shared those results with potential off takers. And we do have quite high confidence that we will be able to meet the grades that we are setting forth in our technical document. I should note, though, that the way we've configured our concentration circuit, we will be producing only two grades at a time. So whether that's a 67 and a 65 or a 65 and a 62, that will depend on the nature of the ore and the liberation characteristics coming into that.
Peter Ameluksen: Had been tested at <unk>.
Peter Ameluksen: Respected international lines and share those results with potential off takers.
Peter Amalukson: And we do we do have quite high confidence that we will be able to make the.
Peter Amalukson: The grades that we are set forth in our technical document I should note, though that the way we've configured our concentration circuit, we will be producing only two grades at a time, so whether that's 67% 65 or $65 62.
Peter Amelunxen: So whether that's 67 and a 65 or 65 and a 62, that will depend on the nature of the ore and the liberation characteristics coming into that. But we've set it up to be able to handle the two independent grades from the concentrator all the way through the port, with sufficient storage capacity at the port to manage those independently. So we're quite confident that we'll be able to do it. And by doing it this way, obviously, we maximize the recovery from both the high grade and the low grade. Thanks a lot. So that's a significant improvement over the last iteration.
Peter Amalukson: Will depend on the nature of the ore and deliberation characteristics coming into that but we set it up to be able to handle the two independent grades from the concentrate or all the way through the port with sufficient storage capacity at the port to manage those independently. So we're quite confident that we'll be able to do it and by doing it this way.
Peter Amalukson: But we've set it up to be able to handle the two independent grades from the concentrator all the way through the port with sufficient storage capacity at the port to manage those independently. So we're quite confident that we'll be able to do it. And by doing it this way, obviously, we maximize the recovery from both the high grade and the low grade, a significant improvement over the last year.
Peter Amalukson: We maximize the recovery from both the high grade and low grade.
Peter Amalukson: And a significant improvement over the last generation.
John MacKenzie: Yeah, and thanks, Pete. And certainly, the feedback from potential customers has been very positive.
Speaker Change: Yeah, Thanks pace and certainly the feedback from from potential customers has been very positive.
Craig Hutchison: Thanks. I appreciate your answers. Thanks, Craig.
Speaker Change: Okay. Thanks, I appreciate your answers.
Unnamed Questioner: Thanks; I appreciate your answers.
Unnamed Questioner: Thanks. I appreciate it, Ron.
Greg: Thanks, Greg.
Operator: There are no further questions at this time.
Speaker Change: There are no further questions at this time I will now turn the call back to Mr. John Mckenzie. Please continue.
Operator: There are no further questions at this time. I will now turn the call back to Mr. John MacKenzie. Please continue.
John MacKenzie: I will not turn the call back to Mr. John MacKenzie. Please continue. Thank you.
John MacKenzie: Thank you. So we look forward to updating you again in late October with our Q3 results and until then stay safe and feel free to reach out to Gerald or Daniel If you have any further questions.
Operator: So we look forward to updating you again in late October with our few three results. And until then, stay safe and feel free to reach out to Gerald or Daniel if you have any further questions. Thank you for your continued support, and have a good day.
John MacKenzie: Thank you for your continued support, and have a good day.
Speaker Change: For your continued support and have a good day.
Operator: Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.
Operator: Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.
Speaker Change: Ladies and gentlemen, this concludes today's conference call. Thank you for your participation you may now disconnect.
Operator: [music].
Operator: Okay.
Operator: Okay.
Operator: Okay.
Operator: Okay.
Operator: Okay.
Operator: Okay.
Operator: Hi.
Operator: Sure.
Operator: Okay.
Operator: Okay.