Q2 2024 Aura Minerals Inc Earnings Call

Operator: This conference is being recorded, and the replay will be available on the company's website at auraminerals.com slash investor slash The presentation will also be available for download. This call is also available in Portuguese. To access it, you can press the globe icon on the lower right side of your Zoom screen and then choose to enter the Portuguese room. After that, select Mute Original Audio. To access our conference in Portuguese, click on the globe icon at the bottom right of your Zoom screen and select the Portuguese Room option. When accessing the new room, make sure to mute the original audio.

The replay will be available at the company's website at our our minerals dotcom slash English it though it is less.

The presentation will also be available for download. This call is also available in Portuguese to access you can press the globe icon on the lower right side of your zoom screen and then choose to enter the Portuguese room.

After that select mute original audio.

Speaker Change: But as the sadness are conflating St. Portuguese clicking a week when you do global I'll add he said your G&A to the sweat that loves him. He said, it's showing up so Portuguese room, Alex decided enough novel Siler City fixes Yamal Tidewater as you know.

Speaker Change: We would like to inform that all attendees will only be listening to conference. During the presentation and then we'll start the question and answer session. When further instructions will be provided.

Operator: We would like to inform you that all attendees will only be listening to the conference during the presentation, and then we will start the question and answer session when further instructions will be provided. Before proceeding, we would like to clarify that any statements that may be made during this conference call regarding the company's business prospects, operational, and financial projections, and goals are the beliefs and assumptions of Aura's Executive Board and the current information available to the company.

Speaker Change: Before proceeding we would like to clarify that any statements that may be made during this conference call regarding the company's business prospects operational and financial projections and goals are the beliefs and assumptions of Auris Executive Board and the current information available to the company.

Operator: These statements may involve risks and uncertainties, as they relate to future events and therefore depend on circumstances that may or may not occur. Investors should be aware of events related to the macroeconomic scenario, the industry, and other factors that could cause results to differ materially from those expressed in their respective forward-looking statements. Present at this conference are Rodrigo Barbosa, President and CEO, and Kleber Cardoso, the CFO. Now, I will turn the conference over to Rodrigo Barbosa. You may begin your presentation.

These statements may involve risks and uncertainties as they relate to future events and therefore depend on circumstances that may or may not occur.

Investors should be aware of events related to the macroeconomic scenario the industry and other factors that could cause results to differ materially from those expressed in their respective forward looking statements.

Regal Barboza: Present at this conference we have HUD, Regal Barboza, President and CEO and collaborate kardos the CFO now.

Speaker Change: Now I will turn the conference over to hold the Regal by Basel you May begin your conference.

Speaker Change: Thank you all and good morning. Thank.

Rodrigo Barbosa: Thank you all and good morning. Thank you for also being here with us. I am glad to be here again to present the second quarter of 2024. I will, as usual, present an overview of all the operations and how we're progressing with our growth projects. And then Cleber will go into more details on the results.

Speaker Change: Thank you for also here with us.

Speaker Change: I am glad to be here.

Speaker Change: The second quarter.

Speaker Change: Or.

Speaker Change: As usual I'll present, an overview about the operations and how we are progressing with our growth projects and then a plan, but we will go in more details on the results.

Rodrigo Barbosa: In the second quarter, again, we had a very strong quarter in terms of results and cash generation while we continue to advance in Puerto Morema. However, as we were projecting during the demand sequencing, this Q2 is the weakest compared to the other quarters of the year. And we had a change in contractor numbers, which I will explain further in order to reduce costs that have already completed. So we are now well positioned to have a very strong Q3 and also a very strong Q4.

Speaker Change: The second Walker again, a very strong quarter at Lincoln as a result of cash generation, while we continue to drive the basket.

Speaker Change: Although as we reward projecting dwindle and mine sequencing.

Speaker Change: In Q2.

Speaker Change: The weakest.

Speaker Change: Compared to the other quarters of the year and we had a change in contractual enormous which I will explain further in order to reduce cost us that has already completed so we are now.

Speaker Change: Well position to have a very strong Q3 and also very strong Q4, we project to have a stronger second semester compared to the first semester together with a lower cost and higher gold price and gave us a chance to continue to improve our results along the year and have a very strong year.

Rodrigo Barbosa: We project to have a stronger second semester compared to the first semester, together with a lower cost and higher gold price, which will give us a chance to continue to improve our results throughout the year and have a very strong year in 2024. So in terms of production, as we were projecting a weaker quarter compared to Q1 and also Q2 and Q3, together with the changing contractor in Almas, we reached a production of 64.3 gold equivalent houses, coming from 68 last quarter. And now we are projecting to be about 70,000 per quarter during the next, during the second semester. The 64.3% is already a 33% increase when you compare it to last year.

Speaker Change: In 2024.

Speaker Change: So in terms of of production as we were projecting a weaker quarter compared to Q1 and also through <unk>.

Speaker Change: Together with the change in contract or.

Speaker Change: We reached the production of $64 three gold equivalent ounces coming from <unk> 68 last quarter and now we are projecting to be above 70000 per quarter.

Speaker Change: What are the next building the second Samantha.

Speaker Change: The $64 three is already at 33% increase.

Speaker Change: Compared to last year, we will see the results of the inflection in terms of production than less of more that happened last year and as we've continued to move upwards going this year and then also in the next year when <unk> stopped the production.

Rodrigo Barbosa: We will see the results of the inflection in terms of production, the last 12 months that happened last year, and then we continue to move upwards in terms of EBITDA, although we had lower production compared to Q1. Higher gold prices allowed us to reach $56 million in EBITDA, and there's a strong EBITDA again. And I want to highlight that if you add Q1 EBITDA and Q2 EBITDA, we are reaching close to $110 million in EBITDA during this first semester, which is weaker than projected in terms of production than the second semester. It's $110 million with a gold price of $2,173.

Speaker Change: EBITDA, although we had a.

Speaker Change: Lower production compared to Q1 higher gold prices.

Speaker Change: US to reshape our $50 million to $60 million out of EBITDA.

Speaker Change: Strong EBITDA again, and I want to highlight that if you add Q1 EBITDA in Q2, EBITDA, we're reaching close to $110 million on the EBITDA. During this first semester, which is weaker than projected in terms of production.

Speaker Change: The second semester is 110.

Speaker Change: Gold prices of up to.

Rodrigo Barbosa: And now we are going to have stronger production in Q2 while gold continues to be traded closer to $2,400 or above $2,300 for the second semester, which will position us to have another very strong Q3, stronger than Q1, Q2, and also Q4 for the year. In terms of all in-sustaining cash costs, we had a slight increase of $41 compared to the first quarter of 2024. That comes mostly from lower grades that we reached in Apuena with the highest separation and also the change in contractor in Almas.

Speaker Change: <unk> thousand $173 and now we are going to have stronger production through Q2, while gold continues to be traded a quarter two 2400 above 23 hundreds.

Speaker Change: For the second semester.

Speaker Change: Which will position us to have again very strong Q3 stronger than Q1, Q2, and also Q4 for the year.

Speaker Change: In terms of all in sustaining cash costs are we had a slight increase of $41 compared to the first part of 2024 that comes mostly from lower grades that we reach it in a way with the highest reparation and also the change in contractor.

Speaker Change: In August for the second for the third quarter and fourth quarter.

Rodrigo Barbosa: For the second, for the third quarter and fourth quarter, Almas is already, we have already changed the contractor, we are already producing close to 45 to 5,000 ounces, 4,500 to 5,000 ounces of gold per month, while at Apuena we will reach a higher grade, so we should see also all in-sustaining cash costs improving or decreasing in value for the next part. With that, Evida, Cleber, we're also going to share with you, we had a non-recurring accounting event that affected our net income.

Rodrigo Barbosa: That comes from good news; while the gold price continues to increase, we have to market to market our options. So that also is a non-recurring and accounting loss that goes to our net income, together with an exchange rate that changes, reals coming from 5 to 5.5, and 5.6 during the quarter. With a strong cash flow that comes from the first semester, we also paid dividends close to $25 million in dividends plus $4 million of share buybacks. So that will also continue.

Rodrigo Barbosa: We continue to give cash back to our shareholders while we are investing and growing. If you add the dividends we paid in the last 12 months, that, together with the share buyback, is reaching 8.8% of our yield to our shareholders, which continues to put us among the highest dividend yields in the world for the gold sector. During the quarter, we also acquired two important prospection projects, Pezo and Pequenche, and we now have an option to do a drilling program that will go together with the Matupá project so that we can add more resources and reserves to Matupá and extend the life of the mine.

Rodrigo Barbosa: Although Matupá, we already have enough to make the payback and good returns, it's still 300,000 ounces of reserves, and we expect with Pequenche, Pezo, and then together with Bananal to significantly increase our resources and reserves in the project, and we'll do the drilling program during the second semester, and then we'll update the market accordingly as we have the results. We also published, or I would advise all the investors to take a look at, our sustainability report that we recently published.

Rodrigo Barbosa: This is the second report that we have published and that we should continue to do so in the next years, giving full transparency of the over 360 concepts, where we also look at the impacts on communities and the environment and also within our employees and everything that we do. In terms of safety, as we always share with you, we broke our internal record last quarter in Q1 that one year in all the operations without any lost time incident.

Rodrigo Barbosa: Unfortunately, in Apuena, we had an incident, but we continue to do a very strong incident report so that we have 21 months in Arenzazul, 20 months in Minas, and 24 months in Almas without any lost time incident. And also, during the construction of Borborema, we don't have any lost time incident.

Rodrigo Barbosa: All the daily checks, we continue to monitor on a monthly basis with independent consultants to check our structures, our technical structures, and all our structures are in compliance and comply with the current legislation. So on the left side, on this chart, on the line, on the left chart, this is the last 12 months of production. As you can see, since Q2 last year, when we reached the challenges in lower grade, challenges in lower grade in Apuena, we reached the lowest level, 228 gold equivalent ounces produced.

Rodrigo Barbosa: Every quarter after that, the last month, we've been increasing. And that increase comes from the challenges in Honduras have already been addressed. And we are producing a running rate, as we can see on the right side, 19,000 ounces per quarter. Then we also have higher grades.

Rodrigo Barbosa: We had higher grades in the second semester of the first quarter of this year in Apuena, and we almost started commercial production during Q3 last year. So in every quarter now, we are having stronger production compared to last year. That puts us on the last 12 months, an increase. So from 1,228,000 until Q2 2023, now at 266 for the last 12 months. And again, as we will have a stronger second semester than the first semester of this year, we should continue to see improvement in the last 12-month production, Q3 and Q4, when it should be stabilized. But then I would also invite the shareholders to take a look at the Borborema project, which I will highlight on the next slide.

Speaker Change: Compared to last years that puts us in the last 12 months an increase from 428000 in Q2 2023 now at 266 in the last 12 months and again as we will have a second semester stronger than the first semester of this year, we should continue to see improve.

Speaker Change: On the last 12 months production feel free in Q4, why when it should be stabilizing but then I would also like to shareholders. We'll take a look on the boardwalk in my project, which I'll cover highlights on the next slide that should start to ramp up by Q1 next year and then we also continue to add also that interim.

Rodrigo Barbosa: That should start the ramp up by Q1 next year and that we also continue to add ounces into our last 12-month. Our order should continue to increase production, while, as we will see, we are meeting the guidance in terms of the cost of insustaining cash costs. Actually, the second semester should be strong, better than the first semester.

Speaker Change: Last 12 months. So all all of those should continue to increase production, while as we will see a weekend. We are meeting the guidance in our cost all in sustaining cash costs actually the second semester should be strong better than the first semester and then into next year, but what are my answers with a lower all in sustaining cash.

Rodrigo Barbosa: And then next year, Borborema enters with a lower insustaining cash cost compared to our average. So our order will continue to grow, and the cost will decrease, while gold prices continue to be strong. Again, we had a first semester realized price of close to $2,170 per ounce, and our gold price has been traded at close to $2,400 per ounce. So that combination of more production, lower cost, and a higher gold price will boost or continue to boost our EBITDA for Q3 and also Q4. On the right side of the slide, on the bars, as you can see, Aranzazul is very stable compared to Q1.

Speaker Change: Cost compared to our average so all of them continue to grow decreased cost while gold prices have continued to be strong again, we had the for Samantha realized social 2177.

Speaker Change: $70 per ounce gold price is being traded at close to 2000 and $400 per ounce. So that combination of more production lower costs and stronger gold price will boost our if it continued to boost our EBITDA for Q3 and also Q4 on the right side of the slides on the boss.

Speaker Change: As you can see that as a very stable compared to Q1, I pointed out where we reach at lower rates than what's already projected due to mine sequencing, we're transitioning from our Nashville, two two nausea, and so that transition out of reduce our grades increased strip ratio, but we should be also now entering.

Rodrigo Barbosa: At Apoena, where we reached a lower grade that was already projected during the mine sequencing, we're transitioning from Aranzazul to Nasdaq. So that transition reduced our grades, increased preparation, but we should also now enter higher grades with more productivity in Apoena so that we will be able to meet the guidance. Minasa, again, is very stable and continues to be strong. We fixed all the challenges from last

Speaker Change: A higher grades with more productivity and I play and that's real.

Speaker Change: We will be able to meet the guidance.

Speaker Change: Awesome again, very stable continues to be stronger with fix it all that all the challenges from last year, and then just being on the third and fourth quarters that we have strong production between 18 to 20000 ounces per quarter and that we could we should continue to see those kind of promotions are for tier three and Q4 almost where.

Rodrigo Barbosa: And then it's been in the third and fourth quarter that we have had strong production between 18,000 to 20,000 ounces per quarter. And we should continue to see those kind of productions for Q3 and Q4. ALMAs, where differently we were projecting; we did not project the change in contractor.

Speaker Change: Differently that the AR that we were projecting who do not projected change in contractual. So that's why we had a lower production put back to work in panels that due to the change in contract.

Rodrigo Barbosa: So that's where we had lower production compared to our internal estimates. But due to the change in contractor, ALMAs should be running between 4,500 to 5,000 ounces of production per month. We had in April, it was close to 2,200, May 3,500, and now June reaching 4,800, which is the running rate that we should expect for the upcoming month in ALMA so that we are very confident that we'll be delivering on the guidance from the next slide.

Speaker Change: Almost I shouldn't be running between 400 to.

Speaker Change: 4500 to 5000 a.

Speaker Change: Gold production of ounces of production per month, we had them in April.

Speaker Change: It was closer to 2200, a may 2005 hundred and now June reaching a 4800, which is the running rate that we should expect for the upcoming mall in almost all of that we are very confident that we'll be delivering into the guidance.

Speaker Change: From next life.

Speaker Change: In terms of all in sustaining cash cost as you can see it as being a very stable since Q4 of last year moving around the 1300 on all in sustaining cash cost last quarter. We had that last Q2, we had an increase that comes from mostly lower grading up window, which we don't expect to have lower grades in Q3.

Rodrigo Barbosa: In terms of all-in sustaining cash costs, as you can see, it's been very stable since Q4 last year, hovering around $1,300. Last quarter we had, last Q2, we had an increase that comes from mostly lower grades in Napoena, which we don't expect to have that lower grade in Q3 and Q4, and also higher costs due to the transitioning contractor in ALMA. Just to give you an idea, we are now coming from running rates during the first quarter and a little bit on the second of R$17 per tonne for the contractor.

Speaker Change: Your work and also higher cost due to transitioning contracts or a lean in our almost just to give an idea of a weird.

Speaker Change: Now coming from running rate during the first quarter and a little bit on the second of our 17 Ryals per ton you know on the contractor and all we have reduced to $13 five a reality per ton.

Rodrigo Barbosa: Now we have reduced to R$13.5 per tonne with the contractor, so that's a significant more than 20% decrease and puts us in a very strong ALMA position to have higher production with a lower cost, so that will also boost our results during the second afternoon.

Speaker Change: With the tons moved in with a contract. So that's a significant the more than 20% decrease and putting us in a very strong position to have a higher production with a lower cost. So that will also boost our results during the second semester.

Speaker Change: Yeah.

Rodrigo Barbosa: As I mentioned, we are doing the first semester of production, which is 133 gold equivalent ounces. This is very much within the middle of the guidance for the year. However, as I mentioned, the second semester will be stronger than the first semester, which puts us on the direction to be on a stronger health in terms of production.

Speaker Change: And as already mentioned.

Speaker Change: We during the first semester and the production reached 133 gold equivalent ounces. This is very much within the middle of the guidance for the year. However, as I mentioned second semester will be stronger than first semester, which put us.

Speaker Change: Oh, the direction to be on the stronger stronger house.

Speaker Change: In terms of production and that's the reflection of GPS and will also happen in OE sustaining cash costs are where we already close to the low of the guidance that we should continue to improve while we used sustaining cash cost so it should be.

Rodrigo Barbosa: And that the reflection of this will also happen in all these sustaining cash costs, where we are already close to the low of the guidance that we should continue to improve all these sustaining cash costs. So we should be, during the second semester, at the low end of the guidance in terms of all we, in terms, as a reflection of no change of contractor in ALMAs and also higher grades in APOEA, in the CAPEX on the right side of the slide.

Speaker Change: During the second semester at the low of the Guy because he tends off all week in times.

Speaker Change: As a reflection of no change of contract putting almost and also.

Speaker Change: Higher grades at <unk>.

Speaker Change: And I point out.

Speaker Change: The Capex and then on the right side of this slide as you can see we are very much in line on the Capex front exploration and also maintenance and project and expansion. We are on the first semester below.

Rodrigo Barbosa: As you can see, we are very much in line with the CAPEX for exploration and also maintenance and project expansion. We are in the first semester below half of the guidance, but that's because most of the expenses and the investments and the cash disbursement for Borborema happen in the second semester. So we continue to maintain our guidance for the year.

Speaker Change: All I'd say half of the guidance, but that's because most of the expenses anything vessels into cashiers endorsement for boardwalk might happens on the second semester. So we continue to maintain our guidance for the year and actually bought about am I as we will see in the next of life is being very much in line in terms of schedule and budget.

Rodrigo Barbosa: And actually, Borborema, as we will see in the next slide, is being very much in line in terms of schedule and budget. So, as I was mentioning, Borborema, we are already 40% complete, which is very much within our schedule and within our budget. Again, highlighting the numbers of this project that is not being priced in our shares. For this project, we did a feasibility study with 812,000 ounces of reserves at the gold price of close to $1,700.

Speaker Change: So as I was mentioning.

Speaker Change: But what amount we already 40%.

Speaker Change: A complete which is very much within our schedule and we've seen our budget again, highlighting the numbers of those projects that is not being pricing in our shares and this project. So we'd get a feasibility study with 812000 ounces of reserves and the gold price at <unk>.

Speaker Change: 17 closer to 1700 and that was giving us a NPV of $182 million only adjusting the gold prices for 'twenty 300. This NPV is already at $440 million at the 'twenty 300, goldstrike and gold prices already been trained at a ball from the 23.

Rodrigo Barbosa: And that was giving us a NPV of $182 million. Only adjusting the gold prices to $2,300, this NPV is already at $440 million at the $2,300 gold price. And gold is already being traded above $2,300.

Speaker Change: But also and more importantly, also we are considering this is a feasibility study 812000 ounces of reserves and we already have close to 2 million ounces of resources that mostly of these can also be converted into reserves as we have the.

Rodrigo Barbosa: But also, and more importantly, we are considering this feasibility study, 812,000 ounces of reserves. And we already have close to 2 million ounces of resources that can also be converted into reserves as we have the permits to move close to 5 kilometers of one road. That's already in progress, and then we expect to have the permits within less than one year. And then from that, another one or two years in terms of construction.

Speaker Change: Permits seemed to move closer to five kilometers off one road that's already in progress and we expect we're seeing a less than one year to have departments and then from that another one or two years in terms of construction. So this project can have more than double their reserves are with that permit.

Rodrigo Barbosa: So this project can have more than double the reserves with that permit, which will significantly boost our NPV and returns on this project. And Borborema, as we did with Almas, we are applying all the fat track going to production. It's easy to build, easy to operate. We built the plant while we did all the basements. And we built a lot of the parts aside from the plant so that we could mount them all together in a fast track process during Q3 and Q4.

Speaker Change: That will significantly boost our NPV and returns are and just brought it and what about them as we did with Mcdonald's we are applying all the fast track going to production.

Speaker Change: It's easy to build a user to operate.

Speaker Change: Then we are mounting the plant. So why are we are does all the basement and we built a lot of the parts aside from the plant so that wind months, who have multi altogether in a fast track process during Q3, and Q4 and ramp up you just casually you'll have to start on the first quarter and next.

Speaker Change: Yeah.

Speaker Change: So with that our past true fiber to go into the results and then I'll come back with questions and answers and then to wrap up all their projects.

Rodrigo Barbosa: And ramp up is scheduled to start in the first quarter next year. So with that, I will pass to Faber to go into the results, and then I'll come back with the questions and answers, and then we wrap up our project.

Speaker Change: And I was wondering Joe good morning, everyone.

Cleber Cardoso: That's Rodrigo. Good morning, everyone. Okay, so this quarter, despite the fact that Rodrigo was mentioning that we saw a slight decrease in our production compared to the last quarter and that it was the lowest expected production per quarter for the year, we saw an increase in both net revenues and EBITDA this quarter compared to the last quarter. So in terms of net revenues, we reached $134 million now in Q2, bringing the last 12 months to exceed and pass $1 billion at the end of We have never reported less than 12 months of revenues above $500 million.

Speaker Change: Okay. So this quarter. Despite the fact that the rig was mentioning that we saw in light of degrees.

Speaker Change: Production of all parts of the less partner and that being the lowest expected for virtual first market for the year.

Speaker Change: We saw an increase in both net revenues and EBITDA underscores or compared to the last part.

Speaker Change: So in terms of never met revenues reached $134 million now too.

Speaker Change: Bringing the last 12 months strict exceeded kras have begun.

Speaker Change: At the end of Q2, which is a record high in the east for our Florida. We have never had report that our last 12 months revenue was about $500 million.

Cleber Cardoso: Adjusted EBITDA, we're going in the same direction. We also see an improvement compared to the last quarter, now achieving $56 million in this quarter, coming from 53. If we compare it to the same period of last year, we more than doubled the EBITDA for this quarter. And then now, accumulated for the last six months, we have $180 million accumulated, which is already significantly higher than the EBITDA that we reported last year, which was $134.

Speaker Change: Adjusted EBITDA, we're going in the same direction, we see also an improvement compared to divest Parker now achieving $56 million on these parts are coming from previous to treat if we compare to the same periods of last year, we more than doubled they'd be down this partner.

Speaker Change: And then now accumulated for the last six months, we have $180 million and tobacco related.

Speaker Change: We shall read are used to getting incrementally higher than they'd be done that we brought to market last year, which was 134.

Cleber Cardoso: So keeping our expectation to meet our production guidance, cash cost guidance, and considering current gold prices, we should be continuously increasing both the quarterly EBITDA and also the accumulated less of monthly EBITDA increasing going forward. When we come to the net income, and we were reporting a $26 million loss for this quarter that is entirely explained by either no cash or no recurring losses. Most of that, as Rodrigo anticipated, is First, as a result of a continuing increase in gold prices, the gold price increased by over $100 between the end of the first and second quarter, which generated non-cash losses related to our gold derivatives.

Speaker Change: So keeping our expectation to meet our production guidance cash cost guidance samples to their current cycle. The prices. We should continue to be seen in the next quarters move the parkman EBITDA in OS would be accumulated.

Speaker Change: Let's cover amongst that'd be increasing going forward.

Speaker Change: When we come to the net income and we were reporting a $26 million or a loss. This quarter that is entirely explained by.

Speaker Change: These are noncash or nonrecurring losses, most of that is really with anticipated.

Speaker Change: First as a result.

Speaker Change: Chino, increasing both prices good prices and previously by over $100 between the end of the of course, the second Parker we generated.

Speaker Change: Non cash losses related to our wood derivatives.

Cleber Cardoso: It also affected the impact because of the Brazilian Real that was perceived as 11% square. Both factors are very positive, actually, from a business side. Of course, gold prices are positive because we export metals from Brazil. It's good if the reality holds up.

Speaker Change: Also.

Speaker Change: FX impacts because of the Brazilian real depreciated, 11% this quarter.

Speaker Change: Both both factors are very positive action to transform you decide you know of course, what the prices higher prices as Fabrizio, but because we are exploring some that goes from Brazil. It's good acceleration in reality by the way, but then we see on these occasions. These noncash losses have been net income ever going to outgrow.

Cleber Cardoso: But then we see on these occasions these cash losses and net income. I'm going to go into more detail about that. Then finally, in terms of cash and net debt, our net debt achieved $142 million at the end of the quarter, increasing from the previous quarter as expected, as we continue to build the Borborema project. And also in the quarter, we paid $29 million between Big Benz and Sharebuyback, with this net debt at the end of the quarter. Our Net Debt is over $50,000, achieved 0.8 times at the end of the quarter, so we're still very comfortable in our cash position.

Speaker Change: Specifically slide I'm going to say about that.

Speaker Change: Finally in terms of cash and net debt, our net debt, but shoot under $42 million at the end of the Parker.

Speaker Change: Greetings from the from the Big three months Parker as expected.

Speaker Change: As we continually be okay, but to be able to work with them on projects.

Speaker Change: So in the acquired or do we paid them spending $90 million.

Speaker Change: Between dividends and share buybacks.

Speaker Change: We produce.

Speaker Change: Net debt at the end of the quieter our net debt over EBITDA attributed to your 0.8 times I've handled departure, so we feel very comfortable.

Speaker Change: In our cash position to offer a couple of boards, you'll come to $90 million at the end of the Parker.

Brink: Okay here now with brink.

Speaker Change: And the big failures for explaining the change in the cash position throughout the second Barker.

Cleber Cardoso: We're still comfortable with about $190 million at the end of the quarter. Okay, now we bring you the details for explaining the change in the cash position throughout the second quarter. So here on the far left side of the page, we see we started the quarter with 214 million dollars. Then as a reminder, on the left side here of the page is what we call just a free cash flow to firm, which is the cash flow generated by the four miners in production, not including how much we're investing to grow the business in either expansion or reserves and resources. We see that from a quarter ago, we generated 37 million dollars in cash.

Speaker Change: Over here on the left side of the page with respect to the cracker is at $214 million.

Brink: Ben.

Speaker Change: I remind everyone who's left side in Europe with pages, one recall, what just a free cash flow to firm we choose the the cash flow generated by the four mines in production not including how much we're investing to grow.

Speaker Change: And either expansion of our reserves and resource.

Speaker Change: We see.

Speaker Change: Was verse from acquirer, we generated $37 million in cash.

Cleber Cardoso: If we exclude changes to working capital, which we had $8 million, and no recurring temporary consumption, the cash flow would have... It includes $45 million, so it was a strong quarter. Again, as Rodrigo mentioned, in a quarter in which food prices were close to $2,300.

Brink: We exclude changes in working capital, which we had a $8 million.

Brink: No no recurring theme for our assumption of the cash flow we've been having.

Brink: Being close to $45 million, so was a stronger partner.

Roberto: Again, as Roberto mentioned and acquired in which book prices were closer to 23 hungry.

Cleber Cardoso: In the middle here of the chart is the investment for growth, so we invest another $5 million in the quarter in exploration, and $17 million is mainly for Borborema construction. And then on the right side is what I call the financial items. The biggest one was the return of Capcox's shareholders, the intent to share buybacks. And I'd also like to highlight here another two items. One is we see effects impacting cash and equivalents of $11 million. This is not cash consumption.

Brink: In the middle here the other charges in the investment for growth. So we invest another $5 million in the Parker exploration.

William: And about $17 million is named William on cost structure.

Speaker Change: And then to the right side, it's I wouldn't hold the financial items.

Speaker Change: And the moment the biggest one there was a big return of capital shareholders dividends and share buybacks.

Speaker Change: And I would like to highlight here or there are also other two items one is.

Speaker Change: We see effects.

Speaker Change: In fact, the cash and equivalents of $11 million. This is north of cash consumption, the reason, which was negative $11 million or its just because.

Cleber Cardoso: The reason we see this negative $11 million is because Borborema holds most of its cash in Brazilian reals in Brazil because most of the capex expected to complete the project will be incurred in Brazilian reals. Because the Brazilian Real went from 5 to 5.55, so 11% depreciation in the quarter, when we converted that cash in Brazilian Reals to dollars, it seems to have less dollars. But again, we don't expect that to translate into a free cash flow loss because the capital is going to be incurred in real. And the second item I'd like to show here is the derivatives and others.

Speaker Change: We're going to have my holds most of its cash in Brazilian reais in Brazil, because most of the topics.

Brink: Expected to complete the project will be incurred in Brazilian reais.

Speaker Change: Because of the Brazilian real went from $5 to $5 55, so 11% depreciation of acquired for women, we felt great the best fashion reacts with dollars.

Speaker Change: We it seems you'll have less dollars, but again, we don't expect that should Trump waking up.

Speaker Change: Free cash flow loss, because the capex is going to be incurred in reais and the second I can I'd like to just show here.

Speaker Change: Is the read about teaching others will have a $2 million loss cash flow for the year.

Cleber Cardoso: We have a $2 million cash loss here, which is how much in cash the net payments would pay to the bank to remove the credit support agreements, which are the agreements that allow the bank to call margins against Aura. So in the second quarter, we did a negotiation, and then we ended up paying a net amount of $2 million in cash, which we'll see when we see the net income.

Speaker Change: Which was how much in cash the net payments would pay to the banks to remove.

Speaker Change: The credit support type of agreements, which are the agreements that allowed the bank to onshore to coal margins against Florida.

Speaker Change: So in the second quarter, we did a negotiation in the end we end up.

Cleber Cardoso: There was a 13.4% impact on our P&L, but the net cash impact was just the $2 million received. For the quarter, so for the semester now, it's the same analysis for the semester, we see a free cash flow to the firm of 53 million dollars. Investing $54 million in a significant amount to grow the operations, $34 million mainly in the Purple Hema, a significant amount also in exploration, $10 million in the first six months, in the financial items, the main items like the ones that I explained before.

Speaker Change: Being in that come out so $2 million in cash, which we're going to see when we've seen them and then there was up 13 point explore impact our P&L, but the next cashing back plus just the $2 million a seat heater.

Speaker Change: And acquired Sir so.

Nam: So now he's the chairman Nam is farthest to master it was cheap the free cash flow to score of $53 million.

Speaker Change: Investing $54 million, so significant amounts to grow that.

Speaker Change: The operations are $34 million, mainly the Brookwood M. A significant amount so some exploration than we got in the first six months.

Speaker Change: In the financial wise against the main items that I've never wanted bag explained before.

Speaker Change: And then here in the space, we bring a breach explaining dance between the adjusted EBITDA that we saw before and the net income.

Cleber Cardoso: And then here on this page, we bring a bridge explaining the items between the adjusted EBITDA that we saw before in the net income. This quarter, we bring a little bit more details because of the items that impact the net income this quarter. So we see, as we saw before, EBITDA. We start with $56 million adjusted EBITDA. When we look at that by business units around the zoo, once again, the strongest results with $23 million.

Speaker Change: These acquired or we bring them in a weak market status because of the items that back and then well come this Parker.

Speaker Change: So we see as we saw before EBITDA, we start with $50 million to $60 million adjusted EBITDA. When we moved to that by business unit. Our Unabsorbed was once again.

Speaker Change: The strongest results with $23 million.

Cleber Cardoso: Minosa came close, a very good quarter, $19 million in EBITDA in Minosa. Apoia, despite being the most difficult quarter in terms of lower production and higher cash costs, also 7.5% in Almas also, it's a positive highlight, but with $11 million EBITDA despite being the quarter where we changed the contractor and had some impact also in production and cash costs. Amortization and depletion at $50 million came according to our expectations and then the ones when we detail a little bit more of the financial items we were reporting $45 million in financial expenses this quarter again it's most of that didn't translate or we don't expect to translate in cash losses out of those 45 the main items are $11 to $12 million the market to market accounting losses because of increasing gold prices for the Berberia Malvas gold derivatives as we saw in the last two quarters, We see here the $11 million, and FlexCashLots, which is related to the ProProDemo Cash Help in Reales.

Speaker Change: I was I came close but very good required for $19 million in EBITDA.

Speaker Change: All of that.

Speaker Change: Oh boy and despite of being the most of these people acquired during periods of lower production and higher cash costs also seven five.

Speaker Change: At this time, we thought.

Speaker Change: So it's a public didn't highlight but with $11 million EBITDA. Despite uncertainty in the Quaker where I would change the contracts are in that had some impact so supervision and not in cash costs.

Speaker Change: We're just finishing depletion row at $15 million came according to our expectations and then.

Speaker Change: They're ones when we get a bit more oh, the financial items.

Speaker Change: We were reporting $40 million to $45 million in financial expenses as part of again, it's a more stock back.

Speaker Change: Didn't translate so are we don't expect it translates in cash losses.

Speaker Change: Out of those 45 at the main items are.

Speaker Change: $11 million to $12 million the market to market.

Speaker Change: I'm counting losses for our because of increasing the prices for the Bermingham all of us.

Speaker Change: <unk>, which started last two quarters.

Speaker Change: We see here the $11 million.

Speaker Change: In fact sketch law, which is related to the Brookwood M a cash cow, but reais.

Cleber Cardoso: And 13.4, which was the fee that we agreed with the bank to remove the ability for the bank to have margin calls against the company. We agreed to pay the bank about $13 million, but as part of the negotiation we did last year with the banks, we are expected to receive $11 million this quarter, so the net amount that we paid in the end was just the $2 million that I presented before.

Speaker Change: Aimed at $13, four which was the fee that we agreed that should they do the banks to ensure we move there.

Speaker Change: As it relates afraid of extra she'll have margin calls against the company.

Speaker Change: We agreed to pay to the banks about $13 million, but we had it all so that's part of the year.

Speaker Change: The negotiation that we did last year with the banks.

Speaker Change: We expect to receive the $11 million as Parker. So they match up Mount that we paid in the end. It was just truly done daughters that I presented before.

Cleber Cardoso: The income tax expense is a portion of that; it's similar to when there was a big depreciation of currency, especially the Brazilian real. We have deferred tax liabilities; we created those provisions that were not expected to become tax payments in the future. That was $7 million in this quarter. Then these items explain the $26 million net income loss. And from this quarter, as I mentioned, we are starting to communicate and report a new KPI, just the net income, in which we bring back the gain or losses with derivatives and the gain and losses with FX.

Speaker Change: The income tax expenses, a portion of that is seen with our there was when there was a big depreciation of currency, especially the person every ice.

Speaker Change: We have a deferred tax liabilities.

Speaker Change: We created those provisions that were not expected to have a general through its broker to become a tax payments in the future that about $70 million and disquiet Kurt.

Speaker Change: These items are explained in $26 million net income loss.

Speaker Change: And from this part or as I mentioned, we are starting from when it gating our revpar I can't keep digesting that in time in which we bring them back could be a gain or losses with their Eva cheese and the gang of losses with effects, we believe going forward as an abuser to to communicate.

Cleber Cardoso: We believe going forward it's going to be easier to communicate because of the volatility of gold in a free exchange. Excluding those two items, our adjusted loss would have been only three million dollars, of which if we excluded them at one time, you know, so no cash loss related to the derivative thresholds of 13 million dollars and the deferred tax liabilities, actually, our net income would be positive $17 million, which is more close to what we see in terms of operational results. And with this, we end the presentation, and we are open to questions now.

Speaker Change: Because also they will like GDT, or gold's and and Frank Strange.

Speaker Change: Excluding those two items, our adjusted loss would have been only $3 million.

Speaker Change: Of which Ah if.

Speaker Change: If we excluded this one time when it will show a noncash loss related to the Riva cheap thresholds over $13 million.

Speaker Change: The deferred tax liability is actually our net income would be positive in <unk>.

Speaker Change: Which is more close to a true why do we see in terms of operational results from assistance.

Speaker Change: And with this way on the presentation and open to questions now thank you.

Speaker Change: Yeah.

Operator: We are going to start the question and answer session for investors and analysts. If you wish to ask a question, please press the button Raise Hand. If your question has already been answered, you can leave the queue by clicking on Put Hand Down. The first question comes from Ricardo Monegaglia of Safra.

Speaker Change: We are going to start the question and answer session for investors and analysts if you wish to ask a question. Please press the button right hand. If your question has already been answered you can leave the queue by clicking on my hand down.

Speaker Change: Our first question comes from he kind of them when they goglet with stuff that.

Operator: You can open your microphone.

Speaker Change: You can open your microphone.

Sasha: Hello, everyone climb minimal Sasha.

Ricardo Monegaglia: Hello everyone, Rodrigo, Cleb, and Natasha. Solid results in the quarter, especially in Minosa and Arensa Azul. So my first question is, could we expect a maintenance of such strong operating rates in those operations, Minosa and Arensa Azul? Maybe in the third quarter, not necessarily in the third and fourth quarter.

Speaker Change: Our solid results in the quarter, especially in the North Zion items Zeus. So my first question is.

Dana: We would expect coming Dana for such strong operating rates in those operations North zone on Amazon.

Speaker Change: Maybe third quarter and not necessarily Jordan, the fourth quadrant would be interesting to understand but no.

Ricardo Monegaglia: It would be interesting to understand. On the other hand, it seems some specific conditions created some sort of perfect storm in Apoema and Almas during the quarter. And you mentioned during your presentation that you expect better figures for Q3. So could you give us more details on the drivers of this better operating performance, maybe a range for grades and striperation in APOENA and a new cash cost level in ALMOS as operating rates normalize with the new contractor? Thank you for the opportunity. Thank you. Yeah, I think so.

Speaker Change: On the other hand has seen some specific conditions created some sort of a perfect storm enough for your mine almost during the quarter and you mentioned during your presentation that you expect better figures for Q3.

Speaker Change: So could you give us more details on the drivers of this better operating performance, maybe a range for grades and strip ratio now below an a and a new cash cost 11 enormous as operating rates normalize within your new contractor.

Speaker Change: Thank you for the opportunity.

Speaker Change: Okay.

Speaker Change: Yeah, and I think for another little I mean loss that we should continue to have strong production understanding that some volatility quarter to quarter.

Rodrigo Barbosa: Yeah, I think for Aranzazul and Minas, we should continue to have strong production, understanding that there is some volatility quarter to quarter, but producing 17,000, 18,000, 19,000 ounces per quarter in Honduras is something that is reasonable. And I think for Aranzazul, the second semester seems much equal, much like the same of the first semester with some minor deviation either for less or for more. Then ALMAS, as I mentioned, we lost some 3,000 to 3,500 ounces during the change of contractor.

Speaker Change: But producing 17 18 19000 ounces.

Speaker Change: Uh huh.

Speaker Change: <unk>.

Speaker Change: That is reasonable and.

Speaker Change: Thank God.

Speaker Change: I know this as well.

Speaker Change: Second semester.

Speaker Change: It seems so much.

Speaker Change: Equal much like at the same off the first semester with some minor deterioration either.

Speaker Change: For less or more.

Speaker Change: Then all of us as.

Speaker Change: As I mentioned, we lost him.

Speaker Change: <unk> 3000, 7500 Uh huh.

Speaker Change: Houses.

Speaker Change: During the change of contractor now so we should expect to have a thoughtful 4500.

Rodrigo Barbosa: And now, we should expect to have close to 4,500 hours of production per month at a lower cost. So we're very comfortable reaching the levels of the guidance during the second semester. And actually, we are already reaching this in June, right? Then, as you mentioned, it was projected to have a lower grade during Q2 and highest preparation. So we are comfortable that during Q3 and Q4, we should start having higher grades and lower preparation, which will put us at least in the middle of the guidance that we gave to the market in Apuena. So we're very comfortable with the projections, we're very comfortable with the guidance, and we're very comfortable to share with you that we will have stronger production overall in the second semester compared to the first semester.

Speaker Change:

Doug: Doug ounces of production per month.

Speaker Change: At a lower cost so.

Speaker Change: Comparable reaching the levels of the guidance.

Speaker Change: During the second some economics actually we already reaching days.

Speaker Change: In June right.

Speaker Change: Then I'll put in them.

Speaker Change: As you mentioned we.

Speaker Change: We had and that was projected to have a lower grades during that Churchill on highest strip ratio. So we are comfortable that during Q3 and Q4, we should start having a higher grades.

Speaker Change: And lower our separation, which will.

Speaker Change: With us achieving at least in the middle of the guidance that we gave to the market in a point in there. So we're very comfortable with it perhaps is not very confident with the guidance and it was very comparable to share with you that we will pass on the second semester stronger production overall compared to the first semester.

Rodrigo: Thank you Rodrigo.

Ed: Our next question comes from Ed you guys. Just so is that what they thought would be D. You can open your microphone.

Operator: Our next question comes from Edgar de Souza with Ita BBA. You can open your microphone.

Eagle: Hello, everyone and welcome to Eagle quite a bit or not.

Edgar de Souza: Hello everyone, hello Rodrigo, Claire, Bernat, so thanks for the question, congratulations on the consistency of the results, the stabilization of production in Minas, the company on the track to deliver the guidance, this is something that enhances the company's transparency, and also the company moving with the project. So, my first question would be regarding the gold price. If you, Rodrigo, can comment a little bit on your expectations for gold prices for the next few years and also for the long term, given these higher gold prices that we have been seeing, or if you think that we should factor in above sterile levels for gold prices in the long term, this would be very helpful.

Ed: Thanks, Thanks for the question and congrats for the consistency of the results does this stabilization of prediction. He knows the company on track to do they put the guidance.

Speaker Change: Did you say that enhance the Companys transparency also the company moving with the project.

Edgar de Souza: And also, my second question would be regarding Matupa. We know that Matupa has a solid NPV, but you are also moving with M&As and some exploration developments in the region. So, my question would be, when do you think we can expect the approval of Matupa by the board? And if you think that there is a chance that we could see another project maybe coming from an M&A or any changes to Matupa projects before the start of the construction? And lastly, a very quick one.

Speaker Change: So my first question would be regarding go to price. If you can comment a little bit on what your expectations for a good price for the next few years and also for the long term given this higher gold price that you. We have been seeing if you think that we should.

Speaker Change: Factoring a box turrical levels.

Speaker Change: For gold prices in the long term.

Speaker Change: And these would be very helpful. And also my my second question would be regarding months, we know that <unk> has a solid and deep V. But you were also moving with our M&A.

Speaker Change: Some exploration developments in the region. So my question would be.

Speaker Change: When do you think we can expect the approval.

Speaker Change: The board and if you think that there is a chance that we could see.

Speaker Change: Another project, maybe coming from an M&A or any change it seemed to me to Pos.

Edgar de Souza: You had those issues with the contractor at Almas. What have you been doing to prevent this in Borborema? Have you already started conversations with the contractor at Borborema? What can we expect on this front? Thank you.

Speaker Change: The project.

Speaker Change: Before D D D D. These thoughts of the construct.

Speaker Change: And lastly, a very quick one.

Speaker Change: Had those issues with the contract threat armor.

Speaker Change: Have you been doing to prevent these in.

Speaker Change: Have you already started the conversations for the contract wording, but putting him on what we can expect this from thank you.

Rodrigo Barbosa: Thank you, Edgar. I'll try to be very straight to the point. On gold prices, if we understand what drove gold prices up, I think then we can project if that should continue or not. So when we looked at the last six months or the last year, we had a unique situation where the gold price increased while real interest rates also increased. That never happened in the past.

Speaker Change: Thank God, the Guy I'm, not quite sure to be a very strict.

Speaker Change: Straight to the point on gold prices.

Speaker Change: If we understand what drove oil prices top I think then we can protect that.

Speaker Change: Continuing on now so when.

Speaker Change: When we looked at the last six months of last year, we had a unique situation where gold price increase while our real interest rates also increased at the never happened.

Speaker Change: In the past and the reason for that comes from probably.

Rodrigo Barbosa: And the reason for that comes from probably the consequences of the wars, particularly in Ukraine, where the world froze all the US dollars that Russia had all over the world. So that triggered many other central banks to start buying, diversifying from US dollars, and buying other real assets such as gold. So that's why you also see central banks in China and other non-so-friendly countries to the United States diversifying. Also, another thing that pushed the gold price up is the record high level in terms of fiscal deficit. The United States and Europe, while they have the highest debt to GDP, they have the highest fiscal deficit, and the world doesn't see it.

Speaker Change: Yes.

Speaker Change: The consequences of the war and particular in Ukraine, where the world.

Speaker Change: Froze all of the U S dollars that Russia had all over the world So that triggered a many other central banks stocks.

Speaker Change: By diversifying from U S dollars and buying.

Speaker Change: Although our real assets such as gold. So that's why you also see a central vaccine in China and other non salt friendly countries to the ninth states.

Speaker Change: Diversifying.

Speaker Change: Also another thing that pushed the gold price please.

Speaker Change: The the record high level in terms of a piece called asset. It doesn't go in nine states in Europe, while they have the highest.

Rodrigo Barbosa: And continue to print money. And when you print money, that loses value. So not necessarily gold prices are only appreciated, but perhaps US dollars and other fiat currencies are devaluing because of that. So if you understand that this is the reason, and then you start projecting, do we think that the world will stop cutting expenses and have fiscal discipline? Number one.

Speaker Change: That's a GDP they I have the highest.

Speaker Change: It's called baskets in the World doesn't see and continue to print money when you print money that Las Vegas, So long as the surgical practice I'll only appreciate it but perhaps.

Speaker Change: Our U S dollars and other quarters are evaluating because of that so if you understand that this is the reasons and then you just start protecting those are we think that the war.

Speaker Change: <unk> stopped cutting expenses and being in have a fiscal discipline number one I don't think I don't see that conversation coming in for example in the new elections in the United States number number two or do we see the war.

Rodrigo Barbosa: I don't think I don't see that conversation coming in, for example, in the new elections in the United States. Number two, do we see the world becoming more stable in terms of geopolitics? We don't see that, right? So we see that things escalated in the Middle East, so it's been very unstable in the last. It has actually deteriorated in the last couple of weeks. And then there is another factor: the gold price increased while interest rates increased. That never happened,

Speaker Change: Becoming more stable in terms of geopolitics, we don't see that right. So we see that the Ah things escalated in the middle East has always been very unstable.

Speaker Change: The last time he has actually deteriorated in the last couple of weeks and then there is another factor and the gold price increased while our interest rates increased.

Speaker Change: Ever happened normally both price increases when interest rates decrease so if you put them on the path that we are now projected interest rates should decrease you can also maybe project at a gold price might continue to increase so I don't see that today are variables that award.

Rodrigo Barbosa: Normally, the gold price increases when interest rates decrease. So if you put that on top of the fact that we are now projecting interest rates to decrease, you can also maybe project that the gold price might continue to increase. So I don't see any variables today that would drop the price of gold. Of course, there's always going to be volatility in the short term, but we believe, and many other reports and analysts believe that gold should continue to appreciate.

Speaker Change: Ah drop the price I think of course, there's always be gonna be volatility in the short term, but we believe in many in all the reports and analysts believe that God should continue to I appreciate that.

Rodrigo Barbosa: Then, second question, you asked about Matupac. We are in the final process of getting the license to start construction. We did those acquisitions, and we are drilling also in Bananal. Yes, we will analyze how they will compound together with the project Matupac. Yes, we have no decision yet, but our decision is to start construction as soon as we get the final license. However, those conversations are going to happen in the upcoming weeks when we will decide the right timing for us to start the construction of Matupac. In parallel, we continue to monitor and have various initiatives on M&A. We cannot control when it is going to happen.

Speaker Change: And then second question you were asking about my soapbox.

Speaker Change: We are in the final process of getting the license that you start construction. We did those acquisitions. We are drilling also in Butler now.

Speaker Change: Yes, we will analyze how difficult balance together with the project, but yet we have no decision yet to our decision to stop construction.

Speaker Change: As soon as we get the final license. However, those those conversations are going to happen and then upcoming weeks and we will decide the right timing for let's just stop the construction of muscle while in parallel we continue to monitor and have.

Speaker Change: Payables initiatives on M&A.

Speaker Change: We cannot control when it is going to happen, but no no no negotiation in place right now, but there are many projects that we're taking a careful look all their content that can have a look so that we can have a new M&A in the next one or two years.

Rodrigo Barbosa: There's no negotiation in place right now, but there are many projects that we're taking a careful look at, and other companies are taking a careful look, so that we can have a new M&A in the next one or two years. Then your final question was about the contractor in Almas. That happened because we hired one contractor that had a significantly lower price when we did the bid process over a year ago to start in Almas.

Speaker Change: Then your final question was about the contract or an enormous.

Speaker Change: That happened because we had that one contract that that had a significant lower price when we did the bid process.

Rodrigo Barbosa: We knew that he didn't have a lot of experience, but we took the risk and believed that we could work together with him in order to transfer know-how and then for them to be able to perform at an efficient level. Unfortunately, that did not happen. He could not achieve the productivity that we expected with the trucks and the equipment that were not capable of doing so, so we had to hire additional equipment, which increased our price, and now we transferred to a new one.

Speaker Change: During a over a year ago, a charge will start.

Speaker Change: Enormous we knew that they didn't have a lot of experience, but we took the way. It's got none that we believed that we could work together with them in order.

Speaker Change: I sort of know how and then for them to be able to to perform as efficient level. Unfortunately.

Speaker Change: It did not happen that he could not achieve the.

Speaker Change: The productivity that we expected.

Speaker Change: The trucks and the equipments on war not capable of doing so so we had to hire additional.

Rodrigo Barbosa: Then we asked Borborema. Yeah, there are a lot of lessons learned in Borborema, either in the construction of Almas and also in the operations that have been applied, and we actually have already done the bid process in order to hire a contractor in Borborema, and we are putting in, we could combine at this time a good price, the best price, with a very strong company that has a very good know-how in terms of operations for Bor

Speaker Change: Which increased our power price and knowledge transfer to a new one and then we have to boardwalk. Yeah. There was a lot of lessons learned and board whatever you're doing the construction of all of US and also on the operational that's being applied and we actually now are ready at all that the bid process in order to ensure to higher contract I mean, whatever and we have.

Speaker Change: <unk> got put any we could combine at this time.

Speaker Change: Good price best price with a very strong company that has a very good knowhow in terms of operation I forgot about admob.

Speaker Change: Thank you. Thank you Henry.

Operator: Thank you. Thank you, Rodrigo.

Speaker Change: Our next question comes from Qinetiq, many pitches with X Pete you can open your microphone.

Operator: Our next question comes from Guilherme Nippes with XP. You can open your microphone.

Guilherme Nippes: Thanks Rodrigo and Klebe for the opportunity and congratulations on the results. So, Guilherme Nipps from XP.

Pete: Thanks will do in Quebec for the opportunity and congratulations on the results. So Glenn me from XP I have two questions here on all sides. So.

Guilherme Nippes: I have two questions on our side. So my first question is for Apoena. Production and costs were affected by the higher strip ratio and lower grace, mostly due to the transition from Ernesto to Nozzy. So my question is, when do you expect production and costs to normalize in this operation? And my second question is if you could give us any updates on the other projects, including Serra da Estrela and Altamira, and if you could also share your thoughts on Potasio's new M&As. These are my questions. Thank you.

Rodrigo Barbosa: So in APOENA, we should see a stronger Q3 compared to Q2, and then even stronger in Q4. If you'll see, by coincidence, APOENA has been able to achieve stronger Q3 and Q4 over the last three to four years.

Glenn: My first question is for our planned production costs were affected by the higher strip ratio and Lloyd Grace.

Speaker Change: Mostly given the transition from an a N S. Two noisy. So my question is when you when do you expect production and cost to normalize in digital duration.

Speaker Change: And my second question is if you could give us any updates on the other projects.

Speaker Change: <unk>.

Speaker Change: So how did they still all time, yeah, and if you could also share your thoughts on potential new M&A because all my questions. Thank you.

Speaker Change: Oh.

Rodrigo Barbosa: So we should see that improvement also going to Q3 and Q4, understanding that we will not reach such a higher grade that we reached in Ernesto a couple of years ago. But we will see improvement in Q3 and Q4, which gives us a very comfortable position to be within the guidance. Although, if you multiply the first half's production by two, you'll see that we will not be reaching the low level of the guidance, but that Q3 and QB will be stronger.

Speaker Change: So in <unk> Ah boy, and we should see a stronger Q3 compared to two.

Speaker Change: And then it's even stronger in Q4, if you'll see for you to think we're not has been able to achieve a stronger Q3 and Q4 over the last three or four years. So we should keep that think broke them into also greenfield work understanding that we will not reach such a higher grade that we reached the Nashville.

Speaker Change: Years ago, but we will see improvement in Q3, and so far which gave us a very comfortable position to be we've seen the guidance. Although we can multiply the first half production by true you'll see that we won't be it will not be reached the low level of the guidance about that do you think youll be able be stronger we will be now we've seen the guidance on our plan.

Rodrigo Barbosa: We will be within the guidance of APOENA. So we're very comfortable that we'll meet, either on the production but also on the cost side. Actually, now with the further evaluation of Rial, the cost side is improving, and in US dollars. Daniel asked us about Serra da Estrela.

Speaker Change: So we're very comfortable that we have which you don't have production, but also on the cost side actually now with the further devaluation of real cost.

Speaker Change: Cost side is improving.

Speaker Change: <unk> of dollars.

Speaker Change: Then you asked about so how they trade up.

Rodrigo Barbosa: We are continuing to do the exploration program. We renewed the option that we had on this project because we had very interesting and strong results in the first year of exploration. We are consolidating the information, and that area has a very strong rainy season that normally cannot do drilling, which is finished in May and June. And now we have started again doing the drilling campaign. We expect to be able to publish some reports by the end of this year or early next year. In terms of M&A, we continue to monitor the market. We like both copper and gold in the Americas.

Speaker Change: We are continuing to drill exploration program.

Speaker Change: Program, we renewed the option that we had on this project because we had a very interesting and strong results on the first year of exploration. We are consolidating a formation that there wasn't that arrow has a very strong rainy season that didn't normally cannot do drilling which is.

Speaker Change: Finished in May and June and I always thought that again during the drilling campaign and we expect to be able to publish at some reports.

Speaker Change: By the end of this year or early next year.

Speaker Change: In terms of M&A.

Speaker Change: We are continuing to monitor the market, we like both copper and gold in the Americas.

Rodrigo Barbosa: That's our focus, something that is close to production or in production, or with significant reserves already discovered. And so we can work on the feasibility study, build the project, and then operate. That's our main focus. Why will we play opportunistically as we did in Alta Mida, which is the early stage? That's why we did a minor participation so they would have a few years of exploration progress, which is being monitored. And then once they consolidate better, they understand the resources and reserves, then we can have another discussion about whether we should increase or not our participation.

Speaker Change: That's our forecast something that is close to a production or in production or with our reserves are significantly already.

Speaker Change: I discovered and so it can work on the feasibility study and build the project and then operate.

Speaker Change: That's that's our main focus now why are we can we will play opportunistically or portal needs to come in as we did not meet our which is our early stage. That's why we did that.

Speaker Change: Minor participation.

Speaker Change: We will have a few years of exploration province, which are monitoring.

Speaker Change: And then once we consolidate better and understand our resources and reserve then we can have another discussion and then if we should increase our not our participation in that process.

Speaker Change: Very clear thank you.

Operator: Very clear. Thank you.

Paul Rankin: Our next question comes from Paul Rankin with BSA capital, how long will the negative performance on currency and gold hedging continued to impact the balance sheet.

Operator: Our next question comes from Paul Rankine with VSA Capital. How long will the negative performance on currency and gold hedging continue to impact the balance sheet if 1. the gold price holds around current levels or 2. rises another $100 per ounce?

Speaker Change: One the gold price holds around current levels or two raises another hundred dollars per ounce.

Speaker Change: Okay.

Paul Rankine: Let the clever answer this. Just 30 seconds.

Speaker Change: That's a clever and service Uh huh.

Speaker Change: Just thought 30 faculties hull hopefully we will continue to have those kind of not cash losses, but that means that gold price is increasing and most.

Rodrigo Barbosa: Hopefully, we will continue to have those kinds of not cash losses because that means that the gold price is increasing. And most of our production is assessing those higher gold prices. Clever, please.

Speaker Change: Most of our production on assessing both a higher gold price a planet. Please.

Cleber Cardoso: Thank you, and Rodrigo, for my comments. Yeah, so in fact, yeah, both in terms of business are positive and higher growth prices. It's good for the business, and affects the valuation as well, because we reduce our cash costs, so if gold prices stay where they were at the beginning of the end of Q2, we shouldn't see any additional market-to-market losses in the next quarters. So gold prices are now about $100 above where they were at the end of Q2.

Speaker Change: Well, they're just sort of my comment.

Speaker Change: Yeah, so effects Ah yeah, both of it back in terms of the business is positive and Ohio lube prices.

Speaker Change: It's good for the business.

Speaker Change: FX devaluation as well.

Because of this our cash costs so.

Speaker Change: If gold prices stay where they were at the beginning of the end of Q2.

Speaker Change: We should then see in the in additional market to market losses in the next quarters.

Speaker Change: So will the prices now.

Speaker Change: $100, a book, where they were at the end of Q2 so.

Cleber Cardoso: So if gold prices stay above and keep increasing, we should continue seeing these no cash losses, which as Rodrigo said, it's positive, just as a reminder, no? About 25% of our production, 20% to 25% depending on the quarter, is hedged with a cap of $2,400. So if gold prices go above $2,400, what does that mean that we're capped at $2,400 for one-fourth of our production? What are the benefits of the upside for the remaining most of our production while still incurring accounting losses?

Speaker Change: If you go the prices is payable in Q keeping breathing we.

Speaker Change: We showed a continuous seeing these sunbelt extra losses, which has whether it was sad is probably just as a reminder, no.

Speaker Change: About 25% or up for production.

Speaker Change: Finished with 25, depending on the quarter.

Speaker Change: These hedges, we've got capped off a cliff for hundreds.

Speaker Change: It could go the prices go up a minute per hundred what means that as we were kept us waiting for 100 right.

Speaker Change: One for our production.

Speaker Change: But the benefits of the upside for the remaining of most of our production why you always to incurring a company losses.

Cleber Cardoso: So, in general, we hope it's positive. We'll try to go down. We're gonna see you again. And if it's your question, if we try to stay where they were at the end of the quarter, that should have zero impact on the next quarter.

Speaker Change: So in general we hope it's positive.

Speaker Change: Prices go down we're going to see you again, we'd expect shortly to consisting of laws.

Speaker Change: To your question if oil prices stay where they were the big stand up required for.

Speaker Change: That should have a zero went back into the next group of workers.

Speaker Change: Thank you.

Operator: Next question from Happy Nizami with National Bank Financial: Can you tell us more about the organizational changes, particularly the addition of corporate level technical roles?

Happy Neerajsemri: Our next question from happy need semi with National Bank financial can you tell us more about the organizational changes, particularly the addition of corporate level technical roles.

Speaker Change: Yes, Thank you Robyn for being here with us as.

Rabi Nizami: Yes. Thank you, Rabi, for being here with us. As we continue to increase production and complexity, in 2018, we had two operations. Then in 2019, we restarted, actually in 2018, we restarted three operations. Now we have built ALMA's four operations, building Borborema, the fifth, and then we have Matupá, Serra da Tela, and hopefully a few others. So it's becoming more and more important for corporate to have a very strong technical team in order to keep the stability of our operations.

Speaker Change: As we are continue to increase production and complexity.

Speaker Change: In 2018, we had two operations than 19, we restarted that Arizona actually 18, a restocking that was all three operations now we are.

Speaker Change: Uh huh.

Speaker Change: Built almost four operations building for them on the fifth and then we have multiple by sad that Teva and whole picture water. So that's becoming more and more important on corporates, who have a very strong technical team in order to keep for the stability of our operations and so that's why we are bringing.

Rabi Nizami: So that's why we are bringing Henrique, who is the general manager, the director of Aranzazul, who has been stable for the last four years, into corporate so that he can, together with Glauber and the team, help us on the technical side to maintain or even improve our stability of operations. And also think about the construction and new M&As that should be coming in, as I mentioned, in the coming years. So that's a part of the strategy of enhancing our technical abilities to have a very stable operation.

Speaker Change: And he came from the which is the general manager the director of Idose Oswald that has been stable for the last four years into corporate so he can.

Speaker Change: Together with Gaba and added the team and help us on the technical side to maintain or even improve.

Speaker Change: Our stability of operations and also think about the construction and new M&A.

Speaker Change: That should be coming in as I mentioned in the upcoming year. So that's a part of the strategy of the Hastings, our technical abilities to have a very stable operations understanding that we'll continue to have clean structure. Our various themes are cooperating not attribute very production and focusing and there's lots of import.

Rabi Nizami: Understanding that we continue to have a slim structure, a very thin corporate in order to be very productive and focus on what is important, while all the mines continue to have their and Liberdade, they continue to have the freedom to make a decision under the culture of Aura360.

Speaker Change: And while all the mines continue to have their oh.

Speaker Change: They are not as they continue to have the freedom to make a decision on the future of our 360 and concept.

Speaker Change: Yeah.

Speaker Change: Thank you the question and answer section is over we would like to hand, the floor back to Mr. Ed How did it go bad policy for the company's final remarks.

Rodrigo Barbosa: Thank you. The question and answer section is over. We would like to hand the floor back to Mr. Rodrigo Barbosa for the company's final remarks.

Rodrigo Barbosa: So, thank you all. Again, just wrapping up, a strong quarter, although a weaker production compared to Q1. Very now, we are very much in line to meet the guidance. Actually, we should be in the top range of the guidance, as I mentioned, in the first half of the guidance with production in the second semester. Lower, we should also lower our sustaining cash costs during the second semester, while our gold price continues to be strong, so that will significantly continue to boost our EBITDA cash flows and results for Q3 and Q4, and continue to build Borborema, which should start ramping up next year.

Mr. Ed: So thank you all again, just wrapping up strong quarter, although our weaker.

Mr. Ed: Production compared to Q1.

Speaker Change: Very much in line to meet the guidance actually we should be on the top range of the guidance as I mentioned on the first half of the guys. Just wanted to start with the production on the second semester.

Speaker Change: Or we should lower also always sustaining cash cost during the second semester.

Speaker Change: Where both price continued to be strong so that will significantly.

Speaker Change: Can sleep continues to boost our EBITDA cash flows and results for Q3, and Q4 and continue to be able to board about Irma which have stopped.

Speaker Change: We are ramping up next year. So the production of our reach at the border as I mentioned by Q2 of last year and now every every quarter. We are improving in terms of our last 12 months, we will see that from Q3, we will see that in Q4 and then we will have next year that will continue to see that improvement in terms of production cash.

Rodrigo Barbosa: So, the production of Aura reached the bottom, as I mentioned, by Q2 last year. And now, every quarter, we are improving in terms of our last 12 months. We will see that in Q3, we will see that in Q4, and then we'll have next year, then we'll continue to see that improvement in terms of production, cash costs, and gold price. We don't control, but as I mentioned here, with the EDGAR question, we believe we will continue to be strong, if not stronger, so that will boost our results for the year, and we'll be very well positioned also to have So, I thank you all, and I will continue to update the market on exploration and production as we move along the next quarter.

Operator: Aura's conference is now closed. We thank you for your participation and wish you a nice day.

Speaker Change: Cost and what price, we don't control, but as I mentioned here.

Speaker Change: With that said you got a question. We believe we will continue to be strongest in not stronger from that will bolster our results for the year and we will be better positioned very well positioned also to have a stronger 2025. So I think you all I know, we will continue to update the market on the exploration in <unk>.

Speaker Change: Production as we move along the next quarters.

Speaker Change: <unk> Conference is now closed we thank you for your participation and wish you a nice day.

Speaker Change: Okay.

Speaker Change: [music] Goodbye.