Q4 2024 First Quantum Minerals Ltd Earnings Call
Speaker Change: Thank you for standing by. This is your conference operator. Welcome to the first Quantum Minerals fourth quarter 2024 results conference call.
Speaker Change: As a reminder, all participants are in a listen-only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. To join the question queue, you may press star then 1 on your telephone keypad.
Speaker Change: Should you need assistance during the conference call, you may signal an operator by pressing star then zero. I would now like to turn the conference over to Ms. Bonita To, Director and Investor Relations. Please go ahead, ma'am.
Speaker Change: Thank you, operator. Good morning and thank you everyone for joining us today to discuss our fourth quarter results. During the call, we will be making forward-looking statements. As such, I encourage you to read the cautionary notes that accompany this presentation, our MDMA, and the related news release.
Speaker Change: As a reminder, the presentation is available on our website and that all dollar references are in U.S. dollars unless otherwise noted.
Speaker Change: On today's call are Tristan Pascall, our Chief Executive Officer, Ryan MacWilliam, our Chief Financial Officer, and Rudi Badenhorst, our Chief Operating Officer. And with that, I will turn the call over to Tristan for opening remarks.
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Speaker Change: Thank you Bonita and thank you everybody for joining us today for our fourth quarter and year-end 2024 update.
Speaker Change: Whilst 2024 began with several challenges brought about from the suspension at Cobra Panama, we reacted swiftly with the implementation of our comprehensive refinancing transactions at the start of the year.
Speaker Change: These actions greatly stabilised the business and we remain thankful to our investors for their ongoing support through this period and the remainder of the year.
Speaker Change: Through the 2024 year, our financial stability allowed investment into the Consanti S3 expansion, which has delivered strong tangible progress on the project and, in addition, we were able to realise the commercial production milestone at Enterprise.
Speaker Change: Nonetheless, it was also essential that Consantia and Trident deliver strong operational performance, and it is pleasing to report that we have succeeded on our copper and gold production guidance for 2024, to which Rudi will cover shortly in his remarks.
Speaker Change: More importantly the initiatives that we took to improve operational performance have set us up well for 2025 for continued safe productivity in Zambia.
Speaker Change: Beyond continuing this operational performance, our priorities for this year are very clear. Number one, to deliver on the CONSTANTI S3 expansion.
Speaker Change: On this, I will provide more detail when I review our outlook at the back end of today's call. Number two, to continue additional initiatives to further strengthen the balance sheet, to which Ryan will speak on.
And number three, to make progress towards resolution in Panama.
Speaker Change: I will provide a brief update on this topic and the power situation in Zambia as well as corporate updates before I hand the call over to Rudi.
Speaker Change: I was in Panama with a board of directors at the end of January.
Speaker Change: We continue to engage with industry and ministerial officials, including hosting a tour at Cobra Panama for the Minister of Environment and Minister of Public Security in January.
Speaker Change: We continue to await approval of the Preservation and Safe Management Program that will allow the export of concentrate that remains on site.
Speaker Change: We have not yet met with President Melino. The President remains focused on advancing Social Security legislation in the country, but has made public comments that he intends to address the issue of the mine in early 2025 once Social Security is resolved.
Speaker Change: The purpose of the audit will focus on assessing the current state of the facilities, potential environmental impacts, and necessary mitigation and restoration measures, as well as determining the real cost.
Speaker Change: the cost of the restoration of the mining area and the means to fund these costs.
Speaker Change: The terms of reference acknowledges that environmental restoration of the mining area is a complex and long-term process which will require years of effective implementation and rigorous monitoring to achieve sustainable results.
Speaker Change: The public consultation period for the terms of reference concluded last week and we await further instructions from the Ministry of Environment.
Speaker Change: We do welcome the environmental audit and we are prepared to cooperate fully.
Speaker Change: The company has always operated its operations with transparency and in full compliance with international environmental standards, and we are confident the results of this environmental audit will demonstrate the world-class nature of Cobra Panama.
Speaker Change: With regards to our ICC arbitration, this was initiated under the previous government, which changed in July of last year following the elections.
Speaker Change: The new government brought in new counsel and requested for more time from the arbitration tribunal. Based on these circumstances, the tribunal unilaterally decided that final hearings should be held in February 2026.
Speaker Change: The company reiterates that arbitration is not the preferred outcome and that we prefer to sit down with the new president to discuss them on, which he has indicated he will do in early 2025.
Speaker Change: We remain committed to open dialogue and to being part of the solution for the country and the Panamanian people.
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Speaker Change: On to Zambia, where the rainy season has started, and whilst the Kariba Lake water levels are replenishing, they do remain at low levels compared to previous years. As such, the company is not planning for the hydroelectricity power generation sources within the country to return to normal output levels this year.
Speaker Change: To address the probable shortfall, the company has put sourcing plans in place for 2025 to ensure that reliable electricity supply is available for our operations, including the start-up of the Consantia S3 expansion project.
Speaker Change: With these sourcing plans for power imports, at this stage we expect that 2025 will be similar to 2024, whereby our Xambian operations should experience minimal material interruptions from power restrictions.
Speaker Change: With our fourth quarter results, we also announced that Bob Harding will retire at the upcoming AEM in May and Ken McArthur will take over as the company's new independent chair of board.
Speaker Change: I'd like to offer my sincere personal thanks to Bob for his guidance, knowledge and impact on the board over the years, including the last two years as chair, during a period of challenge and change for First Quantum.
Speaker Change: I certainly wish Bob a happy retirement. Kevin has been an invaluable director of the board since 2021 and I look forward to working with him more closely in his new role as chair.
Rudi Badenhorst: With that, I would like to now hand the call over to Rudi to review the operations.
Thank you Tristan. Thank you everybody for joining our call.
Rudi Badenhorst: As a result of several operational initiatives last year, Kansanshi and NTNL demonstrated strong results in 2024 and will be maintaining this operational focus to deliver on our guidance for 2025.
Rudi Badenhorst: Kansanshi benefited from improved grade control practices, allowing it to achieve its highest annual copper production since 2021, and several initiatives at Sentinel allowed the mine to achieve record expert mining volumes in 2024.
Rudi Badenhorst: For the year, total copper production, excluding Cobre Panama, was 431,000 tonnes, approximately 14% higher than the prior year, and exceeded the upper end of our guidance of 420,000 tonnes.
Rudi Badenhorst: Gold production for the year was 139,000 ounces, also exceeding the upper end of our guidance of 135,000 ounces.
Rudi Badenhorst: whilst 2024 nickel production of 24,000 tonnes fell comfortably within our guidance range.
Rudi Badenhorst: For the fourth quarter, total copper production was 112,000 tonnes, a modest decline quarter over quarter after an exceptional performance in quarter three.
Rudi Badenhorst: Zambia's energy situation remained challenging through the fourth quarter, however, the company's proactive strategy of securing supplementary power, primarily via the Southern African Power Pool, allowed the company to maintain normal operations with minimal power interruptions.
all be at a slightly higher cost.
Rudi Badenhorst: At Kansanshi, we had another solid quarter, recording copper production of 48,000 tonnes. Feed grades remained high as we continued to access a higher volume of mixed ore from Main 15 cutback that allowed for the mixed and sulphide moulds to remain swapped during the quarter.
Rudi Badenhorst: This was mitigated by a lower throughput as both circuits underwent planned maintenance shutdowns in the quarter and returned to its normal circuit configuration in January 2025.
Rudi Badenhorst: Sentinel reported copper production of 57,000 tons in the fourth quarter, down 3% from the previous quarter, mainly due to lower grids.
Rudi Badenhorst: We, however, continue to make good progress reaching the 9th throughput capacity at Central, with December reporting the highest monthly throughput since October 2022.
Rudi Badenhorst: The development of Stage 3 Western Cutback and the recommissioning of Input Crusher 1 two months ahead of schedule allowed for increased availability of softer material, improved availability of the primary crushers and improved fragmentation of the ore.
Rudi Badenhorst: At Enterprise, nickel production was down quarter over quarter, producing approximately 3,700 tons of nickel.
Rudi Badenhorst: During the quarter, sources of nickel sulphide ore was impacted by weathering and alteration in a fault line in the southern wall of the pit.
Rudi Badenhorst: As such, the Enterprise flotation circuit was switched to three copper ores in December, while the fault area was mined through and the altered material was stockpiled separately for blending with fresh nickel sulphide ore.
Rudi Badenhorst: Nickel feed resumed in January after the empty area was mined out.
Rudi Badenhorst: At Cobre Panama, we continue with the necessary maintenance work for asset preservation, along with environmental work to ensure compliance with the environmental and social impact study for the project.
Rudi Badenhorst: continue to have 1,300 workers on site and will adjust the level of employment in accordance to the conditions on the ground in Panama.
Rudi Badenhorst: Thank you, and I will now hand the call over to Ryan to review the financials.
Thank you, Rudi.
Ryan MacWilliam: On the market side, the copper price was strong early in the fourth quarter, supported by anticipated U.S. Fed rate cuts and Chinese stimulus measures.
Ryan MacWilliam: Copper prices pulled back in early November, reaching a low of $3.95 per pound following the US elections and concerns around potential tariffs. Overall realized prices were 2% lower than in Q3.
Ryan MacWilliam: While demand remains strong, we expect continued price volatility as the market tries to get a feel for how broad and extended the potential tariffs and associated trade wars might be.
Ryan MacWilliam: Quarter over quarter, Revenue and EBITDA were down 2% and 13% respectively.
Ryan MacWilliam: This was due to lower copper and gold sales, coupled with higher unit costs at Sentinel and Enterprise.
Ryan MacWilliam: U4 net earnings attributable to shareholders was $99 million, with adjusted earnings per share of $0.14. This was the second consecutive quarter in the green since Cobre Panama entered preservation and safe management.
Ryan MacWilliam: On to costs, where performance continues to be strong. Copper C1 costs were up 7% at $1.68 per pound due to slightly lower production volumes and increased tolling costs at Sentinel.
Ryan MacWilliam: This was mitigated by a reduced draw in stockpiles at Canadian cheap and lower ambient fuel costs, which lags behind crude oil prices by about two months.
Ryan MacWilliam: Remaining input prices were stable. This includes Zambian power rates, which were in line with Q3, as our Zambian team continues to effectively manage the power restrictions in country.
Ryan MacWilliam: On a full year basis, it was pleasing to see copper C1 cost of $1.74 per pound coming in below the bottom end of revised guidance.
Ryan MacWilliam: It is worth noting that excluding Cobre Panama, the full-year copy unit cost was at its lowest level since 2021.
Ryan MacWilliam: This cost performance was driven by strong copper and gold production, along with elevated gold prices, which more than offset the six cents impact of third party power rates in Zambia.
Moving on to guidance.
Ryan MacWilliam: While cash cost guidance for 2025 and 2026 benefited from increased gold volume and price assumptions.
Ryan MacWilliam: This was offset by the impact of Zambian important power costs of approximately 7 cents per pound, as well as expected higher labor and maintenance costs.
with respect to capital expenditures.
2025 capex increased to 1.3 to 1.45 billion dollars
This includes $100 million of expenditures carried over from 2024.
In addition, the guidance reflects some cost pressures.
Ryan MacWilliam: Also within the three-year guidance is approximately 400 million dollars in capital expenditures related to the S3 expansion and 325 million dollars related to mining feet replacements at Kinshanshi.
On to the balance sheet.
Ryan MacWilliam: It was very pleasing to see the consistent operational performance lead to this reduction in net debt, even as we continue to fund a major capital expansion project and cobrate Panama PS&M costs.
Ryan MacWilliam: Net debt also benefited from reduced working capital levels, with cash received from previous quarters late sales, increased Zambian VAT receipts and the timing of payables.
Ryan MacWilliam: Liquidity increased during the quarter and remained strong at $1.6 billion.
This comprises of $112 million in cash
and $750 million for Undrawn Revolver.
Ryan MacWilliam: During the quarter, some of the hedges that we previously put in place rolled off.
Ryan MacWilliam: Resulting in a quarterly and fully actualised head gain of $13 million and $34 million respectively.
Ryan MacWilliam: We've maintained our hedging approach from last year, with protection from downside copper prices during the period of expenditures and ramp-up of the S3 expansion.
Ryan MacWilliam: We now have roughly 50% of our copper cells hedged via collars through to the end of 2025, with new hedges recently added for 2026.
Ryan MacWilliam: However, over 90% of our 2026 production remains exposed to spot prices.
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Ryan MacWilliam: It is now a year since we concluded the comprehensive refinancing and it is pleasing to say that
maintaining a cost-discipline-risking VIA program and extending the tridentility.
Ryan MacWilliam: As Tristan noted in his opening remarks, we continue to look at additional initiatives to further strengthen our liquidity and balance sheet.
Ryan MacWilliam: We have a range of options in front of us, which includes the potential minority stake in the Zambian business.
Ryan MacWilliam: This process is ongoing and as such we won't be making further comments in this regard.
Thank you.
Tristan Pascall: That concludes the finance section. I'll now hand the call back to Tristan.
Thank you, Ryan.
Tristan Pascall: Before handing the call over for Q&A, I would like to review the guidance we provided in January.
Speaker Change: At Conservancy, guidance reflects a conservative ramp-up profile for the new 25 million ton per annum concentrator at the S3 expansion project.
Speaker Change: Our presentation has several pictures of the progress on the build and commissioning process at site.
Speaker Change: The project remains on schedule for completion by mid-year, and work such as training of the workforce is focused on ensuring a smooth ramp-up of the new concentrator.
Speaker Change: The conservatism that is applied to forecast production from the Consantia S3 expansion is, however, related to the grade profile of the surface-level stockpiles that would be initially fed through the plant.
Speaker Change: As these stockpiles have been sitting on surface for several years, with the potential impact of weathering, we have prudently applied a conservative grey profile to this material.
Speaker Change: And whilst lower grade, the cost of moving this material will be reduced as it is already blasted and at surface elevations.
Speaker Change: We remain on schedule for pre-stripping of the southeast dome and the higher grade ore from this section of the deposit will be fed into the plant starting in 2027.
Speaker Change: At Sentinel, we have accelerated mining in stages 3 and 4 in order to smooth out the production profile and de-risk future ore supply.
Speaker Change: These actions are responsible as they will assist in achieving an optimal and sustainable balance of grades and volumes during the life of the mine. However, there will initially be some higher volumes of oxidised and transitioned material to work our way through.
Speaker Change: At Enterprise, the focus for 2025 will be on optimising the development of the pit to supply feed volumes to the plant.
Speaker Change: We have mined through the highly weathered area on the southern wall, and additional and deeper reverse circulation drilling is underway to broaden our geological understanding of the working areas in front of us.
Speaker Change: I would like to end my prepared remarks by directing my thanks to the team at First Quantum for their hard work this past year and also to our shareholders for their ongoing support.
Speaker Change: 2024 was a challenging year, but I'm optimistic about the outlook for 2025.
Speaker Change: We are focused on our main priorities for this year. Firstly, towards resolving the situation in Panama.
Speaker Change: We continue on our public outreach programs to educate the Panamanian public about the benefits of Cobra Panama and that mining of natural resources in an environmentally and socially responsible manner is a necessity for the country and our modern lives.
Speaker Change: We also look forward to constructive discussions with the government for a resolution of the situation.
Ryan MacWilliam: Secondly, as Ryan mentioned, we will continue with a proactive management of our balance sheet and liquidity position.
Rudi Badenhorst: Thirdly, as Rudi mentioned, we will continue our focus on safe and productive operational performance.
Rudi Badenhorst: And finally, in Zambia, delivery of the Consanche S3 expansion project in mid-2025 will be an inflection point for the company that will enhance our financial resilience and support continued growth.
Rudi Badenhorst: Thank you. This brings our prepared remarks to an end. Operator, we can open the call for Q&A.
Rudi Badenhorst: Thank you. We will now begin the analyst question and answer session.
Speaker Change: NLS are permitted to ask one question and one follow-up and are welcome to rejoin the queue if they have more. To join the question queue you may press star then 1 on your telephone keypad. You will hear a tone acknowledging your request.
Speaker Change: If you are using a speakerphone, please pick up your handset before pressing any keys. And to withdraw your question, please press star, then 2. We will pause for a moment as callers join the queue.
Speaker Change: And the first question will come from Oris Wildcadal with Scotiabank. Please go ahead.
Oris Wildcadal: Hi, good morning, and thanks for the update. Questions around the Panama situation.
Speaker Change: I'm just curious, given that the social security issue isn't fully solved yet,
Speaker Change: and now the canal has become, I guess, a focal point as well. Do you still anticipate sort of resuming or starting negotiations by the end of the first quarter or could this timing now slip into later in the year?
Hi Boris, thanks for the question.
Speaker Change: Yes, the President's been clear, as he was at the end of last year and then into this year
that, for him, the social security matter.
comes first and the mine topic would follow directly thereafter.
Speaker Change: Originally, the timing of that, the government had wanted to pass in December and certainly, you know, their optimistic forecast in January.
Speaker Change: As far as I understand the current status at the moment, the 200 articles of the draft bill were passed at the end of last week in the first committee, the first round, and there's two subsequent rounds of debate.
Speaker Change: So, somewhat through that, the next stage of that debate happens in the National Assembly.
Speaker Change: And if the legislation passes there, then it goes for the final third round.
So you
Speaker Change: The President's been clear in telegraphing that that needed to happen first and then onto the mine. I think in regards
Speaker Change: noise around the canal, we would just say we're absolutely focused on making progress towards resolution.
and to work constructively with the government and the
The Mind Prevents.
Speaker Change: provides a lot of opportunity in terms of underlying the economy, employment and so on in the country.
Speaker Change: So at this stage we see progress and we see it moving forward. We continue to hold to our expectations around reaching resolution as soon as possible.
Speaker Change: Just as a quick follow-up if I may, does the five-month delay on the ICC final arbitration hearing, I guess the February of next year, do you think that impacts the pace of negotiations this year, just given it would seem to ease the pressure short-term?
No, look, I think the...
They accepted that but
Speaker Change: would hold to a tight resolution timeframe now, and that was the move to February 2026. In terms of the work that needs to happen for each party's submission and so on, that continues to be held, so I don't see that shifting the ground very much.
Okay. Thank you very much.
Speaker Change: The next question will come from Edward Goldsmith with Deutsche Bank. Please go ahead.
Edward Goldsmith: Thanks, Tristan. Two questions from my side. Firstly, on Cobre Panama, how should we think about the timeframe for approval of the Preservation and Safe Management Programme and the environmental audit to begin? And then secondly, can you give an update on how you're thinking about the balance between financing options versus partnering and sale options going forwards?
Ryan MacWilliam: Sure, Edward. I'll hand the second question to Ryan, but on the first one...
Speaker Change: Look, the P&SM plan we submitted early last year and our understanding it's been well reviewed but really the situation with timing is that it's in line with the
the President's policy to get through Social Security first.
Speaker Change: We would point out the importance of that program. There's urgency around ensuring the ongoing environmental stewardship of the site and asset integrity. We were able to show that to the Minister of Environment and the Minister of Public Security when they came to the site at the end of last month.
Speaker Change: And, you know, that is important beyond the status of the mind.
Rudi Badenhorst: pass so that we can be sure of the spending. Beyond that, as Rudi said, we have 1,300 people on site and that costs.
Rudi Badenhorst: need to be born, we cannot do that indefinitely without those interim measures.
Rudi Badenhorst: which is the airport of the concentration of PNSM and coming in place and being approved. So we would say that those do need to be considered now and approved imminently so there's clarity on that, resolution and so on can step forward logically.
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Edward Goldsmith: Hi Edward, in terms of your second question on the balance sheet...
Speaker Change: The first point to make is that we come from a very strong starting position. We ended Q4 with $1.6 billion in liquidity, and even more pleasingly, we actually saw net debt go down through the course of Q4 and liquidity increase through the course of Q4. As we look ahead to 2025, we have a range of options ahead of us.
Speaker Change: You alluded to the minority stake sale in Zambia, and certainly serious engagement continues in that respect.
Speaker Change: We'll weigh that up against a range of other options. You know, you saw us last year access the bond market You saw us last year enter into prepays Those same options continue to be there for us for us together with a range of other financing options. So it's really about progressing a variety of initiatives and as they come to fruition
Speaker Change: Considering the pros and cons of each from both the financial perspective and also a strategic perspective and we'll work hard on that through the course of this year
Speaker Change: The next question will come from Marcio Farrad with Goldman Sachs. Please go ahead.
Marcio Farrad: Thank you. Good morning, everyone. Just in terms of vendor, I think in the last call you mentioned that you'd expect to have a final resolution or potential deal by the end of December. Just trying to understand if there is any potential timeline. It seems like you're not in a rush. You have other options. But if you have a certain timeline to when you decide to go ahead or not, which the minority states say at least. Thank you.
Thanks, Marcio. Ryan, will you take that question?
Speaker Change: Now Marcia, I think we've been consistent throughout that any arrangements we enter into in Zambia will be for the next 25 years.
So rather than rushing to a specific timeline
Speaker Change: We have to take the time and engage with counterparties on what is a large and complex business. So it does take time, but see if there's an alignment on what the right sort of agreements are that work for us, that work for a counterparty, that work for the government of Zambia. And really, that's how we're approaching it. If and when we get to that point,
Speaker Change: So, you know, then we'll announce that to the market, but we're not putting specific timing and dates to make sure it has to be done by X or Y date. It's really about getting to the right agreement rather than a quick agreement.
Speaker Change: Okay, thank you. And just a follow-up to Tanzania, it feels like we are still...
Speaker Change: in terms of total import and how confident you are you can keep operation running with total developers like you did in the last few quarters. Thank you.
Speaker Change: Thanks, Marcio. I can take that one. So, look, we've been proactive in securing supplementary power, as we were through the course of 24. And, yes, we're only halfway through the rainy season. So far...
Speaker Change: It seems relatively on track. It was a little bit dry at early January and then wet to late January. The rainy season will last...
Speaker Change: through sort of till March, April, and then you only really see the big inflows.
Speaker Change: into Kariba following that as that rainfall comes down from Angola. So I'm not here to predict that rainfall, we've just put in place a responsible strategy in order to ensure that we have the power available and if we have upside from that in terms of additional hydroelectric supply then that's great.
Speaker Change: We've taken a conservative line and that would include making sure we've got power for the S3 expansion at Kinsanchi.
Speaker Change: The next question will come from Chris Lafima with the Jeffreys. Please go ahead.
Speaker Change: Thanks operator. Hi guys. Thanks for taking my question Maybe just to follow up on
Speaker Change: and your C1 cash cost guidance, what are you assuming about power availability and how should we think about kind of the potential variability around that depending on the hydropower levels in 2026? Thanks.
Ryan MacWilliam: Thanks, Chris. Ryan, do you want to take that one? Yeah, Chris, so just as Tristan touched on our conservative approach to sourcing power, we've also taken a conservative approach to forecasting costs in respect of power. So our cost guidance assumes the same 2025 cost...
Ryan MacWilliam: profile 2026 that through the course of 2026 we continue to have that seven cents per hire per pound of copper impact on our costs As Tristan noted if we see stronger rains and we're drawing on more hydroelectric power through the course of 2026 You'll see that reduce and that'll then reflect the upside on the cost guidance that you currently sit with
Speaker Change: Okay, thanks. And then secondly on the hedging strategy, I would assume that if Cobra Panama comes back online or when it comes back online, the strategy will then shift back to spot market exposure or will you continue to hedge after the mine is restarted? Thanks.
Ryan, he played that one.
Sure, Chris.
Speaker Change: I mean just to comment in general how we think about hedging, I mean our goal as a company
Speaker Change: really ramps up through the second half of this year, and then we start to get the benefits of the higher grade ore into next year. That's how we've shaped the hedging book. I'd say we're
Speaker Change: We've looked at hedges at reasonable rates and really it's that management of the balance sheet while we deliver a capital project that's driving that timing rather than covering Panama specifically. Our goal remains to get back to an unhedged position in time.
Speaker Change: Great. Thank you for that. I appreciate that. Have a good day.
Speaker Change: The next question will come from Lawson Winder with Bank of America Securities. Please go ahead.
Lawson Winder: Yeah, thank you, Operator. Hello, Tristan, Ryan, and team. Thanks for the update today.
I was wondering about the
Lawson Winder: Cobre, Panama public outreach that you guys have been doing. I think it's a great initiative. And I was just curious if that's turned up any areas of weakness on which you think either First Quantum or the government of Panama could improve in terms of communicating the benefits of the mine
the public, whether it's operating, hiring, or otherwise. Thanks.
Thank you.
Speaker Change: Sure Lawson, thanks. So absolutely we acknowledge particularly around the condition that led to suspension our communications to broader society in Panama were low and missing and not where they should be and that's beyond the communities around the mine and really into the
into the city, but also into
Speaker Change: different demographics, young people at university and so on. So we've really stepped up that effort.
Speaker Change: and included in our $12-$13 million a month spend is a lot of effort going out into those communities. So we've had some 40,000 people come through in various interactions, either direct visits to the site or through public fairs and engagement.
Speaker Change: in universities, at social events, in work with our people on the ground, not just on the mine, but in broader society. Beyond that, we've had some 300,000 engagements.
Speaker Change: with our virtual tour on the website, and those are just steps in a pathway. We need to continue the education, continue the engagement as we go through the process towards resolution.
Speaker Change: resources available and the opportunity that responsible mining can provide to an economy to society is gathering, but we need to keep working hard on it. We need to keep reinforcing the messages and also speaking with detractors. We've been reaching out to them.
Speaker Change: So that they have a technical basis for understanding and that's also helping on some of the fake news, some of the misrepresentation that was there previously in order that at least there's a technical and a factual basis to a discussion.
Speaker Change: Thanks for that follow up, it's helpful. And for my follow up, can I ask about the streaming financing option that Ryan, you mentioned on your slide on potential third party sources of financing.
Speaker Change: So just first of all to clarify, I assume that means a precious metals byproduct stream and then and then secondly
at what stage are these discussions and...
Speaker Change: How would you say that type of financing ranks versus the others highlighted on that slide? And then I would note, obviously, I think you have an existing by-product precious metal streaming arrangement that I think would be fairly described as quite successful. So your thoughts there would be very helpful. Thanks.
Sure
Please go ahead with that. Yeah, hi Lawson.
Speaker Change: a wide range of options, and because of that goal, that includes streaming.
Speaker Change: That being said, I wouldn't read into that that, you know, we're going to do a stream or that's number one on the list. That slide just highlights, there's a range of options.
Speaker Change: We consider all of those options, we'll advance some of them, some of those will just remain kind of as backups, we'll advance a variety of them, and when you get to the finish line on each of them, it's really about putting them up as your other alternatives and saying which is the most attractive.
Speaker Change: Put capital and how does that align with what our strategic goals are?
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Great. Thank you.
Speaker Change: The next question will come from Ionis Masvoulas with Morgan Stanley. Please go ahead.
Speaker Change: where you reiterated commissioning in H2 of this year. Can you remind us how long it's going to take to get to full nameplate capacity and related to that, when do you expect to be outside the low grade stockpile zone in which case you get both higher throughput and higher grades? Thank you.
Bye.
Thanks, Yanis.
Speaker Change: So we will finish, we will complete construction by mid 2025 and be commissioning and ramping up through the second half of the year as you say, look I think we expect
Speaker Change: by the end of the year to sort of be at 80, 90%.
Speaker Change: extent level, that kind of level in terms of our ambitions and we're putting a lot of effort into the operational readiness that is training of the workforce and artisans to be ready to receive.
Speaker Change: the plant. I was there at the end of January walking around and it's in a very good state of progression. We were commissioning the major substation and then several substations behind that.
Really the main work is on
Speaker Change: Piping and electrical in terms of man hours left, but there was a good allocation of resourcing towards that We've got all the major equipment on site. Yes a couple of pumps here and there
Speaker Change: So we feel very good about that pathway and also about the ramp up thereafter.
Speaker Change: In terms of the grade profile that would deliver, yeah, those...
Stockpiles are at service and available.
Speaker Change: on a hole that's just on the flat across from the other side of the pit and so
Speaker Change: That's an opportunity to take low-cost feed, to add to the bulk material that we're pushing through. There's 25 million tonnes of additional sulphide material that we're seeking to pour into the new concentrator.
Speaker Change: And then over time, as we continue the pre-strip at South East Dome, we will expose high rate ore there in South East Dome, but continuing to take feed from main pit.
Speaker Change: which continues through the life of the mind to be an important source of awe. So the grade profile we expect...
Speaker Change: improve from the sort of second half back end of 2026 as that comes through and the stripping is complete in South East Oam and then 2027 as we put into our guidance we really start to see the benefit of that.
Speaker Change: That's very clear. Thank you very much. And just a follow-up.
Speaker Change: It seems the situation, the hydropower situation in Zambia remains a challenge, at least for one more year. You have been pursuing options on power sourcing via PPAs. How is that progressing? And if you were to sign
Speaker Change: 10 or 15 year PPA agreements. How should we think about the cost of power? Is it comparable to what you're baking into the guidance for 25 or could it see potentially another step up? Thank you.
Thanks, Yanis.
Speaker Change: So I think what we would say is, given that we're only halfway through to the rainy season, that we plan conservatively, and so that's why we put that forward. Lake Kariba was held low last year because of the drawdown, and also because they were doing work on the plunge pool behind the wall. That work is now complete.
Speaker Change: They'll probably need a good couple of seasons of rainfall to really recharge Cariba in the absence of record years. So we plan for that conservative basis. We are working with third-party power.
Speaker Change: supply those agreements had in place, and these are extensions thereof, plugged into the Southern African Power Pool across various sources in the region. And then beyond that, we're working with
Speaker Change: for example, Total Energies and also Charit Energy on a longer term project to install solar and wind power. That project we expect to be commissioned and running around 2027-2028 in terms of when we would
see the outflow, which is around 430 megawatts.
Speaker Change: The next question will come from Ian Rosso with Barclays. Please go ahead.
Ian Rosso: Thanks Tim. Two questions for me. Just on enterprise, looking at your all-in sustaining cost guidance, it currently seems like the nickel price is below the bottom end of that range, so it suggests that the mine will be cash negative.
Can you maybe talk about what
Ian Rosso: options you have, I mean, would you consider slowing that down and treating more copper ore? Obviously, it seems like you're opening in the pits in later years to bring costs down materially where you will most likely be generating cash, but just trying to get a sense of what the options there are there if prices stay low. And then secondly, just on this
Ian Rosso: This export duty on gold, Dore, how confident are you that that will be reinstated or that suspension will be reinstated so that you can actually start selling gold again?
Ryan MacWilliam: Thanks Ian. Ryan, do you want to take that question, the first one? Sure. Hi Ian. So just the nickel cost guidance is...
Ryan MacWilliam: $5 to $6.50 per pound for this year. That's on a C1 basis. And you're right, the all-in cost $7.50 to $9.25 is above where the nickel price is.
Ryan MacWilliam: currently. But what we'd note is you then see that fall quite materially in 2026 and 2027.
Ryan MacWilliam: where the midpoint is around $6, so below where current nickel prices are. And what that is, is that's the effort to open up the pits this year.
Ryan MacWilliam: work through some of the more oxidized material and we'll continue then to see the cost profile step down as we get into as we work through that and also open up better grades.
Ryan MacWilliam: And so, you know, that cost profile, once we're in that 2026-2027 period, is strong. So at this stage, no plans to change the operational approach and planning approach around enterprise.
Speaker Change: Yeah, and on the gold export levy, so we've had the conversations with government. I was in Zambia in January Speaking with the president. We feel comfortable with that. It's not just
Speaker Change: that was effective. It was also the GEM producers there and so it's a broader perspective, but the conversations around that were pretty clear, so we do expect the suspension to be reinstated in.
Speaker Change: Thanks. Do you think that still happens in Q1, so you can sell gold in Q1?
Ryan MacWilliam: Ryan, do you want to take it? Yeah, Ian, I think we'd be confident that'd happen in Q1. I mean, we would note, actually, as it's currently set up, we sell most of our gold dore to the Bank of Zambia. So we're actually not exporting that, but certainly we think it's important that that is removed and the interactions we've had with government so far suggest that will get moved in the near term.
Okay, all right. Thank you
Speaker Change: The next question will come from Anita Soni with CIBC World Markets. Please go ahead.
Anita Soni: Good morning, Tristan, Ryan, and team. So just a couple quick questions. The first one, a follow-up on the extension for the ICC arbitration hearing. Is that the final date to which it could be pushed to, or could you see that pushed further?
Hi, Anita. Yeah, that's the final date.
Speaker Change: And then the second question, a little bit more big picture, with the comments coming out from the U.S. President around the Panama Canal.
Speaker Change: Have you seen any change in the government sentiment towards the mine? And what I'm thinking about is either trying to find alternative sources of revenue
Speaker Change: and also how they think about critical minerals considering, you know, other countries are pushing to get their critical minerals developed at this stage, so if you could just provide any color that would be appreciated. I'm just trying to see if there's any read-through to Cobra Panama.
Speaker Change: Look, what we would say is that we're absolutely focused on making progress towards resolution in Panama. We continue to work very constructively with the government.
Speaker Change: and we continue with our responsible stewardship of Cobra Panama towards reaching a solution that is in the best interest of the country and its people. That's really our focus.
All right, thank you. That's it for my question.
Speaker Change: The next question will come from Craig Hutchinson with TD Cowen. Please go ahead.
Craig Hutchinson: More elevated than I would expect for the next few years, just given the limited reserves. I'm just curious whether the production profile extends much beyond 2027.
Craig Hutchinson: with the reprocessing of tailings, and I guess as a second question, would you guys consider a gold prepay? Does that have the potential to be a material amount to you guys? Thanks.
Craig Hutchinson: Thanks, Craig. It's great to get questions on Gold MacRae and, yeah, we feel very enthused there. Look, copper production is coming to an end and will cease, we expect, the second half of this year, but gold production is on. So we've just commissioned the carbon and leach plant there.
Craig Hutchinson: and we received approval for mining of the Oriental Hill at the end of last year. So that activity will get underway and we don't have a full reserve state there just because of location and drilling and so on, but we do expect it to...
Craig Hutchinson: It starts to look more cloudy, so that's really our time frame at the moment.
Craig Hutchinson: And in terms of the prepaid, you're right, that is an option to us, so we talk in the slide about...
One of the options available to us being...
Craig Hutchinson: Copper prepays like we did last year, but absolutely is demand in the market for all prepays. But again, it just comes back to
Craig Hutchinson: looking at each opportunity for financing and then just weighing up the cost of capital of each.
Okay, great. Thank you.
Speaker Change: This concludes the question and answer session. I would like to turn the conference back over to Mr. Tristan Pascall for any closing remarks. Please go ahead, sir.
Speaker Change: Thanks operator and thank you to everybody for joining the call. We thank for your time and your interest and we look forward to speaking to you again at the next opportunity.
Speaker Change: This brings to a close today's conference call. You may disconnect your lines. Thank you for your participation and have a pleasant day.