Q4 2024 Capstone Copper Corp Earnings Call
Okay.
Good afternoon, ladies and gentlemen, and welcome to the Capstone Copper's fourth quarter 'twenty 'twenty four results conference call.
At this time all lines are in listen only mode. Following the presentation, we will conduct a question and answer session.
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Speaker Change: This call is being recorded and Wednesday February 19th 20th twenty-five I would now like to turn the conference over to Daniel Some theory. Please go ahead.
Speaker Change: Thank you operator, I'd like to welcome everyone to Capstone Koppers Q4, 'twenty 'twenty four conference call. Please note that the news release and regulatory filings announcing capstone Koppers 'twenty 'twenty four fourth quarter financial and operational results are available on our website and on SEDAR plus if you are logged into the webcast. We will advance the five to 10.
Speaker Change: This presentation, which are also available in the investors section of our website I'm joined today by our CEO John Mckenzie.
Speaker Change: President and Chief operating Officer Castle Bar, our SVP, and Chief Financial Officer, Robin Randhawa, and our SVP risks E. S. P. N General counsel, when do cat or had a chilly, Jim Whittaker and our head of technical services. Peter M alone and are also available at the end of the call for questions. Please.
Speaker Change: The comments made on the call today will contain forward looking information within the meaning of applicable securities laws. This information by its nature is subject to risks and uncertainties and actual results may differ materially from the views expressed today for further information on the risks and uncertainties pertaining to our business. Please see capstone is most recent filings which are available on our.
Speaker Change: Website and on SEDAR, plus and finally I'll just note that all amounts discussed today are in U S dollars unless otherwise specified now I'll turn the call over to John Mckenzie.
John Mckenzie: Thanks, Daniel and Hello to all of you dialing in from the Americas, Europe, Australia, and all around the globe.
John Mckenzie: We're pleased to present, our fourth quarter 2020 full results and achievements.
John Mckenzie: 'twenty 'twenty four it was a big year for us as we commissioned and ramped up on severity and a cheap design throughput rates at monsters blockers.
John Mckenzie: This coming yet represents an inflection points.
John Mckenzie: Our recently released 2025 guidance demonstrating increased cash flow generation.
John Mckenzie: Strong copper production growth and lower costs.
John Mckenzie: We'll be focused on operational execution across our portfolio and further deleveraging of our balance sheet, while continuing to advance our pipeline of organic growth opportunities.
John Mckenzie: Starting with slide five.
John Mckenzie: In Q4 opera delivered record consolidated copper production of 53 9000 tonnes at consolidated C. One cash costs of $2 56 per pound.
It was our strongest quarter of the year with respect to production and costs and that translated into our best quarter of the year from a finite from a financial perspective.
John Mckenzie: For the full year 2024.
John Mckenzie: We produced a record $184 5000 tonnes of copper at consolidated C. One cash costs of $2 77 per pound.
John Mckenzie: Presenting a 12% increase in output compared to 2023.
John Mckenzie: Last year was marked by several major achievements as outlines in Chile.
John Mckenzie: After producing first copper concentrates in June at our flagship months' of any development project, we achieved commercial production levels in September.
<unk> ramped up to full rates by year end with.
John Mckenzie: The previously announced $870 million capital budget.
John Mckenzie: This is a significant accomplishment and I would like to thank our team for their commitment and dedication during the past three years and delivering this milestone.
John Mckenzie: To start the year I am pleased to announce it in January we averaged above our nameplate throughput capacity at months have added with the low throughput of 33000 and 409 tons per day.
Speaker Change: I know that our team is eager to demonstrate what the new months of Veda sulfide concentrate is capable of.
Speaker Change: And it's a team remains hard at work preparing to execute on our months of very optimized project.
Must Blumquist: Meanwhile, it must blumquist, we're locked the design capacity of the operation to a successful de bottlenecking of the backend is the thoughts.
Speaker Change: Ending the year above design low throughput in November and December.
Speaker Change: This continued in January with a third consecutive months achieving above targeted mill capacity of 20000 tonnes per day.
Speaker Change: I'll finish to the year with Pennsylvania was subpar, but we're laser focused on progressing our asset integrity program.
Speaker Change: Sure we consistently achieved the design capacity of the operation.
Speaker Change: While delivering our near term growth.
Speaker Change: We have also advanced our future phases are good.
Speaker Change: Leasing of Texas, and executable feasibility studies for the months of very optimized and the neighboring something Domingo projects in the second half of 2024.
Speaker Change: On the corporate side doing things for 'twenty, four we took steps to improve our balance sheet strength and flexibility locked.
Speaker Change: Marked by a reduction in our net debt by $185 million compared to 2023.
Speaker Change: Our balance sheet is in excellent shape.
Speaker Change: And we're committed to deleveraging further.
Speaker Change: Internally generated cash flows prior to our next major phase of growth.
Speaker Change: Turning to slide six.
Speaker Change: As I noted.
Speaker Change: This year represents an inflection point for capstone.
Speaker Change: In 2025, we're targeting 220 to 255000 tons of copper production.
Speaker Change: Cash costs between $2 20 to $2 50 per pound.
Speaker Change: As we focus on operational execution across the portfolio.
Speaker Change: We will advance our pipeline of organic growth opportunities to continue the transformation of our business.
Speaker Change: And with that I'll pass over to Robin for our financial results.
Speaker Change: John We are now on slide seven.
Speaker Change: In Q4, we recorded copper production of 53, 9000 tons, reflecting growth of 14% quarter over quarter, driven by the growth growing production from the ramp up of MVP.
Speaker Change: As a result of seasonal swells that load ports in Chile copper sales came in below payable production levels by approximately 22 800 tons this quarter.
Speaker Change: The impact of the delayed sales from Mento Verde is approximately $11 million with respect to EBITDA for around one cents per share on earnings.
Speaker Change: We recorded revenues of $447 million in Q4, driven by realized copper price of $4.04 per pound.
Speaker Change: That was slightly below the <unk> copper price averaged for the quarter. However.
Speaker Change: However, on an annual basis, our realized copper price was largely in line with the average price.
Speaker Change: A testament to our <unk> hedging program.
Speaker Change: In Q4, we realized strong gross margins and $1 48 per pound for 37%.
Speaker Change: So your one cash cost of $2 56 per pound decreased by 10%.
Speaker Change: Quarter over quarter. This was driven by the ramp up of our mental various sulfide operation, which contributes to our lowest cost production.
Speaker Change: Cash cost decreased from $2 52 per pound in Q3 to $1 83 per pound in Q4.
Speaker Change: As well our mental sprankle operating at nameplate capacity, where cash cost decreased from $3 41 per pound.
Speaker Change: The $2 30 per pound in Q4.
Speaker Change: Mental Verde sulfide cash cost should decline even further in 2025 and operating at full nameplate capacity.
Speaker Change: Adjusted EBITDA in Q4 of $171 9 million nearly doubled year over year, driven by higher realized copper prices and copper production as a result of sulphide production ramping up amount overnight and mental cycles.
Speaker Change: Moving on to slide eight.
Speaker Change: On the left hand side, we summarized our available liquidity, which as at December 31, 2024, it was greater than $500 million, including 132 million cash and short term investments of $374 million of undrawn amounts under $700 million corporate.
Speaker Change: I mean credit facility.
Speaker Change: Our net debt of $742 million down slightly.
Speaker Change: From prior quarter, but the MVP capital costs behind us.
Speaker Change: Over the course of 'twenty 'twenty four if we are successful successfully deleveraged from our consolidated net debt to EBITDA ratio of three six X at the beginning of the year to one point buybacks at year end.
Speaker Change: The chart on the right hand side of the page illustrates your EBITDA sensitivity at various copper prices.
Speaker Change: The start of 2025 minutes of shifts from the light Gray bar for the 2020 for actual EBITDA of 496.
Speaker Change: $496 million to the turquoise bar, which represents EBITDA in the range of $800 million to $1 3 billion at copper prices between $4 to $5 per pound based on the midpoint of our 2025 guidance.
Speaker Change: This level of EBITDA generation will enable us to focus on generating cash to delever, our balance sheet with a pathway to below one times net leverage is spot copper prices.
Speaker Change: This provides a strong platform from which to advance our growth pipeline in terms of Matto pretty optimized and Santo Domingo.
Speaker Change: Moving on to slide nine.
We wanted to provide a breakdown of our operating cost drivers for 2025 to address the potential impact of tariffs on capstone.
Speaker Change: Should the threat of tariffs to be implemented in the U S. We estimate that 90% of our 2025 operating cost should not be directly impacted notably labor contractors and services.
Speaker Change: Diesel sulfuric acid and power.
Speaker Change: On a consolidated company wide basis year to date, we have seen some positive tailwind through favorable foreign exchange movements and higher.
Speaker Change: Byproduct pricing compared to our guidance assumptions, which position us well so far in 2025.
Speaker Change: Now I'll hand, it over to cash flow for the operations review.
Speaker Change: Thanks, Robyn we're now on slide 10.
Speaker Change: Victor Balli produced 11626 studies of copper to Seaworld and cash costs of $3 30 per payable pound during Q4.
Speaker Change: After starting the year strong in the first half Pinto Valley experienced setbacks in the third and fourth quarters that resulted in the mill operating.
Speaker Change: Below where we want it to be.
Speaker Change: Throughput averaged 45000 tonnes per day in Q4 with unplanned downtime due to electrical and mechanical issues that resulted in one of our six ball mills being down.
Speaker Change: This persisted into the first quarter, but we are recently back up with all mills journey.
Speaker Change: We've guided for 51 to 58000 tons of copper production at Minto Valley in 2025.
Speaker Change: Let's see when cash costs of $2 55 to $2 85 per payable pound.
Speaker Change: We expect copper production to be weighted towards the second half of the year driven by grade and throughput.
Speaker Change: With a lower first quarter as a result of the previously mentioned maintenance.
Speaker Change: We are committed to the implementation of our asset integrity program with the goal of improving the reliability of the plants to drive higher production and lower costs.
Speaker Change: Moving to slide 11.
Speaker Change: Cause them in mind delivered another solid quarter, producing 6000, and 724 tonnes of copper at <unk> cash cost of $1 55 per payable pound.
Speaker Change: In Q4, causing in cash cost benefited from higher silver byproducts, and a weaker Mexican peso, which continue to represent a tailwind for 2020.
Speaker Change: We have guided for 23% to 26000 tons of copper production at close them in 2025 C. One cash cost of $1 60 to $1 80 per payable pound.
Speaker Change: Our mental score.
Speaker Change: It had a very strong finish to 2024 as highlighted on slide 12.
Speaker Change: Total sulfide and cathode production yielded 13563 tonnes of copper at <unk> cash costs of $2 45 per payable pounds.
Speaker Change: Production and cash costs, both improved significantly quarter over quarter, driven by successful ramp up of the concentrate or after the installation of new equipment in July.
Speaker Change: We are excited to demonstrate the full potential of Memphis plant goes to the market now that we have completed the work required to sustain an average throughput of 20000 tonnes per day.
Speaker Change: Which has now been achieved for three consecutive months.
Speaker Change: We have guided for 49% to 59000 tons of copper production in 2020, fives, Portmanteaux blancos slightly weighted to the second half due to planned maintenance.
Speaker Change: <unk> cash costs are guided at $2 35 to $2 66 per payable pound.
Speaker Change: As pictured on slide 13.
Speaker Change: Average sulfide plant throughput was 19600 tonnes per day in Q4, achieving nameplate throughput capacity in November and December.
Speaker Change: We continue to see strong performance into 2025 with average throughput in January reaching 26000 tons per day.
Speaker Change: Even prior to the shutdown in July we started to see throughput improve as a result of our asset integrity program.
Speaker Change: <unk> Blancos as a third the size of the Pinto Valley in terms of plant throughput. So we expect this program to bear fruit more quickly here. We are continuing systematic to systematically rollout. This program at all of our sites.
Speaker Change: Prove availabilities and achieve more consistent performance.
Speaker Change: Now on to <unk> on slide 14.
Speaker Change: Where it was a transformational quarter and year driven by the continued ramp up of the Manto Verde development project.
Speaker Change: Total production yielded 22029 cuttings of copper at a cash cost of $2 53 per payable per.
Speaker Change: Focusing on the new sulfide operation, we posted record quarterly copper production in Q4 plant throughput averaged almost 25000 tons per day during the quarter.
Speaker Change: Throughput has steadily increased over the quarter to an average throughput of just over 27000 tonnes per day in December.
Speaker Change: This improvement has continued into 2025 with the average mill throughput of over 33000 tons per day exceeding the nameplate capacity of 32000 tonnes per day in January.
Speaker Change: Meanwhile, grades continued to reconcile well with the mine and mine plan in the block model.
We still have a little bit of work left to do on recoveries.
Speaker Change: We averaged around 85% in December which took a step back to around 81% in January.
Speaker Change: Earlier this month in February we completed a planned five day shutdown, which included minor change outs on our mills.
Speaker Change: But we also continue to make further minor modifications to the floatation area to get our recoveries to design levels in the upper eighties.
Speaker Change: We're targeting to achieve those design recoveries within the first quarter.
Speaker Change: Copper production and cash costs are forecasted to significantly improve in 2025.
Speaker Change: Driven of course by the new sulfide concentrator.
Speaker Change: We have guided for <unk> 97 to 112000 tons of copper production at Minto Verde in 2025.
At a combined cone cash cost $2 10 to $2 36 per payable pound.
Speaker Change: Q1 is expected to be the lightest quarter due to that planned maintenance and increasing recoveries.
Speaker Change: As John mentioned, our team is also eagerly awaiting the opportunity to execute on our own <unk>.
Speaker Change: <unk> already optimized project, we're advancing detailed engineering and preparing to start the project as quickly as possible. Once we receive a D I a permit amendment.
Speaker Change: Which is expected around the middle of the year.
Speaker Change: We've been encouraged so far by the individual peak daily throughput in excess of 38000 tonnes per day, and we look forward to debottlenecking the plant to achieve 45000 tonnes per day.
Wendy King: Now over to Wendy King for the sustainability review.
Wendy King: Thank you Pascal we are now on slide 15, with a review of our sustainability highlights for Q4.
Speaker Change: Last quarter, we published our 2023 sustainability report, which also included our sustainability performance status Buck.
Wendy King: This includes four years of consolidated capstone data as well as site level data.
Wendy King: In 2023, we started to report both our location based and market based ghd admissions and you can see how we started making progress against our 30% reduction target.
We continue this progress in 2024.
Wendy King: We have implemented key initiatives such as the electrifying for generators and three diesel pumps at Pinto Valley welcomed.
Wendy King: While commissioning the fourth electric rope shovel at adding to electric buses Atlanta Bear day.
Wendy King: These initiatives are also examples of win win opportunities, where we believe we will reduce our emissions while also generating cost savings.
Wendy King: During 2024, we made significant progress towards our sustainable development strategy call of implementing the global industry standards for tailings management across all of our T. S. At by year end 2028.
Wendy King: Our internal benchmarking shows us achieving 48% confirmation at year end, 2024, which exceeded our target for the year.
Wendy King: Okay.
Wendy King: I'm personally very pleased that we have published our first responsible sourcing policy that defines our commitment to embedding our sustainability expectations.
Wendy King: And considerations into the selection and management of suppliers and services.
We are very much looking forward to working in partnership with our suppliers to align with our goal of contributing positively to the lives of workers and communities both close to our sites.
Wendy King: The world where goods are made.
And lastly, perhaps.
Wendy King: Subsequent to quarter end in January we recently signed a 35 year water agreement with a concept to secure long term water supply by raising treated wastewater from SEC aster.
Wendy King: This will also reduce marine discharge and increase water recycling advances like of mine.
Wendy King: The project involves the construction of wastewater treatment plant built by a third party and expect it to be operational in 2028.
Wendy King: And with that I'd like to pass it back to John.
John Mckenzie: Thanks Randy.
John Mckenzie: Turning to slide 16.
John Mckenzie: We've outlined our key priorities for 2025.
John Mckenzie: This year, we will focus on operational execution across our portfolio.
John Mckenzie: Over the past two years, we've been in a period of significant change moving and ramping up months and now we will focus on getting the most out of our portfolio.
John Mckenzie: On severity optimized is another key focus for us.
John Mckenzie: Once we receive the permits we want to execute on it as quickly as possible because it generates tremendous returns for us.
John Mckenzie: And lastly, we're focused on deleveraging and advancing our pipeline of organic opportunities.
John Mckenzie: Turning to slide 17.
John Mckenzie: With our client there is sector, leading growth plans and some of the additional upside within our portfolio.
John Mckenzie: 2025, we will build on last year's strong foundation of 184000 tons of copper and we are on track with the guidance we issued last month.
John Mckenzie: We intend to proceed with months of Ada optimized following the receipt of a permit amendments.
John Mckenzie: We filed for the Gia pivot mid last year and expect the seats around the middle of this year.
John Mckenzie: We plan to finance this project through internally generated cash flows.
John Mckenzie: MV optimized is your opportunity to take us up to around 280000 tons of copper per annum on a run rate basis.
Speaker Change: It sounds like Domingo, we continue to progress with the assessments of the optimal financing structure for the projects.
Speaker Change: We're looking at this in a very similar manner to what we were able to achieve at months away there.
Speaker Change: Included in this.
Speaker Change: We're running a process to bring in the minority partner at the asset level, which is going well.
Speaker Change: Before a potential sanctioning decision that sensor Domingo will.
Speaker Change: We will also want to see all of our assets operating at or near full production levels.
Speaker Change: Our consolidated net debt to EBITDA at below one times.
Speaker Change: And of course, we will also be mindful of the overall macroeconomic environments.
Speaker Change: The way, we see it today.
Speaker Change: That opens up the potential.
Speaker Change: Sanctioning window for sensor Domingos, starting in 2026.
Speaker Change: Since the Domingo has the opportunity to take our production up to a level of around 400000 tons of copper per annum at even lower consolidated costs.
Speaker Change: Beyond these projects we are hard at work to unlock further upside across our portfolio with another low risk brownfield expansion opportunity at months of clunkers.
Speaker Change: Additional flexibility in the <unk> district.
Speaker Change: Unlock more copper and potentially byproducts cobalt production.
Speaker Change: And the potential developments have another major copper district around our Pennsylvania mine in Arizona.
Speaker Change: With that I will turn to slide eight and summarize.
Speaker Change: In 2024.
Speaker Change: We realized this first phase of the transformation of capstone copper.
Speaker Change: With tangible delivery on a peer leading growth.
Speaker Change: We are extremely well positioned to become a leading long locked in low cost copper producer play.
Speaker Change: Playing an important role in supporting the world's decarbonization and electrification efforts.
Speaker Change: And with that we're now ready to take questions.
Speaker Change: Ladies and gentlemen, we will now begin the question and answer session.
Speaker Change: Should you have a question. Please press star followed by the number one on your Touchtone phone you will hear a prompt that your hand has been race.
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Speaker Change: Your first question comes from the line of Oreste <unk> from Scotiabank. Please go ahead.
Hi, good evening nice to see the progress that Nacho birthday here in January.
Speaker Change: Just curious sort of what your expectation is for achieving sustainable throughput and define recoveries over the next couple of months it sounds like we should.
Speaker Change: Would expect some maintenance to impact February in Q1 overall, but curious sort of are we targeting kind of exiting Q1, where we should see both kind of near about steady state nameplate.
Speaker Change: Yes, Thanks, Thorsten and certainly the way you describe it is the way I see it because I'm going to ask Kessel just to add a little bit more color to that so that coverage I guess, let's just cant go with data, but yes, that's what we're anticipating where we are right now with the recoveries.
Speaker Change: We feel like we're getting stable production as we said we had it.
Speaker Change: Planned maintenance process there for realigning the bills.
Speaker Change: But.
Speaker Change: Certainly with the way the progress has gone gone excuse me with recoveries to date, we anticipate by the end of the quarter will be up to normal nameplate running.
Speaker Change: So.
Speaker Change: It's going well.
Well, it's great to see.
Speaker Change: Shifting gears a bit.
Speaker Change: With Metro Verde, going so well, obviously Santo Domingo will become more of a focus.
Speaker Change: John I'm just curious if there is any kind of debt reduction targets ahead of a sanctioning decision that youre thinking about or do you think the balance sheet is strong enough shape that you can push forward with that.
Speaker Change: Even at a cut out certain copper environment.
Speaker Change: Yes, it's a good question.
Speaker Change: Yes, certainly.
Speaker Change: I would like to see all of our other assets operating.
Speaker Change: At or very near full capacity.
Speaker Change: Confidence in the <unk>.
Speaker Change: Successful execution of our sort of asset management framework.
Speaker Change: And.
Speaker Change: Also be generating cash be starting to sort of whittle away.
Speaker Change: Our total debt position, obviously I spoke a little bit earlier about a.
Speaker Change: Net debt to EBITDA ratio of below one that we're targeting there's obviously two.
Speaker Change: Elements to that one is <unk>.
Speaker Change: Absolute reduction in our debt.
Speaker Change: So that has seen that inflection points as we.
Speaker Change: Started moving down.
Speaker Change: So reducing our debt.
Speaker Change: This past quarter.
Speaker Change: But obviously, we're also significantly increasing EBITDA so.
Speaker Change: That ratio sort of continues to look more attractive.
Speaker Change: And I certainly want to be in a position where we.
Speaker Change: We are comfortable from a lagging sort of lagging measure perspective that we are below one times.
Speaker Change: Net debt to EBITDA ratio.
Speaker Change: And then.
Well, obviously look at the macro environment.
Speaker Change: I think it's quite as straightforward as just saying you know if copper prices are high.
It gives us going forward with the project.
Speaker Change: We need to look at.
Speaker Change: What's what's happening in the general project environments as well.
Speaker Change: There are some times when it's actually better to use to launch a project win.
Speaker Change: Other people are not doing so in terms of getting that favorable contracted rates and.
Speaker Change: Better lead times on assets.
Speaker Change: <unk>.
Speaker Change: Yeah.
Speaker Change: Yeah, I think we sort of see ourselves entering a sanctioning window towards the.
Speaker Change: Probably at the beginning of next year.
Speaker Change: But that.
Speaker Change: That really will.
Speaker Change: Involve us looking at the macro environment looking at our sort of internal environments, and just making sure that that is the right timing.
Speaker Change: To take the next step with the project.
Speaker Change: Thanks for the color.
Speaker Change: Sure.
Speaker Change: Your next question comes from the line of Kate Mccutcheon from Citi. Please go ahead.
Speaker Change: Hi, Good morning, John just following on it Santa Domingo you mentioned the sanctioning winter early next year.
Speaker Change: Celadon talks progressing there and what is the timing of it.
Speaker Change: The market on that.
Speaker Change: Yeah, Yeah. Thanks Kate.
Speaker Change: It's going well. So you know we started a process towards the backend of last year.
Speaker Change: We had quite a number of parties that came in into the data room.
Speaker Change: As always been our intention to sort of get down.
Speaker Change: To a smaller number of parties because ultimately this is not quite as simple as just sort.
Speaker Change: Sort of.
Speaker Change: First or highest across the line. It's this is we're talking about a partnership process scores through the next 30 or 40 years. So at the end of the day, it's going to involve negotiation with.
Very small select group of sort.
Speaker Change: Sort of identified preferred partners.
Speaker Change: Today, we have we whittle that number down to we have we have six parties that were in discussions with.
Speaker Change: And I think we should be in a position sort of around the middle of the year to sort of provide.
Speaker Change: No further updates as to where.
Speaker Change: We rest with those are those conversations and then in parallel to that we're also starting to.
Speaker Change: Advance.
Speaker Change: The financing discussions in terms of the project financing.
Speaker Change: But clearly the two us somewhat interlinked so.
Speaker Change: To an extent the nature of the party thats.
Speaker Change: That would come in would also sort of influence the actual final final financing structure for the project.
Speaker Change: I would also say case, that's sort of at the same time.
Speaker Change: Okay.
Speaker Change: We've got a number of work streams that are happening in parallel and in a way.
Speaker Change: We're looking at a number of opportunities I think we've spoken about.
Speaker Change: Some.
Speaker Change: Revenue generating sort of synergies, we've got and the 90 million tonnes of oxides at <unk>.
Speaker Change: Santa Domingo.
Speaker Change: Those are not currently in the base case plan.
Speaker Change: That's that's a big opportunity going forward.
Speaker Change: <unk> acquired <unk> late last year.
Speaker Change: We ultimately intend to incorporate.
Speaker Change: That's all into Santa Domingo.
Speaker Change: On plan and so.
Speaker Change: There's a number of parallel streams of work.
Speaker Change: We're also looking at opportunities to relevant Boulevard in Standalone infrastructure, seeing where there are opportunities to share infrastructure.
Speaker Change: And.
Speaker Change: Those are those are all I would say parallel streams of work that a little busy going on right now so a lot on the go but I think we're very encouraged.
Speaker Change: Okay. That's helpful. And then just on tariffs and the administration. Some of your peers have mentioned some tax benefits, possibly but that's more on the refining side are there any tailwind to call out around capturing that comex premium or any tax tailwind that has been talked about.
Speaker Change: And I think.
Speaker Change: Obviously, we have the Pennsylvania mining the U S and you know it.
Speaker Change: Might be sort of over the longer term.
Speaker Change: When could see some sort of potential opportunities arising.
Speaker Change: I think in terms of obviously the implications of the tariffs right now and seeing sort of a very significant premium between sort of comex and the enemy.
Speaker Change: Ultimately for US I think it's probably fair.
Speaker Change: Neutral.
Speaker Change: Outcome.
Speaker Change: We were not terribly exposed to sort of terrorists on input costs for us.
Speaker Change: To the extent that tariffs could impact on global GDP growth.
Speaker Change: You know that could be deemed as a <unk>.
Speaker Change: Small negatives, but on the other side is that triggers additional stimulus in China that would be.
Speaker Change: A positive.
Speaker Change: Our view at this stage.
Speaker Change: Without further information is.
Speaker Change: That's really swings and roundabouts at this stage and we don't see any impact really on the medium or long term.
Speaker Change: Sort of very positive fundamentals for copper.
Speaker Change: Okay. Thanks, Tim.
Speaker Change: Your next question comes from the line of Daniel Morgan from from Barron's Buoy. Please go ahead.
Speaker Change: Hi, first question is just on the gardens, which was issued a few weeks ago could you just maybe expand on what are the key assumptions.
Speaker Change: That are embedded in that guidance, particularly at ment of other and basically what needs to happen to be at the upper end of the gardens. So what might go wrong to be at the lower end. Thank you.
Daniel Morgan: Yeah. Thanks for the question Daniel.
Speaker Change: Having having a.
Speaker Change: President and Chief operating Officer, Cashel Meagher here with me I'm going to pass it on a cost to him. Okay I'll do my best.
Speaker Change: Metro verdict.
Obviously in the guidance, we've guided to copper tonnage.
Speaker Change: 68% to 80000 tons.
The sulfide excuse me of 29 to 32 in the cathodes.
Speaker Change: Our thinking behind that.
Speaker Change: That is as you know things can go well there is the opportunity when we reach the mid year and if we do get our permit we just stated that for one month. So you were at 33000 times, a day and we occasionally hit 38000 tons. A day. So there is that opportunity that's not really embedded in that.
Speaker Change: <unk> in the back half.
Speaker Change: So that's good because we're a multi asset portfolio now and you know.
Speaker Change: When one asset struggling another asset will pick it up and that's the real fortune that we have with the onset of matches Blanco cement earned eight being.
Speaker Change: Being ramped up now is as we look forward to having four assets that are operating in a reliable fashion Samantha Verde itself.
Speaker Change: You sort of take the midpoint.
Speaker Change: The guidance that would suggest through the sulfide plants, probably around 30% to 31000 tonnes a day.
Speaker Change: Probably at reserve head grade for the year.
Speaker Change: Year of $1 77.
Speaker Change: Sort of in the mid east of recoveries. So we feel that's achievable.
Speaker Change: We got off to a good start here now and certainly.
Speaker Change: Our predictive maintenance is working really well and we had a successful shutdown in <unk>. So we're really encouraged how 2025 is shaping up.
Speaker Change: Okay.
Speaker Change: Thank you.
Speaker Change: Thanks.
Speaker Change: Yes, Thank you that does but just expanding a little bit.
On the cost side of your guidance can you just talk about what's embedded in that regarding the treatment charges have you taken the what appears to be a very favorable settlement into account or not.
Speaker Change: Yeah, Yeah can I ask Robin just to comment on that yes.
Speaker Change: Yes.
Speaker Change: Our cash cost to reflect reflecting the current T. CRC market in there. So I'd say, our budgeted cash cost scenarios around $25 a ton to $30 a ton when.
Speaker Change: When you look at our our concentrate and mix were 56% benchmark and a 44% spot. So then there is opportunity obviously on the spot market.
Speaker Change: <unk> zero to negative to beat some of that cash cost.
Speaker Change: Overall, it's about 25 to $30 a ton.
Speaker Change: Okay.
Speaker Change: Thank you and just last question is the Manta Verde optimized.
Speaker Change: Project, what is the latest update to tug at fair enough I do you know whats the critical path of that nature.
Speaker Change: It was mid year, if I've got that wrong.
Speaker Change: Yes, that's correct.
We are currently progressing with detailed engineering on that we expect that to be complete sort of pretty much around the middle of the year.
Speaker Change: The critical path thoughts of Israeli receipts of the permits amendment the D. I, a it's not a major payment, but its obviously, we need to have that full weekend property per risk.
Speaker Change: We submitted that's around the middle of last year.
Speaker Change: These things typically take around 12 months.
Speaker Change: We've just completed responding to the second round of questions. That's the authority has put forward that normally is a fairly good indicator as to are there any complicated issues or was it fairly straightforward and I think we were very very comfortable with the nature of the questions that were being asked so I think at this stage.
Speaker Change: We continue to be confident that.
Speaker Change: Around the middle of the year, we should get.
Speaker Change: Get that permits.
Speaker Change: We are not seeing any any red flags at this stage in that regard, but that's that's really the gating item.
Speaker Change: Well be that's between now and then we choose to start ordering a few long lead time items.
Speaker Change: And obviously, we just need to look at where the market is that in terms of lead times on certain pieces of equipment.
Speaker Change: Thank you so much for your perspectives Jonathan Cashel.
Speaker Change: Thank you.
Speaker Change: Next question is from the line of Adam Baker from Macquarie. Your line is now open.
Speaker Change: Good morning, or.
Speaker Change: Good afternoon gentlemen.
Speaker Change: Just following up on that and be optimized.
Speaker Change: Just on the Capex guidance, noting that.
Speaker Change: It does.
Speaker Change: None of the Capex coming through in 2025.
Speaker Change: When you compare that to a feasibility study.
Speaker Change: Last year, which did.
Speaker Change: Include about $100 million in Capex to memory.
Speaker Change: It'd be optimized.
Speaker Change: Perfect expansion, how should we think about capex tremendously optimize this year, noting that.
All things going well.
Speaker Change: It will come through mid year.
Speaker Change: Would you expect to Green light the project as soon as you get.
Speaker Change: That payment comes through in <unk>.
Speaker Change: Capex potentially be reevaluated reevaluated sorry.
Yes, Sir.
Speaker Change: The capital for the project is $146 million for NV optimized.
Speaker Change: The return on that is tremendous so it isn't sort of a project, which.
Speaker Change: It makes sense to do as soon as we possibly can.
Speaker Change: On the basis that we have that permit in the middle of the year and we were able to commence then I think we are.
Speaker Change:
Speaker Change: Our current estimate is that we'll probably spend about half half of that budget this year and half in the first half of next year.
But as you say that that's not currently in our Capex budget.
Speaker Change: Budget, it's obviously until we have with.
Speaker Change: Got a project to an approval stage and that involves having all the permits required will obviously.
Taking that to our board getting approval for it and obviously, we will then be.
Speaker Change: Sort of notifying us that that change in Capex.
Speaker Change: Yes.
Speaker Change: The $10 million of expansionary Capex that you currently got there that would be.
One way to items potentially and then.
Speaker Change: It's easy to get.
Speaker Change: And border peripheral but has the possibility to taking place all things going well.
Speaker Change: Yes.
Speaker Change: Oh, there it would be 62 or more 70 72 for the year.
Speaker Change: Got it got it thank you very much.
Speaker Change: Well, it's a bit of ramp up at TSB guidance really well.
Speaker Change: Just noticed that.
Your Shreveport steady too.
Speaker Change: 33000 tons, a day I should say.
Speaker Change: Bob Knight levels.
Speaker Change: Can you pushed out any further do you need to push it any further.
Speaker Change: And just recoveries.
Thank you very much comfortable from the front end of the plant perspective.
Speaker Change: Yeah, well, we've got we've got Jim <unk> Who's our head of all of our Chile business. So I think he's probably best place to two O to answer that question.
Speaker Change: Hi, Yes, I think as Kessel mentioned before we've seen some days right at the nameplate. Obviously, we are trying to run higher than that to take care of any sort of downtime that we encountered as we continued to ramp up this plant and.
Speaker Change: <unk> <unk>.
Speaker Change: And find out more about this new plant that we have.
Speaker Change: We have good days up to 36% to 30000 tonnes a day. So we're very very confident on the throughput design of the plant on the recovery, it's been a bit slower on the uptake we've been in the high eighties into December into the mid eighties through January. So we're very confident that we're going in the right direction with that as well. So we don't see any any major.
Speaker Change: Changes to guidance that we put out with respect to the plant.
Speaker Change: Thanks, guys I'll hand, it off.
Speaker Change: Thanks, Ed.
Speaker Change: Your next question comes from the line of Paul Hissy for Moelis. Please go ahead.
Paul Hissy: Oh, good I guess I was just hoping you might be able to provide a little bit of commentary or an update on any potential discussions or plans you are having with your neighbors around Pinto Valley. Please.
Speaker Change: Yeah, well I can give an initial comments and I'll ask castle to sort of add to it.
Paul Hissy: We've got.
Speaker Change: We obviously sort of signing agreements with.
Speaker Change: With BHP around copper cities to do some drilling work a couple of years ago that drilling works complete and sort of the.
Speaker Change: Resource is being re remodels it basically validated what was there.
Speaker Change: And since then we really just sort of working on a number of of option studies.
Speaker Change: <unk>.
Speaker Change: And I look at what's alternative configurations could be of a district developments and that's that.
Speaker Change: Currently work in progress right now.
Speaker Change: So we don't have any.
Speaker Change: Our conclusions from that at this stage.
Speaker Change: Cashless anything else you'd want to add to that no. We continue to work under that option agreement that John mentioned.
Sort of in the middle of this year is set to expire, but we've extended it once before although the way things are progressing and we hope we don't have to.
Speaker Change: We have a joint committee that is working on what can happen within that region.
Speaker Change: Joining up.
Speaker Change: Copper cities with Pinto Valley, Obviously Pinto Valley itself is $1 4 billion tonnes and theirs.
Speaker Change: Historic resource sort of that copper cities, it's close to that also so.
Speaker Change: Tremendous resource tremendous opportunity to optimize mine plans there.
Speaker Change: So we're working with that.
Speaker Change: That group it is.
Speaker Change: Cooperative.
Speaker Change: And to be able to see what the best way to get the value of at the two sites are now so all I can say, it's progressing really well.
Speaker Change: Okay.
Speaker Change: So hopefully at a little bit more color on that potentially mid year, just taking your comment there about potentially not having to renew the the option agreement again. So yes. Thanks for the response that's helpful.
Speaker Change: Okay.
Speaker Change: Thanks, Paul.
Your next question comes from the line of Dalton Barreto from Canaccord. Please go ahead.
Dalton Barreto: Thanks, Good afternoon, John and team.
Dalton Barreto: Most of my questions have been answered, but John I think you mentioned infrastructure sharing I just wanted to work streams around cannot give mango.
Dalton Barreto: I'm wondering if you can expand on that a little specifically.
Speaker Change: As it relates to the ongoing JV process, but also as it relates to potential implications on the capital for the project.
Dalton Barreto: Yeah.
Dalton Barreto: Also with.
Dalton Barreto: The project has obviously been prepaid and.
Dalton Barreto: I submitted on a standalone basis so.
Dalton Barreto: And if some of that has been.
Dalton Barreto: Influence spot permit considerations as well we plan to have.
Dalton Barreto: Build us another diesel plant the second diesel thoughts.
Dalton Barreto: Just because you know expanding our months of edit one would require.
Dalton Barreto: Whereas we already have a fully permitted diesel pumps through sensor Domingo. It also involves us building out our imports.
Dalton Barreto: Now all of these things, obviously gives us a great deal of strategic flexibility, but you.
Dalton Barreto: You know one of the issues in Chile.
Dalton Barreto: Certainly the government has been quite focused on is it would make far more sense for mining companies to be sharing infrastructure.
Dalton Barreto: And by doing that it's obviously, a lesser environmental impacts in terms of number of sites that are impacted but it's also.
Dalton Barreto: And officials to the points of view.
Dalton Barreto: Hum.
Dalton Barreto: Generally the cost of these facilities are mostly fixed so the higher throughput you get the lower the unit cost. So I think it's it's a it's a view that sort of shaped by the industry that there's a lot of benefits in in sharing infrastructure now they are.
[noise] of ports and a number of diesel plants that already exist along that coast.
Dalton Barreto: So what are the work streams is.
Dalton Barreto: Obviously it gives us to do this before we move ahead in both build our own which that is the base case.
Dalton Barreto: So just assess whether or not there's a economically more attractive option to share infrastructure with with another party.
Speaker Change: Got it okay. Thank you and then just maybe one more and this is almost a housekeeping item here.
Dalton Barreto: In your Capex guidance, there's $80 million for.
Dalton Barreto: Sort of ESG related projects I think you called them tailings.
Dalton Barreto: Tailings dam upgrades and stuff like that I'm, just wondering is that going to be sort of a rolling number on a go forward basis or is that a onetime thing.
Dalton Barreto: No I think.
Dalton Barreto: We are in the process of moving all of our sites to G. I S. T M compliance.
Dalton Barreto: And some of our some of our thoughts you have lots of areas that already because you know we've just designed it in both citizen do we did it in line with those.
Dalton Barreto: Other of our tailings facilities that obviously pre date those those standards. We've got plans to do so and each of them has got sort of different time periods that it takes to get there.
I think you know.
Dalton Barreto: And I think probably the longest dated of those is probably Pennsylvania, which is going to take sort of probably two or three years to get to that point.
Dalton Barreto: Months of Splunk us is sort of probably two years something like that so.
Dalton Barreto: So that's that's the sort of timeframe over which we would see that capital.
Dalton Barreto: Recurring and then once we they went back to.
Dalton Barreto: It's just the normal maintenance cost of keeping those facilities go ahead, yes.
Dalton Barreto: Yes, I'd say to open it's going to reoccur for a few years. It may not be at that same clip. So you may see a bit of a tail off.
Dalton Barreto: Downward some spend the ships like transactional.
Speaker Change: Understood. Thanks, very much guys.
Thanks Dalton.
Speaker Change: Ladies and gentlemen, as a reminder, if you would like to ask a question. Please press star followed by the number one on your Touchtone phone should you wish to decline from the polling process. Please press star followed by the number two and if you are using a speaker phone. Please make sure to lift the handset before pressing any case.
Speaker Change: Your next question comes from the line of Sam Catalano from Wilsons. Your line is now open.
Sam Catalano: Oh, Yeah. Good morning, such good evening all.
Speaker Change: I wanted to ask a little bit on Pinto Valley, obviously, you've brought.
Speaker Change: <unk> got a great update of the positive performance.
Speaker Change: From the Chilean assets in January but you also flagged.
Speaker Change: Some of the struggles that pinch I had back end of last year, just wondering how that's going so far this year and whether or not.
Speaker Change: See any risk to your cost guidance in particular.
Speaker Change: From Pinterest.
Sam Catalano: Thanks, Sam with Oscar Castle to respond to that yes sure. Thanks, Dan.
Speaker Change: You know we have a plan the plan is.
Sam Catalano: Sue.
Sam Catalano: Developing a proactive maintenance process versus.
Sam Catalano: Having to react to maintenance unplanned defense.
Sam Catalano: As that system matures color to our asset management framework.
Sam Catalano: Come more predictive on especially the older components within the mine and so I've been to valley itself. Obviously most of the asset itself is pretty aged havent been built in the seventies.
Sam Catalano: We're making really good progress there we.
We did have some unplanned events, obviously that you alluded to in your question.
Sam Catalano: The in Q.
Sam Catalano: Four.
Sam Catalano: The remedy for that persisted actually into through January as we sort of said in the script.
Sam Catalano: But we've seen our way through that now in February and we're back up and running with all six ball mills.
Sam Catalano: So.
Sam Catalano: We do have <unk>.
Planned maintenance to happen that is all considered within the guidance and so we're sort of meeting the cadence that we believe.
Sam Catalano: We will arrive at that sort of guidance that we've given to Pinto valley.
Sam Catalano: So we don't anticipate to lie outside of it and in that guidance the Reeves.
Sam Catalano: There is some latitude for unplanned events.
Sam Catalano: So what we hope as we get ahead of them with this asset management framework and this predictive maintenance model.
Sam Catalano: So we have a we have a lot of people working on this it is the primary focus of the general management there.
Sam Catalano: We believe that all these efforts we've been putting in over the last year will yield fruit this year.
Speaker Change: Okay. Thanks, guys. So just just to sort of push on that a little bit more I guess sort of a reason for that question is yes.
Sam Catalano: It seems like things going very well.
Sam Catalano: In South America, and if I think about the overall company guidance food volumes, 20% to $2 55 for the year. It seems so far that there.
Speaker Change: Your line assets will deliver into that as expected would it be fair to say that you guys feel Pinto, who is probably the biggest risk.
Sam Catalano: As you look at that guidance figures into the back into the year.
Sam Catalano: You know like.
It's all about predicting the unpredictable.
Sam Catalano: So all planned events or put in whether its planned maintenance event is plenty close meant a verdict <unk> Pinto valley, what I would say is that the guidance reflects the risk inherently built into it.
Sam Catalano: So.
Sam Catalano: They you know if you look at the throughput.
Speaker Change: Pinto Valley.
Speaker Change: And you look at the performance of last year in the first half of the year, which was 54000 tonnes a day without unplanned interruptions.
Speaker Change: That exceeds what the midpoint of guidance, we put out hearings, which is at 52, so if you're talking in the context of <unk>.
Speaker Change:
Speaker Change: Risk it's been adjusted in the guidance, if you're talking about it's strictly on a comparative basis or relative basis. So do we.
Speaker Change: Or have we accounted for more unplanned breakdowns at Pinto Valley banner brand new plant.
Speaker Change: <unk>, yes, but that is reflected also in guidance. So we've given our best foot forward what is achievable.
Speaker Change: And what we believe is reliable led at the assets that they sit today with the aim to improve on them year over year.
Speaker Change: Thanks, that's great color I appreciate it.
Speaker Change: Yeah.
Speaker Change: There are no further questions at this time I would like to turn the call over to John Mckenzie for closing remarks, Sir. Please go ahead.
Speaker Change: Thank you. So we look forward to updating you in early may with our Q1 results and.
Speaker Change: Until then stay safe and feel free to reach out to Daniel Michael Claire If you have further questions.
Speaker Change: Thank you for your continued support and have a good day.
Speaker Change: This concludes today's conference call. Thank you very much for your participation you may now disconnect.
Okay.
Speaker Change: Yeah.
Speaker Change: Okay.
Speaker Change: Yes.
Speaker Change: Yeah.