Q4 2024 Aura Minerals Inc Earnings Call

Operator: You have joined the meeting as an attendee and will be muted throughout the meeting.

Rodrigo Barbosa: Good morning, ladies and gentlemen. Welcome to fourth quarter and full year 2024 earnings call. This conference is being recorded and the replay will be available at the company's website at auraminerals.com slash investidores. The presentation will also be available for download. This call is also available in Portuguese. To access, you can press the globe icon on the lower right side of your Zoom screen and then choose to enter the Portuguese room. After that, select Mute Original Audio. To access our conference in Portuguese, click on the globe icon at the bottom right of your Zoom screen and select the Portuguese Room option.

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Operator: We would like to inform you that all attendees will only be listening to the conference during the presentation and then we will start the question and answer section when further instructions will be provided.

Unknown Executive: Before proceeding, we would like to clarify that any statements that may be made during this conference call regarding the company's business prospects, operational and financial projections and goals are the beliefs and assumptions of Aura Executive Board and the current information available to the company. These statements may involve risks and uncertainties as they relate to future events and therefore depend on circumstances that may or may not occur. Investors should be aware of events related to the macroeconomic scenario, the industry, and other factors that could cause results to differ materially from those expressed in their respective forward-looking statements.

Unknown Executive: Present at this conference we have Rodrigo Barbosa, President and CEO, and Kleber Cardoso, CFO.

Rodrigo Barbosa: Now, I will turn the conference over to Rodrigo Barbosa. You may begin the conference. Good morning, all. I'm glad to be here again with all of you.

Rodrigo Barbosa: We are now presenting the Q4 and the year end of 2024, which we'll see was extraordinary year in terms of results. And also not only that, but also setting the stage for us to continue to grow in 2025, and then 2026, and so on. But I'll cover as usual, I we made it during the year, and then clever, we step in in more details on the results. So if we go to the executive summary, on the highlights of the year. There was a busy year that we accomplished significant milestones. But before I go to the milestones, let's go quickly on the results.

Rodrigo Barbosa: We doubled the EBITDA from achieving now $267 million with the gold price slightly below $2,400. Today, gold price is already $500 per ounce compared to what we achieved the last year. So you can imagine that if gold continues to perform at this level, we will have a significant impact on the EBITDA for 2025, not considering also the startup of Borborema. In terms of all-in sustaining cash costs, we finished the year off at $1,373 per ounce. We will also, we are disclosing and sharing the guidance for the year, we'll see the guidance for 2025, slightly above what we performed in 2024.

Rodrigo Barbosa: But mostly because for Apoena, we will go through two years of pushback and investment on the pit, so that we can, after two years, resume to the normal levels, and that will also bring all-in sustaining cash costs below our average. And as we could see, ALMAS was a full production, extraordinary year for ALMAS, despite the challenges we had when we changed the contractor, and already with all-in sustaining cash costs significantly below the average of the company. In terms of Borborema, the year we also made a significant progress in 2024, continue to do in 2025. We are 100% already committed with the budget and investment.

Rodrigo Barbosa: So we do not expect any overrun. And we are very much in line to start the ramp up now in March, and then commercial production to the second semester. So we performed well in the operations. Of course, we did have challenges in Apuena. Most come from the delay on environmental permits that was already granted early this year. But also Minas was a very interesting year where we could continue to improve our operations. We could expand more the pads. In Almas, during the second semester, we also expand capacity so we could increase production. As you will see on Q4, we reached a record high production for Almas with over close to 17,000 ounces of production.

Rodrigo Barbosa: And that Aranzazul are very much in line with our expectations.

Rodrigo Barbosa: more important as important as a good results go back we also made One slide back. We also made significant progress in exploration. We are now thinking and already budgeted to start investing in the underground for ALMAs. We made that acquisition in Bluestone, which we closed in January. We also invest in exploration and we will release our new resources and reserves by the end of March on the AIF with good progress in most of the operations except Minossa, where we are not yet investing much in exploration.

Rodrigo Barbosa: But. Serra da Estrela, Apoena, Aranza Azul, in Almas, we will see progress in all of those aspects.

Rodrigo Barbosa: for we also announcing for dividends a new now we are paying quarterly basis $0.25 per shares. And if you look what we've done in 2024, it's very much in line what we've been promised with the market that we would grow, we would pay dividends, and we would unlock value in three different areas. We will unlock value through execution of the project of Greenfield Projects, putting new projects online on time. We will do improvements in resource and reserves and also grow in M&A so that we can continue to grow and narrow the gap of discount of INAV.

Rodrigo Barbosa: So we did all, we could increase production, we could increase resource and reserves that we will see on the AIF. And then third, we also performed an M&A. All of this while we continue to pay dividends, which put Aura as one of the highest dividend yield companies in the gold sector in the world. So it was a very important year that now sets the stage for us to continue to grow in 2025 with a larger than ALMA's project, Borborema, coming online during the year. As we always disclose, and we also believe good results always come with a good safety standards.

Rodrigo Barbosa: We are super proud to have been within two years building one mine ramping up building two mines and ramping up one production along with the other operations with only one slightly lost time incident during two years, which is a benchmark in the sector in the world. So we have our safety standards are very much in line with our good results. Good managed companies do both. Good results always comes with a good safety standards and also on the structures of geotechnical, the pits, the underground, the tailings dam, all in line with the satisfactory stability conditions. So during the year, we achieved that 267,000 ounces of gold equivalent production, it would have been above that, but the conversion for copper to gold decreases the gold equivalent as the gold price has increased significantly.

Rodrigo Barbosa: But that if we were not this would put us on the high end of the guidance, although the 267,000 is also very much in line with the guidance meeting what we promised to the market since early 2024. On the quarter basis, Aranzazul, very much in line with the previous quarter, very much in line with the mine plan also affected by which is good higher gold prices. So that's why you see a decrease in gold equivalent production.

Rodrigo Barbosa: Apoena, this is where we face the most of the challenges during the year with delays on the environmental permit to enter in a higher grade area, then we had to divert to a lower grade. Now we got this permit, we will prepare the mine. But with the combination with the mine plan, we will see the next two years on the investment process so that we can resume to the normal level of operations after two years by 2027. Minasa, another very important quarter with 19,000 ounces of production compared to 21 in Q3, that is Q3 we had below expectations range and Q4 very much in line with expectation range.

Rodrigo Barbosa: So that is slightly variation that will happen and it happens in Minasa along the quarter, but very important that we could produce above 18,000 ounces on every quarter during the year. And we were glad to see also ALMA's performance extremely very well and actually above our expectations. And now we're reaching 17,000 ounces of production with a very, with below our average only sustaining cash costs as we will see then, that is going to show ALMA's already given an important part on the EBITDA of AURA. And as you can imagine, Borborema is coming online with a similar project, but bigger, but it's open pit CIL, average grades and super ratios about the same.

Rodrigo Barbosa: So we can see then now Borborema coming in online with a very important results bringing to AURA during the second semester and then more importantly, next year. So the four all-in sustaining cash costs, we finished the year at $13.20 per ounce. And then we are now, which was very much in line with the guidance, actually was on the bottom of the guidance as the production was above, was on the top end of the guidance. Then the all-in sustaining cash costs was also at the bottom level, bottom end of the guidance.

Rodrigo Barbosa: Next one. So now, together with the results, we are also releasing the guidance for the year. So we saw a production of the year 267, again, if it were not by the increase of gold prices during the year, we would have produced 276,000 ounces. And then now the guidance with the new projections of gold will be 266,300, that's the bottom of the guidance, the same level of 2024. That's mostly because we see Apoena, as I mentioned to you, will have a lower than the average production during this phase of investment, while Borboreman is coming online and producing mostly in the second semester.

Rodrigo Barbosa: But the Apoena, we also continue to see improvement in our production. In terms of all-in sustaining cash costs, I would highlight that the all-in sustaining cash costs, the guidance is above what we performed in 2024, which is not intuitive. We also mentioned that we can, our new project that's coming online has a below average all-in sustaining cash costs, but that's mostly because in Apuena, in which we will go through an investment phase, and that investment goes to all-in sustaining cash costs, which we will then amortize those investments after we push back the peak and then resume to normal levels of production.

Rodrigo Barbosa: If we were not, the impact of Apuena, our guidance would be 1241 to 1353 in line with what we performed in 2024, with a possibility also to decrease compared to 2024. Understanding that in Borborema, we will have only part of the second semester in commercial production. In terms of a capex, as we could see in 2024, we were the year that we most spent building Borborema. There are remaining expenses, the remaining investments that we already did, but new payments that should be done in the upcoming month for Borborema in 2025. So that we'll see also a decrease in the capex or in the guidance.

Rodrigo Barbosa: Yes, it's important to share with you that we're not including yet here Matupa and other expansion or Bluestone or other investments once we are now narrowing down the details of the investments. And once we approve any of the new investments, then we will include the capex in our projections and then also disclose with the market. As I mentioned to you, Borborema is very much in line with budget, very much in line with the schedule, we should be starting the ramp up now in March. and then commercial production in during the second semester. The economics of this project, it gets better every day, of course, when the gold prices increase, we increase the NPV.