Q4 2024 Ero Copper Corp Earnings Call
Thank you for standing by this is the content operator, welcome to the Aercap, where fourth quarter 'twenty 'twenty, four operating and financial results Conference call.
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Speaker Change: I would now like to turn the conference over to Courtney Lynn Executive Vice President External Affairs and strategy. Please go ahead.
Thank you operator good.
Speaker Change: Good morning, and welcome to Arab Copper's fourth quarter, and full year 2024 earnings call.
Speaker Change: Our operating and financial results were released yesterday afternoon and are available on our website, along with our financial statements and MD&A for the three and 12 months ended December 31 2024.
Speaker Change: A corresponding earnings presentation can be downloaded directly from the webcast and is also available in the presentations section of our website.
Mako Defilippo: Joining me on the call today are Mako, Defilippo, President and Chief Executive Officer, Wayne Drier Executive Vice President and Chief Financial Officer, and Jonathan, but he's the executive Vice President and Chief operating Officer.
Mako Defilippo: Before we begin I'd like to remind everyone that today's discussion will include forward looking statements, which involve risks and uncertainties that may cause actual results to differ materially for.
Mako Defilippo: For a detailed discussion of these progressed and their potential impact on our business. Please refer to our most recent annual information form available on our website as well as on SEDAR and Edgar.
Mako Defilippo: Less otherwise noted all figures discussed today are in U S dollars.
Mako Defilippo: With that I'll now turn the call over to micro defilippo. Thank.
Speaker Change: Thank you Courtney and thank you everyone for taking the time to join us today as.
Speaker Change: As we previously released the operating results in February I thought I would take a moment here to outline our strategy reflect on some of those achievements in 2024 and set expectations on cadence for 25.
Speaker Change: First and foremost arrow is an incredible business, we have a committed leadership team of passionate workforce a diverse portfolio of operating assets and an enviable long term growth project and for us it.
Speaker Change: It is an honor to be stepping into this role at such a pivotal time for the company.
Speaker Change: There are several moving pieces in our portfolio over the next few quarters, which we will have ample time to address on this call, but our near term strategy is simple.
Speaker Change: And can be summarized by four steps step one achieve commercial production at jacobina to deleverage our balance sheet three aggressively advance the long term growth initiatives, we have in our portfolio, including our partnership on for Das and for initiate returns to shareholders.
Speaker Change: So with that said, let's start with two come off and before diving into the challenges we've worked through I want to highlight some key positives.
Speaker Change: Since completing the project on schedule last year with a local workforce and doing it without a single lost time injury or mining operations have continued to track ahead of schedule. The grades from our infill drill program has been higher than we expected and of particular note. Our process plant has consistently achieved at or above design met recoveries.
Speaker Change: Concentrate grades for months now I am deeply proud of these achievements.
Speaker Change: At the same time.
Speaker Change: Knowledge, we've had several challenges that impacted production, both outside and inside our mine gate.
Speaker Change: External to our operation at two Kabbalah, we faced a multi week power outage due to an extreme weather event as well as extended periods of low power quality, which required intervention.
Speaker Change: Central solving these factors, we encountered conventional teething pains as we ramped up throughput volumes. These teething pains can broadly be described as material flow constraints, which range from minor equipment issues, such as volte dimensioning small component pipe weld failures as well as more substantial constraints, including damage sustained.
Speaker Change: To one of our three tailings filters, which impacted operating flexibility and that portion of the circuit.
Speaker Change: While the dollar quantum for these fixes and adjustments as small on the order of $2 million. Each one of these adjustments required dedicated engineering manufacturing delivery to our site in Peru and installation during a scheduled maintenance period.
Speaker Change: This is a long winded way of saying they all required time.
Working closely with our operational teams and third party providers at the end of last year.
Speaker Change: We developed a plan to implement these changes during two extended periods of planned downtime in January and February.
Cut downs were completed and I am pleased to report that we are already seeing substantial improvement with performance strengthening from late February into March the final repair to our third tailings filter remains on track for completion by the end of Q1.
Speaker Change: With these improvements either completed or on track for completion. This month, we are already seeing and expect to continue to see increased plant reliability and throughput volumes and consequences. Consequently, increasing production beginning in the second quarter.
Speaker Change: Want to stress this production cadence is aligned with our reaffirmed full year guidance.
Speaker Change: Switching gears slightly to production cadence at Caribbean Jevan Sheena.
Speaker Change: For different reasons, we expect Q1 to be the softness of the year as we work to set these operations for long term success.
Speaker Change: At Kariba as I outlined on our Q3 conference call, we only expect to see the benefit from additional development, we are doing a pole or to emerge over the next several quarters.
Speaker Change: Amortization of a second development contractor is well under way and if you have any specific questions on how that work is progressing Johnson can provide details during our Q&A.
Speaker Change: At <unk>, we are working to transition the mine to a fully mechanized operation to increase productivity reduce cost and most importantly, reduce exposure to our workforce, which is our top priority.
Speaker Change: We have a capital investment cycle occurring at javelin Ciena. This year, which includes the purchase of equipment to complete the mechanization of the mine ventilation and cooling upgrades as well as an asset integrity program to ensure that we can operate through the duration of our now extended reserve life.
Speaker Change: Again, it is worth noting that our full year guidance, including elevated all in sustaining cost guide for 'twenty five reflects these investments.
Speaker Change: We're excited about the future prospects for the Japanese lean operations and see considerable potential for further growth.
For both of these assets.
Speaker Change: We expect softness to be isolated to the first half of the year. As these changes were implemented and expect the impact to be the most evident during the first quarter again, our guidance ranges reflect this.
Speaker Change: With that backdrop, let's discuss the second step of our strategy deleveraging the balance sheet there.
There are two key points to highlight here firstly, we see a clear pathway to an inflection as to come off production ramps up and we expect a fairly significant deleveraging to occur with the achievement of commercial production.
Speaker Change: Near to medium term, we are targeting a normalized net debt leverage ratio of one five times and while the pace of achieving this milestone will be influenced by copper price. We are confident that the quality of our assets and consolidated operating margins will support our ability to meet this objective.
Speaker Change: Regarding overall liquidity, we remain well positioned to come out around the corner and the recent expansion of our revolving credit facility, which Wayne will touch on.
Speaker Change: The next two steps of our strategy advancing long term growth and shareholder returns.
Speaker Change: We will emerge over the coming quarters.
Speaker Change: Our long term growth remains a priority we intend to pursue shareholder returns more proactively once we make meaningful progress on deleveraging our balance sheet.
Speaker Change: Touching up for <unk> quickly, we have five drill rigs on site right now and expect to complete the 28000 meter phase one drill program by mid year and the majority of the 17000 meter phase two drill program by year end.
Speaker Change: In parallel we are advancing key technical work streams, including a geotechnical program Hydrogeology studies as well as additional metallurgical test work on the high grade zones, we are drilling.
Speaker Change: We are also progressing initial mine and infrastructure layout designed to support a preliminary economic assessment, which we expect to complete in the first half of 2026.
Speaker Change: We are a great partner on this project and value based models and we were very encouraged by the results were seeing thus far.
Speaker Change: To ensure we have sufficient time for Q&A I will leave it there and pass the call to Wayne who will provide more detail on our financial results.
Wayne: Thank you Micah.
Wayne: Our financial results reflect record copper production in the fourth quarter as well as improved metal prices and stronger operating margins for the full year.
Wayne: These factors contributed to cash flow from operations of $68 million for the quarter.
Wayne: $145 $4 million for the full year.
Wayne: Adjusted EBITDA for the quarter and year were equally strong at $59 $1 million and $216 $2 million respectively.
Wayne: During the fourth quarter, we experienced increased foreign exchange volatility, particularly around the U S presidential election.
Wayne: This included significant fluctuations in the U S dollar to Brazilian real exchange rate and the REO ended the year at over six to the dollar.
Wayne: As a result, we reported realized losses of $5 $9 million for the quarter and $8 2 million for the year on foreign exchange hedges, we implemented in late 2023 to mitigate the risk of the real strengthened against the U S. Dollar during took them as construction and ramp up.
Wayne: At quarter end, our total notional foreign exchange derivative position stood at $319 million, consisting of zero cost collars with a weighted average floor and ceiling of 543 and $6 49.
Wayne: <unk> per dollar respectively, extending through the end of 2025.
Wayne: These realized foreign exchange losses impacted adjusted net income by approximately six cents per share for the quarter and eight cents per share for the year.
Wayne: As a result, adjusted net income attributable to the owners of the company was $17 $4 million in the fourth quarter or 17 cents per diluted share and $84 million for the full year was 78 cents per diluted share.
Wayne: Our liquidity position remains strong at approximately $90 million at year end.
Wayne: As noted.
Wayne: Financials, we further enhanced our financial flexibility shortly after year end by amending our existing credit facility to support our expanded operating footprint.
Wayne: This amendment increased total commitments from $150 million to $200 million.
Wayne: Standard the maturity date from December 2026 to December 2028, and secured a 25 basis point reduction in the applicable margin on drawn funds and certain leverage ratios as a result, our pro forma available liquidity at year end was $144 million.
Monica: I'll now pass the call back to Monica to share some concluding remarks.
Monica: Before we move into the Q&A session I will just quickly. Thank our global management team for all the hard work we've put in over the past several months.
Monica: We have reorganized our business made substantial operational improvements across our portfolio and are well positioned as ever to execute on our vision for arrow.
Monica: I'll look forward to delivering continued progress in the quarters ahead.
Monica: Now I will turn the call back to the operator to open the line for questions.
Speaker Change: Thank you to join the question queue. You May Press Star then one on your telephone keypad, you will hear us telling acknowledging your request.
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Speaker Change: First question comes from Orange to walk it down with Scotiabank. Please go ahead.
Speaker Change: Hi, Good morning, a couple of follow up questions on the ramp up that to come off.
Speaker Change: I guess the first one are you still experiencing intermittent power outages, that's impacting the metal or is that now pretty much settled out.
Speaker Change: Yeah, Thanks horse we.
Speaker Change: You know I guess, we all on our last quarterly conference call, we're still working to implement a longer term solution. So we're still seeing some some oscillations in power quality.
Speaker Change: I would just note that the adjustments we made at the end of last year have significantly improved our plant's ability to accommodate that volatility so to put that into context, you know last year, when we were experiencing the.
Speaker Change: Interruptions in power quality, we were having between 15 and 20 mill power trips per day.
Speaker Change: Which is I like to say it was a bit like trying to run a marathon with your shoelaces tied together.
Speaker Change: Since we've made the changes late last year, we've experienced.
Speaker Change: Just a handful of months so significantly reduced obviously, we still want to put it in a long term solution, which we've been working on here and I expect that to to have that done pretty eminently here I think as I outlined last on our last quarter conference call. The investment there is it's quite small we've finalized the engineering work and and.
Speaker Change: We're working hard with our third party provider to put that in place that installations Offsite, we don't anticipate any interruption to operations going forward, but again for.
Speaker Change: For the long term, it's the right, it's the right investment to make.
So does that is that expected then should we think about like by end of Q2 that that offsite.
Speaker Change: <unk> solution.
Speaker Change: Yeah, Yeah, and as I said, we don't so far what we're seeing are coming out of the shutdowns and Gen. Fab, we haven't seen any impact to our progress on ramp up related to power quality because of the changes that we made in Q4.
Speaker Change: Okay, and you mentioned the.
Operational issue I think expect to be resolved by the end of the quarter anything else.
Speaker Change: That's notable at this point that we should be thinking about that could impede the ramp up beyond sort of your normal teething pains.
Speaker Change: You know or if it's a great question.
Speaker Change: Nothing nothing notable that we see now I mean, I think like all ramp ups, there's uncertainty and the pace you know once we complete the.
Speaker Change: We jump over the hurdles that are in front of us which I.
Speaker Change: Phil.
Speaker Change: Comfortable that we've worked very hard in Q3 and Q4 to identify.
Speaker Change: Those constraints. So all I can say is that there's nothing notable that we see in front of US right. Now. However, I would note that we were very thoughtful in putting our guidance range together for two kumar to reflect some of the uncertainties.
Speaker Change: And resolving these issues and I'd say, so far things are on track, we're pretty happy with performance coming out of the shutdowns and Jen fed and nothing nothing new or notable that we see right now.
Speaker Change: Okay, and just one more quick one if I could if you know if we start to see some volatility in the copper price and there's potentially some teething pains on the ramp up can you just remind us what sort of what are the order of operations all financial levers that you would pull to try to protect liquidity and that I assume that means.
Speaker Change: Cutting exploration and others, but I'm just curious.
Speaker Change: What's the pecking order is it requires.
Speaker Change: Yeah look I mean, I think I said in the call, where we're pretty confident you know where were out obviously copper price uncertainty remains topical I think there. The reality is where we're at now with the expanded credit facility. We feel comfortable that we can execute on our strategy, particularly with took them on rounding the corner here.
Speaker Change: As he mentioned we have some leverage in our portfolio, particularly around the work we're doing at for NAS as outlined we have 40000 meters of drilling planned this year.
Speaker Change: Our criteria and under the earn out agreement were only required to do 28000 meters of drilling so we've got quite a bit of flexibility on those work programs.
Speaker Change: There are some other areas that I think we're investing for the long term that are really important that we'd like to continue which is infill drilling the deepening obviously working hard to get the shop completed a pole or those are all some of the levers we have on the investment side again, we'd like to keep those programs going they're reflected in our guidance ranges for the year, but certainly some.
Speaker Change: Flexibility on that side.
Speaker Change: We also have as I outlined a pretty large investment cycle is you haven't seen it this year.
Speaker Change: We're you know we continue to be frustrated by the value that we get for that asset.
Speaker Change: In our portfolio and we have a great partner there so.
Speaker Change: You know, we could potentially look to isolate that from our capex spend for the year.
Speaker Change: Again, you know all these all these longer term solutions.
Speaker Change: Are all these.
Speaker Change: All of these levers I think are about dislocations of value.
Speaker Change: <unk>.
Speaker Change: We feel pretty comfortable with where we're at right now.
Speaker Change: Thank you I appreciate the color.
Gabe Moreen: The next question comes from Gabe Moreen with Bank of America. Please go ahead.
Gabe Moreen: Hi, Good morning, everyone. Thank you for taking my questions. So I have two questions first one dinos.
Gabe Moreen: I just wanted to go over and understand what's driving the large increase.
Gabe Moreen: Specialist frequency.
Gabe Moreen: 570 575.
Gabe Moreen: You should have somewhat of an improvement throughout the year, especially.
Gabe Moreen: Especially in second half so just trying to understand what's driving and how should we expect she went throughout the year.
Gabe Moreen: And then my second question is on China.
Gabe Moreen: Just wanted to understand this.
Gabe Moreen: This quarter.
Gabe Moreen: To increase with increased quite substantially.
Gabe Moreen: Well thank you.
Speaker Change: Yeah. Thank you so let's start with Curry bouncy, one great great questions. Thanks for raising it so see one guidance for the year I would say that if you look back at history, partly because of the <unk>.
Speaker Change: Consistent over the last eight years, the Brazilian reais as as you quite well know has consistently depreciated against the U S dollar.
Speaker Change: We've been consistently I'd say fairly conservative with FX, when we put together our guidance for the year.
Speaker Change: Obviously with with the Bureau on the path that it has on now we expect.
Speaker Change: That to benefit our seaborne cash costs relative to our guidance range, which was done in a lower BRL, but given the volatility in diesel prices.
Speaker Change: And kind of where we see our business, we felt comfortable with the range, we put forward and throwing the FX to the macro environment.
Speaker Change: <unk> is a highly uncertain right now and we were pretty thoughtful about putting our simo cash cards cash cost guidance together for both assets, but I would say the biggest drivers are going to be FX as you mentioned being.
Speaker Change: Substantially more conservative than spot pricing on the BRL. We're also mining.
Speaker Change: Our contribution from the deeper part of the mine has increased year on year. So that's driving a bit of of additional costs in our business and then and then grades as well so so a bit lower grades across the portfolio.
Speaker Change: A combination of factors there.
Serbian Vermeil us, obviously being being top of mind on driving a bit lower consolidated grid and that all has an impact on our operating margins at Kariba again I think we've.
Speaker Change: We've been pretty thoughtful about putting a range there and some of the levers that we have in our portfolio that we're working on I think I've talked last couple of years about the full potential program that we initiated across the company. We've continued to work on that.
Speaker Change:
Speaker Change: And I expect to continue to see cost reductions, particularly coming out of this reorganization that we did here in the first quarter. So.
Speaker Change: They tuned we were pretty thoughtful about our guidance range there that carry over on javelin seen all in sustained costs.
Speaker Change: A couple of things there, it's really just it's a.
Speaker Change: It's a relatively small operation so high grade small tonnage.
Speaker Change: And when you've got flushed with fluctuations in grade or volume.
Speaker Change: Because of the just because of the denominator being small it tends to magnify the impact on all in sustaining costs and see one and those are the main drivers there. So I'd say, it's volume related nothing intrinsic to the asset when you look ahead to our 2020 and our guidance.
Speaker Change: As I mentioned, the biggest step up in all in sustaining costs year on year as all of the investments that we're making in asset integrity might improvement.
Speaker Change: And that's fully reflected in our guidance and in our all in sustaining cost.
Speaker Change: Okay, that's fair.
Speaker Change: Thank you guys.
Speaker Change: The next question comes from Craig Hutchison with TD Cowen. Please go ahead.
Craig Hutchison: Hi, Good morning, guys I just wanted to circle back on the power issue Kumar can you just give us an explanation explanation the guards to what the off site.
Speaker Change: Our solution is.
Speaker Change: And is there any further work you guys are doing on the onsite power solution like is there a potential for some standby power point in future.
Speaker Change: Yeah. Thanks, Greg good questions, let's start with the easy one and then we'll get into some technical aspects.
Speaker Change: On the electrical side, but so onsite no. The answer is no we're not considering that at the moment. We don't think that's a that's a.
Speaker Change: That the situation requires alternative onsite energy like generators, obviously, we couldn't in the future, but we don't see a need I would say that the the the wind storm that happened last year I just want to remind you not only did it knockout power to operations, but it took up power to 230000 people in the region. So you were talking about a major infrastructure.
Speaker Change: Her outage. It was it was a unique situation that we certainly don't expect to happen again.
Speaker Change: On the power quality I'm going to say that says simplistically as possible if you've got questions afterwards, I'm happy to get into the into.
Speaker Change: And to the engineering aspects, but effectively there's two alternatives. We're looking at both solutions right now to see which ones are the most cost effective given the work that we did on our monitoring.
Speaker Change: But effectively it's a series of capacitors are batteries that when there is an overvoltage they absorb energy when theres under voltage discharged energy so that everything downstream.
Speaker Change: Is is.
Speaker Change: <unk> is experiencing stable power quality.
Speaker Change: Even though it's coming into that piece of equipment as it has volatility.
Speaker Change: That's a very very very simplified way of explaining.
Speaker Change: A and electrical engineering problem, but if you've got any questions. You can you can give me a call afterwards and I'll explain in more detail.
Speaker Change: Oh, no I appreciate that and they just went off a question for you just don't come to you you mentioned that in Q1s can be because.
Speaker Change: Or is Q1 I'm going to look a lot like Q.
Speaker Change: Q4, with respect to the grades and throughput or should we expect maybe slightly lower grades higher throughput.
Speaker Change: Yeah, I would expect to be down quarter on quarter. Obviously, we're we're only in a world where in early March here team's work and still and.
Speaker Change: On a on achieving good plan I think there was a there's a number of factors there that are contributing.
Speaker Change: As a reminder, if you haven't seen add significant great outperformance for I think the better part of two years relative to the plan. We obviously see that that grade coming down just based on the levels that we're operating and then.
Speaker Change: Some of the some of the again.
Speaker Change: <unk> focus on on an asset integrity and some operational changes that we made on our procedures and protocols in preparation for mechanized mining we pushed out some of the pillar recovery that we that we had in Q1 than we did in Q4 those are very high grade areas.
We have a peaceful plant that we invested in.
Speaker Change: That process involves putting pasted and then recovering those high grade pillars that we've been very successful at doing over the years, but the timing of that until the recovery has a tends to influence the consolidated grade quarter on quarter.
Speaker Change: The area that we had that we've the way that we've outlined it was Q1 is really about setting up some of those areas to make sure that we can do it safely and effectively.
Speaker Change: So I would expect.
A drop in tonnage as we.
Speaker Change: As we thought that mine for my organization and do some additional development change the interval spacing and then a bit on grade just because of the timing of that pillar recovery program and some of the additional work that we're doing that we're doing there.
Speaker Change: Thanks, guys.
Speaker Change: Sure.
Speaker Change: Once again, if you have a question. Please press Star then one.
Speaker Change: Next question comes from Marcio Farid with Goldman Sachs. Please go ahead.
Marcio Farid: Thank you.
Speaker Change: What sort of dog.
Speaker Change: Most people like to give a whole lot.
Speaker Change: We wish them all the applicable picamoles.
Speaker Change: Well most of the corporation.
Speaker Change: Got it.
Speaker Change: Ballpark the wall.
Speaker Change: Who knows.
Speaker Change: Wondering I mean do you need to see all bodes for.
Speaker Change: He should be laws or kept all official drivers.
Speaker Change: So before we think into next Bobst library.
Speaker Change: M&A or partnerships as well.
Speaker Change: You bet.
Speaker Change: New logos.
Speaker Change: Or do you actually get out of the balance sheet.
Speaker Change: And what would show that.
Speaker Change: Sure.
Speaker Change: Thank you.
Speaker Change: Yeah. Thank you the questions didn't come in Crystal clear for us on our end. So I heard a couple of points of them address I probably missed a couple of things. So just let me know what I Miss but I heard you talk about prioritization of those steps.
Speaker Change: And potential M&A opportunities as it relates to to continue growth I'd say look.
Speaker Change: Our focus as an executive team as a company is on the for the four steps we outlined obviously, it's a it's critical that we achieve commercial production for two commands the gateway to the next three steps of the of the strategy.
Speaker Change: And so that's our that's our main focus right now obviously, we look at things we have a corporate development team some of what Youre sitting here next to me.
Speaker Change: I would I would say that a S R.
Speaker Change: Our stakeholders and shareholders expect us to look at things, particularly when they are in our backyard, but we're crystal clear about our priorities.
Speaker Change: And I'd say that.
Speaker Change: The M&A doesn't have isn't it isn't an immediate focus but again, obviously, we look at things to see if it makes sense. We think we have an incredible.
Speaker Change: Development asset in for an Austin, So I look at the world through that lens, obviously, it's a bit longer term.
Speaker Change: And not producing right now, but it's a really high quality asset we're doing the work on that project I think as we as our technical and operational teams.
Speaker Change: Dig in there I think we get more and more excited about the prospects and what that asset means for our company. We have incredible off at an incredible partnership with valid base metals.
Speaker Change: On that project and we expect to continue to talk about what we're doing there in the quarters ahead, but I'd say again crystal Crystal clear focus.
Speaker Change: On the four steps we outlined.
Speaker Change: Unless there's a major value dislocation bar to see that right now given our priorities.
So that was one I've got I'm getting I'm.
Speaker Change: I'm getting a.
Speaker Change: My notes cost to me, but it says wood, what I'm gonna happen before it took them a has delivered I'd say no.
Speaker Change: I don't think we get the value for yeah, no it won't happen.
Speaker Change: Okay.
Speaker Change: Our next question comes from Dalton Barreto with Canaccord Genuity. Please go ahead.
Dalton Barreto: Thanks, guys Mako Congrats on your first call as CEO.
Speaker Change: Couple of questions for me I wanted to start on three Bob.
Speaker Change: The second contract or it sounds like they're mobilized sounds like they're going to be done by the end of Q1.
Speaker Change: What sort of steps are you putting in place to ensure that once it there got any one contractor that you don't start to fall behind again.
Speaker Change: Yeah, Good question and thanks Dalton.
Speaker Change: Welcome any constructive feedback after the after the call's over.
Speaker Change: So on the contractor maybe I'll just start out here and then and then I'll, let I'll, let Justin divert on mobilization and how we're doing there.
Speaker Change: For you know when you go back all the way to our long term production plans I think it's important to note that we always had in fact up until 2021.
Speaker Change: Third party contractor being as part of our operating strategy and our fleet was always the case.
Speaker Change: When I look ahead.
Speaker Change: On our development rates, we continue to expect about a third of our development in the future to be allocated to a to a third party contractor.
Speaker Change: And when I look over the long term.
Speaker Change: Spect us to continue to to to focus on making sure that we maintain an increased development obviously the deepening.
Speaker Change: That we have over the years, we've been doing.
Speaker Change: Additional development there.
Speaker Change: And so all I can say Dalton for for assurances that are on the development is that it's something that we track on a monthly basis development sufficiency.
Speaker Change: We're focused on increasing this year, obviously with the.
Speaker Change: The second contractor coming in.
Speaker Change: And.
Speaker Change: Yes, it's part of our strategy going forward, it's reflected in our in our guidance and I continue to expect it to be reflected in our guidance.
Speaker Change: Going forward, so maybe I'll just hand, the call over to Johnson for for an update on on mobilization. Thanks.
Johnson: Thanks, Michael.
Speaker Change: So just to clarify on the second contractor, they're finishing what we called on the job training. It's more like a 45 day process is actually.
Johnson: That we do regularly on site.
Johnson: In process of finishing that we hope that we finished by the end of that.
Johnson: This month, we were talking about like 290 people right and large fleet.
Johnson: This is a very good contract that's been benchmarking equipment checked.
Johnson: Looking at what you ask about.
Johnson: How are we going to make sure that the performance of these contractor will be aligned with our expectation I think.
Johnson: Yeah.
Johnson: There'll be a working eight separate areas we've been.
Johnson: Operating in various areas, where we improving conditions on the infrastructure side, which of course impacts the contract also checking very carefully about the condition of the equipment did they bring an offsite finish contracted that we're having there they actually did a pretty good month February.
Johnson: So far from what we're waiting for Dan at mostly related to equipment.
Johnson: <unk> ability and quality of the equipment also the people. So we will be working very closely followed the operations and the contractor putting this together moving forward. So I expect that yes.
Johnson: It will be a transition period, but we expect to soon.
Johnson: Development rates don't increase for them.
Johnson: Great. Thank you for that Jonathan and then maybe I can switch gears to to come up.
Johnson: Market I know you said that you're almost there we're pretty much there on the recovery front.
Johnson: On the throughput side, I know, you're taking sort of multiple scheduled shutdowns, but when the mills up and running can you give us a sense for how it's doing and what sort of the cadence was shut down this over the next sort of weeks or months.
Johnson: Yeah. Thanks, Thanks Dalton.
Johnson: As I outlined again pretty much from the.
Johnson: The day that we turned on that plant.
Johnson: We've achieved recoveries and concentrate grades above our design targets I think you see that you see that pretty well in Q4.
Johnson: Approaching 89% recovery, obviously pretty hybrids as well at two 2% or close to it.
Dalton Barreto: You know I think there's a couple of things that are happening right now Dalton, obviously, we can't do these shutdowns and Gen. Fab, we are in the process of increasing.
Johnson: Production volumes on the front of the plant.
Johnson: I'd say one of the one of the realities is that you know even if you look at Q4, 2.2% copper through the through the through the plant.
Johnson: That's about two five to three times above the life of mine average fee.
Johnson: And so where we're seeing.
Johnson:
Johnson: Really strong performance I would say is the backend of the plant, particularly our concentrate filter, which is which is operating near its it's a currently coming out of the shutdowns is operating near its.
Johnson: Its design.
Johnson: And obviously recoveries and concentrate grades or are hanging in there. So when I think about the front end of the plant and what throughput volumes were achieving there. It's it's probably less relevant to the overall total contained copper in the system and that's where I feel like the performance is we're seeing really strong performance. So Dan day, we're increasing obviously we arent.
Johnson: Well I would hope, but we're not expecting the life of mine average grade to remain at two 2% copper so what we'll be doing over the next.
Johnson: A couple of weeks a month months is.
Johnson: As ratcheting down the grade and increasing throughput volumes and we expect overall.
Johnson: Copper production to to maintain somewhat stable from what we're achieving right. Now again. This is relatively early days. We just came out of a shut down in late February seemed very strong performance. We hope it continues.
Johnson: Let's see how we go here, but but yeah I'm pretty excited about what we're seeing overall.
Speaker Change: Great. Thanks for that market and then maybe if I can ask one last one it's interesting to hear you.
Johnson: Talk about starting to initiate <unk>.
Johnson: Capital returns, particularly given the you know the great profile at two months I'm, just wondering if you've given any thought to what form that would take are you leading more towards buybacks you know maybe a small dividend of the supplementary depending on performance just any thoughts there.
Speaker Change: Yeah. Thanks Dalton.
Speaker Change: I think it's a bit too early to talk about the playoffs or we're focused on getting to come up and running.
Speaker Change: Delevering the balance sheet I think the.
Speaker Change: Well I would say, having discussions with shareholders on what form that looks like but let's let's get through steps one and two of the four step program and then and then have a discussion about what the whatsapp for it looks like.
Speaker Change: Great. Thanks, guys that's.
Speaker Change: That's all for me.
Speaker Change: This concludes the question and answer questions I would like to turn the conference back over to Michael deeply for any closing remarks. Please go ahead.
Michael Deeply: Yeah. Thanks, everyone really appreciate you joining this morning, if you've got any questions. Our team is always available.
Michael Deeply: We look forward to catching up in just a couple of months here. Thanks, everyone.
Speaker Change: This concludes today's conference call you may disconnect. Your lines. Thank you for participating and have a pleasant day.
Speaker Change: Mhm.
Speaker Change: [music].
Speaker Change: Yeah.
Speaker Change: Yes.
Speaker Change: Sure.
Speaker Change: Yeah.
Okay.
Speaker Change: Yeah.
Speaker Change: Yes.
Speaker Change: Yeah.