Q2 2025 Lundin Mining Corp Earnings Call

Good day, and thank you for standing by. Welcome to the London. Mining second quarter 2025 Financial results conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session to ask a question during the session. You will need to press star 1, 1 on your telephone. You will then hear an automated message. Advising your hand is raised to withdraw your question. Please press star 1 1 again.

Please be advised that today's conference is being recorded, I would now like to hand the conference over to your speaker today. Jacqueline Dean president and CEO. Please go ahead.

Good morning and welcome to our 2025 second quarter conference call. A press release and presentation summarizing the financial results for the quarter are available on our website, where a replay of this call will also be available.

All figures presented today are in US Dollars. Unless otherwise noted

Before we begin, please note that today's presentation will include forward-looking statements that are subject to various risks and uncertainties. We encourage you to review the cautionary statements on slide 2, as well as the forward-looking information disclaimer in our MDA and related filings available on Cedar.

With me on the call today are 2 members of our senior executive team. Our chief operating officer Juan Andreas Murrell and our Chief Financial Officer. Titer Poulsen

On June 18th, we held our first ever Capital markets day where we outlined our strategic vision and financial Outlook to support our growth ambitions.

150,000 oz of gold.

To support our strategic Vision, we highlighted multiple near-term growth initiatives at our existing operations. In addition to the longer-term opportunity that is presented with the vicuna project.

The mineral resources contained within this project establishes vicuna as 1 of the world's largest copper gold and silver mineral resources

There is a replay of the CMD available on our website where the audience can go to view to get the full overview as well as highlights from the day.

On April 16th, we completed the sale of our 2 European Minds to believe in this transaction. Generated cash proceeds of 1.4 billion and the use of the proceeds, went towards fully repaying and canceling, the company's cerona Term Loan and towards substantially paying down the outstanding balance. On our revolving credit facility, bringing our net debt. Excluding lease liabilities down to about 135 million as at the end of Q2.

As a result, our reporting now. Focuses solely, on our 4 continuing operations, which are Candelaria coronis, chapata and eagle.

In may, we announced the initial mineral resource at Philadelphia Soul. Demonstrating 1 of the world's largest copper gold and silver resources combined together with the updated mineral resource of Jose Maria, the project contains 38 million tons of copper over 80 million ounces of gold and nearly 1.4 billion oz of silver. Making it a truly unique asset. Also during the quarter, we published our 2024 sustainability report, highlighting the company's environmental, health and safety governance and social performance.

We are proud to note that in 2024, based on our recalculated 2019 baseline emissions, which now include Cerrone, our Scope 1 and Scope 2 emissions targets for 2030 have been achieved.

Even without the inclusion of Quran, our other operations reached 91% of the emissions reduction Target. This was primarily due to Candelaria expanding its contractual agreement to purchase 100% of its electricity from renewable sources with zero carbon emissions in 2024.

Our full sustainability report can be found on our website under the sustainability page.

Importantly that we're no major injuries in the first half of the year and the total recordable injury frequency rate. Our Tris was the lowest in 10 years at 0.33. The team's strong safety performance in the first half of the Year, reflects our shared commitment to identifying and mitigating critical risks. Our continued proactive efforts are driving meaningful. Improvements to the critical controls, we are implementing

Now touching on Q2 20225 highlights copper production for the quarter totaled 80,000 tons higher than q1 primarily driven by a strong performance at Candle area and Castor along with improved copper and gold grades at chapata.

In the first half of the year, we produced 157,000, tons of copper keeping us on track to meet our annual copper production. Guidance range of 303,000 to 330,000 tons

Gold production also increased significantly, quarter over quarter from 32,000 oz to 38,100 Oz, this quarter positioning us. Well, again to achieve the full year guidance, range of 135,000 to 150,000 oz of gold.

This year we included a Consolidated copper cash cost range in our annual guidance. During the quarter, we produced copper at a Consolidated cost of 1.92 cents. A pound coming in below our revised reg guidance range of 195 to 215 a pound which was supported by strong byproduct credits, and gold prices.

Our operations deliver close to 1 billion in Revenue supported by strong gold and copper prices 395 million in adjusted ebit. Uh and 277 million in adjusted operating cash flow.

This quarter, we declared our 36th regular quarterly dividend, which has been adjusted down to just under $0.03 a share.

Per quarter making room for 4.6 million shares to be repurchased. Under our ncib program. In Q2 year to date, we have bought back 12.6, million shares representing approximately 104 million Us in share repurchases.

An annual returns combining an annualized dividend of 11 cents per share with 150 million in share BuyBacks under our ncid program.

I will now pass the call over to Juan Andres our chief operating officer to talk about our production results in more detail.

Thank you Jack and good morning everyone. The current the companies tracking to production guidance on Consolidated basis for copper gold and nickel for 2025 as mentioned earlier, copper production for the company was 80,000 tons for the quarter and 157,000. Tons, for the first half of the year.

Gold production for the quarter totaled approximately 38,000 ounces and 70,000 ounces for the first half of the year.

At Candelaria copper production for the quarter. Totally 37,000, tons. Along with 20,500 oz of gold operationally Candlelight performed. Well during the quarter and softer meal feed continued into the first part of Q2.

This drove higher throughput in the meal, which processed 7.8 million tons in the period.

In the first half of the Year Candelaria produced, 74,000 tons of copper and 41,500 oz of gold. We anticipate steady production levels for the second half of the year which keeps carrying the lariat firmly on track to meet the full year guidance for copper and gold.

At coronis Copper production, reached 29300 tons in Q2 and 58,000 tons for the first half of the year.

Or Mill was in line with planned production, despite and planned downtime caused by a blockage in the primary Crasher.

In the second half of the year, it is expected that copper head grades will improve to approximately 0.4%.

Cathode production continued to outperform expectations with 5,800 tons produced. In the quarter driven by The increased material placed on the leech paths.

In the quarter, chapata produced 11,300 tons of copper and 17,500 oz of gold performance. Improved due to higher grades, and better, copper recoveries, from increased processing of fresh oil, and reduced Reliance on stockpiled material.

Production at chapata is expected to be slightly weighted toward the second half of the year and on a quarterly basis. Similar to production levels in Q2

Our ego. No production was 2,700 tons, and copper production was 2,500 tons for the quarter.

Equipment availability and power outage during the period limited throughput, we expect these to improve in the second half of the year.

Grades and or availability are expected to normalize, which will support the annual guidance forecast for the year.

I will now turn the call over to titer to provide the summary on our financial results.

Thank you for Andreas and good morning, everybody. Um, so I'm pleased to be able to present yet another solid quarter of financial performance for the company, driven by continued Goods, operational performance, as you just heard from founders.

couple with relatively stable lme, copper price environment, in addition to higher gold prices,

All these factors have allowed the company to post another set of goods quarterly results.

Before going into the numbers, I am reminded that we continue to report the contribution from our European assets as discontinued operations. As this transaction closed on April 16th, our second quarter reporting reflects the contribution from these assets for the first 15 days of the quarter.

The revenue for the quarter from continuing operations came in at 937% of the revenue mix.

Golden Nickel contributed 11% and 3%, respectively.

As you can see on this slide, our 2 trillion lines, celerian cerona remained, the key Revenue contributor.

And represents uh, 77% of the revenue generation in the second quarter.

And when including chapata in Brazil, 94% of our revenues are generated from our South American operations.

Now looking at volume sold and realized pricing During the period. We saw 79,000. Tons of copper at a realized price of 4.40 per pound which is slightly better pricing than the average lme spot price for copper During the period.

For the second consecutive quarter, we had sales volumes exceeding, the copper production volume at casarona due to shipping schedules.

113,000. Tons of copper were provisionally priced at $449 per pound at the end of the quarter and remain open for final pricing adjustments.

Turning to slide 14 production costs totaled 507 million for the quarter consistent with the past few quarters.

At Candelaria total costs were higher compared to previous quarter due to higher sales volumes while C1 cost. Over the last 2 quarters are somewhat higher compared to the second half, uh, of last year. As the mining sequence is now back to normalized grades.

Compared to the elevated grades, that were mined during the second half of last year.

Cerrone, costs for the second quarter have normalized compared to the first quarter, when we had abnormally high sales volume from delayed shipments at the end of last year.

Total costs were in line with expectations at $205 million for the quarter, and cash costs are trending in line with recent quarters at $245 per pound.

Chapata's total cost for the second quarter amounted to $75 million. Costs have significantly decreased compared to prior periods.

Primarily due to high, high product credits from gold prices and favorable FX rates.

Given the continuing lows, you won't cause a chapada. We are reducing to full year guidance range to $1.10 to $1.30 per pound.

From the previous guidance of 130 to 1.50 per pound.

This updated guidance represents uh a 37% reduction from the midpoint of the original siwan cost guidance as released in the beginning of the year.

On a Consolidated basis. Our C1 cost for the quarter was $1.92 per pound slightly below our revised full year. Guidance range of 1 195 to 2.15 per pound.

Total capital expenditure, including both sustaining and expansionary investments, was $150 million for the quarter and $325 million for the first half of the year.

Full year guidance for total capital expenditure has been revised upward by $60 million to $795 million due to an increase in the Wakuna budget, as announced at our Capital Markets Day in June.

An increase in capital expenditure at chapata from a dish from additional tailings developments and higher Capital stripping has been offset by lower capital. Expenditure at casserole is due to certain projects being delayed into 2026.

the second quarter expenditures were primarily focused on field activities for Walter program, geotechnical, investigations, road maintenance and the procurement of certain long lead, uh equipment,

Our key financial metrics for the second quarter are presented on slide 16.

Uh we generated adjusted EPA of 395 million and achieved an adjusted ebit margin of 42%.

Our adjusted operating cash flow was 277 million, and was negatively impacted by cash, tax payments at Candelaria of 165 million of which 92 million related to a payment to fully settled. The 2024 taxes due.

Working capital decreased by 37 million, which positively impacted the cash flow and was the result of a partial release from the significant burden Capital built in the first quarter of the year.

The company achieved solid free cash flow from operations of 211 million, despite the relatively large cash tax payments made during the quarter.

Adjusted earnings amounted to 98 million for the quarter, which translates into an adjusted earnings per share of 11 cents us.

Turning now, to slide 18 with the closing of the European asset sale in April. There have been a number of cash inflows and outflows impacting, our cash flow statement and our net debt positions during the quarter.

As you can see, on the left of this chart, we enter the quarter with around 1.44% and we exited the quarter with net, debt of only 135 million.

from the sale of the European assets we received approximately 1.3 billion in net proceeds when allowing for closing adjustments as regulated in the spa and when netting out the cash shiting in the acquired subsidiaries,

Following the closing of the sale, the company paid off 1.15 billion in term loans, as well as repaid, 170 million of debt drawn on the revolving credit facility.

The adjusted operating cash flow and working capital, inflow amounted to 315 million and with total Capital Investments of 150 million, resulted in free cash flow for the quarter of 165 million.

We had totally shared a distribution of 108 million during the quarter of which 72 million related to the payment of the regular dividends declared for the fourth quarter 2024 of 9 Canadian cents per share. And for the first quarter 2025 of 2.75, Canadian cents per share.

Dividends to non-controlling interest at Candelaria and casarona during the quarter amounted to 41 million. While other items amounted to a cash outflow of 233 million, leaving the company with a very strong balance sheet with net debt position at the end of the quarter of 110 35 million

The company continues to hold significantly, liquidity Headroom from its 1.75 billion revolving credit facility with just over 1.5 billion remaining on drone as of June 30th that wraps up the summary for the second quarter of financial performance and I'll now turn the call back to Jack. Thank you teder.

I'll take a few moments to talk about our joint venture partnership with BHP, which holds the vicuna project, a project, which combines the Jose Maria. And filo Del soil deposits.

Combined together with the vicuna project ranks in the top 10 mineral resources for copper gold. And for silver, When comparing against the world's largest operating Minds,

In May this year, we released the maiden mineral resource estimate for filo Del Soul, and updated the mineral resource estimate at Jose Maria.

In addition to the size demonstrated by these deposits is an impressive amount of volume contained within the high-grade core.

The Philadelphia Soul high grade core contains over 10 million, tons of copper and 19 million oz of gold and over 390 million oz of silver.

While Jose Maria, has a high grade core of 1 million, tons of copper 2.4 million oz of gold and 11, 11 million ounces of silver.

Looking on this Slide the image on the right. Shows the additional drill holes from the fillo dough from filo Del soul completed after the cutoff of the mineral resource estimate.

Over 20 additional holes targeting resource expansion and infill. Drilling primarily along the eastern boundary of the deposit as shown in the figure on the right.

Um, our our showing good progress and, and we'll make its way into an updated mineral resource estimate as part of our integrated. Technical studies.

A total of 60,000 meters of drilling is budgeted for the calendar year, 2025 of which already over 50% has been drilled.

In addition to the solid progress made on Drilling and updated eia for Jose Maria with submitted in the second quarter as per the plan.

Ongoing work to support the parallel studies for the multi-phase development plan. Our progressing on schedule, we anticipate the integrated technical report, which will incorporate All Phases of the full-scale project to be complete by q1 in calendar year, 2026.

Preparations for the fiscal stability application. Otherwise known as rigi are also progressing in parallel to the ongoing project study work.

Overall the vicuna project team continues to make solid progress and remains on track with its 2025 work plan.

As presented at the CMD, we have identified several low Capital intensity in mid-term organic growth opportunities.

These are targeting 30 to 40,000 tons of copper and 60 to 70,000 oz of gold in additional annual production for the company.

At chapata, the Salva project presents. A near-term opportunity to increase annual production in the range of 15 to 20,000 tons of copper, and 50 to 60,000 oz of gold, representing 50, and 100% growth respectively.

This study includes adding grinding capacity to process higher grade or from sauba, through the Trap Mill.

Permitting and Technical work. Our ongoing with a prefe study targeted for completion by the end of 2025.

At Candelaria, we are implementing a 2-Step process to ultimately improve performance with the goal of eventually, increasing, throughput From The Underground.

Starting with insourcing, the underground mining contractor, which is expected to improve both mechanical availability and ultimately development rates in the underground.

We will be able to insource as a first step. And the Second Step will be to lead a campaign to improve mining rates in the range of 50. To 60% bringing underground throughput capacity from where it is. Today at around 14,000 tons per day up to about 22,000 tons per day.

Manually for Candelaria and recruitment training and Licensing. For internalization of the crews is already underway.

These Brownfield opportunities complement, the longer-term vision of developing the vicuna project.

We will continue to provide updates as we continue to advance and de-risk these near and longer-term initiatives.

In conclusion.

Solid operational performance from our high-quality operations and higher commodity prices drove. Strong financial results for the company in Q2.

We remain firmly on track to meet annual guidance on All Metals for the year.

We revised cash cost guidance, such a PA, which improved the Consolidated cash cost guidance for the company, which is now at $1.95, a pound to $2.15 a pound.

Net debt stands at the end of the quarter at 135 million, which would significantly reduce in the quarter, using proceeds from the sale of our European assets.

The company is very well positioned for the future. The vicuna district at near-term. Growth opportunities that are existing operations provides a clear path to becoming a top. 10 copper producer as outlined in our Capital markets today in June,

The team remains focused on meeting. Operational targets. Enhancing margins through discipline cost management while maintaining the highest health and safety standards to protect our Workforce.

Thank you, and I would now like to open the call for questions.

Thank you as a reminder, to ask a question. Please press star 1, 1 on your telephone, and wait, for your name to be announced.

To withdraw your question. Please press star 1 1. Again please, stand by while we can pile the Q&A roster,

And our first question comes from Ralph profetii of stifel financial, your line is open.

Uh, thank you, operator. Uh, good morning, Jack and team, uh, 1 Andres, uh, there was uh, some casaron Crusher downtime, uh, in in the quarter and just wondering, it seems as though this was unanticipated. Uh, just wondering what the root cause was, how much downtime and and are these issues behind you.

Morning Ralph. Uh, yes. So it was basically um, some

Players material that created a blockage in the primary Crusher. And it took us probably around 16 to 20 hours to, uh, to solve the problem. So nothing structural, it was probably some, uh, material coming from a faulty area in 1 of the benches that got called in the chamber.

Of the primary crashes.

Thank you. Um 1 Andreas a second follow-up. Uh you talked about some softer or mil feed at Candelaria, is this a function of phase 11 or phase 12 and and as you also speak about some higher anticipated go uh, copper grades coming from phase 12. Is that also anticipated with higher strip ratios. Or are you, are you maintaining that kind of Life of mine? 2.1 ratio that I I see from the, uh, technical report.

Yeah, that's a good point. Well uh it was uh something uh um Temporaries nothing structural in the uh Street ratio.

On face, uh, 12. So we uh,

There were some delays in the all coming from the underground. So we went a little further, uh, on phase 12 and took some, uh, uh, extra tons from the lower benches, but, uh, we will get back on track with the, uh, um, spatial compliance by the end of the year and regarding the software or question. Um, due to this, uh, small changes in the short term, we took more or from the stockpile. We had a a like, let's call it meat grade stockpile, not a low grade stockpile that we use, that material to feed the meal and that material was softer than anticipated. So that is what created these, uh, better results in the throughput.

Gotcha very helpful answers. Thank you.

Thank you.

And our next question.

Of Scotia Bank, your line is open.

Are you being conservative with the guidance for the second half?

Good morning Oris, thank you. Um, know this is a a very, um,

Um, steady year for Candelaria. So, we're not second half, uh, waited as last year. So, grades are going to be very stable along the year. So we don't anticipate any any, uh, differences from our performance in the first half of the year. So maintenance is as planned for the second half and, uh, grades will be, uh, back on track for the full year in the second half through what is expected to be at the um in line with our our projections. So no uh no big changes in the second half of the year.

Oh, sorry. Sorry to clarify. Are you saying grades of candle area are similar to the first half? I thought I heard earlier they're going to be up.

No, in Candelaria slightly lower because they were higher in the first half.

Okay.

Thank you.

Thank you.

And our next question comes from Anita Sony of CIBC your line is open.

Uh, good morning, Jack Peter, and 1 address. Um, a couple of questions, a little follow up on, uh, on Candelaria. So I thought I had read that. You had some throughputs were stronger because you also had some rescheduled maintenance. Can you, can you let us know when that maintenance is now going to be taking place?

It it's uh, it's a normal, uh, schedule, uh, chat down. And sometimes since we had software, or the liners of the meal, were at a lower pace, so we decided to postpone that shot down from June to July.

Okay, so fairly short. Okay. Um. And then, secondly, in terms of, um, uh, the capex spend, uh, this year. Could you just give us a little bit of color on the back half of the year for each of the assets? Uh, I think both on sustaining and growth Capital, um, you're a little under the the, um, half year run rate. So, I'm just trying to understand how uh, those pick up over the rest of the year.

Yeah. Hi, good morning Anita. Yeah, I mean we we are a little bit behind uh on casserole in particular on on certain projects which indeed was also the case uh last year. So the scope of work is

Running a little bit behind plans. So that small facing is not really uh any any savings uh sort of identified at this point.

Uh and therefore, you know, there there could be a slight chance that we are slightly under spending on concern for the full year.

um, but we have also taken down guidance on casual owners since compared to the original guidance and then in Japan in particular, there was some extra

work needed to be done on on the tailing stamp.

Um which is now more or less behind us. So we've increased guidance on japa and we're also doing uh more stripping or more fresh or and less from the stockpile. Uh, which also has increased

Capital and cost a little bit. So so those are the key moving Parts. But

you know 795 million dollars is the full year guidance, including the the growth capex and uh

We uh, we uh, reaffirmed that guidance today.

Okay, so am I just on the um the Caster on? As you said that, um, some of those projects may be, I guess pushed into to next year is that um so are are you saying that that you're going to hit the 7995 for the year? Or is there a chance that um, you're going to be understanding this year?

Well, let's see how we do in the in the in the second half. I mean, we are now assuming that what's planned to be done in second, half will be done, which is why we reaffirming the guidance. Uh,

but all I'm saying is that the trend has been that

the workers progress, a little slower than than planned. So so we will have to wait and see.

All right, and when you said that it's you, you've taken your um, guidance down, you were referring to the production guidance, right? For castrounis.

Or the, the capital know.

Topics.

The capex. So then my question is um if if it works going a little slower than planned, is there any production impact?

You should be expecting.

No, there's not.

Okay.

So, is that just a function of the, you know, the relative weighting of shpata relative to the other assets or is there? Um, just you're just expecting to be maybe at the lower end of the overall guide or is there something else that I should be thinking about?

Yeah, we we we talked about that. I mean obviously, the the big, uh, reduction in guidance was released at the kind of Market day, because originally chapata was guided. I think it was 180 to 2 dollars per pound and we took that down to 130 to 150. And at that point, we did also uh, guide down the consolidated

Group guidance, uh, between $0.10 to $0.15 because of that.

But this subsequent reduction in Chapala guidance is has such a small impact on the weighted Outreach for the group that we decided to leave it intact. But mathematically, I think it would represent 2 or 3 sets further reduction in in the Consolidated guidance.

Okay, all right. Thank you. That's it. For my questions.

Thank you.

And our next question comes from Matthew Murphy of BMO Capital markets. Your line is open.

Hi. Um, another 1 on candle area. Uh, just the, uh, recruiting for insourcing the underground mining. How many people do you have to hire? And, uh, how would you describe current, uh, levels of mining labor, availability in Chile,

Morning Matt, uh, Juan Andreas here. Um, the total insourcing process which will take us uh, at least 2 years is a full-wave process. And in total, there will be, uh, approximately 250 people or positions involved. But since we're in sourcing, uh, we have already started conversations with the contractor and we will, of course give priority to the employees that work for the contractor. So we don't see any uh problems in uh in finding the right skills to to um complete these insourcing process.

Okay, got it.

Um okay separate question. I had on uh uh the regi uh deadline. Um, I think there was a uh San Juan copper conference this week and just some headlines about companies Racing for the uh,

The deadline—do you have any view on the likelihood that the timeline gets extended? When might we hear about that? And, would there be any benefit to the Vicuna JV from a slightly looser Reggie deadline timeline?

I can take that. Hi Matt. Um, thanks for the question. So we don't have kind of any any commentary to provide or any understanding that there's going to be a extended deadline for the read. The application recall that the deadline is July of 2026 and so for vicuna Corp, we're tracking on to that schedule and um can't speak for any other companies that are looking to apply with the REI application. But uh we are uh trending on on schedule.

Okay. Thanks. Sh

Thank you.

And our next question comes from Lawson Wuer of Bank of America Securities. Your line is open.

Oh, great, thank you very much, operator. Uh, hello, Josh and team, nice quarterly result and thanks for today's update. Um, just just in light of the, uh,

The really, really strong gold price. Um, your updated guidance from chipata reflects that, um, as part of the low capex expansion that, uh, chapata is there an opportunity to perhaps Focus that asset on increased gold production either through an updated mine plan or perhaps an optimized uh,

Flow sheet, and you know, partly where I'm coming from is, as you know, when you guys bought this, you bought this from an operator that actually operated that asset as a gold mine. So, it's a huge gold endowment.

Morning Lawson. Uh, yeah, you're absolutely right. We're of course, looking at opportunities to increase recoveries in both copper and gold. But specially given the current gold prices, there's a greater opportunity to add more value from chapata if we can achieve a higher goal recovery. So we're looking at uh a few options that uh later in. In the year, we could share with the market.

Interesting. And then I, I guess then I'd ask the same question about candle area in, you know, in light of the same considerations, and and further, um, with consideration to the fact that the, uh, Franklin, Nevada stream, the percent that they take should drop off next year.

Yes, and and and Candelaria, in general, we have a very good performance at the meal. If you look at our copper, recoveries, they are in the order of 92%. So, any changes to the flow sheet? Um, we don't see a lot of opportunities there, but of course, we'll always be open to any new technology or any uh um, marginal Improvement, to our flow sheet to increase, recoveries in all the metals.

Okay, fantastic. Thank you very much.

Thank you.

And our next question comes from Matt Green of Goldman Sachs. Your line is open.

Hi. Good morning, all I guess just following on from the with the gold theme um at on. So, so of a uh, the the PFS expected later this year, just thinking about the go forward what what are the limitations? Any sort of key technical or regulatory hurdles? You you have highlighted permitting but just um,

Just trying to I guess get a sense of how conservative the development timeline is for Phase 1. And is there going to to possibly accelerate that?

The schedule for Phase 1, uh,

I think we're, we're

We're very confident that we can achieve that. Uh, of course we're still uh, looking at um, the the permitting uh process. Uh, I think we've shared during the capital markets day that we have received the unified license which will give us some uh advantages but we need to confirm that approach. So uh I think in the second half we will have more clarity uh together with the completion of the previous ability study.

Yeah, and uh, maybe just to add to that as well. I mean, we're, we're already looking at collecting Baseline data that will support the environmental licensing process. And so, you know, we're working to get the, uh, the pathway to permitting as as soon as possible. Technical studies are are underway. And so, you know, we'll be, we'll be looking to follow the uh the the quickest pathway follow uh possible following this environmental licensing process.

That's great. Thanks and and look just 1 more for me. Um I guess just on the buyback. Um any specific Financial or or broader thresholds um you would need to see before you would consider expanding uh the scope of that buyback program.

From about 150 million a year.

No, I I I think we uh, we simply just remain opportunistic around when we do the the buy box. We've done just over a 100 million uh, year to date. So 2/3.

and the target is 150, and what we've said is if if for whatever reason we do not reach the 150 million in BuyBacks, then the whatever Gap there exists will be paid out as a special dividend,

In the fourth quarter dividend declaration. So I is it's it's paid out in in 2026.

But we we monitor this obviously uh you know continuously as to when we think the opportunity window for of of opportunity is to buy back.

That's great. Very clear. Thanks and congrats on the quarter.

Thank you.

From Daniel, major of UBS, your line is open.

Hi, Jack and team, thanks, uh, for the call. Um, uh, first just a small operational question the um, cathodes production at uh, Caron's um, continues to remain.

Uh sort of around the 6 6 and a half million uh thousand tons of quarter. Um is that expected to sustain through the remainder of the year. And I think your guidance for 26 is

Uh, 14 to 18. So, coming off a bit. Um, how's that profile in the cathodes at customers?

Morning, Daniel. Uh, yes. In the during the capital markets day, we, we outline some opportunities to increase the utilization of our cathode plan in cased ones. And we have been working on on those, uh, um, options. So, as you said the, uh, the for this year, we're expecting a little higher production than what we, uh, plan initially in the year. And that should also carry over in 2026. So we're looking at, um,

7, which is the new phase in, in kassadin. And then further on, we're looking at bringing, potentially some oxides from Angelica and testing some leaching, uh, Technologies for the, the future. So, with all that, uh, set of, uh, Alternatives, we're looking at maximizing the utilization of our sxcw facility.

Okay, thanks. So, if we look at the run rate for this year, if you were to extrapolate that, it would be fair to say there is a potential upside of 5,000 to 10,000 tons to your guidance. You previously gave potential for the cathodes.

No, I think what we're what we're doing is maintaining the the guidance that we had, I mean, the the significant increase in cathode production will probably come later. Once we've actually been able to improve the capacity of the of the cathode plant.

Thanks. Um, and then um, second

Financial question, 2 parts to it. Um, your cash tax looks like it's still trending below. Um, p&l tax. Can you give us any guidance on? Where do you inspect cash tax to be for the year and then secondly, you reverse some of the working capital in the uh second quarter. How she would be thinking about that in the second half.

Yeah, I mean we we did actually have quite a high cash, tax payment in the quarter because we as I said, we were doing a final settlement of the 2024 Candelaria tax due so that was 92 million.

Uh, and then as we go through this year, we are now starting to install.

uh, cash taxes as per the 2024, uh,

Tax assessments of the tax installments. For the next 2 quarters are going to be

Uh, slightly higher than they were in the involvement for Q1 this year because the Q1 tax installment this year still reflected the 2023.

Uh, tax assessment.

but essentially, our cash taxes, as we try to outline in our Capital markets day, day is

Is relatively low compared to the effective tax rate on the p&l. Because of these tax losses, we have at the cacerola

So what we have been guiding is sort of between 15 to 20%.

Effective cash tax as a as a percentage of the ebar generation. So,

Uh, we we we should expect that Trend to continue, you know, for a long time given the significant tax losses. We have a strong

Okay, it's a 15 to 20% cash tax. I'm sorry that that's a v bit. A little bit d.

I'm assuming.

Ibida. Okay, thanks. Um, and then

Okay. And then, um, final, uh, final question: BHP has been in the joint venture for a few months now. Um, can you share any kind of changes or what...?

What you think um sort of the the direction of um development you know what bhp's has brought in terms of um yeah to to the process. Um since yeah, since the formation of the JV

Yeah, sure. I mean obviously the BHP brings a lot of bench strength with them and a lot of experience with large-scale projects and operations. And so uh, the partnership that we formed transaction closed in in January and and really the biggest thing was bringing together Foe and and Jose Maria and looking at this as a joint development, uh, project and, and a, and a large scale phase development project. And so the vicuna Corp team. Uh, the project team is, is working away on on Parallel studies. Um, we've got independent review, um, uh, teams established to look at the packages of work, that will be coming out and, uh, together both the HP and lending mining are providing support as

As a peer reviewers, um, and I think overall the the partnership strong and we're we're very aligned, I mean this was a culmination of several years of of getting a line before doing the deal. And so I think it was really um, you know, things things are moving as per plan and and uh the partnership is uh, is very strong today.

Great. Thank you. And um it's not a good quarter.

Thank you.

And our next question comes from yoanis masulis of Morgan Stanley. Your line is open.

The presentation, and also from my side, well done on the results. Um, just a couple of questions left from my side, um, the first on chapada where we saw very good performance especially on unit costs

Which I would think it's a combination of your own initiatives that you launched a few years ago, but clearly also effects and gold tailwinds as we move forward into the second half and next year. Do you see potential for more progress on an underlying basis from self-help? Or are you largely where you want to be? And here, I'm just looking at the current operations, ignoring the South opportunity and also here for the first Q1.

Yes. Uh, hi Aries. Um,

Yeah, definitely. We have had a very good performance in in chapata. And as you said, is the result of a combination of the full potential, initially that we launched in 2023, but also with the help of the, uh, increase the metal prices. Um, so what we think today is the result of that work and we expect to continue seeing that level of performance in 2026. Probably the main change would be that we're working on reducing our Reliance on the low-grade stock pile. So the effect of that could be, uh, a slight increase in the head grade and, uh, Improvement in the recoveries. So we're still working on on, uh, the next year, uh, budget and mind plan. But those are some changes that we

You could expect uh, going forward.

That's very interesting. Thank you for that. And second question uh we've seen some of your peers uh looking to capitalize on the elevated. Um gold prices via streaming contracts and hedges. Um is this something you are considering actively to further bolster your balance sheet, ahead of the next uh uh capex cycle uh, and within that. Uh so as it was mentioned earlier, you've got the Frank on the other step down on the current uh streaming. Just just wondering whether you have the appetite to look at financing right here right now, or is it something that you will consider once?

The technical report is out next year and you have more visibility on the capital commitments.

Yeah, I yeah. That's

Uh, yeah. I mean

The front of the stream is obviously there and and it was entered into to fund, you know, to enable the acquisition of CER in the first place. So this all I had to be done at that point in time and uh

You know, but the other way, the goal prices, as you say. Now, the stream is becoming quite costly, but it is what it is. And, uh,

The 68% streams of Franco gets at the moment is projected to step down to 40%.

You know, and this current production rate we anticipate that will happen towards the end of of next year. End of 2026.

so 2027, we should

Get a higher gold Revenue coming from that. Then, of course, you know, there are options around how how, we, how we play that. But at the moment, the construction relationship is start to step down to 40%.

Uh, at that point in time.

So, you know, we obviously know with the funding requirements that we have at uh with the Recon build.

That we do need to, um,

Increase our uh liquidity Alliance to font that. And at the moment the base case for us is simply to increase our enrollment rate to facility. We see that this the most cost of efficient way of getting access to a higher funding capacity.

But we are not ruling out anything else; it will surely be done on what we will use the most cost-efficient.

way of doing this and, uh,

The streaming arrangements we are seeing at the moment do not appear to be cost-competitive with our RCF.

Uh, but you know, that's always off for negotiation and and and if if there's an attractive offer we we will look at it.

We don't rule it out by principle, but it does mean.

Very clear. Thank you very much.

Thank you. This concludes our question and answer session and today's conference call, thank you for participating and you may now disconnect