Aura Minerals Q3 2023 Earnings Call Transcript

Quartr
Provided by Quartr
November 7, 2023

There are 7 speakers on the call.

Operator

Good morning, ladies and gentlemen. Welcome to Aura's Third Quarter 2023 Earnings Call. This conference is being recorded and the replay will be available at the company's website atauraminerals.com. The presentation will also be available for download. This call is also available in Portuguese.

Operator

To 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. We would like to inform that all attendees will only be listening to the conference during the presentation, and then we will start the question and answer session when further instructions will be provided. 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.

Operator

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 the respective forward looking statements. Present at this conference, we have Rodrigo Barbosa, President and CEO and Klebert Cardoso, the CFO. Now I'll turn the conference over to Rodrigo Barbosa. You may begin your conference.

Speaker 1

Good morning, all, and thank you for being here with us. We're going to present the 3rd quarter results And some review of the guidance that we just disclosed yesterday. 3rd quarter was very important for us As a turning point, as we were going to see, going to share with all of you, we have increased the production And we will continue to increase production then along the next quarters. So we changed the curve that we were decreasing a little bit the production in the last 12 months. Now we recover and started to increase back and track again.

Speaker 1

And also this quarter has shown a very significant appreciation on the gold price, not only because of the geopolitical situation, But also the market is starting to realize the debasement of the currency and the Fiat currency and migrating to hard assets Such as gold and other commodities, I would also invite you all to take a look how the central banks have positioned themselves and Going on record breaking, purchasing new gold reserves in order to preserve the value and get a little bit other alternatives instead of just to be Supporting the dollar. China, for example, is selling the U. S. Treasuries and buying gold. And this is going For the last it's going it's happening for the last 12 months and it should continue to happen along the next years.

Speaker 1

But with all of this information, we'll invite all of you to join us in Aura days that will be in early December. Now going back to the quarter. The quarter has shown a significant increase in gold production. We achieved Close to 65 gold equivalent ounces, which is 34% higher than Q2, and we had an increase In order of operations, we increased in EPP by 62%. We increased Aranzazu by 11% and we increased Southern Redress 7%.

Speaker 1

And very importantly, we started to sell gold from Alma's project that we implemented Along the 1st semester, we ramped it up on the record level, and now we start to produce in September October. The operations the increase in operations we saw in the production, then we also increased the EBITDA that reached a value of $30,000,000 Compared to 26.5 on the last quarter, that EBITDA was also negatively affected by a one High cash cost that we saw in Apoena that we used and I will explain a little bit more in the next slides that we used A stockpile with a high low grade and high cash cost during the quarter that has gone already through the plant. And we generated cash, but the cost was higher than the other quarters. And we finished the quarter on Q3 already with a low cash cost on the inventory. Now we are assessing, although Slightly delayed, we are now assessing Ernesto Pituit with a higher grade.

Speaker 1

And the OE sustaining cash cost because of this The high cash cost that came from El Cohera Brazil together with some one time investment in Honduras, We reached a $14 all in sustaining cash cost of $14.37 per gold equivalent ounces. And as we're going to see For the year, we projected to have an average between 12.60 to 13.30 On all in sustaining cash flow, that means that on the 3rd on the 4th quarter, we have prepared the basis to have a significant lower cash cost Important to highlight during the quarter are the two things that I mentioned. 1 is Aurumas, we ramped up Aurumas in record levels in only in less than 5 months, reaching levels that has never been reached at all. Very occasionally, it was reached in the past. That's a combination of our strategy of keeping it simple and a lot of management attention.

Speaker 1

And also the BOTBOREMA project that we published a new feasibility study with a highly accretive Our internal rate of return going to close to 52% internal rate of return leveraged at a gold price of 1900 Not including the expansion that we are already planning in terms of resource of reserves once we move the road and we'll go more in details. We published a new feasibility study. We secured also $100,000,000 on leverage to build the project. We bought additional 20% participation that used to belong to Dundee. And now we are finalizing we just finalized the hedging program that we also cashing $14,500,000 to help us on the equity.

Speaker 1

And we are now finalizing the royalty agreements in order to finish the funding package in the project And also we are while we are moving forward with the construction. Very remarkable achievements that we did during this quarter and very proud about that the Team has been working hard to achieve those levels. We are now at the 0 lost time injury in the entire year in 'twenty three. Actually, in our operation, it's been 12 months that we have our 0 lost time injury in operation. That is a Significant achievement that all the team has been working for several years and now, of course, the challenge is to keep this position, But we are working hard to make sure that everybody that works with us has a very safe environment and can return to their homes the same way they come.

Speaker 1

That's the main priority we have in all across our operations. In terms of stability of the structures, we continue to monitor. We have third parties The new reports and every quarter they come and all the structures, geotechnical structures, either Chinese dam, the leach pads, the underground structures, they're all according to satisfactory levels and being constantly monitored by third parties and So as I mentioned, as a turning point, as we see on the Chart on the left side of the bars of the production of gold per quarter and the line is the last 12 months production accumulated. So we saw that we were slightly decreasing the production on a quarter basis Those are some challenges that we had also in Honduras and now with the recovery of production and operation plus the commercial production problems, we see This curve starting to go up back again, and we should continue to see the curve going up as we are moving forward in the next quarters, Including now Alma's production. On the right side as a production, we see Now the charts that we increased production in Aranzazu, we increased production.

Speaker 1

In EPP, we increased production. In San Andreas, and now we see this The light blue one, which I'm very proud of Alma's project producing. If we in Alunza, so we could Increased productivity and increased production in EPP, we also increased significantly, However, below our expectations due to unexpected heavy rain during this quarter. What happens is at Nestle pit, we are going to the bottom of the pit by the end of the high grade. At the bottom of the pit, once you have Significant rains, a lot of our water gets accumulated and that jeopardize a lot the mine development and the mine production.

Speaker 1

So that Delayed the interest that we had to that we were planning for the high grade in EPP that is now going on the 3rd quarter, but On the Q4, but also going to be pushed to early 2024. So that's main reason that we also Within our guidance is that of those ounces that we were planning this year, some of those ounces now is pushed to 2024. So once we did not have access to the high grades as we were expecting in the NASDAQ, we used the stockpile with above grade To fulfill the plan, that decreased the production because we are replacing high grade with low grade, but not only that, the low grade had a high cash So that also went through the results and increased the cost specifically for NPP. And as we can see, we'll see The cost that we had in the beginning of the quarter of the stockpile was close to $1,000 and now we So in terms of all in sustaining cash costs That is also negatively impacted by this high cash cost that came from inventory of the stockpile break In EPP, we saw a slight increase compared to Q2, but I would highlight here on the right side, in EPP, as you can see, we started The quarter with the stockpile with inventory of ore that is very in front of the plant at $1,000 an ounce.

Speaker 1

We took a lot of those low grade and produced the gold and now we finished the quarter at 569 dollars per ounce on the stockpile and that will also be mixed with the high grade that's coming from Arness. So we expect A significant decrease in all in sustaining cash cost for the Q4 as we are projecting now to have all in sustaining cash cost The whole year of 2023 between close to $12.60 to $13.30 per ounce. So with those unexpected rain And delayed in the Ernesto pit mostly and also some delay in almonds that we will further explain. We are reviewing the guidance That we were projecting at 273 between 273 both equivalent ounces of 245, now to be 231 And 253, the high level is still within the old range, but we now thought would be Important to be more conservative and make sure we achieve this guidance until the end of the year. And the lower production also reflects On the cash cost for our per ounce in the all in sustaining cash cost.

Speaker 1

The all in sustaining cash cost now We were projected to be $11.62 to $12.61 now $12.25 $13.24 On the right side, We have the guidance for CapEx. I would highlight that the previous guidance, we were not including The Borborema project, as we approved the Borborema, the construction of Borborema project during Q3, we are now including a Borborema project on this guidance. That is what explained most of the change on the new project and expansion. And then we remain with the same guidance for exploration and also sustaining. Now going back on the production guidance, as I mentioned, There was a delay on entering the high grade in Ernesto and also some Slightly less production projected for Almas, mainly due to what is happening now in Almas.

Speaker 1

We ramped up very, very efficiently. The plant is producing above its nominal capacity. Now we are going more on the hard, I would say, fresh rock, Which is the hard rock. So there's a transition of very soft rocks into the hard rock. Normally, this is not a major issue, But you need to adapt your mine methodology and a mine implementation procedures.

Speaker 1

And that as a new mine, it's a new contractor. We are now adjusting all the procedures we need to have in mining the hard rock. This is a managerial decision, so that is now being implemented to guarantee that we will be able to reach the production During the next year, 2024 and perhaps even more than we were projecting as we did implementation To increase capacity in the whole system. So all those decisions are being made and fixed to recover productivity now with the fresh and hard rock So in our project, which we are very proud that we have built this Project on time, on budget during the pandemic and during these high inflationary pressures. We not only did that, but we also ramped up this project In less than 5 months, normally, when you see the chart on the right bottom side, you see on the dotted line is The theoretical course of ramp up where most of the companies reached above 80% in 6, 7 months and close to 100 percent in 12 to 18 months of ramp up.

Speaker 1

The other lines are Important companies such as Neomont and other ones that have ramped up, Anglo ramped up in the last 5 years And Almas, we could ramp up to 100% of capacity within 5 months setting new benchmarks. This is Quite an achievement on the team and is a result of a very hard work, significant integration between the team That is running the plant together with the team that was building the plant plus a result of our strategy to keep Simple projects, easy to build, easy to operate. And Borborema, the same team that built Almas, now moved To Borborema and Borborema project, although it's a higher scale compared to ours, it's also Simple to build and simple to operate. Highlighting Borborema, as I mentioned, there was a very busy quarter in order to structure the whole financial Our strategy to fund Colborema, published a new feasibility study, start construction. We hired already EPCM.

Speaker 1

We already had ordered since the Q2 The meal that will be delivered by the end of 2024, so we are moving very much in line our expectation in order to have Board Morena coming online in early 2025. The results of the feasibility, it's Expressive, we have the payback in 3.2 years. Internal rate of return at 52% leveraged at the gold price 1900. And that I would also and I did this and I will invite again all the analysts and also invite the investors to take a look at this project that We are starting with 814,000 ounces of reserves, but The potential is to reach up to 2,000,000 ounces once we move the road. We could not include and we cannot include Ounces that is not free for mining, free to be mined.

Speaker 1

So we all those visibility focus only in 814,000 Our ounces, while the project potentially can be expanded without neutrinos, without significant new studies, Up 2,000,000 ounces of our production. So we expect Corborem to be significantly higher return compared to what we published Of course, that will take a while. Moving the road has been that we already started the procedures So I'll now turn the floor to Klebert that will go and highlight more of the results, and then I will come back to Q and A.

Speaker 2

Good morning, everyone. On this page, as we always do, we bring a summary of the main financial KPIs I reported for the company in the current quarter, the last few quarters and accumulated at the end of To mention mainly EPP operations, what we see is improvements in almost all financial KPIs on this quarter. Revenues exceeding $100,000,000 again, achieving $111,000,000 at the end of this quarter. And our accumulated 12 month revenues, Close to $400,000,000 again. When you go to adjusted EBITDA, we see an increase of $10,000,000 in EBITDA this Quarter coming from $27,000,000 to $30,000,000 at the end of Q3 with an expectation of additional increase in the 4th Quarter as we expect to see increase in production with the reduction in the cash costs.

Speaker 2

And at least for now, the average crude prices in Q4 is higher than When we look at the 12 months accumulated number, also another improvement. We come from 100 $16,000,000 accommodated on the past quarter, dollars 229,000,000 at the current quarter. Switching to net income. The net income, we see a reduction this quarter from $11,000,000 to $80,000,000 This is mainly because on the previous quarter, we recognized some non cash Gains, which was associated with the appreciation of the Brazilian real during that quarter, which Did not repeat on the Q3. And when we see a few months, we see another improvement, Net income reaching $50,000,000 in the last 12 months.

Speaker 2

And then finally, in terms of cash and net debt, we We see also improvement in net debt and in the quarter with $512,000,000 and an improvement in our cash and cash equivalents So close to $108,000,000 at the end of this quarter, mainly because the debt we raised to Here we bring a It should be taking the main items between our adjusted EBITDA and net income for the quarter. As we saw previously, adjusted EBITDA of $30,000,000,000 Of which Aranzazole once again the strongest reported and strongest results. EBITDA of close to $19,000,000 in Aranzazole. Sundres is still we know it's still below its potential, but continue showing signs of recovery, reporting EBITDA of $7,000,000 Alma's, we highlight it was a strong quarter considering only 2 months in production. I know it's more Zalman generates almost $7,000,000 in EBITDA and EPP among the business units in production.

Speaker 2

We've Always behind the quarter $2,000,000 as because of mainly the client account impacts For the reason we're going to explain, the high cost inventories, which now we start Q4 with lower inventories. So we also Expect to see PPPs of debt going up in this next quarter. And amortization, depletion of $13,000,000 We expected finance expenses of $5,000,000 which includes this quarter some effects, Non cash loss because then unlike the previous quarter, in the third quarter, there was a depreciation of the Brazilian real, Which caused some FX losses. So finance expense is negative at €5,000,000 On this quarter, we recognized a $5,000,000 other gain, which was related to the acquisition of the 20% Stake in Robere Marte projects, which we completed during the quarter. This $5,000,000 is Accounting gain, it's calculated with the fair value of the estimated value of the 20% acquisition of the company's stake minus the estimated fair value of the royalties That we gave an extra exchange for this acquisition and we can see it's accretive for the company.

Speaker 2

And then income tax expenses of $80,000,000 mainly Taxes due to the results in Arunza Sur in some deferred tax expenses Of $4,000,000 it's a non cash loss we recognized in this quarter, again, due to the depreciation of the Brazilian Real, Bringing the net income to $8,000,000 at the end of the quarter. And then finally on this page, we bring the detailed analysis I'm wondering if you look for the change in cash and cash positions of the company throughout the quarter. In the first side, left side of the page in red, we see We started the quarter with $110,000,000 Then on this left side of the page, what we call adjusted free cash flow to 4, Which was the cash generated by now the 4 mines in production without some closing investments in the growth of our business. So we see that portion of the business generated $14,000,000 in the quarter. And in the middle of the chart, What we call investment for growth, most of the $11,000,000 were also used in our exploration program.

Speaker 2

We invested $7,000,000 in exploration. Expansion CapEx came down this quarter due to the completion of Almost in commercial production declaration, only $4,000,000 We do expect to see an increase in this number in the quarters to come Now with the Permianema Construction, into the right side, we see the financial items, mainly highlighting the net proceeds from debt, Which was $70,000,000 mainly $100,000,000 term loan we raised To develop the Permoyema project and also minus the payments of the first installment of the inventories by our hours, Bringing our cash position to close to $180,000,000 at the end of the quarter. And now with this, we end our presentation and are open to questions. Thank you.

Operator

We are going to start the question and answer section for investors and analysts. If you wish to ask a question, Please press the reaction button and then click on raise hand. If your question has already been answered, you can leave the queue by clicking on put your hand down. Our first question is from Caio Greiner from BTG Pactual. Caio, your microphone is open.

Speaker 3

Yes. Good morning, guys. Thank you. So two questions on my side. The first one on the Alma startup.

Speaker 3

Rodrigo, I'm sorry You already mentioned this, but I have some connection issues in the beginning. But I was particularly worried about the Alma's Guidance downgrade. So I just wanted to understand a little bit more how this impacts your ramp up plan going into especially into 2024 and into 2025, I mean, should we expect this to be a long lasting event? I mean, are we still expected to see This materially impacting production and shipments into the first half of twenty twenty four, even into the second half of twenty twenty four? Or do you expect this To be settled already in the short term.

Speaker 3

And the second question on the acquisition you guys Announced earlier today on Alta Mira. So I just wanted to understand a little bit more on the rationale of this move. I mean, this you guys are acquiring stake in another company as an investment. This is not really out as usual standard. So just wanted to hear a little bit more what caught your eye In this company, why not go for a complete acquisition?

Speaker 3

Do you guys have any instruments that you can raise your stake To 100%, I mean, was this previously negotiated? So I just wanted to understand a little bit more. Thank you.

Speaker 1

Thank you very much, Caio. Thank you for being here with us. So first question on almonds. We expect to be a short term Transitionary challenge that we have, I mentioned that what happens is we did a ramp up very fast. The plant is working very well above actually our nominal capacity.

Speaker 1

What happened is Once we were we started mining and normally the beginning of the mine is soft rocks that it's easier to mine and to process. Once we reach the transition from soft rock to hard rock, which we operate in EPP and we operate in the other mines, Then that this stabilized the productivity of our contractor together with our mine team. So while this is Pure managerial decisions that is stabilized. This contractor, they are learning how to run mines. They are beginning to operate in mines as well.

Speaker 1

So we are Teaching them a lot how to improve efficiency and a lot of things is going there in order to regain efficiency at their mine. So we do not expect this to be lasting So 2024 and we do not expect this to impact the results of the projection that we had in 'twenty four, 'twenty five compared to what we had in the base case. Actually, As we published recently, we did small investment in order to increase capacity. So we are increasing capacity of Almas To be able to produce above the feasibility study production compared in 2024, and we expect this Manage your decision and improved efficiency to happen along this Q4. That's why we Change a little bit the guidance, but we do not expect significant impact on 2024, perhaps in the first one January February, but then we fastly report the productivity.

Speaker 1

So in the second question on Altamira, we saw Altamira, it's an early stage company. They don't have reserves yet. They have resources and inferred. But we believe very much in the Potentially, it's in Alta Floresta region where it's close to where we have the project Matopah, not close enough to have a significant G and A and synergies because maybe it's close over 200 kilometers, but it's a trend that we like. We see a lot of quotation on the project to significantly increase resource and reserves.

Speaker 1

So what we have the strategy there is that the market As Soles, a spare capital for new companies that need to raise equities, the junior miners are starving for capital And the prices of the shares has significantly dropped in all across the world. Junior Mining has a struggle to raise capital and with the low prices. But we saw a project is good, has a lot of potential. So we saw an opportunity to put a small amount of capital and let them work and see if they prove the results. So we have warrants that We can increase our participation close to 18%.

Speaker 1

We don't have options to go beyond this. However, We found it's natural that once you're there and they start to have successful results in the drilling That we can gradually also increase our participation in the products according to both interest. So Why we are not doing this at Aura, right? We could do exploration. We are not early stage company.

Speaker 1

Our focus is We are not early stage. So our focus is to build And to operate and also increase resource and reserves between the mines that we operate. We don't have the team, the technical knowledge to be at early stage. So That's why our strategy is let's invest in companies that specialize in early stage that have management full time, CEO and all the senior management, the technical team full time doing exploration in order not to distract us from our plants. So We are planting seeds for us to increase production, increase participation of those projects along the next 4, 5 years.

Speaker 1

Those, again, Early stage projects that will take several years to mature, but we will be monitoring close the advancements of those And the price that we have today to join and to enter on those companies is very attractive.

Speaker 3

All right. Thank you very much.

Operator

Our next question is from Edgardo Souza from Itau BBA. Your microphone is open.

Speaker 4

Hi, Rodrigo. Hi, Calabrio. Thank you for the questions. So my first question is regarding EPP. I understood that the main impact for prediction was due to those heavy rains in the quarter.

Speaker 4

So what can we expect for a normalized prediction level for EPP per year, maybe thinking about next year and 2025? And then my second question is regarding Matupa. Are there any news, any Update on the projects, when do you have to start up the construction to make sure that you will deliver that guidance of 450 1,000 ounces per year by 2025. Thank you, guys.

Speaker 5

Okay.

Speaker 1

Thank you, Gar. So your question about EPP projection production and then What we need to do in Matopoia in order to achieve the 25th end of 25th annualized production. So In EPP, we will we are discussing now the budget for next year. But what and so we don't have yet the numbers to However, as you I would invite you to take a note of what we produced in the past without the high grade of Ernesto. Although early next year, we should have some high grade of Ernesto, but along the year, we should go back to the normal levels of Grades of ranging at a $1,000,000,000 to $1,100,000 per ton.

Speaker 1

So we don't expect to have those High levels that we had among the last 2 years due to Ernesto. And we will be releasing the new guidance for 20 24 as we finish the budget discussions and then disclose the production for the Q4. Upon Matupa, we are advancing all The permitting process in order to start the construction of this project during the Q2 next year, that's our target To reach the guidance of 25 for those projects, Matopa can be built in 12 months, 14 months and then you can ramp up Very fast as we did with August. So 3rd 2nd part of next year is our target to start the construction of Matopah.

Speaker 4

Okay. Thank you very much.

Operator

Our next question is from Homa from Canaccord Genuity. Your microphone is open.

Speaker 5

Good morning, guys. Thanks for taking the questions and congrats on the advancements made on Borborma project. So just a follow-up On Edouard, question regarding EPP. You mentioned the grades It should be lower compared to what we saw on the last quarter of last year. But so what will be the normalized And now that you will be closing the Ernesto pit, what will be The life of mine you are expecting because you are investing significantly in exploration there, Swal.

Speaker 5

And additionally, You reported 11,000 ounces of production, but you only sold around 9,600, right? So this was related to the heavy rains as well. And this inventory you build is expected to be sold at higher prices or it was The pricing was already fixed.

Speaker 1

Roman, I'm not sure if I understood the last question. I think

Speaker 5

The second one is regarding the difference between the ounces produced at PPP And the ounces sold, you have around 1500 ounces there. And so that should be considering higher prices that we are seeing these days or the pricing was already fixed?

Speaker 2

Hi, everyone. Going to your second question. Yes, no, that was the only difference It was already sold in the 4th quarter at 4th quarter prices. So we didn't fix

Speaker 5

Yes. And the first one on EPP was regarding the grades you are expecting for the Q4 and the Q1 of 2024, particularly Considering the stockpile you build.

Speaker 1

Now on the Q4, we will continue to see improvement in grades because We are accessing now the Ernesto bid. Although it was delayed, we will see high grade coming in, in Q4 and also Some high grade coming in January, February next year. So the guidance that we gave is based on these levels Great, which will be Ernesto and also not 100 percent Ernesto, but Ernesto mix with other mines that we have, the NOSGI or some stockpile. For the remaining years, as I was mentioning, we should not expect to see higher grade of Ernesto Back in our plans once we will exhaust the mine early next year. We were projected to exhaust the mine by the end of this year, on Q3 and Q4, And the delay has pushed some of those high grades too early next year.

Speaker 1

So then after that, we go back to the normal levels of grades That we worked in 2018, 2019, 2017, which is 0.9 to 1.1, 1.2 grams per tonne Depending where you are on the mine. And you also asked about the life of mine. And yes, we are heavily investing in the Expansion of a life of mine, particularly in EBB where we have a shorter life of mine. The results have been A very interesting and positive, particularly connecting some of our bids that has already that we already worked. So we should see yes, we expect to see an increase in life of mine in the next Hey, I have.

Speaker 1

And probably also we can release something before that showing to the market this increase in life of mine And the potential to further increase EPP. Again, EPP, we expect as we are doing, we started Operating this mine with 3 years life of mine back in 2016. We already operated 7 years We have now more than 3 years of life of mine. And only in the last few years, we started increasing investment in exploration. So we should continue to see a gradual expansion in the life of mine of EPP as we move forward into the production.

Speaker 1

So The result has been very interesting in showing this trend for us to a gradual increase life of mine of operations.

Speaker 5

Awesome. And just one last question following up what Caio asked regarding the acquisition of Altamira, This is minority stake. Just wanted to know if there is any specific project that caught your attention and drove your investment decision?

Speaker 1

Well, they have several, but Cajueros probably is the most promising. They also have 1 copper Gold project at earlier stage that can offer potential part 3 discovery. Again, it's an early stage company that will take several years in order to consolidate the resource and reserves. But we are very We caught our attention. The whole trend of that area that we know very well has a promising has That project has 190,000 hectares in an area that has already produced between 7,000,000 to 10,000,000 ounces of gold.

Speaker 1

And that was mostly came from Arteza now. And now those they are doing a professional drilling in order to consolidate a bigger resource and reserve and then Later on, I'll produce. G Mining, for example, into Cantizinho is operating on similar structures. And they will be able to produce over 100,000 ounces, 150,000 ounces of per year In that kind of exploration in geology.

Speaker 5

Awesome. Thank you very much.

Operator

Our next question is from Habi Nezami from National Bank Financial. Your microphone is open.

Speaker 6

Hi, Rodrigo. Hi, Clever. Thank you for taking the call. A lot of my questions on EPP have been answered, but I'll just add on. You mentioned you had acquired this land package adjacent to it, adjacent to the Japanese pit that had some interesting exploration potential.

Speaker 6

Could you comment a bit about How that's turning out so far? And second question on San Andreas, if you could tell us a bit more about some of the one time maintenance items and Your thoughts on 2024 cost for that asset.

Speaker 1

So you're asking about Japoneso SG. Japoneso is the land package that we bought last year. We are doing now exploration in that area of drilling. We saw continuity of the Japanese strength on that area. So we are now Narrowing and making sure that we can publish the resource and reserves in the next AIF or along next year.

Speaker 1

So a lot of drilling Has been done already in that area. Some of the drillers performed the extension on the step out. Some drillers, of course, don't have 100 percent of a hit rate on those drillers, but we are very optimistic that we'll be able to expand those pits and And the new results will be coming in Until the AIF that will be published in next year. Then your question about, I mean, also, How much was the one time investment? Did you know $2,000,000 $2,300,000 a one timer investment To upgrade the productivity, upgrade the balance, upgrade the whole system in order to increase the productivity of the plant And then recover the production that we had in the past.

Speaker 1

So we don't expect this $2,300,000 that No recurring to happen in Q4 for this year.

Speaker 6

That's a very good. And there was also a comment in the in your financials about recovery being a bit lower In that line, for the time being, based on the kind of order that you're in, what's your expectation for how long that might continue? Can you tell us a bit about 2024 production and cost for Honduras?

Speaker 1

So yes, the order that we are processing now that is On the pit that we are working, I have some other content that has reduced a little bit the recoveries. Some of this has been addressed and that we should see recoveries going up, but it seems that That area is not we'll not have the recovery that we had in the past of 76%, seventy 8 Percent, we are more down to 68% 70% of recovers in those who are and not the 75%, 78%. And we should probably see those kind of results for next year.

Speaker 6

Thank you for answering my questions. Thank you.

Operator

Our next This question is from Ricardo Monigalia from Safra. The first question is, could you give some color on EPP's AISC from Q2 2024 onwards. Should the cost be closer to the actual 2023 guidance above or below those levels. The second question, could you please disclose further details on the deal structure and rationale and the timeline of Altamira's project.

Speaker 1

So the guidance for 2024, we'll be disclosing On January 24. So I cannot go in more much details what would be the cost. What I can share is that the Q3 is not the levels that we'll be practicing because what happened, we used An inventory of low grade ore that was very close to the plant. When you mine along the last we mine along the last 2 or 3 years, what we do is We give preference for higher grades and then we fulfill the plant with the highest grade we can And the lower grade that comes from the mine, we stock on put in stockpile, close to the plants to use in situations that we had this That we had a delay in the EnerSys. So we used a low grade with a high cash cost that has been accumulated Close to the plant for the last couple of years.

Speaker 1

And we do not we will not have this situation next year that we will be mining Fresh ore in the lower grade, but not as low that we pass through the plateau. I think a good guidance would be to see Q1, Q2 or a few years ago plus some impact of the inflation that we had. In Altamira, they are conducting several new drills. This is why they raised the capital. The drill campaign can last 6 months, 1 year.

Speaker 1

Those early stage projects is a gradual information. So we should expect New results of drilling coming in early next year, but the consolidation of our resource and reserves and consolidation The view that we will have about the potential with the firm resource and reserves It will take several years. It might take 3, 4 years depending on the results they have along the next 1 or 2 years.

Operator

Thank you. The question and answer section is over. We would like to hand the floor back to Mr. Rodrigo Barbosa for the company's Final remarks.

Speaker 1

Well, thank you all for being here again. It was unfortunate to review the guidance for the year. That was mainly due to Apohena, in some slight, the outlook that we explained. However, that was a very important and remarkable quarter that we achieved zero time lost time incidents. And also we turned the point, putting almonds into production, increased production in all the operations that we have.

Speaker 1

So the trend of the delay in the last 12 months has been worth and we should continue to see an increase in production in all our operations with improved margins With the Q4, not only for reduced cash costs, particularly for Minoza and also Aqueda that will not have this one time in Minoza And the higher cash cost on stock price, we've combined with a higher gold price. So Q4 will be higher production, low cash cost, Lower cash cost and higher price if gold continue to be in this level. And with all of that, in Q3, we also passed away to achieve Our growth commitment to 450,000 ounces with significant advancement in ours already producing And then Boardboard with new feasibility study, funding package, start off construction that's already moving according to our plan. So I thank you all and I will invite you all again to be with us in Aura Bay. Then we'll go more in detail of each operations, Also with the detailed strategy in finance and also talking a little bit more about the strategy of the company and experts to talk about the gold price And some numbers that I would invite everybody to take a look, particularly in this moment that we see A strong belief of the basement of Fiat currencies due to the high Fiscal deficits and a lot of U.

Speaker 1

S. Dollars being printed on the top of the geological

Operator

Aura's conference is now closed. We thank you for your participation and wish you a nice day.

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Earnings Conference Call
Aura Minerals Q3 2023
00:00 / 00:00