Release Date: August 02, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Tucuma Project achieved first concentrate production and is on track for commercial production by the end of Q3.
- Significant reduction in copper concentrate treatment charges, leading to lower C1 cash costs of $2.16 per pound.
- Strong performance at Xavantina operations with elevated gold grades and record gold prices.
- Solid operating cash flow of $14.7 million and adjusted EBITDA of $51.5 million for Q2.
- Strategic agreement with Vale Base Metals on the Furnas Copper Project, aligning with long-term growth strategy.
Negative Points
- Fatal incident at Caraiba Operations, impacting workforce morale and operations.
- Lower processed copper grades at Caraiba due to mine sequencing and higher dilution in high-grade stopes.
- Temporary evacuation of Caraiba mine due to a seismic event, causing operational disruptions.
- Increased capitalized ramp-up expenditures at Tucuma due to accelerated mining and additional costs.
- Non-cash unrealized foreign exchange losses due to the strengthening of the USD against the Brazilian Real.
Q & A Highlights
Q: Can you provide more details on the ramp-up progress at Tucuma, specifically regarding recoveries and throughput?
A: It's early to provide specific details, but based on the feed grades, our concentrate grades are above expectations, and recovery rates are near design targets. Throughput volumes have increased to about 40-50% of design capacity, indicating good progress towards our 80% commercial production level by the end of Q3. - Makko DeFilippo, President, Chief Operating Officer
Q: How will the financials for Tucuma be accounted for in Q3?
A: In Q3, we will start expensing some costs as we generate revenue from first sales. However, until we reach commercial production, a portion of the costs will be capitalized. Mining costs will go into inventory, and waste costs will be capitalized until commercial production is declared. - Wayne Drier, Chief Financial Officer
Q: With Tucuma ramping up, will the focus for 2025 be on deleveraging the balance sheet or increasing expenditures for exploration?
A: The primary focus will be on deleveraging the balance sheet. Exploration expenditures are not expected to materially change, though there may be some reallocation of resources to the Furnas project. - David Strang, Chief Executive Officer, Director
Q: Was there a seismic event at Caraiba recently, and did it impact operations?
A: Yes, there was a seismic event, but it was in line with historical expectations. We temporarily evacuated the mine as a precaution, but operations have since resumed. The event was unrelated to the recent fatality. - Makko DeFilippo, President, Chief Operating Officer
Q: What are the grade expectations for Caraiba in the second half of the year?
A: We expect higher grades in the second half due to a higher proportion of high-grade stopes. The first half saw lower grades due to development delays and dilution in high-grade stopes. - David Strang, Chief Executive Officer, Director
Q: Can you provide an update on the exploration in the Carajás Camp?
A: We continue to develop material in the Pilar mine and the Vermelhos area, focusing on the UG4 deposit type. We are also working on nickel exploration in the district. - David Strang, Chief Executive Officer, Director
Q: What are the current mining rates at Pilar versus Vermelhos, and how do grades compare through 2024?
A: Pilar's mining rates are expected to increase in the second half of the year, while Vermelhos will remain consistent. We are exploring ways to potentially increase volumes at Vermelhos. - David Strang, Chief Executive Officer, Director
Q: What is the grade of the stockpile at Tucuma?
A: The overall stockpile is around 1% copper, with 44,000 tons grading above 2% copper available for transport. - David Strang, Chief Executive Officer, Director
Q: What is driving the increase in CapEx at Tucuma, and what is being cut back at Carajás?
A: The increase at Tucuma is due to non-recoverable taxes and additional capitalized ramp-up expenditures. At Carajás, the largest reduction comes from synergies in tailings management and oxide heap leach pile closure projects. - David Strang, Chief Executive Officer, Director
Q: Can you provide a broad overview of the Furnas project and its timeline to first production?
A: We are excited about the project and are focusing on identifying high-grade zones for underground mining. We expect to release a resource estimate soon, which will provide a clearer picture of the project's potential. - David Strang, Chief Executive Officer, Director
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
