Release Date: October 23, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Strong operational performance in Zambia, with copper production reaching the upper end of guidance and costs at the lower end.
- Successful power management in Zambia, minimizing disruptions despite power restrictions.
- Increased copper production guidance for the year, reflecting improved operational efficiency.
- Significant progress on the S3 expansion project, with key installations on track for completion.
- Improved financial performance with increased revenue and EBITDA, driven by higher copper and gold sales.
Negative Points
- Tragic accident resulting in the death of a colleague, highlighting ongoing safety challenges.
- Continued power shortages in Zambia, leading to increased electricity costs.
- Pending government approval for the preservation and safe management plan at Cobre Panama, delaying operational activities.
- Ongoing arbitration processes in Panama, creating uncertainty around future operations.
- Increased net debt due to capital expenditure and working capital requirements, impacting financial flexibility.
Q & A Highlights
Q: Could you provide an update on the environmental audit and the status of the existing concentrate at Cobre Panama?
A: The government has indicated that they want the environmental audit completed by the end of this year, although the auditor has not yet been appointed. The terms of reference are being prepared. Regarding the concentrate, it remains at the port, and while the copper content is stable, there are concerns about sulfur degradation. Approval of the preservation and safe management plan is needed to move the material, which is in everyone's best interest. - Tristan Pascall, CEO
Q: How are you preparing for the wet season at Sentinel, and is this affecting your production guidance?
A: We have invested significantly in dewatering and setting up benches to handle water effectively. While the wet season is considered in our plans, we are confident in our preparations. The lower end of production guidance considers both the wet season and necessary maintenance activities. - Rudy Badenhorst, COO
Q: Can you provide details on capital spending for the S3 expansion and any inflationary pressures?
A: We have spent $700 million on S3 to date, with $550 million remaining. Of this, $200 million is already committed. We have visibility on pricing for most contracts, and the project remains on budget at $1.25 billion. - Ryan MacWilliam, CFO
Q: What is the status of the Zambian asset sale process, and what criteria will influence a decision to accept an offer?
A: We are open to partnerships that benefit our Zambian business and stakeholders. Discussions are ongoing, but we cannot provide further details as they are live discussions. - Ryan MacWilliam, CFO
Q: How are you managing power needs in Zambia, especially with the S3 expansion coming online?
A: Currently, we draw about 310-315 megawatts, with 190 megawatts imported due to drought conditions. S3 will require an additional 85-90 megawatts, and we have secured power to ensure a smooth startup and production maintenance. - Rudy Badenhorst, COO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
