Good morning and welcome to our presentation of Mineros S.A.'s financial and operating results for the second quarter of 2025. My name is Diana, and I will be the operator for this call. In this moment, all participants are in this listening mode. At the end of the presentation, there will be a moment for a Q&A session only on the web platform. Please keep in mind that this teleconference is being recorded. Please consider that this conference is held in Spanish with simultaneous interpretation into English. If you have any difficulties to visualize the slides on the web part, you maximize the screen called Slides. From this moment, I will give the floor to Juan Camilo Obando, the Investor Relations Manager.
Thank you so much. Good morning, everyone. Welcome to our presentation of Mineros S.A.'s financial and operating results for the second quarter of 2025. My name is Juan Camilo Obando, and I am the Investor Relations Manager. The original language of this call will be Spanish. However, if you wish to listen to it in English, please follow these two steps. [Foreign language]. Please remember that this call may include forward-looking information. Actual results may vary due to the inherent risks in mining. During this presentation, several financial metrics that are not standard under the IFRS will be referenced. For detailed explanations of these measures and their calculation, please refer to Section 10 of our MD&A available in the Investor section under the Financial Reports menu on our website. Joining me in the room today are David Londoño, CEO of Mineros, Sergio Chavarria, Financial Manager, Santiago Cardona, Vice President of Colombia, Nivaldo Díaz, Technical Vice President of Business Development and Strategy, and Manuela Botero, Legal Director.
Additionally, joining us by phone are David Splett, CFO of Mineros; Luis Fernando Villa, Vice President of Nicaragua; and Wilkinson, Vice President of Investor Relations. I hand the floor over to David Londoño, CEO of Mineros.
, you, Juan Camilo. Good morning and thank you for joining us today. In today's conference call, we will present the highlights, followed by the financial results for the quarter, our operational results, a review of each operation, and finally, our challenges and opportunities. Let's start with the highlights. For the second quarter of 2025, we highlight our gold production of approximately 54,000 ounces. This performance reflects the operational consistency of our mines in Colombia and Nicaragua, reinforcing our continuous effort to maintain stable and reliable production levels. Our gold production reached 108,150 ounces during the first six months of the year.
This represents a 3% increase compared to the 105,000 ounces produced in the first half of 2024. But more importantly, this production was achieved safely. Regarding our silver production, we produced a little more than 70,000 ounces in the second quarter, and during the first six months, we reached a production of about 148,000 ounces. We paid dividends totaling $7.5 million in the second quarter, and year- to- date, we have paid a total of $14.9 million. We also want to highlight that in the second quarter, we finalized negotiations with the unions in Nicaragua and Colombia. Thanks to the constructive dialogue, we have signed labor agreements that reflect our commitment to shared value creation and will be in effect for the next two years. Regarding our exploration and growth programs, we have made significant progress in both the Guillermina Deposit and the Porvenir Project.
We also recently announced the acquisition of 100% of the La Pepa Project in Chile, in which we held a 20% interest. This transaction was completed by purchasing the remaining 80% from Pan American Silver. We will provide more details on this acquisition later on. Finally, we continue to advance in structuring the share repurchase program. As we already have mentioned, the General Shareholders Meeting approved a resolution proposed by the shareholders on March 31st, authorizing the company, at the discretion of the Board of Directors, to repurchase their shares up to a maximum total of $12 million over a period not exceeding two years, meaning until March 31st, 2027. This approval granted our Board of Directors the flexibility to make one or more repurchases of shares at its discretion, subject to applicable rules and regulations in Canada and in Colombia.
Currently, we are moving forward with the design for the program's implementation, and we will announce in a timely fashion any news regarding this to the market. As we will see later, our great operational performance is translating directly into excellent financial results. These results not only reflect our efforts focused on operational efficiency and the solidity of our mines, but also our ability to consistently and safely generate value. We are very optimistic about the company's direction, and we will continue working to maintain this path of growth and success. Let's review the trading behavior of gold. During the second quarter of 2025, the price of gold continued to show positive performance. The quarter-end closing price was $3,303 per ounce, representing a 6.1% increase compared to the first quarter of 2025, closing price of $3,113 per ounce. The average price for the quarter was $3,289 per ounce.
This behavior is reflected in our results, and we will continue working to maintain attractive margins in our operation. I will give the floor to Sergio Chavarria, who will explain our financial results.
Thank you, David. Good morning. Let's start with the income statement for the quarter. Remember that figures are expressed in millions of US dollars. In the second quarter of 2025, our revenues grew significantly by 37%, totaling $180 million. The main catalyst was the 42% increase in the average selling price of gold, while silver sales decreased by 68%. Consistent gold production in Colombia and in Nicaragua, as David highlighted, and our cost discipline were key to achieving these results.
The cost of sales increased by 17% because of higher gold prices, increased the cost of purchasing minerals from artisanal cooperatives by $14 million, higher tax expenses of $783,000, and higher payroll expenses, including $576,000, resulting from the signing of the agreement with the union in Colombia. The gross profit and adjusted EBITDA increased by 81% and 66%, respectively, thanks to the increase in revenues. And net income increased by 141%, reaching $43 million compared to $18 million in profit reported in the second quarter of 2024. Net free cash flow was positive and totaled $45.1 million, compared to a negative balance of $6.8 million in the same period of 2024, and was obtained after deducting dividend payments of the $7.5 million and sustaining capital expenditures of $6.5 million from net cash flow generated by operations. On this slide, we have the accumulated financial results as of June 30, 2025.
The company's revenues show an increase of 39%, reaching $343 million, due mainly to a 41% increase in the average selling price of gold and a 3% growth in ounces sold, despite a 59% decrease in the sales of silver. Cost of sales increased by 18% during the semester, mainly due to higher costs for purchasing artisanal material due to higher gold prices, which amounts to an increase of $23.6 million. Gross profit and adjusted EBITDA registered increases of 86% and 70%, reaching $139 million and $153 million, respectively, thanks to higher revenues that were partially offset by the increase in the cost of sales. Finally, net profit increased by 134% during the semester, rising from $34.9 million in the six months of 2024 to $81.5 million at the end of the semester.
Now, let's look at the adjusted EBITDA, which stood at $82.3 million at the end of the quarter, compared to $49.6 million recorded in the second quarter of 2024, representing a 66% increase. This variation is mainly explained by the increase in revenues, thanks to the rise in gold prices. This notable performance also underscores our discipline in cost control and operational efficiency. We have maintained a rigorous focus on optimizing expenses and processes, allowing us to maximize the impact of favorable gold prices and ensure sustainable profitability, which, as it can be observed, has been maintaining a growing trend over the last few quarters. Finally, let's move on to the cash and net debt.
Net cash flows from operations represent revenues from the sale of gold, silver, and electricity for $196 million, minus payments to suppliers of $91 million, payments for salaries and employee benefits $20 million, and tax payments for $25 million. Cash flow used in investing activities comprises purchases of property, plant, and equipment for $19 million, and purchases of intangible and exploration projects for $2 million. The cash flow used for financing activities was largely composed of dividends payments of $7 million and financial obligation payments of $5 million. At the end of the quarter, loans outstanding were $25.6 million, while cash and cash equivalents were $109.7 million, leading to a net debt position of - $86 million. This figure represents a significant improvement compared to the $2 million recorded in the same period of 2024. As part of our financial strategy, we maintain a solid cash position.
This allows us not only to meet our obligations, but also to be ready to take advantage of growth opportunities as they arise. With this, I conclude the review of the financial results and give the floor to David, who will talk about operational results.
Thank you, Sergio. Let's talk about our operational results. This chart summarizes the operational performance of the last five quarters. As it can be observed, the total production of the second quarter showed a stable and consistent behavior compared to previous quarters, reflecting our operational discipline. Regarding costs, cash costs and AISC increased by 28%, explained mainly by the increase in the cost of sales associated primarily with the purchase of mineral from artisanal mining. During the second quarter of 2025, the average selling price per ounce of gold reached $3,313, recording a 42% increase compared to the same period of the previous year.
We see how we have maintained attractive margins by effectively transferring the increase in the price of gold to our selling prices over the last five quarters. This, coupled with our operational discipline, has significantly improved our revenues and profitability. Let's now look at the operations. I hand the floor to Santiago Cardona, Vice President of Colombia, who will present the details of the Colombian operation, and subsequently to Luis Fernando Villa, Vice President of Nicaragua, who will present the details of the operation in Hemco.
Thank you, David. In Colombia, we reached a production of 21,000 ounces during the second quarter of the year, which represents a 1% increase compared to the same period of 2024. This growth, although moderate, reflects our operational capacity to maintain stability even in the face of technical and socio-political challenges.
In operational terms, we increased the volume of material processed, which partially offset a slight reduction in grades and recovery levels, allowing us to sustain solid performance in our operation. The AISC increased by 19% compared to the same period of the previous year, reaching $1,560 per ounce due to the natural increase in labor costs, as well as higher operating contract costs, and taxes, and royalties. These last two concepts were impacted by the higher gold price. Additionally, we highlight the following aspects in the operation: the signing of the new collective bargaining agreement, as it was mentioned by David before, which will govern between May 2025 and May 2027, strengthening labor stability and relations with our workers. The start of operations of the Aurora Plant, currently in the stabilization process, which represents a key step in our growth strategy and continuous improvement in our production capacity.
Progress in projects related to gold recovery and process optimization. With this, I conclude the presentation of the operation in Colombia and hand the floor to Luis Fernando Villa, Vice President of Nicaragua.
Thank you, Santiago. In Nicaragua, second- quarter production was 33,000 ounces, very similar to the second- quarter production in 2024. We had a 7% increase in processed tons thanks to a,
Hold on a second, Luis Fernando has problems here. Okay, so let's look at the presentation of Nicaragua. We're going to replace Luis Fernando in Nicaragua. So, as you can see in the graph, the production was stable and recorded 33,000 ounces, very similar to the second- quarter production of 2024. We had a 7% increase in processed tons during the quarter, thanks to better operational availability and an increase in plant throughput per hour, which compensated a reduction of 5% in the grades.
The AISC increased by 33% due to a higher gold price, which caused an increase in the cost of purchasing mineral from the artisanal cooperatives. In the bottom right table, we can observe the costs in relation to industrial and artisanal production. During the second quarter, 59% of the total costs correspond to artisanal production, which in turn represented 82% of the total produced in Nicaragua, with 27,000 out of the 33,000 ounces produced. Relevant topics include: also in Nicaragua, during April of this year, the collective bargaining agreement was signed with the unions, which will also be valid for two years as well. Additionally, aligned with the company's growth strategy, the board of directors approved an initiative that seeks to expand Hemco's processing capacity by 20% by early 2028, moving from 2,000 tons to 2,400 tons per day.
With this, I conclude the results for Nicaragua, and I give the floor to David.
Thank you, Santiago. Let's talk about our challenges and perspectives. I want to talk a little about our corporate strategies in the light of the changes in administration and shareholder composition that we have had in the recent months. Our ingredients for our success will be based on several strategic pillars that project us into the future. We have highly experienced management and executive teams that will guide us in this new stage of growth. We maintain a solid financial performance, which gives us the capacity to invest and expand.
Our business strategy is robust, designed to identify and capture new growth opportunities, and fundamentally, we will continue strengthening our social license to operate, ensuring that our presence in Colombia and in Nicaragua continues to generate shared value without conflicts and with the support of communities. Our vision for the future incorporates leveraging our exploration potential, optimizing our operations to ensure our growth is sustainable, and therefore our strategic focus will be centered on accelerating exploration, constant improvement in the operational excellence, always within the framework of our commitment with responsible and safe mining. We will also be focusing efforts on inorganic growth, seeking intelligent investments that generate value for the company and its shareholders. Now, let's review our growth and exploration programs. Regarding near- mine exploration, it focuses on the Panama Mine and Pioneer Mine in Nicaragua, which are currently in production.
During the second quarter of 2025, a total of 10,862 meters of diamond drilling were completed in 71 wells, reaching about 65% of the drilling plan for 2025. We are updating the mineral resources and reserves of these mines, and we expect to publish them by early 2026. As a forward for the board of the new project, we can tell you that we continue to advance as planned with the update of the mineral resources and reserves, seeking to maximize its value with the optimization of the pre-feasibility study scheduled for the end of 2025. We recently announced to the market we have obtained the forestry use permit required to begin the construction phase of its underground mine. This approval allows the initiation of the site preparation and underground development work. It is worth clarifying that the permit specifically covers only mining activities.
Regarding the Guillermina deposit on July 24, we announced its initial mineral resource estimate, which includes indicated mineral resources of 30,000 ounces of gold and inferred mineral resources of 55,000 ounces of gold. Mineralization at the deposit is open, suggesting expansion potential as the exploration works continue. The 2025 drilling campaign began in July and is currently underway with 2,000 meters planned. It represents a promising opportunity that could contribute significantly to the future development of the Porvenir Project. Now, let's talk about La Pepa Project in Chile. As it was announced on August 11, Mineros will acquire Pan American Silver's 80% interest in the La Pepa Project for $40 million. With this transaction, our interest in the project will increase to 100%. The acquisition is expected to be completed not later than September 30, 2025.
This project represents a significant exploration stage opportunity for Mineros in Chile with promising mineralization and plans to further development. The acquisition provides us with exposure to a third- mining jurisdiction, which strengthens our asset diversification strategy and increases our reserve inventory in a country with a long and established mining history in a favorable environment for the industry, with the presence of several multinational companies in the sector. With this acquisition, we are expanding our strategy to include earlier-stage projects, which will allow us to develop a portfolio of growth projects as we mature as a mid-tier gold producer. Moving on to our cost guidance, as we informed in our first quarter earnings call, we have been monitoring our cost guidance in view of the variations of gold prices compared to the prices assumed during the budget.
We have observed how our initial estimates published at the beginning of the year do not reflect the current reality of metal prices, which, as we have seen throughout this presentation, have shown a significant increase during the year. Therefore, the 2024 guidance for cash cost and AISC has been adjusted to better reflect market consensus estimates for gold prices during the rest of 2025, which exceed the $3,000 per ounce. It is important to highlight that this update only corresponds to our cost estimates and does not affect production estimates, which remain in accordance with what was presented to the market at the beginning of this year. We are modifying our estimate for our cash cost, moving from a consolidated range between $1,340 per ounce to a range between $1,560 and $1,660 per ounce.
For the AISC, we're moving from a consolidated guidance range between $1,650 and $1,750 to a range between $1,890 and $1,990 per ounce. Finally, we want to tell you about some changes in management. We welcome David Splett, our new CFO, who joined the team on July 22 of this year. David is a graduate in economics and administration and a certified public accountant. He has over 30 years of experience and a proven track record in the value creation and success in financial and operational roles in base and precious metals, industrial minerals, and oil and gas. Additionally, we had a change in our Vice President of Talent, and we welcome Edilia Diossa, who joined the company on July 3rd this year.
Edilia is an industrial engineer with an MBA and over 18 years of experience in strategic leadership positions in human management in companies in the mining, agro-industrial, and service sectors. The incorporation of David and Edilia to Mineros represents an important step to continue advancing in the strategic objectives of our company.
From this moment, we'll start with our Q&A session. If you have any questions, please write it in the Q&A chat in the web platform. We will not receive questions in any other means. The questions will be received in the chat, in the question- and- answer button in the platform.