Good morning and welcome to our presentation of Mineros S.A.'s Financial Operating Results for the Fourth Quarter and Full Year of 2024.
[Foreign language]Juan Camilo Obando.
Juan Camilo Obando, and I am the Director of Investor Relations.
[Foreign language]
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It is also worth mentioning that this presentation contains financial measures that are not in accordance with the IFRS, such as cash costs and All-in Sustaining Costs each per ounce of gold sold, the average price per ounce of gold sold, and Adjusted EBITDA and net debt. Additional information about these measures can be found in Section 10 of our MD&A published in Canada, which is also located in Mineros' website, which can be found at mineros.com.co. Today, I'm joined in the room by Andrés Restrepo, CEO of Mineros; Alan Wancier, CFO of Mineros; Ana Isabel Gaviria, Vice President, Legal and Sustainability; Santiago Cardona, VP of Colombia. Also with us, joining us by telephone, Luis Fernando Villa, VP of Nicaragua; and Wilkinson, VP of Investor Relations. With this, I shall give the floor to Andrés Restrepo, CEO of Mineros.
Thank you, Juan. Good morning, and thank you for joining us in our report of results for the fourth quarter and full year of 2024. On today's conference, we will present the fourth quarter highlights and also of the full year, followed by the financial results of the fourth quarter and full year and our operating results. We will have a review of each operation, and finally, we will tell you the challenges and opportunities that we see in this new year. Let's start with the highlights, beginning with the fourth quarter of 2024. During the fourth quarter of 2024, we produced just over 54,000 ounces of gold and 112,000 ounces of silver. These operating results resulted in an income of $23 million for the fourth quarter. Our Adjusted EBITDA was $56.9 million, and we had a net free cash flow of $56.7 million.
In October, we paid dividends for about $7.5 million to our shareholders. Now, as for the highlights of the full year 2024, we had a production of 213,000 ounces of gold in our operations, with a production of 131,000 ounces of gold in Nicaragua and 82,000 ounces in Colombia. As far as silver's production, it was 765,000 ounces, an increase of 13% compared to 2023. One of the shareholders asked me about this silver production, that we show as a relevant fact. We had a very good year from the point of view of the silver production, but it's also important to clarify that our focus is gold, and silver is like a byproduct, but it doesn't mean that it's not important. But it means that we do not explore silver like mines or ore.
But in our operation in Nicaragua, the artisanal miners and ourselves, we found this percentage of silver because of the features of the deposit, and that type of silver varies between one year and the other. And that is a relevant fact because we had a very good year in the silver production, but we are a company focused on the gold production and gold, silver, and associated or related metals. And silver is a related metal. These results provided us with a full-year net income of $86.6 million and Adjusted EBITDA of $210 million and a net free cash flow of $86.8 million. During 2024, we paid $27.7 million to our shareholders, and our stock performed very well on both the Canadian and Colombian stock exchanges, rising 129% and 131%, respectively. We now turn to the performance of the gold price.
During 2024, the gold price registered a predominantly upward trend, trading between $1,992 and $2,787 per ounce, with an average of $2,388 per ounce during the year. At the end of 2024, it recorded an increase close to 27%, with a closing price of $2,624 per ounce. The geopolitical events, such as the war in Ukraine and in the Gaza Strip, and the expectation and subsequent confirmation of the reduction of interest rates in the United States, as well as the global inflation expectations, were among the main factors that drove the metal to reach new record heights during the year. And this positive trend was extended strongly in the three first quarters of the year, and it was only diminished during the last quarter due to the results of the U.S. elections and the adjustments in the Federal Reserve's monetary policy rate.
With this, I will turn the floor over to Alan Wancier, who will explain our financial results.
Good morning. Let's start with the income statement for the quarter. Let's remember that figures are expressed in millions of U.S. dollars. During the fourth quarter of 2024, the company's revenues increased by 15%, reaching $150 million, mainly due to a 35% increase in the average gold sales price, and despite the 13% decrease in ounces sold and a reduction of 25% in the silver sales. Cost of sales increased by 16% due to higher gold prices, which increased the cost of purchasing ore from artisanal miners, a higher depreciation and amortization, and higher operating expenses driven by inflation, and also the increment of the maintenance and material costs, services, and labor costs. Gross profit and Adjusted EBITDA increased by 14% and 7%, respectively, thanks to the increase in revenues.
Net income increased by 7%. net free cash flow was positive and totaled $56.7 million compared with $36.7 million in the same period of 2023, primarily due to higher sales and other income of $29.7 million, offset by higher payments to suppliers during the quarter of $8.1 million. Turning to full year 2024 results, revenues grew 20% due to a 23% increase in the average selling price of gold, and silver sales increased by 48% compared to the previous year. Also, the cost of sales increased 17% during 2024, mainly due to higher artisanal material purchase costs because of higher gold prices, higher labor costs, higher service costs, and higher taxes and royalties.
Gross profit and Adjusted EBITDA increased by 27% and 22%, respectively, due to higher revenues partially offset by higher cost of sales, and income from continuing operations increased due to higher gross profit, partially offset by higher costs. Income from continuing operations increased due to an increase in gross profit, which was already mentioned. And finally, we highlight that net income had a significant increase of 403% compared with 2023, and net income from continuing operations increased by 16%. Now let's move to the cash. The cash for the quarter increased by $39 million, closing in $96 million. The flow of operations is mainly comprised of gold and silver sales of $167 million, payments to suppliers of $72 million, employee benefits payments of $15 million, and tax payments of $7 million.
Cash flows used in investing activities are explained by purchases of property, plant, and equipment of $19 million, and purchases of intangibles and exploration projects of $2 million. The cash flow used for financing activities was largely composed of the payment of dividends of $7.5 million and payment of financial obligations of $5 million. Now let's look at the Adjusted EBITDA. Adjusted EBITDA increased by 7% due to a higher number of ounces sold, coupled with an increase in the average gold sales price. To close the financial part, let's turn to the net debt. The decrease in net debt compared with the same period of the previous year is explained by a significantly larger cash balance at the end of the period. At the end of the quarter, loans and borrowings were $25.9 million, while cash and cash equivalents were $96.4 million.
As we have mentioned previously, as part of our financial strategy, we constantly monitor the market for opportunities in order to be prepared when cash needs required and this cash position meets our goal of having available this cash to meet our obligations and growth projects. With this, I return the floor to Andrés, who will talk about the operational indicators.
Thank you, Alan. Okay, so now let's talk about our operational indicators. So the graph on this slide summarizes the operating performance for the last five quarters. As you can see, total production of the fourth quarter was down in 13% compared to the same quarter in 2023. But if you see, there is also consistency in the four quarters of the year. That is a strength Mineros has, and that is worth highlighting in all the meetings that we have with you.
So we are having this comparison with this spectacular quarter that was the last quarter of 2023, but along the year, we had very consistent results. As you can see, the total production of the fourth quarter, there was a reduction in 13% in comparison to the same quarter in 2023. And Nicaragua, due to a 7% lower production in Nicaragua and 19% lower production in Colombian operation, that increased the cash cost of 38%. Why is it done per ounce? Because if we produce less ounces and the costs are fixed, that indicator increases. So the main factor for the increment in the cash cost is 16% in cost of sales, and the all-in increased by 35%, explained by the increase in the cash cost. So it is the basic calculated offset by a reduction of 12% in CapEx in the sustaining capital expenditures.
During the fourth quarter of 2024, the average selling price per ounce of gold reached $2,662 per ounce, an increase of 35% compared with the same period from the last year. Remember that in Nicaragua, we purchased the mine to the artisanal miners. So when the gold price increases, our costs increase as well, and that has an impact in the cash cost and in the AISCC. As can be seen in the trend lines in the graph, we continue to maintain very attractive margins and very consistent operational results. So when there are high prices of gold and there is devaluation of the peso, the costs are increased. If you compare these cash cost levels with the current prices of gold, we continue to have very good margins that allow us to operate in a very good manner in Colombia.
The fourth quarter production was 23,000 ounces, a decrease of 19% compared with the fourth quarter of 2023. I would like to stop here for a while so we can see the graphs in Colombia. As you can see, Colombia had a very challenging year. The production in the first quarter was 19,000 ounces. It was then 21,000 in the second, and then 23 and 24 in the third and fourth quarters. We see a negative impact in comparison to the last quarter of 2023. That was a very good quarter, and this is normal in the mining operations. Our equipment advanced to the north, and they reach richer or more or less rich areas that we cannot manage, that we cannot control. That is the way the gold is deposited in the deposit, so what can we do?
We can control the costs and expenses, and that's what Colombia did along the year. They had a very, very restricted policy of the control of costs and expenses, and that is reflected in the net income, and you can see that even with productions lowered to the last quarter of 2023, the gross margin was quite, or the gross income was quite similar, so the mining companies cannot manage the price of gold because that's given by the market, and the production, in a certain way, it's given by the deposit. There is some possibility to manage that because of the deposit, but what we can control are costs and expenses, and Colombia did a very good work when controlling costs and expenses, and at the end of the year, they had a gross income that was considerable in comparison to the last quarter of 2023.
Despite, production was better, and the gold price obviously helped a lot, but the price of the U.S. dollar affected this a lot. So that is how this mining operation works, and this is a very clear summary of what happened in Colombia. The gross margin was, the gross profit was decreased by 4% because the revenues, this is in comparison to the last quarter of 2023, but it was offset by a better, a very good management of costs and sales and benefited by the best prices of gold. Now let's move on to Nicaragua's results. Nicaragua had a very different year from the one that Colombia had. The fourth quarter production at Hemco was 32,000 ounces, and it was a very consistent operation, 33, 33, 34, 32, in comparison to 34 from the last quarter of 2023.
That's a reduction in comparison to the 34,000 ounces produced in the fourth quarter of 2023. Year by year, Nicaragua's result is positive. Nicaragua had an increase in the production result. This gross income, the AISCC had an increase of 27%, although we maintain very clear productions. Why is that? Because the cost in Nicaragua is highly affected by the gold price. 75 or 80% of gold produced in Nicaragua is produced by this purchased ore at 70, it's like 70% to these artisanal miners, and that ore is paid at a spot price of gold. When the price increases, obviously the cost increases. In terms of gross profit, this increased in 42%, reaching $27 million compared with $19 million in the fourth quarter of 2023, mainly due to higher revenues from higher gold prices and high or a greater amount of gold and silver ounces sold.
To summarize this, we had a very challenging year in Colombia in which we had great efforts to improve the production, but we increased this in the last quarter, but not enough. It wasn't enough to offset the impact of the first three quarters, but we were very organized in the management of costs and expenses, and we had a good year in Colombia, and we received the benefits of a better gold price. Nicaragua had a very consistent year. It received all the benefits of the gold price. It had an increment in costs explained by the price of gold that increases the cost of the ore that is purchased from artisanal miners. This is, we're going to see now what is the growth and exploration programs. We are going to see the estimates for 2025.
During 2024, the total production at our Colombian and Nicaraguan operations was within a range of 2024's guidance. For the Canadian or Toronto's market, we need to comply with the guidance that are the signals that we let the market know that we are going to comply with, and that's very important for the market. In terms of production estimates, the table that we are showing you now, it includes the cost estimates. We are going, we see forecasted production between 81,000 and 91,000 ounces of gold for the Colombian operations and 120,000 and 132,000 ounces for the Nicaraguan operation. We see this consolidated as 201,000 and 223,000 ounces of gold by 2025.
On the cost side, we're estimating consolidated cash cost per ounce to be in the range of $1,340-$1,430 per ounce, while the AISCC we are expecting to be in the range of the $1,650-$1,750 dollars per ounce of gold. So we see the margins here. Now we move to the review of our gold and exploration programs. What we have about the Porvenir project, the assumptions were updated and the metallurgical test work analysis was completed and leading to the completion of the geometallurgical model in the fourth quarter of 2024. This has allowed us to evaluate alternative mining methods to improve mining efficiency and reduce costs. Also, we finished the geomechanical studies. We are working on updating the mineral resources and reserves of the Porvenir project to maximize its value, and we are in the optimization of the pre-feasibility study to reduce the investment.
This is going to be completed in 2025. Luna Roja, in the fourth quarter of 2024, we did this in-house metallurgical testing that was completed at Hemco's laboratory, along with all technical work and analysis to update the mineral resource estimated for the Red Moon deposit. Our Luna activities are scheduled for the Luna Roja in 2025 because we are going to be focused. We are working on this part of the lands here in Nicaragua. In terms of near mine exploration, we finished a total drilling program totaling 134 wells and 37,860 meters was drilled in 2024. In the fourth quarter of 2024, the drilling program advanced at the Panama Mine and Pioneer Mine with a total of 4,000 meters were drilled at the Panama Mine and 3,825 meters at the Pioneer Mine.
A drilling campaign of approximately 30,000 meters is planned for 2025. We are estimating a total of 7,500 meters for the Panama Mine and 12,500 meters for the Pioneer Mine. We are preparing the initial mine mineral reserve estimate, which is expected to be published by the end of 2025. Now, this concludes our prepared remarks. At this time, we would like to open the call for the questions. Okay, we're going to give you some more minutes. So we see them now. Okay, so now we're going to see the first question from Mr. Julián Ausique. It says, "Have you already estimated our dividends recommendation for 2025?" So the board of directors defined a recommendation that we will publish today in the afternoon or tomorrow because we are completing or finishing this technical draft that we should publish in the Toronto market.
And that dividend signal is included in that draft or that document that we are preparing, and we cannot give different information from in Toronto and in Colombia. But you can expect that for either today or tomorrow. It's good news in terms of the dividends. Second question from Mr. Ausique. "Can you explain in a more detailed way the implications in the elimination of the royalties from Alluvial Mineros to Mineros?" No, this hasn't been eliminated. And what we did was to remove this number out of the AISCC. Why? Because that is measured in a consolidated way in Canada, and these intercompany charges are eliminated when they are consolidated. So they eliminated this figure in order to have more clarity about that.
Number three, "Have you calculated the implications for the liquidity of the stock in Colombia and in Canada because of the OPA of Sun Valley?" No, we don't think that OPA will affect the terms of liquidity, but we are in this, in terms of what we can tell you about this liquidity of the company. It has grown four times in relation to 2023. So on average, the number of stock traded in the Canadian stock exchange market was 2,000 on a daily basis. And in 2024, it increased to 86,000 shares traded on a daily basis. So 2024, we have seen this increment in the liquidity of the share.
I would say, or I would add to this, that we have this perception that this increment in the trade of the share is a result of a lot of work, of a lot of like sowing that we did in the last two years or in the last five years. Even before the company was in Toronto, we had these meetings with investors at a national level and also at an international level, presenting the company, presenting this to the market, explaining this to investors, so every time, and even more, because we have to be consistent, this is a marketing activity that sometimes you feel that it's not worth and that because you don't see the results immediately.
In those visits to investors, in those meetings that we have during one or two days, when we visit different markets, and in those two days, we may have 40 or 50 half an hour meetings with investors. Those who attend, they say, "I am an investor," or "I am an investor or a shareholder in Mineros." The liquidity. The company has shown consistent results. For the Toronto market, it's very important that you underpromise and you overcomply. We have done this in these last years because the way we see these consistent results in the company that shows a tranquility to the market on two factors that at the beginning didn't show any kind of tranquility, and that was the Alluvial operation. The other one was the purchase of artisanal ore in Nicaragua.
Investors have realized that although we have this purchase of the ore in Nicaragua and that we have an Alluvial operation, both are consistent and investors like that. So we think that the OPA from Sun Valley may have an impact, but many things may happen from here to the future. We are working on the company. We're giving good news, and this may create interest in the share and create more transactions. We do believe that transactions are not from a size that will affect the trade or the trading of the shares. We have another question from Mr. Mesa and Mateo Mesa. And they say that the government of El Salvador is unlocking the mining sector in the country and considering that the country has a rich gold zone. Is there any way to start investing in El Salvador?
Santiago, in the mining business, the time or the processes take very long, a very long time. It may take seven years, and this announcement that a country is going to start working or allowing to work in the mining sector are very interesting, but we have to be cautious and we have to wait for this transformation to be maintained in the time or in time because we have seen cases of countries that have opened their doors to the mining sector, but then when the administration changes, the situation changes as well, so before we extract the first ounce, it's always good to be in a market where the support to the mining activity is consistent and with a long-term vision. We have a second question from Mr. Mesa. Could you give us more information about the OPA by Mineros?
I'm going to give the floor to Ana Gaviria.
According to the information published in the Bulletin of the Stock Exchange Market, the Financial Superintendency in Colombia, they accepted the request from Sun Valley to do this public offer to acquire between 5% and 9% of the ordinary shares of Mineros to a public price offer of COP 4,600. The deadline for the acceptance of the offer will start on February 21st and will end on March the 6th, but it may extend in time. So I think more information was given by Andrés about the impact it may have.
Thank you, Ana. Thank you. The next question that's also from Santiago. What is the gold price that you expect for 2025? As you have seen, the gold price has rocketed. Today, it is in $2,920 or $2,910. A lot of international banks are also considering prices of $3,000 or even higher than that in this year. These are prices that we never imagined six months ago. I would say that this range, a very feasible range, is between $200 above or below the price that we have today, and it may range between $2,800 and $3,000 or $3,100.
I think it has a great impact from what is going on out of the geopolitical scenario. We have to wait to see what happens in the world. Having said that, we have our estimates with more conservative gold prices because it's always better to consider more conservative gold prices, adjusting the expenses and the cost based on these more conservative prices. When we have a higher or when we have a better price, you receive that benefit.
What was the driver of the net income in 2024 for Mineros that allowed them to recover in such a good way? There are many factors. We didn't have the negative impact from Argentina. Although we had an impact in Colombia's production, the result was good because of the good prices of gold. And in Nicaragua, we also received the benefit of the gold prices because we reached the production goals that we had set. There was an impact in the cost because, as I have said, the cost of the ore that we possess with the artisanal miners, it follows the export price, but the net result is good, is positive for the company. So I think the best driver is price. But in order to receive the benefits of a year of good prices, the company has to be adjusted to that, to be prepared for that.
We had all the permits in Colombia, in Nicaragua, the investments that we had done in the last four or five years to increase the production capacity in Nicaragua. We have created also innovation activities in Colombia in order to work in this deposit, in this alluvial deposit that is hard to recover from, that is difficult. People say that we don't have to complain about anything because of the gold prices, but the mining activity has very important challenges to face. The deposits are not exact science. We estimate productions based on the calculations. We assume that deposits have a uniform behavior, but they do not have that uniform behavior. And there are situations that have an impact on the costs that are unpredictable. So, as I mentioned, the management of mining operation is mainly based on a good management of costs and expenses.
As we did that, we received a very good benefit because of the prices or of the. Next question from Mr. Santiago. What is the value in the ledger of Mineros in a separated way to 31 December 2024? Its value is COP 1.8 billion, but that is about $405 million. That is the value in the ledgers. We have another question from Jaime Álvarez. When can I expect to obtain the updating the resources of Luna Roja? And do you see that feasible for production? We will have this initially, this artisanal mining. We work with artisanal miners, the surface part or the more superficial part of the deposit. But what we are predicting for next years is like to have a reduction of the base of resources and reserves in Luna Roja. Why?
Because they are extracted with the artisanal miners in the time being or doing this. We continue to do this exploration that is brownfield because there is operation there. They do or they create these mining models to extract that ore. Mineros has a package of concessions that is quite large. We have seen these situations or these places as Las Reformas that are closer to the current deposits. We give a priority to them because in order to make the cost more efficient. Luna Roja is a very interesting field. It's a very important deposit, but it's not in the it's quite far. We have found other places that are quite interesting as well. We have these 170,000 hectares in the concession package. We have different parts of exploration that have given us results.
We haven't discarded Luna Roja, but that's not an imminent priority because the other zones are providing enough ore to comply with the budget. For example, the brownfield exploration of Pioneer Mine, where we had this small base of resources when we had just entered Nicaragua, and it was challenging, and we have found a great variety of additional resources, and the deposits have a continuity. So we prioritize. And it doesn't mean that we are discarding anything, but we keep that for the different years. Thank you so much. We continue with the next question from Mr. Franco. Have you considered new exploration fields and exploration and exploitation fields in Colombia? What are the expectations that you have in Colombia considering the adverse policies that we have in Colombia?
In our strategic plan in Colombia, we also consider the organic growth in each country and in each mine and in our property titles and some requests of titles that we have close to our alluvial. So we have these campaigns of exploration as we have in Caucasia and also in our titles in Zaragoza, El Bagre, and Nechí. We continue with our exploration campaigns and some verifications of our resources and reserves and also the growth in the alluvial and some close-by sectors. And about the regulation in Colombia, that's something that we have worked always with the authorities and the communities because we have to see the moments of uncertainty. They have to be seen as moments of opportunity.
We see these opportunity moments where we see that more expectations are open that we are working with the communities and mineros that want to be formalized and along with the mining and environmental institutions from the departments and from the national level to open other possibilities for the mining sector. In these moments where we have this type of crisis, we will also see opportunities that will be seen in any jurisdiction where Mineros is working. That is the. I will complement this or I will add something else. Ten years ago when I first arrived to Mineros, the Alluvial Operation had ten years of an active life. Today it continues to have that. We have additional factors to exploration that is called greenfield that add years to the lifespan of a mine. That is the cutting that's a cutting measure.
If they don't do that, if they don't comply with it, that's not efficient to work with. With greater prices, this measure becomes more interesting or it opens the possibility to some operations that goes beyond this greenfield operation. As Santiago says, we are doing that. Next question. That's from Mr. Mesa. Are you going to publish the MD&A in Colombian pesos? The equivalent document to the MD&A in Colombia, it's the Informe Integrado de Gestión that complies with the different documents from the Financial Superintendency that is available in our website in Colombian pesos. We could also say that we did that, but as you do that with an exchange rate of a moment in time, it loses its validity when the exchange rate changes.
So it's always good to have or it's always better to have these pesos or documents in pesos for the Colombian market and in U.S. dollars for the Toronto market. And always considering the U.S. dollar as a functional currency. And although it sounds bad, it's always good to, I mean, like we are using a foreign currency, but we use most of the things in U.S.. dollars. That's the currency we use. We have used like we have when we started to list in the stock exchange market. We changed our functional or working currency to U.S. dollars. When do you think the beginning of the expectation of the projects is going to start? That depends on how each project moves forward and the needs of the ore that we have. We have this allocation of CapEx committee, and we prioritize this according to where it's more profitable.
That was what I was saying when I talked about the management of costs and expenses. So a company may have a project for many years, and they will accelerate that or postpone it according to how they are doing in other production fields. So, Porvenir is a very important project in Nicaragua, but the Panama Mine and the Pioneer Mine are providing the ore that we need for a full capacity of our plant. So it doesn't make sense to push that. And we should keep this efficient growth and leading that in an adjusted way to things that are happening in the country. For example, there is this project of construction of an electrical interconnection between Rosita and Bonanza. When that line is built, our energy costs will be reduced in the Panama production or operation, I'm sorry, and the Porvenir's potential operation.
That Porvenir should start its functioning when this interconnection line starts working as well, and we will transfer that to the state when we stop the investment, so we adjust this project that is a 100% mining project to the evolution of a project that is an electrical interconnection project, and we prioritize that if we have an emergency with the ore, but we postpone that if we don't have that emergency. Next question. What do you think will be the percentage of increment of the dividend? We need to publish that information in Colombia and in Canada at the same time. We will publish that in the same moment. This is in order to prepare a general assembly in Toronto. All the paperwork is so demanding and so full of things that we do this in the first semester of the year.
We have to do this in the first quarter of the year in Colombia. This creates a pressure for us to create all the documentation that we need for that. Thank you for understanding. Wait for us for one or two days more. We will let you know what's the dividend that we will propose. We will clarify that the final determination is made by the assembly. Juan Antonio Mejía, he asks, "Good morning. Do you have any coverages?" I also want to congratulate you for the results. The value that the shareholders have seen is a very good value. We don't have a coverage. We don't have any coverages. We stopped taking them when we saw the gold price was increasing.
When we see there is a change in this type of trend, when it's going to be more stable, we will eventually take those coverages. The policy for the coverages for Mineros is to cover the operations that are challenged, that are being challenged, that have very narrow margins. So we guarantee that they comply with the budget, that they comply with the EBITDA. And we sacrifice potential additional incomes. We have very competitive cash costs in relation to the gold price. So if we took this with coverages, you wouldn't have the possibility to have the exposure to the gold, and you wouldn't benefit from those prices. Next question from Mr. Alvarez. Why is Mineros still related to Nomad in Argentina? That's a commitment from the purchaser. They have this information, so they transferred that information to them.
I think in the next days, we're going to visit Nomad in Toronto so we can do a follow-up of this commitment. Considering that El Salvador, I think we have already answered to that question. Next from Jorge Franco. Do you think somebody will acquire the total part of the company through the different OPAs or through the agreements they have already done? We cannot predict that, and we cannot predict the behavior of any shareholder of Mineros in the future. I think that's a question that we cannot respond yet, but we will respond to all the questions. So you don't think we are not responding to certain questions, but to this question, we don't have an answer yet. Next question from Mr. Rodriguez. What's the reason of the increment of costs in Hemco? Because it's not related to the gold price.
Is it possible? Do you think it's possible to comply with this guidance of $1,750 per ounce considering the high cost of the Q4? Yes. We think that is possible. We see different variations in the quarters. There are some quarters in which there are more maintenance moments and activities and cost may change. But in a consolidated, as an average, we think that goal is possible. I would add, or we would say that in Nicaragua, the last year was a dry year, and we have our own hydroelectric capacity at a low cost. But when we have a dry year, we need to buy more fuel, more diesel, and that had an impact in Nicaragua, but that's not for every year.
So if we have greater amounts of rain and with the investments that we are doing in order to improve the efficiency of our small power plants in Nicaragua, we can be optimistic, and we may reduce that cash cost and AISCC in Nicaragua. Thank you so much. We have this contingent liability of $40 million in Nicaragua because of fiscal matters or tax matters. Do we have to pay that? Shall we pay that, or what's the possibility of paying that? The DGI sent us or asked us to pay this amount of money because they do not acknowledge a ministerial agreement that is valid, that will allow us to discount from the or to reduce from taxes a special contribution that is done at the beginning of the year. And that's the ad valorem, that payment. We don't see a legal foundation for that charge.
What we are doing is we replied to that charge, and we said that that's not legal. We requested the DGI to reconsider the possibility of charging that. Having said this, what are the taxes that are charged in the country? It depends on the authorities of the country. There might be a modification in the ministerial agreement as a result of this situation. In this moment, what we only did was to reveal that in the MD&A because of the recommendation of the tax consultants. We don't know if this charge will be kept, and we don't know if this is going to be for the same amount or for a different amount.
We comply with the obligation of telling you about these conversations that we are having with the state or with the authorities, but we still don't know what's going to happen. If we knew what was the definite charge, we would have included that in the statements of the year, but it's still too early. But we need to respect the market, and we need to reveal that when the time comes. Next question from Mr. Echavarría. Do you see any change in the purchase of gold ounces in Nicaragua in comparing 2023-2024? What's our competitive advantage? So we sold more ounces in comparison to 2023, and these variations are natural or normal. In terms of the competitive advantages, we have them. We are more efficient than mineros artesanales. And that's why we can give them more for the ounce of gold to the artisanal miners.
Probably the option of an artisanal miner is to sell to Mineros rather than to sell this to an artisanal grinding mill. We do not only have competitive advantages here, but this is a strategy that gives us a natural coverage, and it gives us if the gold prices reduce, the costs are also reduced. This is also a friendly strategy with the environment because all those ounces, if they were not processed in our plant in an environmentally responsible part, they would be ground in places where they use mercury. We are reducing the environmental impact in the country.
That is a win-win situation because the artisanal miner will get better and a higher price for their ore, and the company wins because we have access to the ore at very competitive prices, and we will have a natural coverage when there are price variations. For Mr. Romero, can you tell us something about La Pepa project in Chile? We have an interest of 20% in that project. The owner of 80% is Pan American Silver, and we think that Pan American Silver wants to sell this project. If they sell that, I think we will participate in that transaction, but there is nothing confirmed about this. Why do we think that Pan American has an interest in selling that? Because it's a very small project for them.
It's not a big enough project, so the company is paying attention to that, and that is not attractive for a company such as Pan American Silver. So probably they will look for purchasers, and when that happens, we will follow that sale process, but we have no announcements to make about to the market. Next question from Mr. Alvarez. Have you heard anything from the permits in Colombia? It seems that with this administration, we won't have any renewal. What is the current state of illegal mining in the titles of the company? We see the news about this. During this administration, we haven't received any material permits to continue with our operation in Colombia. But in the last administration and in the other administrations, we had called for enough areas, or we had asked for these areas to continue operating.
So we have the lands to continue operating with this administration and with the future administration. What's the possibility for us to manage this? We have requested some permits for some small areas for the formalization, and there have been some advances or progress more than with the regional authorities rather than with the national authorities. The illegal mining is very complicated. We have seen more equipment from Brazil in the Nechí, in the northeast part of Antioquia. And that's an investment that is like if they had invested $80 million in Colombia, $80 million for producing illegally using mercury. They don't produce any royalties, any taxes, any contributions to the state. We believe that the government, that the state should work on this. This is something that affects all of us, not only to Mineros.
If all this activity was done legally and they paid taxes, the income the state would have would be considerable, and the fiscal situation of the country wouldn't be so complex, and we would contribute to the development of the country. For us, it's very sad that they don't continue working on the formalization process, that they don't simplify all the paperwork to do that, and that they do not let people work formally on this. I don't want to finish giving an answer to this question. Not everything is illegal mining, but we also have ancestral mining in a small scale, informal mining with all the possibilities to be formalized. Those are small miners, ancestral miners, informal miners that have the chance to be formalized, but we are victims of the illegal extraction of minerals because we don't think that it's even called mining.
That is something different. That is something totally illegal. This is from Mr. Restrepo. I would like to know how do you manage the political risk in the Nicaragua operations? We manage the political risk in all the operations. We have just told you about the Colombia situation. In Nicaragua, we behave as a visitor. We think that the political situation in Nicaragua is related to Nicaraguans. And because we respect them, we should behave as a guest, as a visitor. We create employment in Nicaragua. We pay taxes. We create well-being, and we invest in the country. The political situation should be solved by the Nicaraguans. That is something that you should consider that we respect them from our company. We respect them. And we should do that in any other country where we have operations where we are not local. And the same happens in Chile.
In Chile, where we have La Pepa, at the beginning of the current administration, there were very concerning signals for the mining activity, and we didn't say anything about that. It was something that Chileans needed to solve. How do we manage this political risk at a macro level? We have to diversify the geographies, and we continue to look for third geographies where to operate. We sold Argentina. We don't have any more problems there, but we continue to explore or look for business geographies. So we manage this risk. We atomize that risk.
Thank you, Andrés. For the moment, we have no more questions. We have only some messages, like congratulation messages, and we thank you for that because the Mineros team has worked a lot in at least these last two years, during this last year, to have these results.
It's not like, as my friends tell me, it's like your life is quite easy, as my friends tell me, because the gold price is quite good. Yeah, we know the gold price is good, but the company is harvesting all the benefits of that gold price because we sold the foundations, and we built those foundations. I think that I have been the one that has I mean, I'm not the one that has made the greatest effort, but it's the employees of the companies because these are committed people that work in areas that sometimes are areas that are difficult to have difficult access, with difficult environments, with love and dedication to their company. That fills me with emotion and pride.
Thank you for the messages, and I will send them to the employees of the company tomorrow when we will have this meeting that is called the Coffee Cup with the President, and some people come to my office, and I will tell.