Earnings results of this third quarter 2024. I am Karen. I am your operator for today. Participants are in the listening mode. Please be aware that this conference is recorded. Please note that this is conducted in Spanish and with simultaneous interpretation into English. At the end of the presentation, there will be a session of Q&As only in the web platform. If you have any difficulties seeing the slides in the web platform, you will have to select the platform called Slides. I give the floor to Juan Camilo Obando. He is the Director of Investor Relations for Mineros.
Thank you so much. Good morning and welcome to our presentation of Mineros S.A. Financial Operating Results for the third quarter of 2024. I am Juan Camilo Obando and I am the Director of Investor Relations for Mineros. This call will be conducted in Spanish.
However, should you wish to listen to it in English, please follow. Before we begin, it is important to caution listeners that this call and presentation may contain forward-looking information regarding the company's future results and that, for various reasons, the nature of the mining activity, these forward-looking statements may or may not materialize as anticipated. For this reason, we'd remind investors to exercise caution when making investment decisions and not to rely solely on the information presented here. It is worth mentioning that these presentations contain non-IFRS financial measures such as cash cost and AISC, per ounce of gold sold, average price per ounce of gold sold, adjusted EBITDA, and the net debt. Additional information regarding these financial measures is contained in Section 10 of our MD&A published in Canada, located on our website under the Mineros profile.
Today's call, we have Alan Wancier, Vice President; Ana Isabel Gaviria, Vice President, Legal and Sustainability; Santiago Cardona, Vice President, Colombia; and on the phone, Luis Fernando Villa, Vice President, from Nicaragua. Today is not with us, Andrés Restrepo, who is in Vienna on a work trip. I give the floor to Alan Wancier.
Thank you, Juan Camilo, and good morning, everyone. Thank you for joining us today in our report of the Q3 from 2024. In today's call, we will present the most important highlights of the third quarter, followed by the Q3 on the financial results for the first nine months, our operational results, a review of each operation, and finally, our challenges and opportunities. According to our highlights in the third quarter, we produced just under 54,000 ounces of gold and 190,000 ounces of silver in the first nine months of 2024.
Our production was just under 160,000 ounces. These operating results earned us $20.8 million of net profits in the third quarter. Our Adjusted EBITDA was $62.9 million, and we had a Free Cash Flow of $38.8 million. Also, in July, we paid $7.5 million in dividends to our shareholders. Now, let's see the behavior of the price of gold. During the three months ended in September 2024, the gold price moved strongly higher, breaking several all-time high levels during the period. The closing price for the quarter was $2,634 per ounce, 13% higher than the closing price as at June 30, 2024, of $2,332, and the average price for the quarter was $2,476 per ounce. According to the analysts, one of the main catalysts of the rally in gold was the expectation and subsequent confirmation of the start of an expansionary monetary policy by the U.S. Federal Reserve.
The decision to lower the U.S. benchmark rate by 50 basis points reaffirmed investors' appetite for the metal, which sustained demand for gold during the quarter. In addition to the enduring geopolitical tensions in the Middle East, together with the demand from investment vehicles for the asset, it has supported the historically high price levels seen during this quarter. With this, I will hand over to Juan Camilo, who will explain our financial results.
Thank you, Alan. Okay, we'll start with the quarterly earnings statement, but let's remember that these figures are expressed in millions of U.S. dollars. Revenue increased in 39%, placing in $141 million. Due to an increase of the gold sale price and an increment of 7% in the ounces of gold sold, and a 74% increase in sales of silver that reached $2.35 million.
Cost of sales increased due to higher gold prices, which increased the cost of purchase ore from artisanal miners, greater depreciation and amortization, and higher operating expenses driven by inflation, which increased maintenance and materials and services and labor costs. The gross profit and the Adjusted EBITDA rose 113% and 88% respectively due to higher revenue. Net cash flow was $38.8 million due to timing issues of the payment of income tax in Colombia, lower payments to suppliers for goods and services of $17.8 million due to the sale of the Gualcamayo property. In terms of revenue, this grew 23% because the price of gold rose 19% and because silver sales were 82% higher.
On the cost of the sales, it rose 18% due to higher cost of purchasing artisanal material because of the higher gold prices, higher labor costs, higher cost for services, and higher taxes and royalties. Gross profit rose 33% thanks to higher revenues, partially offset with higher cost of sales. Profit from continuing operations increased due to the increase in gross profit, partially offset by the increasing cost. Now let's move on to cash. Cash for the quarter increased by $30 million, closing the balance to $67 million, and cash flow from operations is mainly composed of income from gold and silver sales, $139 million payments to suppliers, $69 million, payments for employee benefits of $12 million, and tax payments for $6 million.
Cash flow used in investing activities explained mainly by purchases of PPE, $13 million, and purchase of intangibles and exploration process of projects in part of $1 million. The cash flow used for financing activities was largely composed of the payment of dividends, $7 million, and the payment of financial obligations, $5 million. Turning to the adjusted EBITDA. Adjusted EBITDA increased by 88% in comparison to the third quarter of 2023 due to a higher number of ounces of gold sold, coupled with an increase in the average of gold sales price. To close the financial part, let's move on to the debt, to the net debt. The reduction in net debt is explained by a lower balance of credits that is with a balance of $57 million and credits and loans, $29 million. This reflects the company's solid cash position.
As we have mentioned before, as part of our strategy or financial strategy, we constantly monitor the market for opportunities in order to be prepared when cash needs require it. With this, this cash position ratifies our availability to serve our obligations and growth projects. I give the floor back to Alan, who will talk about the operational indicators.
Thank you, Juan Camilo. As you can see in this chart, we summarize the performance of the last five quarters. The increase in production was increased by 7% in comparison to the same quarter in 2023. The increase in production is mainly due to 25% higher production at Hemco, where we observed an increment in the tons processed and an increment of 2% in recovery.
This was partially offset by a lower production of 15% in our Alluvial mine, and that is due to the decrease in volume of material processed and 15% lower grade. The cash cost per ounce of gold increased by 5%, largely explained by the 14% increase in the cost of sales due to higher gold prices, leading to higher cost of artisanal mining, given the increase in the price of gold, as well as the devaluation of Colombian peso that influences some of our costs incurred in that currency, partially offset by a 7% increase in ounces of gold sold. The AISC per ounce of gold increased by 5%, explained by the increase in costs already mentioned and by the 13% increase in capex of operations. The average sales price for the quarter increased by 29%, reaching $2,327 per ounce. Now let's see the operations.
In Colombia, the production of the third quarter was 19,700 ounces, which represents a decrease of 15% compared to the third quarter of 2023. This is because there was a modest reduction in the material processed at 13% lower grade, partially offset by recoveries of 12% that were much better. Compared to the third quarter of last year, the AISC increased 30% due to higher costs on labor and services and increased maintenance and materials costs. This was partially offset by a slightly lower sustaining capex. Gross profit increased by 8% to $16 million, driven by higher gold prices, partially offset by higher labor costs, depreciations, and amortizations. Now let's move on to Nicaragua. The production of Q3 was 24,000 ounces, that was 26% higher than in Q3 2023 due to an increase of 37% in the tons of ore processed, with a 2% better recovery.
All this offset by a slightly lower grade ore. Increased tonnage was largely due to a brief stoppage in Q3 in 2023 for about two weeks as a preparation for a very high rainy season. The AISC was reduced by 10% due to a higher production of gold, and despite the purchases of artisanal material being more expensive due to the high price of gold. Gross profit increased by 496%, principally due to higher revenues due to the higher gold price and more ounces of gold and silver sold. Let's move on to tonnages and perspectives. Our Nechí Alluvial property is behind guidance for annual production and will likely remain below that original guidance given the modestly lower grade and that we have less formalized dredges than the ones that we originally estimated.
Additionally, we experienced delays in receiving and commissioning of a new dredge, delaying the timing for expanding our production capacity. Accordingly, we are revising our guidance lower for Nechí Alluvial. At our Hemco property, production is tracking within the guidance range provided for both mines, and as a consequence, we maintain our guidance for the Hemco property. Regarding the production that comes from artisanal mines, we are narrowing our range because production was reaching the superior end of the same. Given this combination of operating results, we are updating our production guidance to 2024 to a range between 203,000 ounces and 219,000 ounces. In terms of cost, cash cost per ounce of gold and AISC per ounce of gold sold was mainly projected as similar gold price of $1,980, with an inflation of 10% in Colombia and 6% in Nicaragua and a USD-Colombian peso exchange of 4,300.
Nonetheless, year to date, the average realized price per ounce of gold sold has been $2,477, which is almost $500 per ounce higher than the average gold price assumed when preparing our initial guidance. The exchange rate in Colombia is about COP 3,980. This is the year average. It's not the last of the day, but the year price. And due to this and due to the production and alluvial in Colombia, we have also decided to adjust our guidance in terms of cash cost and AISC, as you can see in the presentation. At a given consolidated level, our estimate of this cash cost to close the year goes from $1,180-$1,430 and moves to $1,250-$1,330 and $1,480-$1,580 dollars per ounce, respectively. In the third quarter of 2024, we completed 2,036 meters of drilling in 46 holes, reaching 62% of the drilling plan of 2024.
The objective of this campaign is to increase the mineral resources and mineral reserves at the Panama Mine and the Pioneer Mine. We have intensified our drilling in La Reforma. The newly discovered vein at the Pioneer Mine, Mineros is moving forward with the preparation of an initial mineral resource estimate for La Reforma target, with expected in the fourth quarter, with publication scheduled for 2025.
About the Porvenir project, based on the market conditions of raw materials, the administration is going to improve the resources and reserves of the project and is going to adjust the possible costs of development described in the pre-feasibility study completed in 2023, with a view to maximize the value of the asset and the projected returns. Accordingly, the company has delayed preparation of the pre-feasibility study optimization to 2025.
With this, I would like to conclude our formal presentation, and I open the call to questions.
Thank you, Alan. We'll take some time so we can get more questions, and then we'll open this Q&A session. Okay, let's start with the first question from Eduardo M. He says, in the hypothetical case, the government prohibits Colombian mining, how would Mineros continue operating in Nicaragua?
First of all, we don't think that's going to happen, that to prohibit mining in Colombia. Mining gives us a lot of resources and benefits to the country. We don't think this is going to happen. But to respond to your question, each mine is managed in an individual manner. A mine in a different country is managed individually. They are directly related with the alluvial mine in Colombia, especially our operation. Our operation in Colombia is alluvial, and our mining operations in Nicaragua are underground operations.
They are totally different.
We will see the second question from Mr. Santiago Mazo. He asks, are you expecting a price per ounce in gold and silver higher than the current one, or are you expecting a correction in both?
Santiago, i t is hard to estimate the price of gold in the future. And as we all know, there are many things going on in the world. There are some important wars occurring in the Middle East, in Ukraine. We have a new president in the United States, and all these actions will probably affect the gold price in the future. We believe that gold price has also increased due to the things that are going on in the world, and possibly it has an adequate price. And it depends on more macroeconomic decisions to see if the price will continue growing or decreasing.
We saw a small correction of the price in the last 10 days since the election of the new president of the United States. This is also correlated with the increase of the stock market in the United States. Many times when the stocks in the United States increase, the gold price decreases a bit, and vice versa. Also, due to the expectation of low interest rates in the United States that were being lowered, and now they are more stable. We have to wait and see what happens next year, but at these levels, the gold price will be beneficial for any gold mining.
Thank you so much. We have another question related to the gold price from Mr. Santiago Rozo. He asked, as you mentioned, the gold price has reached very high levels, and we also observed a very decrease recently.
How does this decrease impact or this correction impact the operation and the preferred projected cost?
Of course, any increment in the cost of gold impacts us positively and, in the opposite, impacts us negatively. In the particular case of Mineros, we have a great operation in Nicaragua of artisanal mining, and the cost of artisanal mining is related to the gold price or tied to the gold price. So a reduction in the gold price, although it reduces our revenue, it also reduces in a percentage of our costs. Somehow, we have an actual hedge against the variation of gold prices in Nicaragua.
Thank you so much. We have another question here from Juliano Siqueira. They ask us, do you have any projection for 2025?
Our projections or forecasts are mainly published in the second half of January. So please be aware of that and attentive to these dates.
Nonetheless, we have been communicated different from what we have nowadays. Our two operations continue operating at almost full capacity, and our expectation is to operate positively as we are doing it nowadays.
Thank you, Alan. Juliano also asks us about the regulatory risks in Colombia, such as the one of mineral or mining districts. To respond to this question, Santiago, the floor is yours.
Good morning, everybody. We are constantly monitoring the regulatory and legislative aspects. Nowadays, we have the Decree 044 from the Ministry of Environment. We have to cover about some environmental restrictions, but not in the Bajo Cauca or Lower Cauca and the main mining districts that you mentioned in your question. It's being implemented. It's in these working tables with all the stakeholders or the interested parties.
I think this is an opportunity to work along with the government in the formalization process as we have been doing so. Because there is no doubt that Bajo Cauca has been a territory devoted to the mining business. As you see these strikes in the mining sector for some weeks ago, it's looking to strengthen this mining activity. We think that this agro mining district is a possibility to continue growing with the government or to continue growing in our sector along with the government. We continue working with the different institutions in order to manage this type of possible regulatory changes.
Thank you, Santiago. Next question is from Alice Delgado. They ask about the optimal ratio of gold ounces versus the annual production for a mining company. How is Mineros in these terms?
The more gold reserves we have, the better.
In mid-size companies that work with the underground mining, they have reserves for three to four or five years, and they continue working on this. In Colombia, we have a life of mine for 10 or 11 years only in reserves, and that is much higher than average for an alluvial mining or also for an open-pit mine. In Nicaragua, we have five to six years, but nonetheless, the greatest part of our artisanal production in mining, as you know, the artisanal mining is not measured by reserves. This is ore that we buy to artisanal miners that is not measured under the methodology NI 43-101.
Thank you, Alan. Next question is from Mr. Juan Antonio Mejía. He asks about this coverage. Currently, you have this coverage in gold, or are you exposed to commodities?
Why don't you propose to rebuy the shares in Colombia to increase the floating stocks in Canada? Juan Antonio, we don't have those gold coverages. We are 100% exposed to commodities. And in terms of the other question, the second half of the question, we are always studying and seeing what's the best way to benefit our investors. What you have asked is definitely an option, but there are many other ways to benefit them, and all the options are considered.
Thank you, Alan. Next question from Joanna Rivera. One year ago, during the call, you mentioned there were three more years of the concession. What's the current status? What's the due date for Nechí to continue exploring the mining title? And what's the risk that under this government, we are not approved in a new environmental license to continue with the operation?
Joanna, thank you so much for your question. We do have. I remind you that the mining operation in Colombia that reached yesterday turned 50 years. It has some regulatory transition periods in which we are ruled by an environmental plan that is approved for the total project, for the total operation. We have these concession titles where we require environmental permits that we will manage later on. And this reading of the plan of the environmental plan is the one that you mentioned that last year, we highlighted the three years of coverage. This implies that once we require permits for the use of resources, such as the use of water, and we have to change our environmental management plan that covers the whole project. So we are already working in this new terms for one of our operational stages to continue in the fourth year, as you mentioned.
This is a recurring topic, and this is part of our operation. We have to continue with this due to the particular features, due to mobility. This is not a fixed operation, but every year we move. So part of our business is to make this feasible in the future. The other point that you cover about the continuity or the risks, we are working along with the local authorities and also the national authorities with Antioquia and ANLA to manage these processes in the future. We are also working, as I mentioned before, new possibilities or modalities of feasibility through these formalization processes that show improvement or give more flexibility to other areas and other process flow to continue with the business. We are working on this in the next three years.
As we mentioned, we will have more updates on this environmental management plan and other permits in other areas that will allow us to give flow and continuity to this.
Next question is from Freddy Machado. He asks, according to the exploration results and the production results for Porvenir, Panama, and Pioneer in Nicaragua, the production perspective, is it good for next year?
In terms of Porvenir, as we mentioned before, we are in these studies to continue to improve the project to make it more profitable. And in relation to Panama and Pioneer, we don't see many changes in comparison with this year. See, next year in comparison to this year, we produce between 33,000 and 38,000 ounces in our underground mines. And we think that is a good estimate for next year as well. We don't see drastic changes.
Thank you, Alan. Another question from Mr. Santiago Mazo.
Do you see any chance of having operations in other countries equal to the current ones to diversify your portfolio and the risks of Latin America and working in Canada or the United States?
Yes, of course. That's one of our tasks in Mineros. We're always looking for new assets. We look for assets from Alaska to Patagonia. We always have these conversations with different companies in order to achieve this goal, to acquire them. We don't have a specific transaction, but we are always looking for that. That's one of the strategies of Mineros.
Now, let's move on to another question from Erick Domínguez from the investment team. What's any additional information that you may provide?
We have 20% of a project called La Pepa that is in a very, very early stage.
Our partner, Pan American Silver, is the owner of 80%, and we've had conversations with partners in the last month to see how to progress with this. But beyond this, we don't have additional information about it. It's an interesting project. It's a large project, and it is in the early stages.
Next question is from Echava rría. With the current prices of gold, have you considered to use futures to perform or to do any coverages for the next years?
As I mentioned this before, we don't have live coverages, but we are following the gold price very closely to see if there is any opportunity. Our coverages are maybe for mitigating risks, for assuring cash flows in case an operation is very expensive or is difficult to perform. And our operations are okay in terms of cost versus the gold price.
But that's something we continue to monitor because last increment sounds or it is very interesting.
Now, a question for Santiago from Mr. Camilo Álvarez. Given the situation from some weeks ago in Bajo Cauca and the recent publication in different articles about the situation of the Buriticá mine, I would like to know if there is any presence of illegal groups in the mining titles and what's the level of risk?
Thank you so much, Camilo, for your question. Last publications and news that have talked about this that I mentioned, this mining strike that was there for a couple of weeks, it's related to the decision of the government of widening a decree that gives competence to different forces to intervene the illicit or illegal extraction of ore for the government and all its military forces.
The Navy and the miners are asking them for them not to be chased. One of our strategies of management of risk is to work along with these miners and the government to formalize them and also being able to maintain and give continuity to our operations and that we all work in the mines that we can work, just like what we see in Nicaragua where we work with the miners. We see risks of invasion. The gold price will always be attractive. That makes it more profitable. Any kind of operations. So the illegality or the illegal numbers increase, we have that risk. That's part of this operation. And we do have the mitigation mechanisms and administration of that risk always along with the institutions and the authorities.
Thank you, Santiago. Next question. And we have Ana Isabel who is going to help us respond.
The question is from Manuel Rodrigo. In SEDAR+ Canada, they published the approval from the Superintendencia Financiera de Colombia of the OPA, and it starts acceptance period on November 20th. We don't have any information in Colombia. Do you have any information on the pre-agreement? Is there any difference between the information published in Canada and Colombia?
The information related to OPA, according to the Colombian regulations, should be published by the operator. In this sense, all the information related to the OPA is available in the daily bulletin of the Bolsa de Valores de Colombia. And you can also look for that in the web page of Mineros. And we have the different publications, the notebook and the annexes.
Thank you so much. Mr. Santiago Rozo, given the current price, could you provide an estimate of intrinsic value of the share?
Intrinsic value of the share is the net assets divided by the number of shares. That in a stock exchange market is not the value of the share. With the prices of gold, I think that our share should be stronger because we are having very good results. If we divide this on a yearly basis, the current EBITDA should be about $200 million in EBITDA. The market capitalization of Mineros reflects that reality, and my expectation is that the share price of Mineros should be higher or in better levels.
No more questions. We'll give you some seconds so you can write more questions. Thank you for your participation. We're very happy with our results, and we expect to continue bringing you good news in the next quarters.
Thank you, everyone. We'll talk to you again in three months' time.
We conclude our call. Thank you so much.