Mr. Juan Camilo, you can start. We can begin.
Thank you so much. Good morning, and welcome to our presentation of Mineros S.A.'s financial results for the second quarter of 2024. My name is Juan Camilo Obando, and I'm the Director of Investor Relations of Mineros. The original language of this call is Spanish; however, the option to listen in English is available. At the same time, identify the box that says Media Player and click on Mute. Before we begin, it is important to caution listeners that this call and presentation may contain forward-looking information about the company's future results, and that for a variety of reasons, including the very nature of the mining and mining activity, this forecast may or may not be realized as anticipated.
For this reason, we advise investors to exercise caution when making investment decisions and not to rely solely in the information presented here. It is also worth mentioning that this presentation contains non-IFRS measures, such as cash cost and all-in sustaining cost per ounce of gold sold, average price per ounce of gold, adjusted EBITDA and net debt. Additional information on these measures can be found in Section 10 of our MD&A, published in Canada and available on our website and on SEDAR+ under the Mineros profile. Today, I'm joined by Andrés Restrepo, Chief Executive Officer and President of Mineros; Alan Wancier, Chief Financial Officer and Vice President, Finance. In addition, we have, by telephone, Ana Isabel Gaviria, Vice President, Legal and Sustainability; Santiago Cardona, Vice President of Colombia; Luis Fernando Villa, Vice President of Nicaragua. With this, I will pass the call to Andrés Restrepo. Good morning.
Thank you, Juan. Good morning, and thank you for joining us today for our second quarter 2024 results presentation. In today's conference call, we will provide you with highlights, our financial results, results of operations, a review of each operation, and finally, our challenges and opportunities. Let's start with the highlights. In the second quarter, we produced just under 54,000 ounces of gold and 2,025 thousand ounces of silver. This is greater than what we had had in 2023. In the first six months of 2024, gold production was 105,444 ounces. On the other hand, in April, we paid $7.5 million in dividends to our shareholders.
In addition, we committed more than $10 million to finance three major projects in our Works for Taxes program with the Colombian authorities in the Bajo Cauca region, investments that we share with the other companies. In joint projects with Grupo Nutresa, we allocated more than $5 million to provide libraries for educational institutions in Bajo Cauca, and $2 million to provide sports equipment for schools in Bajo Cauca. On the other hand, in a project with Grupo Argos, we invested $3.5 million in the municipality of Cáceres, Antioquia, for the construction... This money will be for the construction of a pedestrian bridge. Let's turn now to the performance of the gold price.
It is important to note that the increase in gold prices, although it positively affects our income due to a better selling price, it also increases our costs because it makes it more expensive to purchase artisanal material in Nicaragua. In contrast, in a scenario of falling gold prices, the situation is reversed, making us less vulnerable to falls in the price of the mineral. It is possible that some of you may see that the behavior of the Mineros results is less good, less favorable, when the gold price is high, comparing to the old, but is less bad when the price goes down.
According to data from the World Gold Council, during the second quarter of 2024, the gold price ranged from $2,065 - $2,427 per ounce, averaging $2,038 per ounce for the period. Thus, during the first half of 2024, the gold price has risen by 12%, outperforming most of other asset classes. Gold's strength has been largely due to central bank buying, Asian investment flows, consumer demand, and the continuation of regional conflicts such as Israel, Palestine, and Russia, Ukraine. The growing geopolitical risk of spreading conflict is also weighing on investors' minds, which has consistently supported the gold price. With that, I will turn the floor over to Alan, who will explain our financial results. Good morning to all. Let's start with the income statement for the quarter.
Let us remember that the figures are expressed in millions of U.S. dollars. Let us remember and let's look at the second quarter. Revenues increased 40%, thanks to an 18% increase in the average price of gold per ounce sold, and an 83% increase in silver sales. All this despite a 6% decline in gold ounces sold. The cost of sales increased because it was more expensive to purchase artisanal material by $7.8 million, given the participation of artisanal miners in an environment of rising gold prices, as Andrés just mentioned. Also, we had higher costs due to the 13% devaluation of the U.S. dollar against the Colombian peso, and higher maintenance and material costs, service costs, and depreciation and amortization, which was higher by $1.8 million.
Gross profit and Adjusted EBITDA increased by 1% and 4% respectively, due to higher revenues despite higher cost of sales. Income from continuing operations decreased, mainly due to higher material purchase costs from artisanal miners and higher exchange rate expenses, which amounted to $2.6 million, as well as higher taxes, which amounted to $7.7 million. Loss from discontinued operation decreases to zero due to the sale of Gualcamayo in September 2023. We now come to the accumulated results. In the first six months of 2024, revenues grew 15%, due to a 14% increase in the average price per ounce of gold sold, and an 87% increase in silver sales that increased $5.7 million. This was slightly offset by a 2% reduction in the sale of gold ounces.
The cost of sales increased 20% due to higher prices for artisanal material, given the higher price of gold, higher salary costs, higher payments for services, and higher taxes. Gross profit and Adjusted EBITDA increased by 4% and 6% respectively, thanks to higher revenues, which offset higher costs. Net income from continuing operations was affected by a modest increase in gross profit, which was offset by higher costs and lower revenues due to the payment of insurance on the Llanuras plant last year of almost $4.9 million, and higher deferred tax expenses of $8.6 million, mainly caused by the devaluation of the US dollar. Finally, the loss from discontinued operations, as I mentioned previously, decreases to zero due to the sale of Gualcamayo last year. Now, let's look at the cash flow.
Cash decreased by almost $18.7 million, closing at $27.2 million as of June 30, mainly due to the timing of income tax payments in Colombia, with a payment of $27.5 million in the second quarter of the year. With respect to cash flow operations, it is composed mainly of gold and silver sale revenues of $126 million, offset by payments to suppliers, $77.3 million, employee benefit payments, $15 million, and the aforementioned tax payment of $27.5 million.
Cash flow generated from operations for the six months period ended June 30, 2024, decreased by $15.4 million compared with the same period in 2023, due, as mentioned previously, to higher income tax payments and lower revenues from sales of goods, offset by lower payments to suppliers and lower payments to employees due to the disposition of the Gualcamayo property. The cash flow used in investing activities is explained by purchases of PPE for $12.6 million, and purchases of intangibles and exploration projects for $1.6 million. The cash flow used for financing activities was largely composed of payment of dividends of $7.5 million, and payments of financial obligations for $8.2 million. Now, let's move to adjusted EBITDA.
This increased 4% with respect to that same quarter of 2023, due to higher revenues from higher gold prices and higher silver sales. To close our presentation, let's talk about net debt now. The increase in net debt when compared with the same period of the previous year is explained by a lower cash balance. At the end of the quarter, loans and receivables were up to $29.1 million, while the balance of cash and cash equivalents was $27.2 million. As part of our financial strategy, we constantly monitor the market for opportunities in order to be prepared when cash flow needs require it. With this, I give the floor back to Andrés, who is going to talk about the operating indicators. Thank you, Alan. Now let's move to the operating results.
The graph on this slide summarizes the operating results for the last 5 quarters. As can be seen in the bars, production in the second quarter decreased by 6% compared with the same quarter of 2023. The decrease in production is mainly due to a 16% reduction in Colombia, due to a 9% reduction in grade and an 8% reduction in volume of material processed due to sequencing problems in the mine plan of the Nechí Alluvial Property. We are currently making efforts and taking various initiatives to improve this situation. I want to pause to explain this a little bit better. The alluvial property is, it's close to the Nechí River, and we are moving forward from south to north in the exploitation. So these are not homogeneous.
They have years when some sometimes are richer areas, but others are poorer. These sites explains the reduction in some years or areas that the sterile material is easier to extract, and the other one is difficult. So there's, like, some sands that block, and the place makes it difficult to drag a processor. So this is not the pressure that we're doing, that dredging process, to be as efficient as possible, and this is why we are showing and trying to do these initiatives. But we should not abandon these areas because they have less tenors and are difficult to process, because we are moving forward to the north, and we are closing areas. So therefore, we cannot go back so easily with operations under water that were previously mined.
The cash cost per ounce of gold sold in the second quarter of 2024 was $1,304, and the AISC per ounce of gold sold from continuing operations was $1,514, compared with a cash cost of $1,044 and the AISC of $1,225 in the second quarter of 2023. So this means that there's a substantial growth in CapEx, but on costs. And the increase on costs, they were explained. What we are having in the Nechí, but also higher price of gold that is better with the purchase of the mineral. The 25% increase in cash cost per ounce of gold from continuing operations is mainly due to a 22% increase in cost of sales due to higher gold prices.
This is the exchange rate effects. When there's a revaluation of the Colombian peso with respect to the dollar price, the cost is higher of the processing operation in Colombia. So if you noticed, we have a very good price for gold, but all the factors that could offset the benefit of this better price of gold were given in this second quarter and this first quarter of 2024. The increase in all-in sustaining costs per ounce of gold sold from continuing operations is due, in part, of the increase, as we said before, by the cash cost, together with a 12% increase in sustaining CapEx expenses. But it would have been offset, an offset with greater production compared to the previous quarter, but it's higher. It's much more higher. Now let's look at the operations, starting with Colombia.
In Colombia, second quarter production was 20,600 ounces, a decrease from the first quarter of 2023, but an increase from the quarter, from the first quarter of 2024. This 16% decrease is explained by lower volumes and lower grades, as mentioned earlier. While cash cost and AISC increased by 25% due... This is important to highlight, that this is a very good operation, and it has generated benefits of gross profit in the second quarter. In Nicaragua, the second quarter production remained stable. We have a consistent operation at 33,000 ounces, similar to the same quarter of 2023 and the first quarter of 2024. Why is it so stable? Because the plant in Nicaragua operates at full capacity, so there's no great variations. Some variations with the tenor. It's the same thing in Colombia, can happen in Nicaragua.
Generally speaking, as we operate at full capacity, you don't see and don't wait to see great variations unless we will take capital that will increase the situation that we are not seeing and looking right now, really. The AISC per ounce of gold increased 18%, mainly due to higher gold prices and higher purchases of artisanal ore, as we just explained. The gross profit for the second quarter of 2024 was 34% higher than the second quarter of 2023, due to higher revenues from higher average selling price per ounce of gold and higher silver sales. This, as I said before, this is partially offset by a 23% increase of cost of sales.
Both significant increase in revenues and the lower increase in costs are largely due to higher gold prices, given the way in which artisanal miners participate in higher metal prices. Now, with this phenomenon in Nicaragua, that we have incorporated lots of efficiencies in this operation, we have mining that are more technified and advanced. We have been more efficient, but the impact on gold prices is really big and make it visible, these improvements that we try to incorporate every month. Now, let's move to our challenges and perspectives. Here, we have a comparison between the guidance that we provided at the beginning of the year and the actual production situation as of June 30, 2024. Based on guidance, our production estimate was between 209 and 229 thousand of ounces of gold.
Cash cost and AISC levels per ounce of gold are between $1,180 and $1,270, and $1,435 and $1,530, respectively. Consolidated data at the end of the quarter show production of 105,444 ounces, a cash cost of $1,240, and AISC of $1,472, $1,472. So we are under that guidance, as you can see. We are currently on track to meet our production estimates, while our costs have trended above the upper end of the range, due to the strength of the gold price and also to the Colombian peso and lower production at Nechí. But in our opinion, these are alarm and alert signs. This is a warning.
These are under the variables of the business, and it does not affect on the results of our company. At this stage, we are maintaining our guidance, but we are continuing to monitor these parameters closely because it may happen. Maybe we cannot comply the guidance of cost if we have a rally of a price of gold, gold, but this is not necessarily is a bad news. These are not bad news. With respect to Porvenir project, talking about growth perspectives and exploration, updates to the geometallurgical assumptions, along with the 2023 metallurgical work analysis, are underway, and the company expects to receive the results to update the geometallurgical model in the second half of 2024. This has delayed a little bit our study of pre-feasibility until 2025, but I think this is not bad.
It is important for the company to take its time to analyze Porvenir. It's a project that has its challenges, a project that has high content of zinc and other minerals as well. So this is polymetal project, so we have lots of challenges here, and we need to be cautious, and we have to have, we need to have as much information as possible to take measures in the future. So I believe that the analysis that you may do, as long as the project is underway with its feasibility pre-feasibility is good because it's different to find some surprises during the pre-feasibility and feasibility and correct them, doing some changes in its design, in its process, rather to find a surprise when you are already in the advanced phase.
Regarding the Luna Roja deposit, we expect to finalize the technical work and analysis supporting an updated mineral resource estimate for the project by the end of 2024, for release in early 2025. At this point, I would like to thank everyone for being with us today, and I would like to open the call for questions. Now, we are going to start the Q&A session. If you have any question, please write it in the box, in the webcast chat box. Questions will not be received any other way. The questions will only be accepted to the chat box in the webcast area. Okay, let's start with the Q&A session.
The first question that we have is from Juan Antonio Mejía, and he's asking: Why the drop in production in Nechí plant, and why it had the cash flow dropped so much with the current gold prices?
Okay. I had explained before that the variation of the Nechí operation is due to two factors. We are dredging less amount of material because the confirmation is more complex to dredge, so it is normal. This site has been changing through area where we are working. This field and deposit is changing. We have easier materials to dredge, and some others are more complex and due to the tenor as well. These are normal variations that are produced in the mining sites. The operation is also profitable, but we need to dredge this year to comply with our mining process, because we cannot go back.
We cannot go back due to the cash flow. Alan also talked about, I'm going to say... I'm not the financial operator, but please, Alan, correct me if I'm wrong, but the change in that, in the calendar made us that we had to pay taxes in the second quarter, while in last year we did it in the third quarter. So this makes it that from each, it's less good, but we hope that the third one will be better. So yes, Alan, correct me if I'm wrong. Yes, Andrés, what's normal is to pay taxes in Colombia, specifically in the second quarter. Last year they were paid in the third quarter because we had, we had an acceptance this is with respect to taxes. We had an extension, and this was like to the cash flow.
Good morning. I wanted to compliment Andrés. The situation in Colombia's production, apart from the evolution that the deposit has, as Andrés explained it before, and the uncertainty of the business, we are close to start a suction dredging, that in order to improve the volumes of to adjust this variation of the deposit. This is one of the measures to improve stripping, so it's important for you to know. And on the other hand, we have had three machines that are out of service, that we are planning to put them and to install them again on operation. So this will complement the change of the deposit that Andrés already explained. Yes, we have a dredge. We bought a dredging machine in Brazil, and this will help us to increase the amount of material that will be dredged. Thank you.
Okay, let's continue with the next question: What are your expectation for the tax of cashflow over the earnings for the following year? And this will be in the third and fourth quarter. Those cash were higher, and this income tax, what are you waiting for this year? Additionally, could you describe how the cash flow that's available, how are going to be where is this going to be moving the third and fourth quarter?
Well, as I said before, variations in cash flow of this quarter with respect to the previous was the payment of taxes in the second quarter. This is totally normal. Generally speaking, the last two quarters of the company always generate more cash flow than the first two quarters of the company. Therefore, what do we wait to improve? And, and there's cash flow in the second half of the year, and indeed, as George, what you are asking is that the tax, the income tax of the total 2024 will be equal to what is paid in the cash flow. Let's remember, however, that what's paid in this year is the, income tax for 2023, and what we will be paying in 2025 will be the income tax of the ongoing year.
Second question. Next question: What is your opinion, that Porvenir should be developed?
Yes, more. Yes, I agree.
What would be those acquisitions? Would you consider a cash flow and, shares?
Yes, Porvenir is okay. We have been increasing numbers and figures, but Porvenir is competing with other options that we may find due to the list that we have in Toronto market. We are seeing all options, exploring them.
We are still working in improving the Porvenir projects on all means, but also it competes with other opportunities of operations and acquisitions. We are looking projects, other projects, that demonstrate interesting figures, and also small operations similar to ours that can be interesting candidates to merge. However, nothing has been concluded yet, as not too solid on this road. But we believe that we need to continue looking forward in order to obtain the earnings in Toronto. But secondly, because this is a good time to appear and to look in market. Some companies have not changed, prices are good, and our price also improved with new shareholders. So therefore, it puts us in a place where a merging or a merge will be good for shareholders, current shareholders of Mineros.
All of these are opportunities that a mining company has to be looking permanently, but there's nothing enough advanced or sufficiently enough to share any information right now. But when we have it, we will notice it promptly. Okay, let's continue with another question. Could you give us more detail about the reduction of production in Colombia? And is there an adjustment of the strategy with a new investor? Do you have a perspective to, of this to 2025? Okay, let's start with the first one. What happened is what I just said. Mining... it's like this around the world. This is a process where you estimate based on drillings that you have, on distance between one drilling area and the other one, and it is difficult that they will comply the perspectives or estimates exactly 100%.
Sometimes it's 100%, but the message that I, Juan was saying at the beginning, the perspectives and projections may vary, partly by its nature of our business. So therefore, what is going on in Nechí? Yes, we would like to take a good opportunity of the gold price, but it's not a critical situation because it's the behavior, the normal behavior of the deposit. We are occupying on improving the amount of gold and material that we are dredging. We are looking to improve recovery. We analyze production, we are monitoring to try to see that this reduction by the normal evolution of the process, but that there will be no phenomenon that we have missed in our analysis.
Until now, we have not found anything different of what we are sharing today, but we are doing efforts to improve, to improve numbers, to improve figures, and improve indicators as well. There's no adjustment in the strategy for the new investment, investors. When we had the new investor, we made a presentation of the strategy of Mineros, and We validated with them. They agree to what we are doing. The truth is they are supporting us with strategy strongly. So there's nothing new to share apart from this. Our perspectives for 2025, they are similar for these years because we are trying to work at full capacity and operate at full capacity in an operation. So in order to have a substantial change in the numbers, what could happen, that we will incorporate a new project, that's Porvenir.
But Porvenir, the conditioning of a new plant and a new mine can take two or three years, so therefore, we will not be seeing it in the following year. Or that we can incorporate a new capacity in milling and in the Nicaragua plant. We have a plan to widen and to make this plant bigger, but this will be spoken then later on. Maybe some efficiencies will be incorporated. Maybe we can have a better tenor. But what we can expect from the company is consistency, and with respect, that will generate benefits of good gold prices, and that it's able to keep good figures, good metrics with the gold price, where the gold price is not so good. Make predictions about what's going to happen with the gold price and the dollar price; it's difficult.
We are focusing on keeping efficiency on the operation as much as possible.
Okay, the following question also comes from Julian. "Can you remind us the expectations of Porvenir and Luna Roja and the possible entrance of operations of both plants?"
Yes, Porvenir, we were talking about productions between 50,000 and 70,000 ounces. Please, Alan, correct me if I'm wrong. He's in the meeting here. And we had a life for this mine for 10 years. This year, we've been working in exploring more to increase the reserves and also metallurgical or part of this process, of this project, and reviewing the metallurgical aspect to become with the recovery part.
So if we would deploy Porvenir, and we will keep the actual, the current situation of the mine, Mineros, this could be between 50,000 and 70,000 ounces. Luna Roja is too early to see. What we found in Luna Roja, it was an area, an interesting area, with resources, potential, potential resources, but it is too early to say how much ounces, how many ounces we can find in this deposit. Last year and this year, we did some additional exploration around this target, and as I was saying before, at the beginning of next year, we will share with you a little bit more of Luna Roja, but for now, we are doing all the analysis of exploration campaigns, and we don't have results that we can certify, and therefore, we can share with you now, today.
Next question from Lucas Carvajal: "Do you estimate an increase on expenses of exploration for the following months, or this will be stable for the rest of the year?"
They will be stable for the following, for this year. If we are looking, this second semester, we'll be starting or making budgets of exploration, and therefore, there can be some variations between one year and the other, depending on the campaigns proposed, but it is too early to see this. What we are trying to keep in Mineros is like a balance. It's a balance between what's invested in growth and what's been invested in maintenance, and to have a healthy cash flow, and also to pay dividends to our investors. This is what we are looking.
Okay, next question from Nelson Valencia: "What work-... Are you moving forward for the resources and the mineral reserves of the project, projects in Nechí? We've been 10, 11 years of a life cycle, of life, for the life of Nechí, where we are starting initial investments.
It is too early to say, but yes, we have identified some areas where we can continue, and we can move forward this operation, operation. But for now, in order to replenish these resources in Nechí, we are working because we have a good life, mine life, a good life, life of mine for 10 years, and it's good for this. We don't have further questions for now. We are waiting some minutes if there's another question.
Okay, let's wait. In the meantime, let's summarize what we have just said. What do we see from the board?
We see solid results in geographies that are complex, and a company that is currently in a situation that it's privileged to look options of growth, to explore growth options, and this is what we are doing. We haven't concrete anything else yet, but we are not in a rush. We have a good cash flow situation. We have a low debt, and we have operations that are operating continuously with no problems. We can look more calmly at the different opportunities that we may find. There was a question. Yes. Okay, there's a question.
Andrés Otoya, he was asking about the possible purchase of our shares.
Purchasing shares has to be approved by the board of directors of our shareholders in Colombia, so this is something that we have been looking and, we have been exploring. But we did not show this to before. We did not had, an authorization in the past meeting, but we've looking really closely and in with interest. Maybe we will surprise you from the meeting, promptly, but we still don't have a decision. This is not a decision yet. It has not been taken, but we are looking for this. And at the same time, and what Andrés Otoya said before, due that we are looking for opportunity, well, it would not be a bad idea to have a cash in the company because sometimes those opportunities that we are looking makes more sense, sense buy it with cash than with shares.
So the fact that we won't jump, that we have a good position, let's make some shares. Again, purchase some shares, we will have less cash and less opportunity to explore new opportunities in the market. So many times, these opportunities may make us to have some transactions with shares, but sometimes it's better to do investments with cash. Most of all, when the company with which we can do a good acquisition, or we want to keep a partnership or an alliance, has a better price than we have in the market. So making that transaction with cash is less disruptive for shareholders. So therefore, this is more to think about the situation of the company, to take opportunity in advance of having a good... Why not an extraordinary meeting to talk about this purchasing of shares?
Because we believe that we need to keep options for the company. But many times they ask that they are punished or to recognize the true value of the shares, but we expect to have a good dividend for this year. So sometimes it's difficult comply with all the expectations and having all open options for the company, but we believe that the management we are doing is balanced around every part. We have had a good behavior of the share. We have a good dividend. We have, and we're keeping the options for the company to take advantage of any opportunity we can see in the future for the growth of this company.
Okay, we don't have further questions, therefore, we will be concluding this meeting for results of second quarter.
We want to thank you all for being here today, and we hope to see you in the following meeting for the next earnings results.
We will be concluding now. Thank you for participating. You can close the call now. So let's stay a little bit more-