Thank you for standing by. Welcome to the MMG Limited Second Quarter Production Report. All participants are in a listen-only mode. There will be a presentation followed by a question-and-answer session. If you wish to ask a question, you'll need to press the star key followed by one on your telephone keypad. I would now like to hand the conference over to Jarod Esam, Head of Investor Relations. Please go ahead.
Hello, and welcome to MMG's Quarterly Production Report teleconference. This report and today's discussion cover the operational performance of MMG sites for the second quarter of 2023. Joining us today are MMG Interim CEO, Mr. Li Liangang, and CFO, Mr. Ross Carroll, together with other Exco members. I'll now hand over to Liangang, who will discuss the highlights in the report before we provide an opportunity to ask questions.
Thank you, Jarrod. Good morning to everyone, welcome to MMG's 2023 second quarter production report teleconference. As always, at MMG, with our first value is safety. Our Total Recordable Injury Frequency Rate for the second quarter is 100 hours worked. This represents a decrease on the full year 2022 period of 1.25. Let's now turn to our production performance for the second quarter of 2023. The other quarter, we provided approximately 93,000 tons of copper and 50,000 tons of zinc. We are pleased to report that we achieved increased production at each of our operations compared to the first quarter of 2023. Las Bambas copper production in the second quarter was 81,000 tons, representing a 153% increase on the same period last year.
After resuming mining activities in March, Las Bambas has remained at full capacity with uninterrupted operations. During the quarter, various operational improvements, including optimization of the third ball mill, have resulted in all mill throughput, reaching 13.6 million tons, the strongest quarter since 2019, and the second-highest quarter in the operation's history. In the second quarter, the state of emergency implemented by the government of Peru and in place throughout the quarter, has allowed for stability along the southern corridor. With the stability, Las Bambas concentrate transportation has remained uninterrupted since the removal of roadblocks in March. Pleasingly, we achieved record high sales of around 470,000 tons of copper concentrate in the second quarter, with around 43% of sales revenue contributed by drawdown of stockpiles.
The reduction in stockpiles for the first half of 2023 is around 70,000 tons of copper concentrate, and when combined with movements in all inventory, we expect an associated stock movement cost of around $957 million to be recognized in our interim accounts. Now turning to an update on community dialogue. We received a formal dialogue process with the Fuerabamba community in April, and these conversations are progressing. MMG remains committed to working closely with the government of Peru and community members, with the aim of ensuring transparent and constructive dialogue. Discussions with the Huancuire community were delayed due to the recitation of the presidents of the community on the 12th of June.
The community has elected a new community president on the 15th of June, and the appointment was registered as the public registry on the 6th of July. The Huancuire community has formed a new negotiating commission for the dialogue with Las Bambas, with the first meeting held on the 17th of July. Las Bambas is a significant contributor to the local, regional, and national co- economies in Peru. Our aim with these communities, with these communities, together with others along the Southern Road Corridor, is to strengthen relationships and lead the long-term sustainable development of our host communities with that of Las Bambas. We are optimistic that more enduring agreements from the continued development of Las Bambas can be reached. Now turning to the Las Bambas outlook for 2023.
In line with prior guidance, we expect Las Bambas copper production to be in the range of 265,000 tons and 305,000 tons, subject to continuous supply, people, and logistics access to site. We are hopeful to be able to commence the development of the Shahuindo deposit before the end of 2023. Moving into Kinsevere. In the first quarter, Kinsevere's copper cathode production decreased by 7% to around 11,000 tons, compared to the same period in 2022. This was mainly due to lower ore mill throughput, caused by unstable power supply from the national grid and a plant shutdown for the installation of the cobalt plant. However, a higher ore feed grade and improved recovery rate resulting from an increased supply of higher grade third-party ore partially offset the lower milled throughput.
The Kinsevere team progressed preparatory work at Sokoroshe II in the second quarter. We expect the mine ore from Sokoroshe II to restart, to be transported to Kinsevere mine site in the second half of the year. I'm happy to report that construction progress of our Kinsevere Expansion Project is on track. During the second quarter, we completed the majority of the structural and mechanical installation for the cobalt plant. Civil work continued for the construction of the concentrator and commenced for the roaster and acid plant. We expect the first cobalt production in 2023, and the first copper cathode from sulfides in 2024.
The Kinsevere Expansion Project is expected to extend the mine life to 2035, and take annual production up to 100,000 tons of copper equivalent production once we reach full ramp up in 2025. As for prior guidance, the expectation of copper production in 2023 remains between 40,000 tons and 48,000 tons. We expect C1 cost to increase to between $3.50 and $3.35 per pound, from the prior guidance of between $2.00 and $2.30, $0.50, and $2.80 per pound.
This was driven by a lower than expected cobalt price, reduced ore milled volumes, caused by unstable power supply, and increased reliance on third-party ore to offset the reduced oxide ore mined. Now, moving on to our Australian operations, Dugald River and Rosebery. At Dugald River, we produced approximately 36,000 tons of zinc in the second quarter, which is a 12% increase. Sorry, which is a 12% decrease compared to the same period last year. The mine has been prioritizing the safe ramp-up of operations since restarting in late March after a 44-day suspension due to a fatal incident in February, with full rates of mining and processing achieved in May.
The zinc production was also impacted by lower mining grades due to the mining sequence and work area accessibility. However, the processing team achieved a record high quarterly recovery rate of 90.9% by driving incremental improvements through various optimization initiatives. The safe and successful ramp-up of operations at Dugald River have allowed the mine's full year production guidance to remain unchanged from last revision, with an expected grade range of between 135,000 tons and 150,000 tons. C1 cost is expected to be in the range of $1.05 and $1.20 per pound.
At Rosebery, zinc production of approximately 13,000 tons and lead production of around 5,000 tons were 13% and 12% higher than the same period last year, respectively. During the second quarter, mined and milled volumes recovered from lost production time in the first quarter related to the bushfi res. Workforce availability also improved, supporting more stable production. Milled ore grades from both zinc and product byproducts were also higher, largely due to mining sequence and a higher contribution from remnant stopes. In line with prior guidance, we expect Rosebery to produce between 55,000 tons and 65,000 tons of zinc in zinc concentrate in 2023.
Due to higher byproduct grades and strong precious metals prices, C1 cost is expected to be at the lower of prior guidance of $0.45 and $0.50 per pound. We are now happy to take your questions. I'll hand over to the moderator. Thank you.
Thank you. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star two. If you're on a speakerphone, please pick up the headset to ask your question. Your first question comes from Lawrence Lau from BOCI. Please go ahead.
Okay, thank you for taking my question. I have actually two questions about Las Bambas. First of all, for, we have a very strong quarter for Las Bambas in terms of production. I would like to know that, if in case we cannot start the development of Chalcobamba before the end of this year, what kind of production will be for the full year? Can the strong performance continue in the next two quarters, even without Chalcobamba? This is my first question. Second, in the presentation, Mr. Li talked about the extension of state of emergency on the southern corridor. It will expire this month. What will happen by then?
Can the government continue to extend the state of emergency without limit? Thank you.
Hi, Lawrence. It's Ross calling, yeah, thanks for the questions. Firstly, with our production guidance, if there is no Chalcobamba, and we're able to operate continuously for the rest of the year, we should be looking at total volume of around about 300,000 tons. That's with no Chalcobamba. Yeah, obviously, it's a little bit hard to predict because we've got the impact of when Chalcobamba gets approved and also the effect of whether we get the road blocks or, you know, major sort of civil disturbances again. Yeah, basically, if we can produce uninterrupted for the rest of the year and no Chalcobamba, it should be around about 300,000 tons.
I think with your second question regarding the state of emergency, it's been renewed to the middle of August, and I think the Minister of Energy and Mines has come out and said openly that the government will continue to utilize the army and the police to protect the hallway, to keep the hallway open. I think get fair warning about is that obviously with the social disruption earlier in the year, that had an effect not only on the individual companies, but also Peru as a whole. Certainly the piece that the government is going to continue supporting us and the other mining companies that are impacted. Does that answer your question?
Yeah, I think largely. Thank you, Ross.
Your next question comes from Chris Xu from Balyasny Asset Management. Please go ahead.
Hi. Thank you very much. My question is regarding Chalcobamba. Your announcement that you are-- you remain hopeful that the development can commence by the end of 2023. How long will it take to come on stream, assuming that, you know, it can commence by the end of 2023? How quickly will that be ramped up to full capacity? Thank you.
Chris, look, that it depends a little bit on the weather conditions. If it's in the wet season, it becomes more difficult because we have to put all the infrastructure. We'll continue building the infrastructure and finishing that. If it happens earlier in the year, when it's still dry, so we're able to sort of do pre-strip and also the infrastructure, construction together or more in concert. You know, the wet season sort of starts in November and goes through to about March. You know, if we happen to get the approval in the wet season, it would probably take us three months to prepare the mine or the pit for production, and then we start the pre-strip and then the mining after that. It's, yeah.
It depends on the season, but you're roughly looking at about three months of preparatory work.
How about the ramp-up to the full capacity?
No, to the ramp-up to full capacity, that would take, probably, you know, six to nine months before we'd be at full capacity.
Oh, got it. Okay, thank you very much.
The next question comes from Jimmy Feng from Citi. Please go ahead.
Hi, thanks for the presentation. I'm very happy to see the normal operation of Las Bambas and the inventory decreasing. I have a few questions. The first question is regarding the inventory. We know that in the end of first half, there is still large inventory in the Las Bambas. Do you have any guidance there, how many inventory will be reduced each month, assuming no more transportation disruption and the Las Bambas mine run at the current rate? The second question is regarding the negotiation with Huancuire community. We know that the first meeting with the new president of the community was conducted recently. What's the feedback? Is there any incoming key timelines for this negotiation and any target for the outcome? That's my question. Thanks.
Yeah, thanks, Jimmy. I might take question one, and then let Troy Hey, who's our Head of Stakeholder Relations and Corporate Affairs, take question two. At the moment, our inventory is about 170,000 tons of concentrate at site. There's two things that impact how quickly the inventory comes down is, firstly, how much we produce, and that depends on the grade, and then obviously how much, or how open the roads are. It sort of roughly speaking, it'll be sort of 30,000 tons of concentrate, which is roughly per month, which would be roughly sort of 10,000 tons of metal or a little bit under 10,000 tons of metal per month, would be the drawdown.
Thanks, Jimmy. Troy here. We're very optimistic with the discussions with Huancuire The good things I think we can take from this is that we are meeting with the community. We've now had, we meet again Tuesday, today. There are also a number of informal meetings happening there. We are able to access, we're talking, we have a schedule and an agreed structures in terms of working groups and a schedule emerging ahead. While we don't have a particular date, I think we're growing in confidence with each meeting that we understand the issues we need to discuss. We have a clear program of meetings. As I said, it would be absolutely fantastic to be able to get in and start work by the end of the year. Nothing that we're seeing today says that we shouldn't be able to achieve that.
Okay. Okay, got it. Very helpful. Thank you. Give you the answer.
Your next question comes from Howard Lau, from HSBC. Please go ahead.
Thank you. Thank you for taking my questions. I got a question regarding our unit cost of Las Bambas. I see that there's some increase of C1 costs this year compared to last year. What's our expectation going forward with Chalcobamba development and also without Chalcobamba development in terms of the unit cost? Thank you.
Howard, so obviously don't have final numbers on this, but so talking generally, if we're at that sort of 300,000 tons a year, I think you'll find the unit costs will stay relatively where they are. If we're able to bring Chalcobamba into production, and get the higher grades and therefore increase our production, I suspect you then see the costs come down to probably that sort of a $1.30-$1.50 range. Until we sort of know exactly when we've got Chalcobamba, it's quite hard to predict.
As I said, if we stay at 300,000 tons, we're probably looking at $1.70-$1.90, if we get up to 400,000 tons or across the 400,000 tons with Chalco, it should drop to in the range of $1.30-$1.50.
Okay. Got it. Thank you.
The next question comes from Eun Young Lee, from DBS. Please go ahead.
Hi, thank you for the good production results. I have two questions. I'm just wondering, how long is the operation possible in the Las Bambas without the development of the Chalcobamba? I'm just wondering, what's the current result in the Las Bambas? In case you can't succeed to develop the Chalcobamba piece, so what is the your sustainability of the operation? That is my first question. The second question, are you considering building on alternative transportation rather than a truck, to resolve the problem with the community? I think that when you develop the Chalcobamba, you need to have more, you know, transportation method and then the way to ship the concentrate. The conflict with the local community is likely to continue.
if you are wondering if you consider any, you know, alternative transportation method to resolve this conflict entirely. That is my questions?
Yeah. Thank you, Eun Young. Firstly, if we don't get Chalcobamba, we would look at sort of production being in the sort of 200,000 tons-250,000 tons a year range. That is sort of the medium term, because as the grade drops in Ferrobamba, it'd be difficult for us to maintain it. Yeah, it would sort of trend down towards that, yeah, 250,000 tons-200,000 tons a year mark, which is obviously not optimal. You know, just naturally, this is a sort of 350,000 tons-400,000 ton mine. Yeah, so that's why Chalcobamba is so important to us. As far as the alternative transport, the only real alternative is potentially building a slurry pipeline.
The issue with that is it's not a short-term fix for us, because to build the pipeline, we would need to get land access for the pipeline, and then there's also the construction period. Then it'd be very hard to predict how long that would take. I think as you can see, the approval timelines in Peru, it wouldn't be a short exercise. Now in regard to your question about the additional volume because of Chalcobamba, when Chalcobamba does come into production, and we get a full year out of it will push it up to about 370,000 tons-400,000 tons a year of production. You know, that's well within our means for transport, and we have actually done that much, transported that much before.
We do have enough capacity to include Chalcobamba, when it comes into production. Obviously, you know, that can still be subject to roadblocks.
Okay, thank you so much.
Any questions?
Once again, if you wish to ask a question, please press star one on your telephone and wait for your name to be announced. We'll pause for a moment until participants register for a question. There are no further questions at this time. I'd like to hand the conference back to Mr. Liangang Li for his final remarks.
Yeah. Thank you, everyone, for your time again. If you have any further questions, please feel free to catch up with our investor relations and corporate affairs teams. Thank you again. Goodbye.
Ladies and gentlemen, that does conclude our conference for today. Thank you for participating. You may now disconnect.