Hello, and welcome to MMG's 2022 first quarter production report teleconference. This report and today's discussion cover the operational performance of MMG's assets for the March quarter of 2022. Joining us today is MMG Interim CEO, Mr. Li Liangang , CFO, Mr. Ross Carroll, EGM Corporate Relations, Mr. Troy Hey, and EGM Americas, Jianxian Wei. I'll now hand over to Liangang , who will discuss the highlights of the report, after which there will be an opportunity to ask questions.
Thank you, Brent, and hello to everyone who's joined us today. As always, our first value at MMG is safety. Our total recordable injury frequency rate for the first quarter of 2022 is 1.68 per million hours worked. This is a slight increase in the TRIFR of 1.09 for the full year of 2021, and is a timely reminder that we can never stop our efforts to eliminate all injuries from our workplaces. Following the success of 2021, we produced around 79,000 tons of copper and 50,000 tons of zinc in the first quarter of 2022. Las Bambas copper production in the first quarter was 69,000 tons. This represented an increase of 7% on the prior comparable period last year.
Operational performance was very strong, with throughputs up by 2.5%, combined with stronger recovery rates. Despite Peru continuing to be impacted by high rates of COVID-19 infections, we were able to maintain good workforce availability due to strict health and safety protocols for our people. I will now address the current situation at the Las Bambas mine, where members of the Fuerabamba community have recently invaded the site to protest allegations that we have failed to meet certain social investment commitments to that community. For safety reasons, we have been forced to temporarily suspend operations. We completely reject these allegations and have presented evidence of completed commitments to the government for review. We remain extremely frustrated by these actions that continue to disrupt the operations of the mine and ultimately impact the development of the Peruvian economy.
We provide large social investments and business support to local communities and take our commitments seriously. Las Bambas is a significant contributor to the local, regional, and national economies, and we will continue to pursue peaceful and constructive dialogue with the aim of reaching an enduring solution. Regarding the Fuerabamba community's dispute, it should also be noticed that this community was relocated to a high-quality modern township that was developed in consultation with the community. They have also been the recipient of many other benefits, such as employment, financial compensation, healthcare, education, and social investments that amounts to one of the most generous relocation settlements in the history of the mining industry. There are further meetings scheduled with the Prime Minister's office in the coming days, and we hope to reach a resolution for this current disruption.
Despite these ongoing community challenges, Las Bambas remains a world-class copper asset with significant growth potential that we are working towards delivering upon both for our shareholders and for the people of Peru. We are now finalizing construction of the third ball mill, which is expected to be commissioned in July and will help to lift recovery rates. At Chalcobamba, we received formal permit from the Peru Ministry of Energy and Mines on 24th of March. The development of this deposit and associated waste dumps is planned to be commissioned progressively over the next few months, followed by the first production during the second half of 2022.
We currently expect higher production rates for Las Bambas in the second half of this year, and full year copper production guidance is maintained as between 300,000 tons and 320,000 tons. Regarding cost, Las Bambas cost guidance in 2022 remains in the range of $1.30-$1.40 per pound. Moving on to Kinsevere. Copper cathode production of around 9,800 tons was 21% below the same period last year. This was the result of lower grades as plant feed was still entirely reliant on lower grade stockpiles and supplemented by third-party ore.
Despite the lower feed grades, processing plant performance remains pretty strong, with an average recovery rate of 96.2% compared with 95.5% during the same period corresponding to the prior corresponding period. Following the end of the wet season, mining of the remaining oxide reserves restarted as planned in the middle of April. The mined ore will be supplied to the plant at the beginning of May, which will improve the average plant feed grade for the remainder of the year. In line with prior guidance, copper cathode production for the full year of 2022 is expected to be between 45,000 and 50,000 tons. C1 cost is expected to be between $2.50 and $2.80 per pound.
Higher than last year to reflect the higher costs associated with the ramp-up of mining activity over the remainder of 2022. In addition to the Kinsevere expansion project, following the approval by MMG's board on 24th of March, the team has started site works and will step forward with construction. With this project, the mine will see a shift from the mining and processing of sulfide ores and the introduction of a cobalt circuit, extending mine life by 13 years and taking annual production up to more than 100,000 tons of copper equivalent production. First cobalt production is expected in 2023, and the first copper from sulfide feed in 2024. I will now move on to our zinc operations, Dugald River and Rosebery.
At Dugald River, zinc production of around 38,000 tons was 23% lower than the prior corresponding period due to the combined impact of lower ore mined, lower throughput, and reduced ore grades. From January to mid-February, Queensland implemented COVID-19 quarantine restrictions, which reduced labor availability at Dugald River mine and impacted mining and processing volumes. The lower feed grade was a result of mining lower-grade stops in the current phase of the mining sequence, but was largely in line with expectations. We maintain our production guidance for Dugald River in 2022 of 170,000-190,000 tons of zinc in zinc concentrate. Meanwhile, the anticipated C1 cost is unchanged in the range of $0.70-$0.80 per ton.
We expect stronger silver and lead by-product prices will offset the impact of higher TCs. At Rosebery, zinc production of 11,831 tons was 39% lower than the same period last year. Similar to Dugald River, ore mined and milled was impacted by workforce availability due to COVID-19 restrictions in the first quarter of the year. Ore grades also fell as the mine transitioned mining activity to lower grade stops. In line with prior guidance, we expect Rosebery to produce between 55,000 and 65,000 tons of zinc, in zinc concentrate in 2022. C1 costs are estimated at $0-$0.15 per ton.
The impact of higher treatment charges and higher costs associated with operating at depth and increasing energy prices is expected to be offset by the strong contribution from higher by-products production and prices, demonstrating the benefits of the nature of the Rosebery ore body. Now, we are happy to take any questions.
Hello, operator. Are you able to prompt for questions, please?
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 handset to ask your question. Your first question comes from Chris Shiu from Balyasny Asset Management. Please go ahead.
Hi. Good morning. Thank you very much for the presentation. I've got a couple of questions for Las Bambas and Dugald River. The first question is, this morning we are seeing some headlines saying that Peru has just declared a state of emergency to restore copper production at Southern Copper's [Qulong] mine. I'm just wondering, I mean, this is something that has rarely been done by the current administration. It's never been done before for Las Bambas, despite the fact that Las Bambas production is probably double that of [Qulong]. I mean, what is the, you know, reason, you know, for that change in tactic? I mean, is that going to, you know, change the, you know, situation in Las Bambas as well?
That's the first question. Thank you.
Thank you for your question. I would like to have Mr. Wei , the Executive General Manager – Americas, to take your question, please.
[Foreign Language] At Las Bambas today, I was aware of that, the declaration of this state of emergency has been used for Southern Peru. Las Bambas currently is coordinating with the government, and we hope they can take the same action for Las Bambas in order to resolve the problem.
Got it. Now we are seeing invasion of Las Bambas properties, right? I mean, is that also, you know, an escalation of the protest? Because in the past, it's really just blocking public roads, right, public properties. Now it's actually, you know, entering into MMG's premises.
Today, the Minister of Energy and Mines has arrived on Las Bambas site, also had a dialogue with the community. The minister basically had a position like the reconciliation to resolve the problem. They believe that all the meeting was conducted in a peaceful environment. We believe there is no possibility or risks for the, you know, escalating the situation. The minister tomorrow will have another conversation or dialogue table with another community. We believe there will be improvements to secure that there will be a good environment for the dialogue table.
Got it. Thank you very much. Last question is on Dugald River. If we compared the production volume and the sales volume, I think in 2020 as well as 2021, production was like 25,000 tons or so above the sales volume. I think in the first quarter of 2022, the trend is similar. I mean, if we annualize that difference. I'm just wondering, how should we account for that difference? What is the inventory level now? I mean, do we have any plan of lowering the inventory or keep that level? Thank you.
Regarding the Dugald River, as I just mentioned in my reports, the production has been affected from January to mid-February due to the COVID-19 infections and low workforce availability. But if we look at the March production volume, it was above budget. It shows that the production has been catching up from the March month. Hopefully, if we have you know the COVID-19 situation stays stable, we still you know. That's why we keep the annual production volume unchanged, the expectation volume unchanged.
Regarding the stock level, I think that's the sales has been, how to say, the offtake sales of the concentrate from Dugald River has been most likely ahead of the plan. We don't have really any real challenge in converting the sales.
Sorry. If I can
Uh.
Chris, I think what you might be referring to is the payability.
Yeah.
There's roughly a 25% difference between production and the payable metal. That's actually the payability from the smelters. As Liangang again said, we have minimal stockpiles of finished product on site. Basically, you know, it's a little bit lumpy. We might have three shipments a month, but basically as we produce it, we sell it.
Got it. Understood. Okay, thank you very much.
Thank you, Chris.
Thank you. 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 will pause momentarily to allow further questions to register. The next question comes from David Wei from Balyasny Asset Management. Please go ahead.
Sure. Thank you, management. Thanks for your time. I just have a quick question regarding the inventory at Las Bambas. I noticed that it has reached like 88,000 tons by this quarter. I want to know whether you have a like a very specific plan how to unwind this or clear this inventory in the rest of the quarters. Also, I want to know like what the ideal or normalized inventory for you for the inventory at this site. Yeah. Thank you.
Yeah. Thank you, David. Regarding the concentrate inventory at Las Bambas site, I think that you know the major constraints is the you know road blocks. You know, we have been challenged by the road blockages starting from the year. We plan to have a 100,000 DMT shipments for the month of April. You know, the recent community invasion has disrupted the shipping schedules or plans.
If we can keep the road blockages, you know, issue solved, I think that we will have the chance of getting the site inventory level to normal by the end of the year of 2022.
Yes. Thank you. Actually, I just want to gauge, like, what the normal inventory you mean, whether it's like 20,000 tons or 40,000 tons. Like, I just want to gauge the rate, how can we, like, destock this pileups.
Yeah. David, I think the ge-
Mm-hmm.
The general inventory at site would be anywhere between 0 and 20,000 tons of metal. Yes, we've basically-
[crosstalk] Got it.
Got 4x or 5x more than what we would expect to have.
Sure. Got it. Crystal clear. Yeah. Thank you. That's all my questions. Yeah.
Yeah. Thank you, David.
Thank you. There are no further questions at this time. I'll now hand back to Mr. Li for closing remarks.
Okay. Thank you for your time, everyone, and that concludes today's call. If you have any further questions, please follow up with our investor relations team.
Thank you.
Thank you.
That does conclude our conference for today. Thank you for participating. You may now disconnect.