Hello, and welcome to MMG's 2021 first quarter production report teleconference. This report and today's discussion cover the operational performance of MMG's assets for the March quarter of 2021. Joining us today is Chief Executive Officer, Geoffrey Gao , and MMG's executive team. I will now hand over to Geoffrey, who will discuss the highlights in the report, after which there'll be an opportunity to ask questions.
Thank you, Brent. Hello to everyone who is joining us today. At MMG, our first value, as always, is safety. In the first quarter, our operations recorded a total recordable injury frequency rate of 0.79 per million hours worked. This was significantly better than the 2020 result of 1.38. While we will never stop our efforts to eliminate injuries, I am pleased that we continue to benchmark at the very bottom end of global tiers on injury frequency. I am also pleased to report that we continue to deliver stable operations at all of our sites, with production modestly ahead of our budget in the first quarter, despite the ongoing COVID-19 impact. To address the operational performance. In the first quarter of 2021, MMG produced over 77,000 tons of copper and 68,000 tons of zinc.
On a full year basis for 2021, we maintain our guidance for production of between 360,000 and 390,000 tons of copper, and 240,000 and 260,000 tons of zinc. Las Bambas copper production in the March quarter was over 64,000 tons, which despite being 12% below the prior year, was in line with our internal plan. The lower production was a function of the lower ore grade in this current phase of the Ferrob amba pit. Production levels are expected to improve sequentially over the remainder of this year. Initially from higher mining volumes and grades at Ferrob amba, followed the contribution from Chalcobamba in the second half. At Chalcobamba, we anticipate formal permitting to complete during this current quarter. At the same time, we are progressing community discussions and continue to expect mining to commence shortly after formal permitting approvals are received. Turning to community relations.
Despite Las Bambas enduring over 100 days of transport disruptions in 2020, the first quarter of 2021 saw fewer disruptions. This allowed transport operations to run at full capacity for longer periods, and stockpiles were reduced from around 65,000 tons of copper to around 37,000 tons. Pleasingly, transport operations have continued to run well, and as of earlier this week, stockpiles had been further reduced to around 33,000 tons, worth over $300 million at current prices. We will endeavor to transport these remaining stockpiles and realize cash as quickly as possible over the remainder of the second quarter. Moving on to Kinsevere. Copper cathode production of around 12,500 tons are also in line with expectations. Mill throughput was stable, but similarly to Las Bambas, the processing of lower-grade ores resulted in production being lower than prior quarters.
Following a temporary suspension of mining activity in the third quarter of 2020, the majority of mill feed came from low-grade stockpiles and third-party ore. In terms of outlook, we continue to make progress on study and early mobilization works in anticipation of the next development phase at Kinsevere, which will see a shift to the mining and processing of sulfide ores and the introduction of a cobalt circuit. We anticipate a final investment decision during the current quarter of 2021. I will now move on to our zinc operations, Dugald River and Rosebery. At Dugald River, zinc production of 49,000 tons was close to record levels, highlighting consistent strong performance since the ramp-up of this asset in 2018. This outcome was driven by strong recoveries, improvement in mining performance and better extraction methods to reduce waste.
This represents the benefit of ongoing work to debottleneck the mine and optimize the plant. We remain confident that from 2022, we can deliver on our target of over 2 million tons of mined ore a year, and annual zinc production approaching 200,000 tons. At Rosebery, zinc production of over 19,000 tons was 11% higher than the prior year. While lead, copper, gold, and silver production was 19%, 14%, 31%, and 23% higher respectively. Displaying the benefits of the polymetallic nature of the Rosebery ore body. During the quarter, Rosebery celebrated the major milestone of its 85th year of continuous operation. Positively, we see no signs of this coming to an end in the near future, with recent encouraging drill results providing support to our ongoing work to further extend the mine life. Another positive driver for our zinc business is the outcome of the recent zinc treatment charge negotiations.
Benchmark TC was set at $159 per ton for 2021. A more than $140 per ton reduction on 2020, which will provide significant cost relief for both Dugald River and Rosebery. It should be noted, however, that some of this benefit will be offset by the impact of a higher Australian dollar-U.S. dollar exchange rate. At this stage, we are maintaining our C1 cost guidance at $0.70-$0.75 per pound for Dugald River and $0.00-$0.10 per pound for Rosebery. I'm now happy to take your questions. Please, can all questions be directed to me in the first instance. I will then call members of the executive team to respond. Due to the reason of the time difference, Mr. Wei Jianxian, the EGM Americas, is not available today. Together with other executives, I will address Las Bambas related questions.
I will hand over to the moderator.
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 are on a speakerphone, please pick up your handset to ask your question. We will pause to allow participants to join the queue. 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 are showing no questions at this time. I will now hand back to Geoffrey.
Okay. Thank you. Thank you all for joining us today.
Pardon me, Geoffrey. We have a question. Your first question comes from Joanna Tan from Citi. Please go ahead.
Hey, Geoffrey. It's Jack. Jack here. Hey, Ross. Just a quick one. Can you hear me okay? Sorry about the background noise.
Yeah, we can hear you, Jack.
Yes. Thank you. Just a quick one on Las Bambas, Chalcobamba permit. Given that, as mentioned in your production report, the formal permitting is actually continue to be delayed by COVID-19 impacts and also the political situation in Peru, how confident are you in forecasting we're going to get the formal permit in the second quarter of 2021? I guess the question is more referring to, also relevant to the full year production guidance now is maintained. In case of more COVID-19 cases or very slow vaccines, and also the uncertainties, what are the contingency plans and how visible is that? Thanks.
Okay. Thank you. Thank you, Jack, for your question. Regarding the permit of Chalcobamba, this is a process handled by the government. We have been continuously working closely with the government and also the discussion with the community. We don't have the control or have the exact timing, but right now, we do not see significant risk around our timeline to get this permit in place in this quarter. I'm afraid I am not in a position to give you an exact time on that. That's the answer to the Chalcobamba permit. Regarding the COVID situation in Peru, we do see the second wave of COVID-19 from earlier this year. Thanks to the experience we learned from managing the COVID-related risk in 2020, now we got effective health and hygiene protocol. For example, prior mobilization testing and safe accommodation.
Right now, we've got enough accommodation facilities on-site. We have been able to maintain the workforce availability above 90%. That's close to normal level. Right now, we don't think the COVID-19 situation will have significant impact, particularly on our operation. Thanks.
I think, Geoffrey, if I could just add, too.
Okay.
The Peruvian government has given mining companies permission to vaccinate their own employees. We only heard that this morning, so I don't think there's been enough time to enact it. I think that's also a promising sign and reflects the importance of the mining community to the Peruvian economic climate.
Yeah.
Thank you, Geoffrey. Thank you, Ross.
Thank you. Your next question comes from Eunyoung Lee from DBS Bank. Please go ahead.
Hi. Can you hear me clearly?
Mm-hmm.
I have two questions. What is your utilization ratio in Las Bambas mine? Expecting that you are selling stockpile at the peak speed. I didn't read your report. What is the current stockpile at the end of March, and then current stockpile in the Las Bambas for the copper? I understand the COVID-19 situation is quite worse in the South America area, and then so it's very difficult to expect. What you are actually doing to minimize the negative impact to your operation from the COVID-19? That is the first question. The second question, I understand that this year, the zinc TCs has been declined significantly, so that is the positive news for the 2020 level. How much do you expect your EBITDA in the zinc in this year?
How much of EBITDA is expected to grow, thanks to the lowering the zinc TCs? That is the second question.
I may need some clarification on your question.
It dropped from 65 to 37 I think.
I understand your first question regarding the stockpile in the Las Bambas. I have said in my briefing that is the 37,000 tons by the end of first quarter.
Question of the implication.
Yeah. In general, the second question regarding the COVID-19 implication, I have the answer that to Las Bambas operation. We have other operations in Australia and in the DRC. In Australia, the COVID-19 situation is well under control, so no any implication, particularly on our Australian operations. Given the DRC, we continuously monitor the COVID situation and to have all the necessary protective measures in place. So far, we have been able to manage the situation well. The COVID-19 situation in the local region so far didn't have any substantial impact on our daily operation.
Okay. Can I ask how many staffs in the Las Bambas mine have been infected by COVID-19?
You mean?
How many cases? Yeah. How many cases of COVID-19 you have in the Las Bambas in Peru?
I don't have that number with me, but we did have some cases. As I mentioned earlier, through the prior mobilization test, we are able to identify any cases before they really go to the site. That means we are successfully managing the impact and without any direct impact on the operation itself.
I think anecdotally, there's probably close to a 50% infection rate in Peru. As Geoffrey mentioned earlier, we've got about 90% of our workforce on site. I think that they get tested twice before they go to site. We've been quite effective in making sure that we don't have an outbreak on site as such.
Ross, the third question is on the EBITDA benefit of the zinc from the lower TC.
Yep.
Can you please address that question?
Yeah. There has been a significant decrease in the TCRCs from last year, the benchmark being about $300 a ton to $159. That will deliver quite a significant benefit. Where it is being offset for us is that the Australian dollar is much stronger than what it was last year as well. We've got an Australian dollar, U.S. dollar exchange rate of about $0.77. There's a slight benefit, when if you sort of cancel out the TCRCs and the exchange rate. I think what you need to remember, too, there's virtually a perfect correlation between the Australian dollar and the copper and iron ore prices. Obviously, with copper prices being strong, zinc prices are being strong as well. Generally, when the price rises for the commodities, the Australian dollar rises as well. There is a natural hedge there.
Yeah, there will be a small benefit, but it's virtually immaterial. Does that answer your question?
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. Your next question comes from Joy Zhang from Goldman Sachs. Please go ahead.
Hello. Hi. Thank you, management, for holding the call. I just have one quick question about the potential impact from the presidential election in Peru, as one of the candidates seems to suggest that Peru should privatize all the mines in Peru. How do you see the potential impact to Las Bambas if this candidate is elected?
As a business, we really don't comment on the, particularly when we are still in the process. We just finished the first round. We know we got two candidates for the second round of presidential election. Again, we will closely watch the process. Also, I think we, as a business, will, either individually or work together with the other mining peers. The new president or new government, we will also work closely with the government to definitely promote our business development activities. At the moment, I cannot give you further comment regarding any possible implication because it is still in the process. Thanks.
Okay. Thank you.
Thank you. Your next question comes from Chris Shiu from Horizon Asset. Please go ahead.
Hi, Geoffrey and Ross. Thank you very much for the presentation and the Q&As. I've got two questions. The first one is regarding Las Bambas. Could you tell us more specifically, in terms of numbers, what sort of mining volumes and also grades we should expect for the second quarter and the third quarter and the fourth quarter for this year? That's my first question. Thank you.
Okay. Thank you, Chris. Your question around whether we can provide the quarterly production information, particularly on the guidance. We are not in a practice to provide quarterly guidance. I don't think most of the mining companies do that. That's because the volatility of the nature of operation from quarter to quarter. As I said in my briefing, the Q1 production is lower than the prior period, but it's in line with our budget. In our budget or in our internal plan, we will have higher mining volumes and also grades. Firstly, that is regarding this mining sequence in the current Ferrobamba pit. Particularly in the second half, we expect we will have contribution of high-grade ores from Chalcobamba. In our plan, definitely we will have a much better second half than the first one, and the grades will improve gradually.
As I mentioned, we are still maintaining our annual production guidance at the moment. Thank you.
Thank you. My second question is regarding the further strategic development in the Kinsevere project. I do understand that the further investment and project will be dependent on the final decision, which hasn't been made yet. If we look at industry peers, like for example, China Molybdenum, it has entered into a strategic cooperation agreement with CATL, in which CATL has secured a quarter of the stake in the Kisanfu cobalt project, which is also under a greenfield development stage, right? Do you see any interest from these battery makers or electric vehicle manufacturers, and do you see any merits in this sort of strategic cooperation agreements with them, potentially? Thank you.
Yeah. I may answer the question in two aspects. First one is, we are still in the, I can say, the final stage of optimization of the study work on the Kinsevere sulfide project. We expect we can reach the decision point in this current quarter. Second aspect is that we have been in some discussions with, like you mentioned, the battery producers for the cobalt product from our project. Since we are still in the study stage for this project. There were some discussions, but at the moment, nothing concrete I can disclose. Thank you.
Thank you. There are no further questions at this time. I will now hand back to Geoffrey.
Okay, thank you. Thank you everyone for joining us today, and if you still have any further questions, please follow up with our investor relations or corporate affairs team. Goodbye.