Earnings Call: H1 2018

Aug 14, 2018

Morning, ladies and gentlemen. My name is Andrew Lindsay. I run Anter Castle's office in London. So today, we bring you our half year results webcast. This year, for the full time in many years, we're bringing you from Santiago. And we have here Ivan Arregara, our Chief Executive and Alfredo Acuta, our CFO, who will take you through the presentation. I'll hand you over to Ivan. Thank you for your introduction, Andrew, and welcome to the Antofagasta webcast and conference. I would like to start with a brief overview of our performance during the first half of the year. I further will then take you through our financial results. I will then talk about the copper budget and our development options with a focus on value delivery and return. Finally, I will close with our guidance for the year, which is unchanged and key messages before opening the floor for questions. I'm pleased to start by saying that there have been no fatalities at the group this year. And indeed, we have had more fatalities since 2016. We are working hard to ensure that this continues to be the case for the rest of the year and the years thereafter. We continue to focus on reporting high potential incidents and on the verification of critical safety controls. We have extended the focus we apply to safety to also include health. This will further help our path efforts to prevent future risks of disease or injury as a result of tasks carried out today. As expected, it has been a challenging first half of the year with the rate impacting our performance. It is important to remember that we only said that 2018 would be a year of 2 very distinct halves. As we have been guiding previously, our production profile for the year is skewed to the second half as grades are projected to increase throughout the year, allowing us to meet full year guidance. This improvement in grades will also be maintained and carried into 2019. The greatest improvement in performance is expected at Fintinola Concentrates, where the increase in grade will be the most pronounced as Malmo moves into higher grade areas of the Esperanza pit. We also expect to achieve higher recoveries at Faivar and Antucoya. In both cases, processing conditions have been adjusted earlier in the year to optimize recoveries, but the typically more extended leaking cycles will result in improvements later in 2018. There are some headwinds such as cost escalation from input prices and a stronger Chilean peso. However, we remain focused on costs, operating consistently and using all of the capacity at our operations. At the same time, we continue advancing the growth alternatives at Los Pelambos and Centiguela and focus on returns to shareholders. You have all seen this slide before, but it is essential to how we operate and our decision making process for capital allocation is simply simple. Cash is applied first to maintaining our operations, including sustaining CapEx and mine development and then allocated to pay dividends according to a minimum committed payout ratio of 35% of underlying net earnings. We then consider capital investment in development options with a strict focus on returns. We then excess cash returned to shareholders, typically by paying a larger final dividend. The 2017 30 dividend, which was completed in May this year, was €500,000,000 equivalent to a payer ratio of 67%. And the interim dividend this year is €67,000,000 which represents 35% of net earnings. In the period, we also repaid some $310,000,000 of debt. Now turning to the highlights during this period. As I mentioned earlier, during this first half year, we had no fatalities. In terms of copper production, we produced 317,000 tonnes in half 1. As you will recall, since the beginning of the year, we planned to produce 45% of the annual production during the first half of the year. And if you allow for the 9,200 tonnes of copper in concentrate stockpile at Los Bolandos at June Close as a result of the pipeline blockage, we achieved this. Our production guidance is unchanged for the year at a range of between 705,000 and 740,000 tonnes and a net cash cost of $1.35 per pound. We have labor negotiations with the 2 main unions at Los Pelambres, which were completed successfully. And now our next scheduled negotiation is not until next year. As part of our plan for monetizing some of our infrastructure assets, in July, we announced that we came to an agreement to sell the open access and regulated sections of Centilela transmission lines for $117,000,000 And we are considering divestment alternatives for some of our other energy and water assets. Social and environmental issues are important to the sustainability of our business and the way we approach this is key. At Saldivar, we submitted an environmental impact assessment to the authorities to extend our water permits to match the life of mine currently extending it to 2029. And we also entered in Sayurah into a renewable power agreement. During this first half of the year, we have continued working on optimizing our assets. Los Pelambres continued delivering high performance. The blockage of the concentrate pipeline was an isolated incident as we have moved to more intensive preventive maintenance practices and have adjusted our procedures to avoid this type of event recurring. Los Pelambres received approval for the environmental impact study for the Phase 1 expansion. I will refer to this in more detail in the growth alternatives section. At Centinola, we have added a second line of oxides with the addition of a new open pit mine and a plant, including crushing and heap leaching to feed the existing SX EW facility. Inpanto oxide is ramping up and is expected to contribute from 30,000 tonnes of cattle this year. The moly plant is also ramping up at Centinela, and we shipped our 1st cargo of moly from Centinela in July. As mentioned before and as part of our plans, we agreed to the sale of a section of the power transmission lines for $117,000,000 at Centinela as well. At Anticoya, we are focused on further recovery optimization, and we're looking at ways to further improve gas management and spent ore disposal to capture the high level of fines in the mine ore. At Salveira, we continue to optimize recoveries for high sulfide content ore. Actions taken include reducing the height of the leach pads and adding chloride following the NITIYA patented process. During the 1st 6 months of the year, Salvita signed a new power purchase agreement, which will bring its energy cost down from 2020 onwards, and it will be the 1st mine in Chile to operate with 100% of renewable energy. I would like now to pass over to Alfredo, who will give you some more detail on our financial performance. Thank you, Ben. Let's now move to our financials and let's start with a brief overview before going into more detail. Revenue rose by 3.6 percent to $1,000,000,000 for the year, while EBITDA was $904,000,000 16% lower than in the same period last year. This is consistent with our previous guidance of lower sales tons and higher production costs impacting our first half EBITDA. Earnings per share totaled $0.194 per share, 34% lower than in the same period last year due to lower EBITDA and higher depreciation and amortization charge as Encuentes Oxide is now in production. Operating cash flow at 890,000,000 was down 22% because of lower EBITDA and net cash costs were $1.52 per pound. Our EBITDA decreased by $175,000,000 to 904 $1,000,000 in the first half twenty eighteen. The impact of higher realized copper, gold and metal bearing prices was 239,000,000 on revenue, partially offset by lower sales volume because of plant lower mining grades, which reduced revenue by €175,000,000 dollars Management costs increased by 181,000,000, partially due to the start of the Umpentes oxide mine and plant. Costs were also impacted by the strengthening of the Chilean peso and higher input prices, especially energy and diesel, acid and steel based consumables like grinding gold. Additionally, we're spending too even more on exploration and evaluation as we move to progress exploration work at what we consider a highly prospective target in Chile. The valuation expenditure at 2 meters also increased following the reformation of the project right to renew its mineral lease. The contribution to our transport division associated and joint venture has also decreased by $9,000,000 At the railway, although transport volumes increased by 2.2%, higher diesel costs reduced margin temporary as this gets added to the customers. Now turning to cost. The pet gas shows the movement in our cash cost before the product credit by 9. Cash cost before the credit credit were up $0.36 per pound compared with the same period last year. All operations were affected by the stronger local currency and higher input prices. In the terms of Los Pelambres, in addition to costs were impacted by the one off funding bonus. However, after by credit credit, Los Pelambres unit costs at €104 per pound were 5% lower in the first half compared to the last year. At Centenary, the strongly local currency and higher energy, diesel and asset prices were combined with the new contract oxide mine and plant coming into production and ramping up to achieve full capacity later in 2018. In addition, lower grade resulted in lower absorption of fixed cost as copper production decline. Our total debt level by total credit were $0.40 per pound for the first half, dollars 0.08 per pound higher than in 2017, which brought our net cash cost to $1.52 per pound. In the bottom graph, you can see the driver of the change in the cash cost. Our successful cost and competitive business program achieved $54,000,000 in saving, reducing cost by 6 sorry, dollars 0.07 per pound during the 1st 6 months of the year. Expected lower production for the first half of 2018 impacted unit cost by $0.29 per pound, while exchange rate inflation and input cost dropped cost up by $0.13 per pound. As you know, we implemented our cost competitiveness program back in 2014. And since then, nearly $480,000,000 has been renewed from our cost structure. The repeat improvements are not just something that we do in the downturn, but are something that we strive to do all of the time just in the same way as we always strive to improve safety. Our target this year is $100,000,000 of which $54,000,000 has been captured so far, and a large portion of the annual target has been already identified for our team. One of the main goals of this program is to improve the structural competitiveness of the group, and we believe that by embedding our program framework in the company, we will achieve this saving in a sustainable way. We are committed to continue working to improve our cost position. The total capital expenditure for the half year on a cash basis was BRL422 1,000,000 and we are on track to be at or below the $1,000,000,000 guidance for the year. As we explained at the beginning of the year, in 2018, sustaining capital is projected to include a concentration of scheduled mine fleet investment and total dam well enlargement costs during the year. Moving on to cash flow and the meaning in the group net debt position. Net debt decreased by $79,000,000 before paying the final 2017 dividend of $400,000,000 which took the closing net debt to $781,000,000 Cash flow included EBITDA from subsidiaries of $845,000,000 plus a cash positive contribution working capital movement of 46,000,000 dollars Non cash outsell included taxes paid during the period, which were higher than in the same period last year, even though pre tax profit reduced. Current year provisional tax payments are based on pre year profit, which were higher in 2017. In addition, tax payment also include $148,000,000 of payment in settlement of the sustaining balance in respect of the 2017 tax charge. Although it is not shown in the graph, scheduled debt repayment totaling a net of 308,000,000 dollars were made during the first half of this year. As of the end of the period, our net debt to EBITDA ratio was 0.32x, maintaining the strength of our balance sheet. I would like now to pass you back to Ruben. Thank you very much. Thank you, Alberto. I would like to say a few words about the copper market. The outlook for copper in the medium term remains very positive. China continues to grow strongly as do the other major economies in the world and the role of copper in a more sustainable and green economy is well recognized. On the supply side, significant constraints remain given grade decline and the long lead times enveloped below production expected from the new projects in the industry's pipeline. However, in the shorter term, we expect volatility in copper prices to persist. Uncertainty arising from the ongoing global trade negotiation is impacting all commodities. And in the case of copper, although we have not seen any discernible impact on demand yet, the market seems to have already reacted. To date, disruptions to global supply has been lower than normal and currently everyone is watching labor negotiations here in Chile. The main risk, of course, is that a trade war may impact global trade, and that will be negative for commodities, especially if it were to have a knock on effect on economic growth in emerging markets. In the meantime, the impact is being felt through the short term price decline. However, we are well positioned, especially with our improving rate profile. And in the long term, the outlook continues to be very positive for copper. Now I'll take you through our growth opportunities. During the year, we have continued progressing with our 2 main development projects, the Los Pelambres incremental expansion and the expansion alternatives at Centinela. By the end of this year, we expect to approve the EUR 1,300,000,000 Los Pelambres expansion with production starting towards the end of 2021, adding 55,000 tonnes of copper production a year. At Centinela, we will decide on whether to expand the existing plant or build a separate one by the end of the year. And in either case, we expect production to start in 2023. The second concentrator would add 180,000 tonnes of copper equivalent, and the alternative expansion would be smaller, and we're working on quantifying this at the moment. In addition, we are continually shaping our portfolio, investing in mining projects and divesting some of our non mining assets. We announced the sale of the Centinela transmission lines in July, and we're now considering monetizing the value of some of our other infrastructure and equity investments. Remaining focused on copper mining is core to our strategy. On guidance, as I mentioned earlier, our guidance is unchanged. For the full year 2018, production guidance is in the range of between 705,000,740,000 tons and net cash cost to be close to $1.35 per pound, assuming no further strengthening of the Chilean peso and current moly prices. For the second half of the year, you will see our production up as growth will grow quarter by quarter and at the same time, our cost will decrease to reach our targets. So let me conclude then by summarizing the main points. As expected, this has been a challenging first half of the year and grades are expected to improve in the second half of the year, and that will carry on into 2019. We remain focused on cost and operating consistently using all of the spare capacity at our operations. Our growth projects are on track, and we are committed to maintaining our financial discipline. We have low debt levels and have a flexible and robust balance sheet. Thank you for your time. And now I will be happy to take any questions that you may have. Thank you. We can now take our first question from Daniel Major from EBS. Please go ahead. Hi, there. Thanks very much for the call. A few questions. Can you give us any guidance on your expected expenditure in exploration and valuation and also corporate and other lines in the second half of this year and into next year? Secondly, on cost, I believe there were a number of one off items that are not captured in the net cash cost guidance, some increases in provisions, environmental expenditure, etcetera. Can you give us any guidance on those cost items going forward whether they will be repeated? And then the third question, we're halfway or sort of halfway through the year. Can you give us any preliminary guidance on the CapEx for 2019 assuming that you approve the loss peramory expansion in line with your plans by the end of the Okay. Look, on costs, I mean, the first thing I would stress is that if you look at our unit cost performance in the first half of this year compared to the prior year, 80% of that is linked to lower production volume. And therefore, as we move into the second half, the rate of absorption of our fixed costs increases due to higher grade and higher production. And therefore, we expect to see that therefore removed from our cost increase and cost base. And then the balance of the cost increase on a unit basis is exchange rate and input costs, and about twothree or half between onetwo twothree of that was actually compensated by our cost and competitiveness program. As you mentioned, we've had a few one off items, whether it's environmental compliance expenditure. We also spend some amount in what's the sort of closure of some material assets, and those are one off. And therefore, we do not expect those to recur in the second half. So we're not expecting any material, I would say, one off items or charges as we move into the second half. And then the rate of absorption out of higher production, which is the main component of the unit cost increase in the first half, we think will help our cost come down quite significantly in the second half. In terms of exploration and evaluation, we have in fact increased our spend in exploration. Think we've got a few targets, which we have been working on now for a few years in Chile, and we feel those are very attractive and prospective. And therefore, we are spending more money on drilling, which is where we want our exploration money to go. I think the trend of spend or the run rate that you've seen in exploration spend in the first half is likely to continue in the second half, maybe slightly lower, but in that order of magnitude. And as I say, it's very much driven and directed towards specific targets that we've been looking at for quite some years and which we're now moving into doing some very significant drilling there. On the capital expenditure, I think we will provide guidance when we release later in the year our Q3 production figures as we normally do. And therefore, I am unable now to share specific numbers. I think we have been keeping our capital expenses figures within guided figures. We've guided for this year that it would be in the range of around $1,000,000,000 and we're probably coming at the number which is slightly below that. If you look at next year, we expect to have spend on sustaining CapEx and mine development. I think different to this year where we have some specific mine replacement activity and also the enlargement of some of our tailings dam. Some of that spend will not be there next year, but we will add on the other hand the development of the Los Pelambres incremental expansion. So figures, I think, will compensate. And therefore, we don't expect to see great differences in CapEx year on year. However, specific numbers, we will give guidance as we move into the later parts of the year and release our Q3 production results. Great. Thanks. So, just to follow-up on the CapEx and just to reiterate, mine development and sustaining CapEx is expected to drop sequentially year on year in 2019 versus 2018. Is that correct? If you can repeat that, sorry, we didn't get that. You expect mine development and sustaining capital to sequentially drop year on year in 2019. Is that correct? In the case of sustaining CapEx, yes, to the extent that we don't have a concentration of capital replacement on mine fleets, which we're having this year, we would expect that to get reflected in the numbers for next year. Mine development probably at similar levels as to what we've seen this year. Great. Thank you very much. Okay. We can now take our next question from Alain Gabriel from Morgan Stanley. Please go ahead. Yes, good morning gentlemen. Two questions from my side. Firstly, on the sale of energy and water assets. Do you mind as a sort of sense of the scale of the capital release that we should be expecting in the next 2 years as a result of those sales? And the second question is on the grade profile going into 2019. You gave us a bit of a teaser saying that the grade strength is likely to continue well into 2019. Are you able to put some numbers behind that, at least for the 2 major mines, Centinela and Pelambres? Okay. Look, in the case of the sale of energy and water assets, I think we are giving the first steps in that direction by means of having divested, first of all, some of our equity stakes in power assets, which we had in the past, and we continue to move in that direction. We've also sold the transmission lines at Centinela, the portion of the transmission lines, which is of open access. And in the case of the water assets, we're exploring the options there. I'm a bit reluctant to give a specific number because that's something that we're looking at as we speak. And I think it will be very much driven by the specific opportunities that we see. I am of the belief, we are of the belief that these assets, which used to be part of the core infrastructure required therefore part of normal investments, will progressively, in our case, be done and the bulk of those investments done by others. And it's moving in sort of that direction that we pretend to continue. In the case of water assets, I mean, we've got a water supply system at Centinela, which is based on seawater. And therefore, it does involve installations in the port, align and pumping facilities. And in the case of Pelambres, we are now developing a water supply system, which does involve the construction of a desalination plant. And while we've decided to build it ourselves, we believe that once it's built and construction risk is removed, it will be a good opportunity for others to take. The replacement cost of desalination or seawater, in that case, facility tends to be around $1,000,000 per liters per second. So that's the sort of replacement value that those assets tend to have. In the case of Pelambres, we are building a plant which roughly will be able to pump around 500 liters per second. And in the case of Centinela, our water system has a capacity of, depending on usage, between 800 1,000 liters per second. And so that will sort of give you a feel of where those magnitudes might be. But again, we will be communicating and share those opportunities as we see them specifically arise. On grade, yes, we have been indicating for a while that especially at Centinela, which is the site that shows most of the grade viability that we're moving now into a higher grade zone. We've guided that Centinela will have a grade on average for this year of around 0.52. And I think for next year, we expect to see a number which is closer to 0.6 and slightly above 0.6. That's the sort of grade change that we expect to see. We went through a very low grade zone earlier in the year, and obviously, that stepped through into the numbers, and that was part of the guidance that we had provided previously. And now we are into a much higher grade zone, which will be carry on into 2019 with grades north of 0.6, which is quite a significant change compared to what we were feeding at the beginning of this year. Thank you. And Pelambres, do you have any sense of the grade development, a little more flattish year on year? In the case of Pelambres, we tend to see much more stability in terms of grade. We are mining today at around 0.67. Percent. And while that's expected to be a slight increase, it's probably going to be 1 or 2 points. So maybe 0.68 but not significantly changing from what we're feeding today. The Lambda's, as we've seen, had a great Q1. Production was slightly down on grade as we have guided, but in fact costs were very competitive. At Pelambres, unit cash costs remain close to $1 in terms of per pound basis and a very good cash generation. We don't expect to see a lot of variation of the viability that we see in Centinela Pelambres. So next year, a slight pickup in grade, but of around 1 percentage points or thereabout. Thank you. Very clear. Thank you. Thank you. Next question comes from Tyler Brody from RBC. Please go ahead. Great. Thank you. Thank you very much for the conference call. Just a follow-up on the last costs if you sold those? And then if you can give an extent of exactly how much the cost comes from the operating rate? And then secondly, if you could perhaps comment that Nela has seen a bit of up and down in terms of production, the throughput rates. Do you expect that to stay relatively elevated in the second half? Okay. I didn't get the second part of the question. It didn't come across very clearly. Maybe you can it was around throughput. Is that Centinela or the Lambres? Yes. It's the audio is very bad. Sorry for that. Yes. Okay. So let me on the yes, I mean the arrangements if we move into monetizing some of these noncore mining investments, we convert those investments into a variable cost based on the consumption of water or whatever specific supply, very much as we do with energy today. So we would have we would be expected to see some impact on cost, That's exactly the sort of trade off and assessment that we will do in making these choices. We believe that some of these assets are very attractive for some investors. And therefore, on the back of a supply contract, which is a solid commitment to purchase water or energy as the case may be, there may be a good opportunity for us to enter into a transaction which is very value accruing, which creates value rather than the opposite. So that's exactly what we want to ensure that happens. Some of the rates at which these investments get discounted by different parties are different to the ones that we use in mining. And therefore, we think this can be done with the delivery also of value accretion. And therefore, that is the choice and trade off that we will make. We would not go into these transactions. We would not do these investments if that hurdle of being value accretive would not be achieved or accomplished. But we believe that the maturity of the investors and operators around these assets today in Chile has or is changing such that, that can be accomplished. On the throughput, I didn't get the question precisely, but I will comment on throughput at Centinela. I mean, we have installed capacity of 105,000 tonnes a day. We've been running, if you look at our figures as we reported them, at numbers which are below that full capacity. And our aim is to obviously use all that latent capacity. Now those 105,000 ton a day are based on a certain level of hardness in the ore. And therefore, when we feed harder ore, that obviously does have a trade off with throughput. And what's happened in the first half is that we had lower grade at Centinela and also had harder ore, and therefore, that's reflected in the performance of the plant. I think the good news is that as we move into the second half, we'll see higher grade and softer ore, which will allow us to capture that extra throughput capacity for that period. So that's what we expect will happen in terms of throughput. In the case of Tel Andres throughput rate, the plant is running at quite interesting rates in the first half. We did see an increase when we compare it to the first half twenty seventeen, And we believe the plant is running actually operationally very well. So that's positive from the point of view of what we can expect in the balance of the year and then going into 2019. A year in which we expect to see higher growth and therefore we do want our plants to be running at full capacity. Next question comes from Jason Fairclough from Bank of America. Please go ahead. Good morning, guys, and thanks for the opportunity. Just first, I did want to say congratulations on the safety record and the 0 fatality record. Antal really does stand out here versus some mining industry peers. Two questions from me. First on the projects, could you give us some color around sensitivity to inflationary pressures? To what extent should we see higher steel, higher oil, stronger Chilean peso feed through into your CapEx budget? Have you locked in any prices? 2nd question, could you give us some color on sulfuric acid and the market locally in Chile? And just tell us whether you buy sulfuric acid on spot or on longer term contracts? Okay. Thanks for the comment, Jason, on safety. I mean, certainly, that's very important. It is the first and foremost priority and we're certainly pleased with what we're seeing in terms of safety record. On the projects, I think in the case of Pelandres, which we expect to take to the Board for approval, We did, as you will recall, review that capital cost estimate. And in doing that, we mentioned at the time that we had derisked in our view the capital cost. And therefore, we are very much locked into values that are consistent with delivering the capital cost estimate that you know. So we're not expecting, anticipating to see impacts on that cost coming out of appreciation of Chilean peso or for that matter still beyond what we've already incorporated as escalation into that cost estimate. So we have and are reviewing that very closely, and we have we see no change to that figure out of cost escalation or further cost escalation or inflation, which was exactly the purpose of reviewing that number when we did. On so no change there expected. On sulfuric acid, I think what we've seen in Chile in the first half is that there's been more imports than you would normally have seen compared to the prior year. I think part of that has to do with the fact that some of the smelters in Chile have been making some upgrades as the norm, the regulatory norm on environmental emissions is changing, and therefore, there have been some stoppages. So imports have come up in the 1st part of this year. We expect that situation to be relatively transitory, and we're looking at that very closely. The way that we purchase sulfuric acid is that around 70%, 75% is on term contracts. So the spot component is around between 20 25. So most of it, we do commit the supply on a current basis. The price of acid has gone up. That's what we've seen as a result of the lower availability of acid locally. But as I say, as these smelters get back into production at full capacity, we expect some of that to ease. In the longer term, the acid is used mostly for leaching operations in oxide. And as you know, those oxide operations are coming down as those mines age. And therefore, what we expect over time is that imports in Chile will actually come down as we move into the future. Okay. Thanks very much. Very clear. Next question comes from Edward Sterck from BMO. Please go ahead. Good morning. Thank you. Most of my questions have been asked and answered. But just to drill down a couple of things here, just to talk about the operation. If you look beyond 2018 and the 2020, the exploration spend going back up in the historical range of $150,000,000 to $200,000,000 per annum? And then on the topic of asset sales, just Yes. On the power and yes, I mean the assets that we look at, I think, are, I would say, primarily power and water. There may be some other infrastructure, but it's not really at this stage probably material. I think it's and therefore, we're focused on those two areas when we think of infrastructure, which is supportive of operations and which could eventually be owned by other parties. On exploration, I think we have made some important changes in the way that we approach exploration, which would lead overall, I think, to lower spend compared to what probably has been the spend taken over along the period of time in the past. We're very much focused on what we call the Americas and therefore have, to some extent, diminished and removed expenditure that we were incurring on traditionally or typically during exploration outside the Americas. And in the Americas, I think this is primarily Chile. And also, we're doing some in Peru, in Mexico and in Canada. Therefore, I would think that the level of exploration expenditure that we would see this year is probably in the sort of feeling of what you would expect to see going forward. And as I say, we've readjusted our exploration strategy so that we're much more focused in the Americas and especially pursuing targets with who believe our perspective here in Chile and in the region. Great. Thank you. Next question comes from Jagadish Thal from Exane BNP Paribas. Please go ahead. Hi, good morning. Two questions, please. Firstly, on your volume guidance for 2018, it's very wide range given you are almost 8 months down into the year. Was there no point in narrowing this down? And how comfortable are you with the top end of guidance versus your first half performance? Secondly, do you still stand by your gross unit cost guidance of $1.65 indicated earlier in the year, but haven't seen that number in subsequent releases? Thank you. Okay. In terms of guidance, I mean, we have reaffirmed our guidance on volume. We have not narrowed or changed the range. And I think from that point of view, we will move, as we've said in the past, in the second half to mine higher grade areas. And therefore, that range captures the sort of variability that we think is still relevant for these purposes. So the midpoint of that range, which is, I guess, the expected number, remains unchanged. And we have not really felt the need to narrow that at this stage. In terms of cost, I think we are guiding to 1.3 $5 on C1. And I think that's been mostly our focus. I mean these numbers is a single point, and these numbers do vary according to issues like exchange rate, input prices and the like. And therefore, our guidance is focused more on C1 cost, which is really our cash cost, which is relevant as it makes it through our cash flow from operations. And therefore, that's the figure that we're focusing on. I think we don't expect to see variations which are significant at the level of the gross or pre credit cost of $1.65 But our main updates and what we're focusing on is the net unit cash questions on the line at this time. I would now like to turn the call back to the host for any additional or closing remarks. We just got one question here, which is about the market. Just ask you to give a bit more color on your perspective of long term copper price and about long term net cash cost? Okay. I mean on the market, I think we believe copper remains very much a supply story. I think supply is constrained in cocoa, very much more than in other cyclical commodities. And therefore, what we've seen this year is the physical market is starting to move into deficit. And therefore, we are positive on the copper market performance. As you would recall, we have declining grades. And therefore, every year that passes, we do get volume out of our market, out of grade decline with everybody keeping production up. So mid term, long term, very positive on copper as we think these fundamentals will prevail. I think the other comment I would make in the more shorter term is that around 80% of the copper that goes into emerging economies, especially when we think about copper consumption in China, is actually used for domestic purposes. And therefore, it's very much a link to the ability of those economies to continue to develop infrastructure and continue to grow, which is also, therefore, somewhat isolating copper from the sort of trade wars that we're seeing, which are taking place. So I think there's also an element there, which is favorable for copper. And therefore, we remain very positive in our outlook for the copper market. Now we, however, believe that what we control is what we should focus on, and therefore, costs remain very important. We are seeing some cost pressures out of exchange rate movements in half 1 and into prices, as we've mentioned. Some of that is starting to ease as the dollar has gotten stronger out of the monetary changes and growth in the U. S. We've seen that the local currency has started to depreciate again at levels today, which is similar to what we were seeing last year. And in our particular case, most of our unit cost increase comes out of production decline in the first half. So that is something that we expect to see reverse in the second half as more production and higher grades allow us to achieve a higher rate of absorption of fixed costs. So yes, there is some cost escalation, but I think in our numbers, around 80% of what we're seeing in terms of cost increase is volume related. And therefore, that's where our attention is. We need to get our volumes up. We have the growth profile to accomplish that in the second half of this year and into next year, and we think that will be a tremendous self help in terms of managing our costs down. Okay. Thank you very much and we expect to see you in September.