Good morning, everyone, and welcome to our results presentation of 2023 results. I will do a brief introduction to the results, and then I will pass the presentation to Eduardo Noriega. He will go through the financials, and then I will go back, to do, I mean, to present an update on the strategy of the company, and finally, we will see some conclusions. So, going to the first, we feel very proud, you know, of a year of delivery. First of all, I have to say that we have very strong performance on ESG, that I will tell you later.
In terms of results, we have $694 million on revenues, EBITDA $274 million, EPS 0.02, and an all-in sustaining cash costs of $1,454, better than the guidance in terms of... I mean, we beat the guidance in terms of cost, and also, we were, you know, very close to the high end of the guidance that we present in the middle of the year. We have to remember that it was a tough year because we're supposed to get the environmental permit for Inmaculada on the 1st of January, and that was the budget done based on that assumption, and we finally got it in August. So that was a difficult situation, but finally, we got it.
In terms of growth, Mara Rosa today is in production. We finished the project on time, on budget, on the 31st of January. We have the first gold pour on the 22nd of February, and today, we feel that we will achieve commercial production before the end of June 2024. So a fantastic result, you know, of Hochschild getting in a new country, in a country that we feel very comfortable to work. Also, we have Royropata. It's a fantastic deposit with 50 million ounces. We have already started drilling, you know, in order to bring new resources.
The new thing is that we have signed this new option of Monte do Carmo with Royal Gold that give us the possibility, you know, to have a new operation in Brazil. I mean, our balance sheet remains very strong. We have $89 million in cash. We remain with a net debt of $256 million, and we are focused on repayment debt, growth, and capital return. I mean, despite the difficulties in during 2023, we feel very good in terms of our ESG results. Let me say that, for the first time in history, in Hochschild history, we have been able to reduce our frequency rate below one, 0.99.
It's a fantastic number, not only for open-pit mines, but, I mean, it's remarkable for underground mines. Also, we have the best ESG score in history reaching 5.75 out of 6. That's very good. We have been able to build Mara Rosa project that has been 5.5 million hours of work without 1 lost time accident. Being in a new country with new contractors and a new team is an impressive achievement. We have been able to increase the local workforce up to 61%, and we have been able also to bring new businesses to communities for $156 million. That's from services and from local providers.
With that, I will pass the presentation to Eduardo Noriega to go through the financial, and I'll come back with you in a minute. Thank you.
Thank you. Thank you, Eduardo. Our 2023 financial results were very strong. With revenue of $694 million, our EBITDA was $274 million, $25 million better or more than what we had in 2022. Our actual net profit was $9 million, $4.1 million higher than our 2022 results. Revenue was 6% lower than the previous year, mainly as a result of the impact of the delay in the Inmaculada permit, on production, so we had lower production than the previous year. But, that was partially offset by better prices, as you can see on the, on the slide.
Cost of sales also fell by 4% in line with a lower production, partially offset by scheduled higher proportion of conventional mining methods in Inmaculada, and slightly higher depreciation. Exploration expenses were lower than the previous year, mainly as a result of the termination of the Snip option, and also budgeting lower expenses as a result of the situation of the Inmaculada permit at the beginning of the year. Our net interest were also lower than last year's, mainly as a result of the capitalization of our interest cost in the Mara Rosa project. That was partially offset by higher debt that we had to complete the construction of Inmaculada, and also increasing interest rates during the year.
We recorded an FX loss of $15.6 million, mainly associated to the evaluation of the Argentine peso impacting our monetary assets in Argentina. Our income tax of $44 million includes also an impact on our deferred income tax from the devaluation of the Argentine peso of $7 million. The number also includes the special mining tax and royalties in Peru for $6.8 million. In addition to these items, we recorded exceptional items for a net amount of $69.5 million, mainly associated to impairments in Azuca and Crespo, our two non-core assets for the company for $63 million. We also recorded an impairment in San Jose of $17 million in the first half of the year, as a result of the increasing cost and uncertainty before the elections.
And in Pallancata, we had $9 million of exceptional termination benefits as a result of putting our Pallancata mine in temporary care and maintenance, until we complete the permitting of Royropata, the fantastic Royropata project. Then finally, we recorded an impairment in Aclara, our project, on the project that where Hochschild has 20%, a 20% interest of $7 million, associated to the challenges the project have in the permitting process. The tax impact of all these effects was $27.4 million. In terms of cash generation, I would say that we used part of our cash and the cash generated during the period to complete the construction of Mara Rosa, as you can see on slide 7 of this presentation.
We started the year with $144 million, and then we generated in Inmaculada $145 million, in San Jose $30 million. We used $4 million of our cash to in Pallancata, including the termination benefits that we had to pay. We had $17 million of brownfield exploration in our projects. Our corporate expenses accounted for $47 million. We paid $10 million in cash. We executed mine closure expenses, and we had care and maintenance expenses of $23 million. Our net interest paid was $18 million. We had $5 million of negative working capital movements and other effects. And then our debt increased, the net debt increased by $25 million.
With these items, as I said before, we invested $131 million in Mara Rosa in Brazil, which, as you can see from the slide, most of it went to the construction of our project in Brazil, the Mara Rosa project. In terms of cost, our all-in sustaining cost was pretty much aligned with what we saw in 2022, with $1,454 per ounce at a consolidated level. In the case of Inmaculada, we had slightly higher cost than what we had in 2022, but the number was below the guidance that we provided to you, mainly associated to the higher proportion of conventional mining methods that I mentioned a couple of slides ago, and also the impact of the delay of the permitting Inmaculada versus what we considered at the beginning of the year.
These negative effects were partially offset by savings achieved by the team, and efficiencies. In terms of San Jose, our all-in sustaining cost at $1,570 was lower than what we showed in 2022 and lower than what we guided to the market, mainly as a result of the FX impact in our cost. The devaluation of the peso helped us during 2023. In Pallancata, we had lower all-in sustaining costs than the previous year, and that we guided as a result of lower CapEx, lower exploration, and production costs.
Talking about capital expenditures, our CapEx for the year was $129 million, below the CapEx of 2022, and below the guidance that we provided to the market, mainly as a result of, again, the impact of the delay of the permitting Inmaculada didn't allow us to execute all the CapEx that we originally planned. And then in the case of San Jose, we also had a reduced CapEx versus previous year and versus what we guided to the market, mainly as a result of the better FX rate for the company.
In terms of the Mara Rosa construction CapEx, it was $121 million, higher than what we anticipated, but this is only a timing effect. We accelerated the execution of the project so that we are able to complete the first pour as early as possible. We're on track to meet the $200 million CapEx that we set for the project. Our balance sheet remains very strong, with a cash balance of $89 million and a net debt of $256 million. Our net debt to EBITDA was 0.7 times. I think there's a typo in this slide. It was not intended.
And as Eduardo, as we said in our Capital Markets Day, our target, the range of net debt to EBITDA ratio is between 0.5x and 1.5x, and we are heading towards the lower end of that range. We executed on some hedges to protect our cash flows, exactly in order to be able to reduce indebtedness at the company level. I would just like to point out in this slide that the lower on this hedge, the second one, the 60,000 ounces hedge that we did for 2025, the lower end of the range, meaning the ceiling of the zero cost collar, is $2,008.485. There is a typo on that line as well.
Then finally, we have not—we're not announcing any dividend in this year-end. We will review that further in the second part of the year. We'll have the internal discussions on that. But before, we need to put Mara Rosa into commercial production, and we need to start seeing the cash being generated from the project. Finally, on the financial results section, just to remind the capital allocation priorities that we outlined during our Capital Markets Day in November, where we first would like to complete the investments that we have in the Mara Rosa project and the Royropata permitting, so the current projects that we are developing needs to be completed.
Second, we invest in brownfield, and we add value to the company through our exploration programs in the properties and the JV properties that we have. Third, we focused on debt repayment and indebtedness reduction. Fourth, capital return, no? And as I said, we will discuss that later on the year. And finally, on M&A, with clear parameters, and hopefully, we can repeat at some point what we just executed on Mara Rosa, which has worked very well for us. So with that, I will return to Eduardo and Annie.
Thank you. Well, our strategy is very simple, is to be focused on core assets. We have Inmaculada, it's our flagship mine. We have 20 years ahead, you know, to do all the exploration, brownfield, with a huge land package. We have Mara Rosa today in production, and it has a life of mine of 10 years, with 100,000 ounces of production, with very good all-in sustaining cash cost. San Jose is a very high-grade mine that is being producing since 2008. And today, with the Argentinian situation, we have an optionality to get a better macroeconomic situation that will be reflect in our results. Royropata is the new deposit in Peru, using the current infrastructure. And Monte do Carmo, the new option, for a new mine in Brazil. Our strategy is very simple.
Brownfield is the way to generate new resources and bring value to the company, extending the life of mine, and of course, we need to be focused on minable resources. Then we have the operational efficiencies. We need to have a lean philosophy across the company. We need to work on process optimization all the time. We have proof that we have a lot of capabilities in order to develop projects on time, on budget. And we need to try to get new technologies in order, you know, to reduce cost, which is the operational efficiency at the end.
Also, something which is very important is to be close to the operations, and that's the reason I've been traveling to the operation on Q1, and I will be traveling again on Q3, and with me, all the executives in the company. On ESG, we need to drive responsibility and respect. We have a world-class safety performance, and we need to continue to get to the zero accident target, which is our dream. And we have already set the KPIs on ESG for 2030, and they are part of our objectives.
As Eduardo mentioned, the capital discipline is also very important in order to funding organic growth, I mean, to debt repayment, capital returns, and of course, a value-accretive M&A, as for example, Monte do Carmo is a perfect example, or Mara Rosa, that has been execute and is today in production. What we present on the Capital Markets Day is a projection of our production for the next three years, that it will be 20% from 2023 to 2026, and also a decrease in costs during the same period or another 20%. The good thing is that from 2027, we'll have also Royropata, and if the option works in Monte do Carmo, we could have also production from Monte do Carmo from 2027 onwards.
Going to Inmaculada, as I mentioned, we have a $45 million CapEx, you know, that is recorded as cost on 2024. But that's based on the TSF expansion developments that we didn't do it during 2022 and 2023. We are installing a reverse osmosis plant, and that's the reason we have this cost here this year. We have a lot of initiatives in order to reduce costs in Inmaculada during this year, but I have to mention that we are working with Boston Consulting Group. Today, Boston Consulting Group is implementing a SWAT team, and on the first three weeks of the work, they have identified with us 70 initiatives to increase production or to reduce costs. So that's very good news.
I mean, the idea in Inmaculada is to maintain 200,000 ounces during the life of mine, and be in this level of cost that it will be reached in 2025. If possible, reduce that level of cost with these initiatives. Going into the potential of the brownfield strategy in Inmaculada, I mean, the short-term objective is to extend life of mine. We have the plan to bring between 2.0 and 2.4 million ounces of gold during the next four years, and the most interesting area at the moment is Eduardo Belt, which is this gray area, where we had fantastic drilling results on the first two months of the year. So we believe that we could give you some news, you know, once we present the new resources during the year. Then we have Royropata.
Royropata is a resource of 50 million ounces. You have the gold equivalent here. We have that resource. We have the geological potential in order to extend this, I mean, to double, really, this resource, and we have already started drilling. I mean, the grades and the width of the vein are extremely good, so it will lead us to introduce mining methods, productive mining methods, in order to have very good all-in sustaining cash costs. And you can see the financial here. So meaning, all-in sustaining cash cost will be around $1,000. The internal return, it will be between 45%-55%, because the CapEx is quite low for a new mine. Basically, we will use all the infrastructure that we have in Selene and Pallancata.
But it's not only that, I mean, we have this the area where we are working, that we call Royropata Belt, but also we have Pacap ausa System, Pallancata Northwest, and Bolsa, which is new areas where we could bring new potential. Today, what we are doing at Royropata is to try to get the permit as soon as possible, and we believe that in three years, on 2026, we will be able to get this new permit. Mara Rosa, well, everybody knows that is in Goiás, is our new mine. We have the first pour. We will reach pre-commercial production on H1 2024. Its life of mine is for 10 years.
We are trying to analyzing at the moment, identifying the bottlenecks at the plant in order to try to get an extra production, that could be a very good upside. In terms of production, Mara Rosa, the idea is to maintain 100,000 ounces for the first four years in production, and the all-in sustaining cost will be between $1,100 and $1,000, more or less, that you can see there. I mean, we have the first gold pour on the twentieth of February. But let me say that the most important achievement in Mara Rosa is not the production, it's the safety. I mean, we have been able to build this project with 5.5 million ounces, I mean, 5.5 million hours of work, without one lost time accident.
I mean, the project is complete on time and budget. We are ramping up, and we don't see any problem at the moment. Also, in terms of ESG, we have been able to introduce a lot of measures in order to have a very good relationship with Mara Rosa community. We build this trail knowledge place, where we have a lot of schools coming to see the history of the project and the history of Mara Rosa and everything. That's been that has been very welcomed by the local government. Also, we have been able to buy from local producers and local suppliers around $9 million.
Today, we have 320 people working at the site, and that's the maximum we can have because there is no more workforce available for us. I mean, we could increase it, but I mean, they don't have any more. The objective in Mara Rosa is really to double the resource in the next 6 years. I mean, we believe that we have the potential to bring a new 1 million ounces of production in order to extend the life of mine for another 10 years. The good thing is that Posse is there. That's where the current deposit is, and we are drilling around this belt, and we believe that there is a lot of potential.
There is some other targets that we'll try in the next few years, but today we are concentrating here, where we can add quickly our new resources and also use the current infrastructure of the plant. Going to Monte Do Carmo, I believe that this option make a lot of sense for the company, and it's totally in line with what our strategy is, on what we propose as our strategy. First of all, because we have a current resource of 700,000 ounces with good grades. Second, because we believe that using our brownfield capabilities, we can increase the resource base and try to put this project in a situation where it could be very profitable for us, and for that, we have 12.5 months. We didn't compromise a lot of cash.
It's only $50 million, I mean, to have this option, and later, if the project is profitable, we will add another $45 million. It's a total of $60 million. And, it's also a very close by to Mara Rosa. It's only 4-5 hours driving. So it's in Tocantins, which is a very mining-friendly state in Brazil. And you need to remember that we established a very strong corporate office in Belo Horizonte for the Mara Rosa project. So today, we have a country manager, we have managers, a financial team. Everything is in place in order to be able to grow in Brazil. So, I believe that this a great opportunity for us, and that's the reason we signed this option. Going to the conclusion, and this is the final page.
We are and we will be focused on the core assets. We will be focused on increased production, and we will be focused on reducing cost. We want to maintain a world-class ESG performance. We have this new low-cost mine in Brazil, which is a very important asset for us. Inmaculada today is de-risk, and we have 20 years, you know, to implement an exploration brownfield strategy in order to bring new resources and extend life of mine. We have Royropata. We need to get the permit. There is another 100,000 ounces with a low cost from year 2027. We will continue with the brownfield strategy. We put $33 million this year in order to drill, and we are drilling everywhere. We are drilling in Argentina. We are drilling in Royropata. We are drilling in Brazil. We are drilling in Inmaculada.
We have, today, a secure, a new project in Brazil, which is totally in line with our strategy of, brownfield exploration. As Eduardo mentioned, we have implemented a very disciplined capital allocation strategy. And finally, as you know, we are a new team, in Hochschild, but, I mean, we are new and very old, because all of us has been in the company for many years, and we have a lot of experience, of working in, Peru, Argentina, and Brazil. That's all for me. Thank you very much for being here today, in our presentation of 2023 results. And we will pass to Q&A. Thank you very much.
Hello? Can you hear me? Yeah, it's Dan Major from UBS. Yeah, a couple of questions. Just on Royropata, can you just walk us through the permitting timeline and requirements, key deadlines, key dates needed to achieve the 2027 kind of startup?
On 2023, what we have done is the feasibility study, yeah, and all the engineering work. And that's ready. That's totally ready. Also, we have been negotiating the easements with the communities, which are the same communities as we used to have in Pallancata. They are the same area. But it's an additional land that we need to negotiate with them. I would say that today we have around 80% of the land negotiated, and of course, there is a lot of expectations from the communities in terms of this new project. So we need to end up the baseline study, which is the dry season and the wet season, yeah, work on the field, has to be done on 2024.
2025, once we finish the baseline studies with, together with the engineering and the easements, 2025, it will be the year that the Peruvian government will review the whole work. You know, we believe that in 12 months, they will be able to do the review, do the observations, for us to take the opportunity to answer the observations. And that process, that evaluation process, should finish on 2025. So we should expect to get the permit sometime during 2026. If, if that's the case, on 2026, we will start developing the mine. Today, mineralization is on the next wall of the current operation, so it's not difficult to start doing developments and start getting production.
It will be a ramp-up, of course, because we need to develop the mine and have enough fronts in order to produce, let's say 2,000-3,000 tons. I mean, we have a huge plant, 3,000 tons flotation plant at Selene, so we need to increase, I mean, to get to that level of production. But that's the timeline for Royropata today.
Okay. Just maybe to follow up on that, I mean, if we look at the history of the company, you've, I guess, fallen short of targets set to the market as a consequence of permit delays. Is there not any way to try and accelerate that permit? You sort of indicated to the market 2027, and you're not gonna be able to receive the permit in 2026. History would suggest the permits take longer than expectations. You know, this is still quite a way away for a relatively simple restart. What's stopping that permit process from accelerating? 'Cause it feels to me, if we take the timeline of the past, 2027 seems optimistic if you only expect to receive the permit in 2026.
Okay, let me tell you, I mean, probably, with that consequence, I mean, that analysis that you have done is based on Inmaculada permit, but that's the only permit that we have been delayed in the past. But if we compare Inmaculada with Royropata, there is many difference. First of all, the area of Inmaculada, it was 10 times of Royropata, so that's make a huge difference. Then, I mean, we don't need to deal with new communities. In this case, they are the current communities that we have the relationship. Also, I would say that the Peruvian government is totally different. Yeah. I mean, we have today a new cabinet, with a prime minister, that they are promoting mining all over the world.
They have been on the PDAC in Canada a few weeks ago, promoting mining. So they are willing, you know, to give us those permits in order to develop new projects. Remember that in at Inmaculada permit, we had the COVID, yeah, and authorities would not able to go to the site, so that was a remote evaluation. That was extremely difficult situation. So we would say that today, allowing a year for evaluation, you know, we believe that the time set, I mean, the schedule that I just gave it to you, is something that it could be achievable. To do it quicker is impossible because, I mean, we have today the engineering. You need two seasons, for the dry and to the wet season.
Then you need that, the evaluation time for the government, which is, I mean, it's supposed to be 90 days, but in real-time, it will be a year. So that's the reason why I believe that on 2026, we could get the permit. So I believe that is realistic.
Okay. It's useful color. Thanks. And then one other question, if I may. Your— So the CapEx guidance for this year is around $175 million-$180 million. Should we assume that the fifteen million on top of that for the new project will go through the CapEx line, it won't be expensed or will it? Where will that sit in the financial statements?
Thank you. Thank you very much, Dan. That expense will go to the CapEx, will be capitalized, you know, because it's a project that we're gonna build later on. So, yes.
Okay, so you've got, it's around $200 million, about $190-$200 million is where we should be?
Yes.
CapEx. Okay. And, and just follow up on that CapEx dynamic. If we go into 2025, based on the expected sort of rate of spend, how should CapEx trend in 2025 at this stage? Without giving us, I guess, some clear guidance for-
We have not provided guidance on CapEx for 2025, no. We have done it for this year, 2024, but it will be pretty much similar, no? I mean, in the case of Inmaculada, you should take into account that there are $45 million that will be expensed this year, that we will not have next year. With similar, excluding that effect, because that is CapEx that we are catching up from the last couple of years. But other than that, it should be relatively similar, no.
Or else equal $45 million less.
Yes.
Okay.
Yes.
All right. Thank you.
Thank you.
Thank you very much.
Good morning, Richard Hatch from Berenberg. Just one question on the dividend. You sort of suggested that you might consider it in mid-year, so is it fair to assume that we might see a reinstatement of the dividend with the H1 numbers?
We have not suggested that yet, because what we have said is, we need to put Mara Rosa into commercial production first. Thank you for the question, Richard, sorry. We need to put Mara Rosa into commercial production first. We need to focused on seeing the cash flows and start seeing that our indebtedness ratios come down, and then once we have that, we'll have a discussion about it. So but there is no, no decision being taken so far.
Would it be? Just to push you on that, would it be kind of crazy to think that if all moves in the right direction, you know, the balance sheet's in good shape, you're about 1x net debt to EBITDA, you're in the middle of your target range, Mara Rosa seems to be going well so far, so congratulations to you on that, and generating a lot of cash. So is it wild to think that the board would perhaps consider, you know, showing that? Or, you know, do we, do we-
No, for sure, they will take those, your comments into, I mean, what you are pointing out into consideration, and will be part of the discussion. It's just that we haven't make that decision yet, and we need to wait and kind of execute on what we said, and then have that internal conversation. So that's-
Thank you.
Thank you.
Just on, and then just on the costs, Eduardo, you, you mentioned about Boston Consulting Group. Just a couple of questions on that. So on slide 15, you've got your cost guidance. So can you just clarify, does that include any of those, efficiencies or not? And then secondly, is-- No. And then secondly, you know, I've seen the skeptical analyst, right? I've seen this before, where Boston Consulting come and do it, and then they charge you an arm and a leg to do it as well. So what's the, the actual net, net benefit here to the company? Can you just-
No, basically, what we have agreed with Boston Consulting Group is a variable fee, you know, based on results. So there will not be any fees on top, you know, that affect the actual all-in sustaining cash costs.
Okay. Is there any way to put kind of a, a rough number or target around it, or you perhaps give us an update with the H1s as to where you are with that, just in terms of cost to volume?
To tell you the truth, it's too early, you know, on the diagnostic. I mean, we have the diagnostic, but we don't have the, I mean, the implementation plan. So I would prefer not to give any, I mean, any number that, you know, it will be with no base, you know?
Thanks. And then last one, I suspect you might not be able to answer it, but on Monte do Carmo, the PFS or feasibility study suggests CapEx of $181 million.
Yep.
Is that a number that you feel comfortable with, or do you feel that there is more work to be done on that?
No, we believe that we need to do a lot of work on that, you know, and it will be part of our option period, you know, to analyze everything. You know, feasibility study, engineering, resources, everything. So, you know, mining method, everything.
Yeah.
You know? We are not going to take a decision based on any numbers of third parties. I mean, we need to do our engineering, our numbers, and for sure we will bring to the market a figure that it will be doable. You know, we are not trying to sell in our project. You know, we are trying to develop a project, putting it into production, on time and budget again, yeah, and you know, achieve our production and our cost targets.
Thanks, Ricardo.
Thank you very much.
Thank you.
Marina?
Good morning. Following up from Richard's question, can you give us maybe some examples of the initiatives you are looking at, at Inmaculada, to increase production and reduce cost?
Well, basically, at Inmaculada, since we have been able to do the developments during 2022 and 2023, there is the opportunity, to, I mean, to make better ventilation, for example, to increase the cycles, the mining cycles, to increase the speed, you know, in order to get more production. I mean, on 2024, we have budget no full capacity of the plant.
... so anything on top of the budget, it will be an upside. So all the initiatives are basically to increase production from the mine, yeah, and try to reduce cost. That's the kind of initiatives, and I believe that they are totally doable. You know, the thing is that, since we have had very difficult years with, I mean, we restricted all the capital expenditure until we got the MEIA. Yeah, today, the mine is less developed that it would need it. So, that's the reason we need to, you know, to introduce these measures.
It's good to have these, you know, consultants to bring energy, you know, to the people and to the operation in order to wake up, you know, and realize that we are in a totally different situation.
Thank you. And one more question, if I may. At your Capital Markets Day, you mentioned the potential to increase the plant capacity at San Jose.
Yep.
Can you give us an update of that project?
Yep. We have in the process of finishing a detailed engineering for that project. It seemed like we'll be able to increase capacity for up to 2,000 tons per day, which is an important increased capacity for San Jose. And the most important benefit of that is that we could process less grade material that has been mined in the past and is already on the stockpiles. So that could give us an extra, I mean, material and ounces to, I mean, nearly free of charge. And the good thing about this project is that we analyzing to install a Vertimill. It's a special equipment that you put between the current mills.
And you get thinner material, and that's the reason you can pass through 2,000 tons through the Selene flotation cells and the ILR, you know. I mean, the leaching process at San Jose.
Thank you. Can you remind us what production, extra production will you get from that, and what was the CapEx?
I mean, the capacity will be something around $10 million. And I'm, I don't have the amount of production that we will be able to... But it will be, I mean, enough, of course, to get a very profitable project.
If I may add to Eduardo's answer, I mean, the payback we estimate on a project like that is less than a year, probably 8-9 months. So it's, yeah, it's a very good opportunity.
Those answers are not part of your production guidance?
It's not.
Okay.
They're not. Yeah.
Thank you.
Thank you very much. Just, a couple of questions on the projects. First of all, there were a couple comments in the presentation. First one on Mara Rosa, under the rainy season impacts. I was just wondering, I mean, obviously it didn't have an impact on first gold, the budget, the timeline or anything, but has it had any impact on stockpiles or maybe the commissioning process? I was just wondering if you could give us any color, just since you mentioned it.
That's a good question. Well, I mean, the original plan, it was to finish the project in December. Yeah? That was not public, yeah, but that was the objective. Of course, we have a very heavy rainy season, and that was the reason that we finished the project on the thirty-first of January. In terms of the impact on the ramp up, there is an impact, but I mean, we have that impact until March, because the rainy season is going to end up in March. I mean, today, the dry stack operation is something that we are learning because it's huge filters working there. And, but the good thing is that we will have a dry season for the next nine months.
So at the end of the day, we don't, I mean, we don't think that we are going to have any impact on the ramp up. And we will have the time, you know, to learn that process during the next nine months. So the next rainy season, we will be ready for, I mean, continued production, so.
Okay.
That's it.
That's great. Thank you very much. And then the, the second one is also on Mara Rosa, which, you just mentioned the de-bottlenecking, that you're working on, something that might help you with volumes. Are we talking about... I mean, it's so early stage that I would have thought it's something like less than a 10% increase in volumes, but are you looking at something that's bigger than that at this stage?
No. That's exactly the figure that I am looking at. When we put Inmaculada in production, the capacity was 3,500 tons.
Yeah.
We reached 3,350. 10%.
Yeah.
So we believe that, we will be able to, you know, to get all those bottlenecks out and try to get something similar. But we are not looking at more production. I mean, the capacity is the capacity.
Okay. That's great. And then the... Thank you very much. And then the, the last one, was coming back to Richard's point. I mean, personally, I'd always rather see growth than a dividend, so I wasn't disappointed at all to see you holding off on the div and talking about deleveraging, which adds so much more value. But just around the thinking, and obviously, it's, it's not just your own thinking, it's the rest of the board's thinking. But you're, you know, within that 0.5-1.5 net debt to EBITDA, do you, do you think of the excess cash as the bottom, when you reach the bottom end of that range, and is that the point where you're very comfortable giving a div and, I mean, you still have other growth opportunities?
I mean, you've got San Jose, which you're talking about, you've got Monte do Carmo, which looks phenomenal, but such early days, and you still have Pallancata and so forth. So lots of growth opportunities, but with that in mind, I would have thought excess cash is sort of the lower end of that range, not the middle end of the range. Is that about right?
Thank you, Tim, for your question. We don't have a specific—we have that range, so for us, for the board to have some flexibility on when do we find that, taking into consideration the opportunities that we have, the growth opportunities we have in front of us, but also the situation of the market and our operations at that time. So we would like to have that flexibility. I have to say that if you look at the dividends that we have paid in the past, I mean, those amounts will not prevent us from also executing in our growth strategy.
So I think we like having that flexibility, and also we're working also on having a more robust framework on capital returns in the future, you know? So we're thinking about it, and we would like, but we would like to retain some flexibility, which I think is important for a mining company.
Okay. Well, since you're considering having a more robust capital allocation, capital returns strategy in the future, I would prefer to see M&A ahead of capital returns, not capital returns ahead of M&A-
Okay.
- personally.
Thank you. Thank you, Tim. We'll take that into consideration.
Hi, Patrick Jones, JP Morgan. Just a quick one on the reserves and resources. Obviously, it mostly just reflects the reduction from production, given the year, given the delay and the exploration and the drilling program. Can you just talk about when you think you'd get a bit more of an update on that? Do you think you'd give something, say, with H1 results, to have a bit more resources there at Inmaculada, et cetera? And then secondly, just on the Argentina side, given, you know, you're looking to be spending a little bit more there at San Jose with that expansion possible, do you think there's any additional possibility to step up exploration in the vicinity of San Jose as well?
Okay. Go ahead with the first question. Yeah. The resources.
Yes. So on the resource, we are restarting our exploration programs in all the mines, as Eduardo pointed out, and we are already drilling. So we are now right now, we are already drilling, depending on how advanced we are, but by half year, we may provide some update on where we are. What I can tell you is that we're seeing excellent results in the drilling campaign so far. So yes, we do have expectations on our brownfield exploration plans, and hopefully we can provide more updates shortly. And then your question was in Argentina. Yes, we are drilling in Argentina.
We're really redrilling in the southern part of the property, and we do have expectations. As I said in my previous answer, the payback of the investments that we will do in Argentina will be short, so less than a year. And that's, I think, positive for the projects that we're looking at. I mean, we have a huge land package in San Jose. I mean, we have San Jose here, and we have Cerro Negro, which is the Newmont operation. It's like 30 kilometers away, one to each other.
We have a lot of mining properties between these two, and we are drilling in a property which is south of Cerro Negro, and it's supposed to be the continuation of Cerro Negro veins. So we are drilling now there, and, I mean, we will expect to get results probably in the middle of the year. Thank you. Yep.
Hi, Yuan Low from Libirum. Could I just ask you about Royropata? The IRR, what commodity prices were assumed, and are you able to say what the post-tax IRR would be? Thanks.
You mean by Royropata or,
In general
... Marosa?
Uh, Royopata.
Royopata?
Yes.
Yeah. So for all our projects, we typically look at the analyst consensus prices, you know? And I think we have stated that the IRR, the minimum IRR that we require is 15%. So we're evaluating all our projects, taking that into consideration.
15% post-tax or pre-tax?
Post-tax.
Okay.
Thank you.
Thank you.
Thank you. Okay, no more questions. Any more questions? Well, thank you very much for being here today. We will see again in any meetings here in London. Thank you very much.
Thanks.
Thank you. Bye.
Thank you.
Thank you.