Good day, and welcome to the Hochschild Mining 2022 interim results and conference call. At this time, I would like to turn the conference over to Ignacio Bustamante, CEO. Please go ahead.
Thank you, Elaine. Good afternoon, everyone. I'm Ignacio Bustamante, CEO of Hochschild Mining, and with me is Eduardo Noriega in Lima, our CFO. In London, we have Charlie Gordon, our Head of Investor Relations. If we can please move to the next one. As you know, today we release our H1 2022 financial results. Let me start with a quick summary of the financial highlights. Revenue is at $348 million. EBITDA is at $131 million. EPS is at $0.01 per share. Cash balance is at $204 million. We have declared a dividend of $0.0195 per share, for a total of $10 million.
On the operational front, as we had already guided our production for the first half of the year was at 166,000 ounces. We continue maintaining our full year production target of between 360,000-375,000 gold equivalent ounces. Regarding all-in sustaining cash costs, our all-in sustaining cash cost for the first half of the year was $1,371 per ounce of gold. We continue maintaining our full year all-in sustaining cash costs target of between $1,330-$1,370, which is something that we're very proud of, particularly taking into account the current challenging environment that we are all seeing. Finally, on the exploration and business development front, Mara Rosa, our most important growth project right now, is on schedule.
Things are starting to move ahead very quickly now that the key construction permit has been granted. The Snip pre-feasibility study continues moving along very well, and we continue targeting to finish it by the end of 2022. Finally, Pallancata drilling is delivering very exciting medium-term results, and we can talk a little bit more about that later on during the presentation. If we please move to the next slide. On sustainability, let's start with safety. On safety also, we have a frequency ratio of 1.28, which is close to our historical low. Same with accident severity index at 72. We have successfully continued the implementation of our Safety 2.0 program, which is basically a program that allows us to continue working on creating the strongest possible safety culture in all our workforce.
Moving to environment, our ECO Score was 5.35 out of 6. Also a very positive score. We continue working on developing our carbon strategy to be net zero and of course, also working on our Environmental Culture Transformation Plan. Regarding people and culture, we continue promoting diversity through our many different programs, both at the operating units and at our central offices. We right now have 50% of our workforce coming from local communities, and we continue working on trying to increase that number even more. Moving to communities, we also continue working very closely with our communities. In 2021, we invested $5.4 million directly in the communities, and also deals with goods and services with the communities for around $16.8 million.
We're going to continue working on that, trying to continue increasing those numbers and working on other initiatives such as connectivity, education, and scholarship, and health-related programs. Let me move to the next slide, please. Now I would like to hand it over to our CFO, Eduardo Noriega, to discuss in more detail our interim results, and then I will continue with the presentation. Please, Eduardo.
Thank you, Ignacio. Could we please. Yes, thank you. On the profit and loss statement, our revenue was for H1 2022, $347.8 million. Our attributable net profit at the bottom of the chart was $7.2 million, and our adjusted EBITDA was $130.5 million. The main variances versus the previous period, H1 2021, I would like to highlight the revenue, which was 12% lower, and this is a result of our guided lower production, mainly in Pallancata, on grades and tonnage. As well as we had lower production in San José that we expect to recover in the second half of the year.
Sales volume were lower versus the previous period, and gold prices were higher by 6%, but silver prices were lower 10%. Our cost of sales rose versus 2021, mainly as a result of higher proportion of conventional mining methods, mainly in Pallancata, where we moved from having more mechanized methods to more conventional mining methods. We had also OpEx in Inmaculada to access new mine areas, and we had inflation, mainly in Argentina that impacted our production cost. These impacts were partially offset by efficiencies and cost reduction plans that we have in place.
In terms of exploration, our exploration expenses increased by $6.9 million, mainly explained by expenses that we had in Snip, $6.9 million in the period that we did not have in H1 2021. In other expenses, we had an increase of $10.2 million, mainly resulted from changes in our mine closure provisions, mainly associated to our unit, Aries. The effective tax rate was 38%, and here we include non-recognized tax losses, mainly in the Snip. Those are expenses that we have in jurisdictions where we cannot use the tax expense for tax benefit purposes. We, in this number, we also include the royalties and special mining taxes that we have in Peru.
This number was benefited by a local currency revaluation in Peru during the first half of the year. In the exceptional items, we had $9.9 million of an impairment on an Aclara investment. That has to do with the reduction in market price, but more importantly due to an expected delay of two years in the construction of the main project, Penco project, as a result of the decision to delay the permitting, to withdraw the permit to reinstate it in the next two years. If we could please go to the following page. Thank you. Our cash balance ended at the end of June 2022 at $204 million.
The cash evolution shows the important investment that we're doing in Mara Rosa and in Snip, as well as temporary items that impacted us in the first half of the year. If we look at the left-hand side of the chart, Inmaculada generated $96 million, San José $8 million, and in Pallancata, we had a net outflow of $9 million, which we expect to recover in the second half of the year. Our exploration plan represented $16 million of cash disbursements, and our corporate expenses were $25 million. In addition, the tax paid in H1 2022 were $38 million. From this number, from this $38 million, $15 million are 2021 taxes that were paid in the first quarter of 2022.
We also had $17 million of 2021 variable payments that are paid in the first half of 2022, again, but correspond to the previous year. We had $11 million of 2021 legal work and profit sharing that was also paid in the first quarter of 2022. We had care and maintenance and closure expenses of $12 million. We had expenses related to our temporary stoppage in San José and some minor remaining COVID-related expenses of $6 million. We paid $3 million of net interest. We increased our working capital debt in Argentina by $12 million, but we also paid $12 million of dividends to our shareholders. Again, we had a temporary effect in working capital of $6 million.
In addition to those items, we had the investment in Mara Rosa, which in total represented $136 million. $124 million for the net transaction cost, and $12 million for CapEx and utility expenses that we're already paying in Brazil. On Snip, we invested $8 million. With that, our ending cash balance, despite the strong investments and these temporary impacts, it remained very strong at $204 million by the end of the period. Could we move to the next slide, please. In terms of cost, we are on track to meet our 2022 guidance. We have varied the individual guidance for Inmaculada, Pallancata, and San José, but overall, we're on track to meet our 2022 guidance.
Compared to H1, in the second half of the year, we expect grades in Inmaculada to rise. We also expect higher production in San José in the second half. We also have a cost optimization program in place to mitigate inflationary pressure, already providing very good results. These effects will be offset by lower grades in Pallancata and higher execution of CapEx in H2 2022. This is again a temporary effect. As Ignacio mentioned, we have also revised our production split, but overall, we are maintaining our production guidance at between 360,000 and 375,000 ounces of gold equivalent for the year. If we can move to the following page, please, on capital expenditures.
We're showing a slight reduction in 2022 CapEx guidance. In Inmaculada, we're maintaining our guidance and there is a higher CapEx allocated to H2 versus H1 to develop resources for increasing life of mine to and complete efficiency projects. In San José, there is a slight increase, close to $2 million due to inflationary pressures. Inflation is slightly higher than the escalation versus what we expected. In Pallancata, we have lower CapEx as a result of our revised mine plan. Mara Rosa is on track with key outstanding environmental permits now received. Our CapEx guidance is slightly lower at between $90 and $110 million for 2022. On the following slide, please. Thank you.
We maintain a strong position to keep growing the business with strong balance sheet to finance our near-term growth, including our brownfield exploration plan and more importantly, the investment that we're doing in Mara Rosa to complete the construction of the project. In terms of capital management, we have low net debt, even after the acquisition of Mara Rosa. No near-term debt maturities. Our next maturities will be at the end of 2023, as you can see on the charts on the right-hand side. We have good relationship with our relationship banks, and we have credit lines in place for that. We have a good history of capital return through dividends, and now we are announcing a dividend of $10 million.
We're maintaining our cost guidance despite inflation. We have, as you recall, hedges in place for Pallancata for 2022 and 2023. With that, we have covered the interim results section. Ignacio, back to you.
Thank you very much, Eduardo. Let's continue with the presentation. Before we go into this slide, let me just remind everybody that we have also released our 2021 sustainability report. It's already on our website. We're very proud with the work that has been done, so I would really encourage you to take a look at it and give us any feedback that you may have. Talking about growth, we continue with our growth strategy focused on four pillars. We have brownfield development projects, strategic alliances, and M&A and greenfield. On brownfield, of course, our most important, our flagship asset, which is Inmaculada, we continue making very good progress, continue capturing the geological opportunities that are in place there. We expect to continue adding life of mine to this fantastic asset going forward.
In addition to that, we continue adding resources as well in San José. In the case of Pallancata, as you know, we have a short-term challenge, but the medium to long term is looking really encouraging on that particular asset, and we expect to update the market soon on that front. On the development projects, we have the construction of Mara Rosa project in Brazil, our most important development project as it stands, and it's also making very good progress, and we'll talk a little bit more about that. On our strategic alliances, also the most important that we have now in place is Snip, and we continue advancing it to a finished pre-feasibility this year and then hopefully move it to feasibility.
We will continue looking at potential opportunities on the M&A and greenfield fronts with the goal of trying to add further projects in the Americas. If we please move to the next slide. Talking about Inmaculada. Inmaculada, as we know, is our flagship asset. It's a high-grade underground mine that started operating in 2015. We have managed to beat production guidance every year. As Eduardo mentioned, we have revised upwards our guidance, so now we are estimating that it will produce between 233 and 239 gold equivalent ounces at an average all-in sustaining cost of between $1,070 and $1,100 all-in sustaining cost. The EIA modification is on schedule for an H2 decision.
We are very enthusiastic about the large regional land package that Inmaculada has and that it is still to be explored. Moving to the next slide, please. We can see there in the map the very positive results that we obtained in our 2021 drilling campaign with 850,000 ounces discovered between the Angela North, Angela Connection, and Juliana South veins. We have our 2022 drill program subject to permit, but we'll be focused on Inmaculada North. Again, Josefa, South Juliana, that area. The west of the Inmaculada area, the Minascucho, that you can see there in the extreme left of the chart, and also Melissa, Anomalia 5, and Jimena veins. We also are doing some surface potential drilling at the Pucu Pucu and Lía Norte veins.
All in all, this is an asset that continues having tremendous potential that we continue expecting to capture in the upcoming years. Moving to the next slide, please. We have also our other operating mines in Peru and Argentina. We have Pallancata with our revised guidance of 3.4-3.6 silver equivalent ounces. We have the strategy right now of adding economic ounces close to current operations. As you know, the short life of mine that it has now creates challenges from a production standpoint. But we're currently working on all different geological alternatives to continue expanding those resources that we can put into production in the short term. We continue targeting those, and we will continue updating the market in the upcoming presentations.
However, the part that is already giving us very positive results is the medium-term program, which is delivering already strong results from Laura- Demian, Royropata, Miriam, and Marco West veins. I would say in particular Royropata and Marco. We expect to give more color to the market, you know, in the upcoming weeks or months. I can say that it is looking really encouraging. Regarding San José, as you know, we own 51%. We have also revised the guidance to 80,000-85,000 gold equivalent ounces. We have a program that is focused on high-grade areas in our operating permits and northwest of the current mine and the Saavedra West areas.
Those are all areas that are located in the mine itself, but also in the close surroundings of it. We also have another project, which is the Ciclon project, for instance, and other properties in the Santa Cruz area that we are also exploring for potential growth of resources all in all. We again will update the market as we continue having results. Moving to the next slide, please. Okay, getting to Mara Rosa. As you know, Mara Rosa is a quite high quality development asset. It is located in the very friendly jurisdiction of Goiás, Brazil, together with many other producing assets and projects in the area. The detailed engineering is already at 80% with construction underway.
It has very robust economics, as you can see there in the charts. We are targeting first production in the first half of 2024. In parallel, we continue working on ways in which we can optimize our exploration or operational opportunities with the goal of extending the life of mine and improving our project economics. You can see there also in the reserve and resources chart that it has reserves of about 900,000 ounces of gold at an average grade of 1.2 grams per tonne. Also with very strong local and regional exploration potential. We are talking there about the targets of Pastinho, Campos Verdes, Morro Redondo, Filo Zorongo, which are the most encouraging ones, and we have actually started already to do the brownfield work on those.
We also expect to give some updates to the market as weeks and months pass by. Next slide, please. As you know, we disclosed that last week, on August 8, we obtained the final site clearance permit, which was very important. With that, we are now already at full speed with the work for the processing plant, earthworks and civil works, starting the mine pre-stripping and starting the work for the water reservoir. The current progress of the project is at 9%. As I mentioned, detailed engineering is at 80%. The long lead time equipment such as ball mills and filters has already been purchased. The Metso 3- stage crusher is being delivered to site soon. The construction earthworks are already ongoing.
The mine pre-stripping contracts are progressing, and the project power line construction is already ongoing. You know, we're very excited with the progress that we have, and we believe that it's gonna be able to be completed in the date and in the timing that we have initially guided to the market. You know, everything is so far moving along to plan. Next slide please. The next slide shows you the importance that Mara Rosa has in our portfolio. Taking into account our 2021 reserves for Hochschild Amarillo or Mara Rosa, the project is now going to represent an increase of 56% in our total reserves. It's a very material amount.
It's also gonna represent, taking into account our 2022 guidance, it's gonna represent a 27% growth in production. As you can see there also it's gonna represent a very important improvement in our all-in sustaining cost profile. Very excited for this project. We continue updating you on the progress as we move along. Next slide, please. The next one is Snip. Snip, as you know, we're also very excited about this project. It's a past producing property in the Golden Triangle. It is located in Tahltan Territory. It used to be an operation, and during the time that it produced about 10 years, it produced 1.1 million ounces of gold at an average grade of 27.5 grams per tonne. Very high grade operation.
On October of last year, we exercised the option to start earning in our 60% from Skeena Resources. In order to do that, we need to invest CAD 100 million over the next three years. We have the option to extend it for an additional fourth year. We have to spend a minimum of CAD 7.5 million per year, which we're gonna do for sure this year. You can see also in the reserves and resources chart there, we have in total, when we take into account indicated and the inferred resource, we are looking at a total of 1.6 million ounces of gold with an average grade of around 10.4 grams per tonne. It's already looking like a very attractive resource.
You know, with significant potential as well. Moving to the next slide, please. We have updated the resource, as I mentioned. You know, announced in 2022, is the table that you saw in the previous chart. Compared to the previous one, that shows an increase of more than three times in indicated resources and an increase of two times in inferred resources. You know, we believe that this asset has a lot of potential, and we want to continue with our drilling work to continue expanding the amount of resources and the life- of- mine of this project. The pre-feasibility studies are underway, and we expect to complete those by the end of the year.
We have achieved certain interesting milestones in Q2. We have completed the metallurgical test work, which is looking good by the way. We have also completed evaluation of ARD potential in waste samples and the flow sheet trade-off study. For Q3 deliverables, we are targeting to complete the processing plant designs, to complete the update of the resource model, and also to complete the TSF and the waste storage facility designs. Since the project is looking very good, better than we anticipated, and it looks very likely that we will continue ahead, we have increased the budget for the year, so now we're talking about $19 million.
The reason for that is basically that we are doing more drilling than we anticipated, and also we have started some of the work that was contemplated for 2023 this year in order to advance the project quicker, you know? Something important that we have done, for instance, is we have already started the environmental baseline study. We continue to be fully engaged with the Tahltan First Nation and the provincial governments. We know we're looking forward to continue progressing this project and making a, you know, a final release of our PFS by the end of the year. Moving to the next slide, please. Okay. Volcan. So as you know, Volcan is now part of a new company called Tiernan Gold.
It's located in the Maricunga Belt in Chile with several other operating assets and projects that are being developed in the region. There's significant support infrastructure for mining in the area. This is a project that has the potential to be a large-scale mine. As a reminder, we acquired the project about 10 years ago, always with the goal of it being a very long-term asset for us. At that time, the PFS had a production estimate of 4.3 million gold equivalent ounces over 15 years at an average all-in sustaining cost of $1,025 per ounce.
The large resource base that we have is about 9 million ounces with an average grade of 0.7, roughly 0.7 grams per ton. We have done important progress this year in the asset. We hired, as you may recall, Greg McCunn as the CEO of Volcan, now of Tiernan Gold. We are in the process of completing technical work to optimize the business case of the project. Again, it has been restructured into a Canadian subsidiary, Tiernan Gold. We are in the process of completing all this work and evaluating all the different strategic alternatives that we have with the asset, with the goal of maximizing the value for future shareholders. Moving to the next slide, please.
We believe that the company is currently significantly undervalued, and you can see there by these two metrics, EV to EBITDA, we're at 1.5 compared to our gold peers that are at 3.7x and our silver peers that are at 7x . In terms of price to NAV, we're at 0.7x compared to our gold peers of 0.8 and silver peers of 1.2x , you know? We believe that there are gonna be many valuation catalysts coming along, you know, in the upcoming weeks and months. One is gonna be the Inmaculada EIA decision. The other one is gonna be the Mara Rosa project progress that, as I mentioned, is moving along very well. Also the Snip development milestones, you know, as I mentioned, the PFS, more geological results, et cetera.
The solid cash flow from Inmaculada, and the brownfield potential that we have at all our mines, including also, Mara Rosa in Brazil. Additional M&A in the Americas. Medium-term production increase, medium-term cost reductions as well, and further capital return potential. If we move to the final slide, please. In summary, the business in our view has been transformed with all the growth options that we have been able to advance. Inmaculada cash flow underpinned with extensive brownfield opportunities. The Mara Rosa construction commence, and as I mentioned, is moving along, according to expectations. We're very excited with that. Snip pre-feasibility underway and expecting to finish it in the upcoming months. Continued M&A focus, and our very strong, robust balance sheet that are underpinned by a highly compelling valuation. This finishes the presentation.
Let me stop there and open up to any questions that you may have.
Thank you. Today's question and answer session will be conducted electronically. As a reminder, if you have a question, please press the star followed by the one on your touch tone phone. If you would like to withdraw your question, please press the star followed by the two. If you're using speaker equipment, you'll need to lift the handset before making your selection. Our first question is from the line of Jason Fairclough from Bank of America. Please go ahead.
Yep. Thanks, guys, for the presentation. Just a little bit of a question about the portfolio. Once upon a time, you were very much focused on Peru, and if I look at you now, you've got Inmaculada. The legacy assets seem to be kind of winding down, but everything else seems to be outside of Peru. I guess the question is, are you done with Peru, or is there just no more opportunity there? Thank you.
Thank you, Jason. No, we're far from done with Peru. You know, Peru continues being our most important country, and we continue having several opportunities in Peru.
I would say that what has probably not changed but has been able to materialize lately is the fact that, you know, as you know, we have been looking to grow and diversify in other countries in the region for many years. We had more of this in the past in Mexico, we have Argentina with Minera Santa Cruz or the San José asset. That's something that we have been looking for a long time. Fortunately last year we were able to capitalize on those opportunities, which is something that hadn't happened in the past because we weren't able to see the right opportunities.
Now we believe that with Mara Rosa in Brazil and Snip in Canada, we have found those two that are looking very, very attractive. Going forward, we're going to continue looking at opportunities in Peru, and we're going to continue looking at opportunities outside of Peru. In Peru, just one comment, you know, even though Pallancata short term is facing challenges, I would say the medium- to long-term is beginning to look very, very attractive, you know? Even though those medium-term opportunities are something that are gonna be for the next three to four years, you know, are not short term, but they are looking like they could be very attractive medium- to long-term opportunities as well, you know.
That's something that we're gonna continue pushing with all our strength. We're far from done. Peru continues being a very important country for us, but we're adding more countries to our strategy.
Okay. Thank you.
Thank you, Jason.
As a reminder, to ask a question at this time, please press star one. We will take our next question from Daniel Major from UBS. Please go ahead.
Hi, can you hear me okay?
Yes, very well, Dan. Hi.
Great, thanks. A couple of questions. First one on the cash flow statement. I think $74 million working capital build during the period is very substantial for a company of this size. Can you give us any indication of how you expect the working capital movements to progress in the second half of the year, what the key variables are, there? Thanks. That's the first one.
Absolutely, Daniel. Let me pass it over to our CFO, Eduardo Noriega, please.
Thank you, Dan. Yes, well, the working capital increase during the first half of the year in part due to temporary impacts, you know. For the second half of the year, we expect payables to go up, you know, because there are payments that have to be done mainly in Peru, like the workers' profit sharing, as well as the variable salaries that are provisioned for the year but pay in the first half of the following year. For that, I mean, that item of our working capital will improve our working capital position. We also expect that our inventories for end products will also come down.
Those are the main drivers for the working capital to be reduced.
Okay. Can you give us any guidance on the magnitude? I mean, what is it gonna be all reversed or half reversed? I mean, can you give us a sense of what we should be thinking out of the $70 working capital build second half?
If you look at the cash flow, you identify close to $50 million of payments that belong to the previous period, 2021, and that will not occur in the second half. That is the amount that we estimate the working capital will be reduced in the second half.
$50 million, very clear. Thanks. Next couple of questions follow on the portfolio. I mean, Inmaculada is doing well and sort of the core asset in your portfolio, and you've got kind of Mara Rosa. When we look at San José, you know, guidance for all-in sustaining costs north of $20 an ounce silver, you're losing about 40% of the cash flow that you generate from the asset on FX translation. You know, is this really something you wanna keep in the portfolio? I don't think you've got any other growth options outside of Argentina. I mean, it feels pretty marginal at this stage unless you can substantially reduce the cost. That doesn't seem that obvious into 2023. How are you thinking about it in the context of the portfolio?
Yeah. San José is a very important asset to us, Dan, and is an asset that we have already more than recovered our investment, so it has been a very profitable investment for the company. I would say that the way we see this at this point is that we're facing a hopefully temporary situation in which there's a very huge gap between the inflation that we're seeing in the country and that devaluation that is being kept under control. You know, that has, for all the ones that operate in Argentine pesos and selling dollars, created a reduction in margins that is very important, and you can see that in the all-in sustaining cost profile.
In our view, that's something that is not sustainable, you know, because, you know, the entire group of companies that face the same situation, if that continues, you know, they're not going to continue being profitable going forward and that's something that cannot happen. In our view, that's something that needs to be corrected at some point in time. The devaluation will need to catch up with inflation, hopefully sooner rather than later. We expect that once that materializes, the margins of San José change for the better. We are gonna start making significant amounts of profits, you know, the way that we have seen in the past.
The short answer is we continue very focused and interested in San José. Right now we're facing challenges that are temporary, but it continues being an asset that is very important to us in the long term, in our view, with still plenty of opportunities to continue delivering value.
Thanks. Yeah. I guess just a quick follow-up on that, San José. You think that we should be modeling sub-20 all-in sustaining cost to 2023?
Well, it's gonna be dependent on your views on inflation and devaluation. That's gonna be the main metric, no? What I can tell you is from the things that we can control, no, the asset continues looking very encouraging. We continue finding new ounces. We continue seeing a lot of geological potential. So for us it's an asset that is gonna be with us for the long term. We should confirm that with
Okay, thanks. That's fine. Just last one on Pallancata. I mean, obviously spoken about the long-term potential, but it seems unavoidable the asset is gonna have to close in the near term. Can you give us any more indication on the timeline there? Is it end of this year? You expect it to contribute much next year? How should we be thinking about the short-term profile at Pallancata?
Yes. What I can tell you, Dan, is that based on information that we have now, it's an asset that will produce this year and probably some of 2023 with the resources that we have. I also can say that we are working very hard on finding other targets. No? There we have some very valid targets that we're gonna be exploring, that we are exploring, and we will continue exploring the next few weeks. We are not giving any guidance to the market yet until we are able to complete that plan.
All right. Thank you. I'll let someone else have a go. Thanks.
Thank you.
Ladies and gentlemen, if there are any additional questions, please press the star followed by the one. Please ensure the mute function on your telephone is switched off to allow your signal to reach our equipment. We'll take our next question from Tim Huff from Peel Hunt. Please go ahead.
Yeah, thank you. I just had two quick follow-ups. The first was also on Pallancata, but not near term. You guys have said that, you know, in coming weeks, months, you'll outline what you think the medium to longer term opportunity is. Ignacio, you mentioned three to four years in there. I guess I didn't know if you could maybe give us an idea of what would be the biggest hurdles towards getting Pallancata back online by the end of, call it, 2025 or so. What would be the biggest hurdles in your view in terms of what it would take to get it back into production medium term? The second question was actually on the div.
Year-over-year, just looking where your EBITDA and bottom line profitability came in, I thought that there was a chance of a lower interim dividend, and it was directly in line with what I was expecting. I was just wondering if you could give us an idea of how you guys are thinking about that dividend through 2022, given that you've got lower profitability, higher CapEx, and it's stayed relatively stable.
Sure. Tim, thank you very much for your question. Let me start with the second one first, with the dividend question. If you take a look at our historical dividend payment, it has been relatively stable. There was one difference in one year. There was a temporary difference because it was in 2020 with COVID, that we decided to suspend, and we paid back again in 2021. Generally it has been kept very stable. We have not had a policy in place. For several reasons. But we believe that going forward, we should have something in place that we present to the market.
We're working on that to try to see if we can put something that creates some predictability on that. Even though the results of the first half of the year were lower than last year's, we still believe that the fundamentals of the business are very strong, and the company has a very strong balance sheet, and we believe that the future is looking very encouraging. We decided to maintain paying a similar amount of dividends that we have paid in the past. No? Going forward, I would say we're working on the dividend, and we expect to give an update by the end of the year on that.
I would say that our goal is to try to continue paying dividends to our shareholders in similar amounts. That's an important part of our values, that we believe that returning money to our shareholders is something that is very important for everybody. The answer is, yeah, we expect to continue to be in a similar path, but we should give an updated indication by the end of this year. Regarding Pallancata, I would say the biggest hurdle is gonna be the permitting time, no, because it's in an area that is very close to our current operation, very close. Okay.
Unfortunately, outside of our operating area, permitted area by a little margin. No? The CapEx and the mining developments that are gonna be required to access that area are gonna be relatively low. Okay? The plant, as you know, is already built, permitted and everything. We have been operating in that area for a long time, for over 15 years. We know the area, we know the communities. The key challenge is going to be to deal with the time to complete the permit requirements and applications and go through the baseline studies during the dry season, during the rainy season. No? Go through all the different reviews of the different governmental authorities.
It's more a question of timing and go through the process than anything else. No? I would say, which puts it in a very special and attractive situation. Because if we're to find, for instance, a greenfield project, we need to build with building relationships with communities, building a plant, getting all the permits, huge investments. No? To develop the mine to build a plant. In this case, no, the mine is already developed. We just need to build some accesses. The plant is built, the relationships are made. It's looking good. No?
Ideally, it would have been great to have it in the short term, but I would say that still having it for the mid to long term should be something that delivers a lot of value for the company.
Okay. That's both answers very clear. Appreciate it.
Thank you, Tim.
We will take our next question from Jason Fairclough from Bank of America. Please go ahead.
Hi, guys. Just to follow up a little bit on the project in Chile, and I realize this was a long time ago, 2011 PFS, so it's 11 years ago. You know, and at the time, you were indicating cash costs of about $1,000 an ounce, which for the grades, seems quite hopeful. I'm just wondering, have you got any feel for where we are with CapEx and OpEx if this were to be updated today? Again, I'm just looking at, you know, 0.7 grams per ton gold. Doesn't look like a dripping roast. Yeah?
Thank you, Jason. We're precisely in the process of updating that. Our goal is to try to finish the PEA by the end of this year, and as soon as this, as it is ready, we're gonna be sharing it with the market. This is still not completed. We're working on many different areas to continue optimizing it. We expect to disclose all that information on all those figures that you just mentioned, Jason, before the year ends.
Do you have a partner here, or is it 100% owned?
100% owned.
Okay. Thank you.
Thank you.
We will take our next question from Ian Rossouw from Barclays. Please go ahead.
Thank you. Just to follow up on the balance sheet. Obviously, you're spending quite a bit on the Mara Rosa project this year and next year. I guess potentially need to shut down Pallancata. Presumably, that will also have some cash outflow costs associated with the workforce, et cetera, like you've had a few years ago at Arcata. Just wondering how the Snip and Volcan and those projects sort of fit in or dovetail with the spending at Mara Rosa. Just sort of conceptually thinking around the balance sheet. Presumably, that will mean you're gonna gear up quite a bit further over the next couple of years. Do you feel there's enough headroom there to raise more debt?
Obviously, your debt maturity profile is $100 million, I think you show in 2023. Do you expect to extend that further, I guess, as time goes by? Just trying to get a sort of an idea of what you're thinking around the capital structure over the medium term.
Sure. Let me pass it to Eduardo Noriega, our CFO, Ian.
Thank you, Ian. Yes. With the cash that we have on hand, the cash generation that we expect for the company in the second half and also in the following years, you know, we should have sufficient cash to build Mara Rosa and also to invest in Snip. However, we are conscious that we need to be prepared for unforeseen events, and we are already. We do have credit lines approved with our relationship banks that we can use if that is the case. We are particularly right now working with our banks to secure a committed lines, you know, in case we need them.
We have strong balance sheet to keep growing the company. We have sufficient cash balance and cash generation, but we're prepared with a capacity to increase our debt if that is needed.
Okay. Just on the Snip project, has a scoping study been done? Could you give us an idea of the sort of metrics Jason was asking on Volcan maybe for Snip?
Sorry, when are they gonna be released? We expect that the PFS data is gonna be finished by year-end, and that's the time in which we're gonna be releasing that to the market as well, Ian. By the end of the year, by December, that should be completed and released.
Okay, thanks. Then just one question on San José, a follow-up from Dan's question on the cash flows there. What was the reason for injecting $12 million into the asset there? I guess just wanted to get a sense if you put debt into the asset, can you actually take that debt out at the same value, or do you also lose 40% cash, after you, I guess, recoup those funds?
Yeah. Thank you. The debt that we took is mainly to handle temporary working capital needs. You know that we have a short-term stoppage in San José at the beginning of the year, and therefore we had some working capital needs. We increased the debt for that reason, and we expect to pay back that debt in the coming year. In the case of San José, we do have access to dollars to pay dividends. No, it's at a high cost, but we will have access to that. The debt taken in San José was mainly to manage working capital needs.
Okay. I saw the assets still paid dividends, so I just thought that you would pay dividends, lose 40% of the cash, and then inject more cash into the business. Was it just a timing issue? It happened at different occasions or different times. And just around the repayment of this debt over the next year, you said, can you recoup that full $12 million back? You lose also money.
No
From the exchange.
No, we recoup it. It's I mean, the debt that we take is not impacted by the FX cost. It's debt taken locally that we pay back locally with the cash generated by the operation. It's not impacted by the FX cost, let's say.
Okay. Okay. That's clear. Thank you. All right. Thank you.
Thank you, Ian.
We will take our next question from Daniel Major, from UBS. Please go ahead.
Hi. Yeah, just follow up on the EIA at Inmaculada. I guess you're progressing towards hopefully getting this approved, but it's obviously pretty critical to the investment case. What's the key items on the critical path, and what's your degree of confidence on the EIA being granted in the short, you know, in the second half of this year?
Yes. Thank you, Dan. The way it stands is that we have already presented our answers to all the observations presented in the last round. We are in the process of waiting for the comments or responses from the different governmental authorities. Once that happens, we have two weeks to comply with the final round of observations. After that, the decision is made. We believe that we're in the last round of that. We believe that, as we mentioned, this is something that is going to be resolved in the second half of this year, during the second half.
So far, we have seen nothing that will prevent us from getting that license. We are optimistic about it.
Okay. That's it.
Thank you.
Thanks.
It appears we have no further questions at this time. I would now like to turn the call back over to you, Ignacio, for any additional or closing remarks.
Thank you. Thank you, Elaine. Thank you very much to everybody for your participation today. Again, let me remind you to take a look at our sustainability report in our website. That is a fantastic piece of work done by our team, and we're very proud of it. Should you have any additional questions, please feel free to contact Charlie Gordon directly at our London office. Thank you very much, and have a great day.