Are planned for you. I'd like to remind you before we get started, and I know you've heard this before. If you have questions, we should have some time throughout our conversation to take some questions. You press that Q&A button at the bottom of your screen, type them in, and we'll certainly get to as many as we can, time permitting. But I'm so pleased to be joined this afternoon by Amerigo Resources CEO, Aurora Davidson. This might be the perfect time to have this conversation, which is, you know, copper has been so much in the news lately. And we're joined by the CEO of a company who refers to their operations as a copper factory. So no better time. Aurora, can you explain a little bit the description of copper factory?
Sure. Thank you, Steve, for having us here. As you said, happy to present Amerigo and then leave some time for questions and answers. We essentially call Amerigo a copper factory because we are a copper producer. We produce a copper concentrate that we sell to the market, but we do not own a mine. And we do not have to engage in many of the production activities that are associated with a traditional sulfide operation. For example, when you think of a mine, you're thinking of drilling, blasting, loading, hauling material to the crusher. We don't have any of those operations at the mine. What we get instead is access through a series of agreements, a contractual framework, to process the tailings. And tailings are the waste material from the mining process.
So we get to process the tailings of the world's largest underground copper mine, which is called El Teniente. Our business model is essentially very simple. We generate additional economic value by recovering copper that has been left behind in those tailings, which is essentially a very way of saying we are a circular economy company, 100%. In our case, as I mentioned, the tailings come from El Teniente. Just to give you some context, El Teniente is the flagship operation of Codelco. Codelco is the world's largest copper producer. It's the acronym for National Copper Corporation of Chile. It's a state-owned organization. That's essentially the counterparty to our framework of production. We process two types of tailings from them. We process what we call fresh tailings. Fresh tailings are the tailings that come in from the daily production of the mine.
So the mine is churning, sending tailings down, and we get those tailings. But we also have the contractual rights to process older tailings that were deposited by El Teniente decades ago in an old tailings deposit that is adjacent to our plant. And we call those historical or old tailings. That tailings deposit is called Cauquenes. So we also call them Cauquenes. So whenever you hear us talk about older Cauquenes, the same thing, just to make it more confusing. So as economic compensation for having the right to process those tailings from El Teniente, we pay them a royalty. We pay them a royalty that is tied up to copper prices. And the copper that we produce, that we are able to recover as a copper concentrate, we sell at market prices. And so this is, in a nutshell, the Amerigo business model. We recover copper from tailings.
We compensate economically the owner of those tailings for allowing us to work with that material, which we then return to them, producing a copper concentrate and selling it to the market. So a way of looking at our plant just from a sort of a logistical point of view is as a bypass operation. You have the mine up in the Andes Mountains. You have a tailings deposit downstream. And in the middle of all of that, you have the MVC operation, our copper factory, which operates as a bypass. Which objectives do we have? We want to produce copper. We want to produce financial margin. We want to do so protecting the environment and the safety of our workers.
Just to finalize the description of our business model, because this is a fundamental part of it, because we have already invested the capital required to reach or to have maximum production capacity at our copper factory, we are able to return a significant amount of the cash that is generated from operations back to our shareholders.
So your shareholders should be very happy when, in the current environment, copper prices are going much higher. Is it that simple? And if you can just explain to me the impact of higher copper prices to your results?
Look, the current copper price environment is very positive for all copper producers, including Codelco, who is a purveyor of our tailings. Of course, it's very productive and positive for us. We have been preparing for a period of stronger copper prices for three years. In 2021, what was the first step we took? We refinanced our debt. We had taken in $100 million of debt to finance the growth of our operation in Chile without diluting shareholders. Three years ago, we refinanced that debt, removing the handcuffs that we had from the bankers to return capital to shareholders. We structured, we repaid a significant portion of the debt, and we structured the remaining portion, which was $35 million then, so that it could be paid in an orderly way over the next five years.
Then we designed a comprehensive plan to return capital to shareholders in a way that would be flexible and that would work well with the cyclicality that is part and parcel of the copper market. The copper prices that we have seen in recent weeks have not been surprising to us. We already have the mechanisms in place that will allow us to continue returning capital to shareholders. Our message since 2021 has been very consistent. We have worked hard, and we continue to work hard to have stable production that is a cornerstone of the company, stable production, stable copper output. We have fiscal discipline regarding our operational costs and how we invest the money. We are reducing our debt. We essentially will be debt-free by the end of 2025.
So those operational conditions and the fact that we are true and firm believers in the dynamics of copper supply and demand and how these factors will continue to push copper prices forward have allowed us to consistently return capital to shareholders. So we like where we are now. We are not surprised or shocked by it. It is something that we were expecting to happen.
Talk to me a little bit about the recent copper price move, because a lot of folks would have thought that you needed to see a stronger Chinese economy to get that rally. But we ran up almost to $5 a pound, which is a very elevated price historically. One, what do you think the recent, what was the driver between the recent move, and how do you think that reflects sort of your longer-term shared by many bullish view on copper prices?
Well, the recent prices, including today's price of $4.40 per pound, $4.40 per pound per copper is a very strong price. It's a phenomenal price. Just to give you some context, because context is always important, we all have short memories and we think, well, it was $5 in the COMEX three weeks ago. Copper prices are now down. They're not. The average copper price in 2023 was $3.85 per pound. That was a strong year. The year before, it was $4 on average for the year. Today's price is phenomenal. It confirms our view of copper and supply dynamics, which can be summarized in two lines. There is global demand consumption growth. That growth globally continues to expand. At the same time, there are clear risks to copper supply.
Just to give you some numbers, in 2023, I mean, just a few months ago, global copper consumption was 25.4 million tons. So that's what the world consumed. What the world produced, global copper mine production was 22 million tons. So there's already, you're pulling to close. You're falling behind. Now, copper consumption is expected to continue to grow. This year, they're saying 3.5% growth. But copper production from the mines is stalling. The mines are being stressed out to produce what needs to be produced. And as I've said before, and everybody that is in the copper industry acknowledges this as a critical problem, you cannot turn on copper production as you would turn on a light switch. It takes years and years of prior work before you can produce your first ton of concentrate or cathode from an operation. So what you mentioned, Steve, is very interesting.
Everybody seems to think that China will continue to be the motor driving copper demand worldwide, as has occurred for the last 20 years. I mean, we entered into a copper supercycle in 2003 precisely because of industrialization and modernization, urbanization of China. And they have been driving forth demand. But what has been occurring in recent years, and I think for at least for the last two and a half, three years, is that a new wave of demand has been building up in China and elsewhere. If you talk about China, China had housing market problems last year. But quietly and without a lot of fanfare, green demand has been building up in China. So global copper demand, or the total demand from China was strong last year. Green demand, decarbonization, electrification demand occurs now ex-China.
So every other country in the world has these projects that are moving forward that all require copper. AI data centers are now touted as quite significant sources of copper demand. Then you have factors like India. You know what I was talking about, growth demand from India. It grew 13% last year. It's astonishing. If you factor in that China continues to grow at a lower rate, but continues to grow, that elsewhere in the world, industrialized economies like the states, like Western Europe, like Canada, who had been consuming less copper are now starting to consume more copper again. Then you have that additional wave of the new economies emerging and following the Chinese path. You have a substantial series of bases of growth points for copper demand. At the same time, producing copper is becoming more challenging.
There is a very simple way of looking at it, and that's the relationship between grade, which is the amount of copper contained in the ore, in the rock, and price. The world's largest copper producers are all getting copper from lower-grade sectors in their mine. If you have lower grade, it means it's costing you more to access that grade to bring it online. You need a higher incentive price to be able to operate, let alone invest. Just from an operational standpoint, you need a higher price the lower the grade is. What has occurred? We had a resurgence in copper prices starting in 2021. Nothing was kicked in as new investment since. Historically, the last batch of new copper projects, quote unquote, new, because they were mostly expansion projects rather than new projects, what we call brownfields, started only in 2017, 2018.
We haven't had any single significant major projects come online. As an industry, the copper producers are facing complexity. A new copper price is required to incentivize.
It used to be, the thought was it used to be $4, right? And we've passed $4, and that hasn't.
It didn't move the needle. $4 didn't move the needle in the last three years, right? Some people said $5. $5 will probably not move the needle that much. Robert Friedland, who knows a thing or two about copper, he says $6.80 is a new incentive price before people can start thinking seriously about putting billions of new investment into the sector. It is challenging. It is critical, I think, a critical aspect of how we're going to be moving forward. For copper producers, it's a great place to be in.
Speaking specifically to what the higher copper price environment means to Amerigo, your CapEx is typically pretty light, $10 million, less than $10 million in maintenance CapEx. You have made some risk mitigation investments the last couple of years that are largely completed. Your cash costs, as reported, around $2 a pound. There's other costs, obviously, involved in that. At $4+ copper, you get to be a pretty solid cash flow generator. There's very little debt on the balance sheet. You've talked about returning capital to shareholders. You have a dividend that's yielding currently above 7%. Then you have extras here that you haven't utilized over the last couple of quarters. Walk through how you're thinking about returning capital to shareholders in a higher copper price environment.
Yeah. Well, you know I'm sorry to bother you with the same story, but it's the same consistent story that we've been telling for the last three years. And you nailed the biggest point or the departure point of all of this is that because we don't need growth capital, we can return capital to shareholders. And we have the mechanisms in place already. We don't want to be guessing what's going to be happening. We know that there's a plan, and basically, it's ready to be executed on. The quarterly dividend is 100% safe at these price levels. There is no question about it. We're paying CAD 0.03 per share per quarter, and that's the yield that you're referring to. So that is a cornerstone. We want to have that dividend set at a price point where it can sustain changes in the business.
Last year, at $3.85 copper price and some operational disruptions that we had at MVC, that quarterly dividend was 100% safe. So we want to continue having that remain a given for our shareholders. That's our fundamental commitment to the shareholders. And then we move on to a second layer, which, just for ease of purposes, let's call it additional distribution. So beyond the quarterly dividend, what can happen? It's share buybacks or performance dividend, performance to copper price. That's essentially what it is. So it's either A, B, or a combination of both, depending on how much money you have and depending on other circumstances, such as, for example, what is our share price at the time of a potential repurchase window, correct? We have been focusing historically in the last quarter since we started with the capital return policy on retiring shares.
We retired 11% of the issued and outstanding because it made sense to do so at the prices that we did. Our average repurchase price was CAD 1.50 per share. So we are essentially, right now, we've always said $25 million of cash in the bank allows us to do additional distributions. So we're knocking at that. We're essentially there at the end of this month. So what will happen? The board of directors will look at the facts in front of them, either restart the buybacks, do a performance dividend, do a bit of both. It remains to be seen, but it's either A or B. There is no big mystery there, right? So that's essentially how it will continue to be at Amerigo, something similar to what we've done in the past. And again, the choice is open to either the performance dividend or the buybacks.
So for people trying to figure out what the hole in the story is, because it seems very, very simple, copper prices go up, you have a clean balance sheet, you're going to return cash to shareholders, and you have a very high-yielding dividend right now. So they're looking at, when I talk to people, and I'm sure you do too, they're looking, well, what can go wrong here? Just walk through the relationship a little bit with Codelco, because that's usually the questions I get. The history of that relationship and how it works with the royalties, just to clarify that.
Sure. It is a successful long-term relationship. It could be one of the few long-term successful relationships you can find as a business case study. It would be good to analyze it. Our operation in Chile has had a contract with El Teniente to process their tailings for 32 years. That's significant. The contract currently runs to 2037. It doesn't mean that it will end in 2037. We have extended that contract before as the term date approaches. It is a successful relationship because it's a win-win relationship, as every successful relationship is, every successful marriage is, right? So what we give El Teniente is the ability of recovering additional copper and additional money from material that, for them, it's a bona fide waste material. And there's nothing wrong. They're not doing anything wrong in providing tailings that have a copper content.
It happens in every mine in the world. You cannot be as efficient as to recover the last bit of copper out of the ore that you have to process. You have a sequence. You have a priority. You have huge volumes to work with. So this is 100% normal. There is nothing wrong with the fact that there's recoverable copper from their operation. And one of the significant success factors in this relationship is the royalty. It's the sharing of the business. It's the sharing of the benefit of the activity with the owner of that material. So they get a benefit. We get a benefit. And that copper price relationship that has been established through the royalty works well. It is a sliding scale royalty. So the higher the copper price, the higher factor we pay to El Teniente. And the opposite occurs.
At lower copper prices, it becomes a de minimis royalty, which has helped tremendously our case, our business, when we've gone through periods of low copper prices. So just to give you an example, at $3 copper, the royalty that we pay to them is around $0.72 per pound. At $4.60, the royalty increases to $1.48 per pound. We both make money at higher copper prices, and we both get to share that benefit. So it becomes a very transparent and a very by the book, way of communicating with your partner. So it's a simple business proposition that becomes the basis of a very simple business relationship. That's the gist of the relationship. It works well for both. It has worked well for both parties for 32 years.
Simplicity is sometimes undervalued, but in this case, I give it high points for how it works and how it translates into also a very simple business model.
Yeah. So we are getting questions around why isn't everyone processing copper tailings? Why isn't it done everywhere? And why can't Codelco do it themselves? It sounds simple.
Yep. The easy question, why doesn't Codelco do it themselves? They are a huge mining complex. They have everything there, Steve. They have an underground mine. They have an open pit. They have open pit sectors. They have an SX/EW plant. They have a concentrator. They have a smelter, moly separation center. You name it, they have it. You cannot do everything in life. It's just like any other example. Why do you cater a lunch instead of doing it yourself? Well, there are people that can do a better job at a cheaper cost, and you can do it. And you can focus on your core competencies rather than be distracted with something else. The second question is quite interesting. Why aren't people looking at tailings in other operations in the world? There are other operations, zinc tailings operations, gold tailings.
In the case of copper, we are the only one that's doing it at this scale. The reason why miners don't focus on tailings is because it is their waste material. Really, there's no sexiness involved in it. You always want to be working with higher-grade materials with the mine expansion, with a new acquisition. Your brain is just geared in a different way. Why would you look? It's almost like, why would you be looking for coins in your pockets? Let's do something else that yields something more that yields me more, that can return more, that can give me a higher ROI, et cetera. By definition, it's contrarian to the mining mindset to be working with tailings, and the price incentive hasn't been there yet.
So, I think that things will change as it becomes more evident that additional sources and additional avenues of recovering copper in a capital reachable way have to be explored. It is happening with overburden. Overburden, you could sort of draw a parallel. It's the rock that doesn't make it to the operation. People are looking at technology, leaching technology to recover copper out of that overburden. In the same way, miners will be eventually incentivized to look at how they can recover additional copper from their tailings. We want to be then essentially a business case study of saying, we've done it. We can do it with you guys under the right conditions.
Do you have conversations, not necessarily to do that today, but people trying to figure out how to do it?
I don't think we're there yet. I think when people think in a very loose way of how they can recover it, they see it more as environmental reclamation, as part of environmental reclamation than as an economic value add. So there is still some additional maturity that is needed industry-wise to reach a point where the economic value of tailings is recognized as such, as economic value, and not just risk mitigation of environmental matters.
Okay. So we do have a question. If that's not coming near term, how do you think about growth? Because you have significantly expanded volumes you're producing there. And you have some investments coming that can probably further. I'm trying to remember the number, 500,000 pounds or something.
Yeah, that's optimization. I wouldn't call it with a capital G. It's optimizing your existing capacity to be more efficient, but that's about it. We have grown the business to where we needed it to be. That's a plus for us. I don't want to be penalized for the fact that I've already grown successfully, and now I don't have to continue to grow. The growth comes, for example, in terms of extending the term of the contract. That's another way of looking at growth. It's significant. It could be significant for us to do that. So I think that we're not pursuing growth for the sake of growth. It has to be a growth that adds value at the end of the day to shareholders. We're very careful, and we're very conservative in how we frame that. We have an investment criteria.
We don't want to be, for example. We've been very clear. We don't want to work on anything that's not copper tailings. That's our path of growth. It's not a copper exploration project that could be of interest because it's in Chile. No, no, no. That's flakiness. We don't want to be flaky that way. But for sure, we have an expertise processing copper tailings. And as I said, under the right conditions of partnership, of price, of location, that would be very interesting to have a discussion on, looking always for the right ROI for the shareholders.
We are just about running out of time. We did cover a lot of ground, but it sounds like a very simple story. Sure, it's not more complicated than this. Anything, if you want to give us the big takeaways you want investors from this half hour.
Sure. I think you had said, can you give me 3 takeaways or so? I'll give you 4. The big takeaway here is that we are a unique type of copper producer with full exposure to rising copper prices. That's significant. We are true believers in the fact that we are reaching a new copper supercycle where a new price floor will be established. It hasn't been established yet. So just as you well, people may not have seen what happened with the 2003 cycle. It was a structurally a totally different market starting in 2003 to what it was before. I think we're on the verge of establishing something similar for totally different reasons, but a replication of that cycle that really gave copper a different standing altogether. We have a world-class partner with Codelco. Their life of mine goes to 2082. We get to recover their tailings.
That's quite significant. We have a story of having operated uninterruptedly for 30 years. So we have survived the highs and lows of copper prices. We have a successful business. We have invested the capital. We wanted to be here 20 years ago. We're here. We're glad to be seeing these copper prices, and we're ready for higher and stronger copper prices.
I think that's the perfect way to wrap it up. Amerigo Resources CEO, Aurora Davidson, thanks so much. Hope everyone found the last 30 minutes informative. If you'd like to follow up on the story, please reach out to me at Sidoti or directly to Amerigo Resources. I'm sure they're happy to answer additional questions you may have. Hope everybody found this informative, and I hope you find the rest of our conference to be useful. Hope everyone enjoys the remainder of the day. Thanks, Aurora. Thanks, everyone.