Good day, and thank you for standing by. Welcome to the Lundin Mining First Quarter 2025 Financial Results Conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, to press star one one on your telephone. You will then hear an automated message advising you you'll need r hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Jack O. Lundin, President and CEO. Please go ahead.
Good morning, and thank you, everyone, for joining Lundin Mining's First Quarter 2025 Conference call. Yesterday, we reported our operating and financial results for Q1. A copy of our press release containing the details of the quarter and a presentation are available on our website, where a replay will also be made available. All figures presented are in U.S. dollars unless otherwise noted. I would like to remind everyone that yesterday's results and certain comments on the call include forward-looking information. I will draw your attention to the cautionary statements on this slide for reference and our latest relevant filings on [SEDAR]. On the call with me today, I'm joined by my colleagues, Teitur Poulsen, our Executive Vice President and Chief Financial Officer, and Juan Andrés Morel, our Executive Vice President and Chief Operating Officer. We will be presenting our figures from continuing operations: Candelaria, Caserones, Chapada, and Eagle.
Touching on the highlights from Q1, quarterly copper production for the company was 76,774 tons, while gold production was 31,849 ounces, which keeps us on track to meet our annual guidance of between 303,000-330,000 tons of copper and 135,000-150,000 ounces of gold. The operational performance, supported by strong gold prices in the quarter, translated into another quarter of almost a billion dollars in revenue, $388 million in adjusted EBITDA, and $337 million in adjusted operating cash flow, which excludes the impact of a working capital build of $215 million. When we released our annual guidance in January, we introduced a consolidated cash cost range. For the quarter, we produced copper at $2.07 a pound, which is in the lower end of our cash cost guidance range for the year between $2.05-$2.30 a pound.
In addition to the operations performing as per plan, the company executed on a number of strategic initiatives that I will touch on in the next slide. On April 16, outside the current earnings period, we successfully completed the sale of our European assets, Neves-Corvo and Zinkgruvan, for cash proceeds of $1.4 billion. Following receipt of those proceeds, we paid off and canceled our term loan of $1.15 billion and repaid a portion of the debt drawn on our revolving credit facility, all of which has significantly strengthened our balance sheet in support of our future growth opportunities. In March, the company entered into an option agreement with Talon Metals to acquire a highly prospective exploration project called Boulder Dash, adjacent to the company's Eagle Mine.
This transaction provides a low-risk, high-potential opportunity that could extend the mine life at Eagle if exploration continues to be successful, improving out an economic ore body. During the quarter, Lundin Mining also announced a new shareholder distribution policy that commits an annual return of approximately USD 220 million per year to shareholders. This is in line with previous annual distributions, but we have increased the level of share buybacks and adjusted the dividend to maintain the set amount. On an annualized basis, we are now paying a dividend yield which is in line with our peers. In February, we updated our mineral resource and mineral reserve statement for our operating assets, where we were able to successfully offset mine depletion and replace reserves associated with the sale of Neves-Corvo and Zinkgruvan.
This past Monday, we announced the impressive initial mineral resource estimate for the Vicuña project, outlining the world's largest advanced-stage copper-gold-silver development project, of which Lundin Mining owns 50% alongside our partnership with BHP. On January 15, we closed the transaction to jointly acquire Filo Corp, and the mineral resource announcement is the first major milestone for the joint venture. It forms the basis for our upcoming integrated technical report that will continue to outline a multi-phase development plan for the district in the emerging Argentinian mining province of San Juan. I will now hand the call over to Juan Andrés, our COO, to walk us through in more detail the company's production results.
Thank you, Jack, and good morning, everyone. The company is tracking to production guidance on a consolidated basis for all metals in 2025. As Jack mentioned, copper production for continuing operations for the company was 77,000 tons, and gold production was 32,000 ounces for the quarter. At Candelaria, production was 37,000 tons of copper and 21,000 ounces of gold. During the quarter, throughput was positively impacted by softer than anticipated ore from sections in phase 11 in the open pit. This is expected to continue into the first part of the second quarter. Overall, production at Candelaria is tracking to guidance. Caserones has performed well this quarter, and throughput was positively impacted by improvements to operations from the full potential program underway. During the quarter, the mill processed 8.7 million tons, which is a quarterly record for Caserones.
In addition, cattle production was strong at 6,500 tons due to continued benefits from ore material being placed on the pads and higher irrigation rates on the damage. Caserones is tracking to guidance for the full year. Production at Chapada will be modestly weighted to the second half of the year. During the quarter, Chapada produced 8,900 tons of copper and 11,000 ounces of gold. Results were driven by an increase in stockpile material to the mill, which led to lower recoveries for the period. Grapes and copper recoveries are expected to increase in the second half of the year due to higher contributions from fresh ore and less stockpile material processed. Chapada is tracking to guidance for the year for both copper and gold. At Eagle, nickel production was 2,300 tons, and copper production was 2,100 tons for the quarter.
Ramp rehabilitation at Eagle East has been completed after the fall of ground in Q2 2024, and normal production levels are expected for the remainder of 2025. Mine sequencing and grades are expected to normalize in Q2, which will support the annual guidance forecast for the year. In the first quarter, we experienced impacts from winter weather that affected ore haulage, which affected mining grades and mill throughput. Overall, we have had a good start of the year, and production is tracking to guidance for 2025. I will now turn the call over to Teitur to provide the summary on our financial results.
Okay, thank you, Juan Andrés, and good morning, everyone. Before going into the numbers, a reminder that for the first quarter 2025, we continue to report our European assets as discontinued operations, and the balance sheet items from these subsidiaries will be reported as assets and liabilities held for sale. As previously mentioned, the transaction closed on the 16th of April, and as such, our reporting for the second quarter will also include the contribution from our European assets for the first 15 days of the second quarter as discontinued operations. The company generated $964 million in revenue from continuing operations. The quarter benefited from certain delayed shipments at Caserones, around 40,000 metric tons of concentrate, which slipped into January and contributed around $80 million to our revenue generation for the first quarter.
With the sale of our European assets, our revenue mix is now even more geared towards copper, with copper generating 84% of the quarter's revenue compared to last year when copper made up around 76%. Approximately 95% of our revenue now comes from our South American assets, with Candelaria and Caserones being the largest contributors. Turning to slide 13, as mentioned previously, with the delayed shipments from Caserones, this benefited the volume of copper sold during the quarter. On a consolidated basis, we did, in fact, sell around 5% more copper in the quarter than we produced. The total copper sold amounted to 81,000 tons during the quarter at a realized price of $4.63 per pound of copper and 30,000 ounces of gold at $3,350 per ounce, before the impact of streaming and including adjustments from prior period sales.
This translated into, as I said, $964 million for the quarter in revenue, which also includes $45 million positive adjustments from prior period provisional pricing on copper and gold. As you can see on the graph to the right, this quarter was the highest revenue generation from our continuous operations over the last five quarters. A portion of our revenue for the quarter is derived from volumes sold under provisional pricing. The final prices for these volumes are subject to adjustments and will typically be determined in the following quarter. At the end of the first quarter, just over 80,000 tons of copper were provisionally priced at $4.43 per pound, with final pricing still pending. Turning to slide 14, production costs from continuing operations totaled $517 million for the quarter, which is slightly higher than the costs recorded for the previous couple of quarters.
This quarter includes the costs associated with the change in inventory at Caserones in relation to the previously mentioned delayed shipments of concentrate, in addition to recording higher production costs at Eagle. In the previous two quarters, a portion of the costs at Eagle were categorized as standby costs, so not reflected in production costs, but ramp rehabilitation work was carried out. With Eagle now having returned to full production, all costs incurred are now charged through the production cost line and thus increasing our consolidated production costs for the quarter by around $15 million-$20 million compared to the previous two quarters. Candelaria's total costs have come down from prior quarter due to lower sales volumes, while C1 costs for the quarter are slightly higher compared to previous two quarters as the mine went to higher-grade ores during the second half of last year.
Costs at Caserones were driven by higher throughputs and an increase in sales volumes from the previously mentioned delayed shipments, while Caserones' C1 costs continue to remain fairly stable. At Chapada, our C1 costs for the quarter are somewhat higher than the previous two quarters due to lower sold volumes for copper and gold. Nevertheless, the C1 costs for the quarter remain significantly below guidance of $1.80-$2 per pound copper for the full year due to continued favorable effects and also due to higher gold prices. On a consolidated basis, as previously mentioned, our C1 costs amounted to $2.07 per pound copper, which is towards the bottom end of our guidance of $2.05-$2.30 per pound copper. Our costs continue to benefit from weaker local currencies, and our C1 unit costs also continue to benefit from higher gold prices compared to what's assumed in our guidance.
Onto slide 15, the total capital expenditure for the quarter was below guidance primarily due to the deferral of capital projects at Candelaria, including deferrals of the SAG power system upgrade and the deferral of relocating certain electrical lines, as well as lower volume moved at Caserones' TSF. These are all expenditure deferrals and are expected to be incurred later in the year. Almost 70% of the sustaining CapEx in the quarter was for stripping and tailings storage development. Lundin Mining's 50% share of capital expenditure related to Vicuña was EUR 43 million, which is tracking slightly above the full-year guidance. Higher expansionary capital costs during the quarter were also the result of an opportunistic mineral rights purchase at Candelaria during the quarter. We remain on track for full-year guidance with sustaining and expansionary CapEx of $175 million for the quarter, while the total guidance for the year is $735 million.
The first quarter key financial metrics are presented on slides 16 and 17. As mentioned, we generated adjusted EBITDA of $388 million and adjusted operating cash flow of $337 million, which excludes a build-up working capital of $250 million during the first quarter. Cash taxes of $43 million also impacted the operating cash flow in the quarter, with a further cash tax installment of $108 million made in April to settle final taxes due in Chile and Brazil for 2024. Free cash flow from operations was $22 million from continuing operations, which includes the working capital build of $215 million. Adjusted earnings were $94 million for the quarter. We finished the quarter in a moderate net debt position of roughly $1.44 billion, excluding capital leases, which equates to a leverage ratio of one-time net debt to adjusted EBITDA for continuing operations.
The company remains in good financial health, with costs trending according to guidance, with some potential upside on the cost structure due to the continued weaker local currencies, as well as a stronger gold price. Turning to slide 18, with the closing of the Vicuña transaction in January and the closing of the European asset sale in April, there have been a number of cash inflows and outflows impacting our cash flow statement and our net debt positions. Reading this chart from left to right, we have already explained the quarterly adjusted operating cash flow, working capital build, and the expenditure on capital items. The closing of Vicuña resulted in a net cash inflow of $79 million, with a cash payment to Filo Corp shareholders of $611 million and receipt of cash from BHP for their 50% stake in Josemaría of $690 million.
With our recently announced revised shareholder distribution policy, the company has pivoted to do more share buybacks, and the company bought $71 million worth of its own shares during the quarter. Accounting for cash interest and certain other items, the company ended the quarter with a net debt of $1.44 billion. After Q1, the company completed the sale of the European assets and received $1.4 billion in proceeds and released to Boliden accumulated cash in the sold subsidiaries amounting to $84 million. Following the closing of the European asset sale, the company paid off $1.15 billion in term loans, as well as repaid $170 million of debt drawn under the Revolving Credit Facility. The company also paid out Q4 dividend of just over $50 million and continued to repurchase shares during April.
As previously mentioned, we paid a cash tax installment of $108 million in April to settle final taxes due in Chile and Brazil for 2024, leaving the company with a net debt position of $262 million as of May 2, 2025. With that, I will now turn the call back to Jack.
Thank you, Teitur. During the quarter, as I mentioned, we entered into an earning agreement with Talon Metals to acquire up to 70% ownership in the Boulder Dash property, which is adjacent to our Eagle Mine. Initial drilling at Boulder Dash intercepted 100 meters grading 0.41% nickel and 0.35% copper, starting at a depth of approximately 9 meters. More recently, drilling has intercepted grades of 2.33% nickel and 2.95% copper, which is in line with the current head grades at Eagle. Lundin Mining has agreed to fund an initial 30,000-meter drill campaign. Following the completion of the 30,000 meters of drilling, the company can decide to fund a feasibility study in exchange for a total ownership of 70%. This highly anticipated drilling program is set to start within the coming weeks. On Monday's webinar, we were able to detail the announcement of the impressive Vicuña mineral resource estimate.
A replay is available on our website, which I encourage the audience to visit. The initial mineral resource has highlighted the Vicuña project as one of the highest-grade undeveloped open pittable copper projects. Its size and scale, not only in copper, validates Vicuña as one of the largest gold and silver resources globally as well. The total measured, indicated, and inferred resource contains 38 million tons of copper, 81 million ounces of gold, and just under 1.5 billion ounces of silver. Filo del Sol and the Vicuña district are poised to develop into a world-class deposit that will support a globally ranked mining complex. Since the initial oxide discovery in 2000, Filo del Sol has emerged as a generational discovery, highlighted by the drilling of the high-grade Aurora Zone in 2021.
Alongside Josemaría discovered in 2004, it forms the Vicuña project, now representing the largest greenfield copper discovery in the last 30 years. The figure to the bottom of the screen shows resource data collected from S&P Global Platform. The figure shows the relative measured, indicated, and inferred resource size of initial discoveries from 1990 until present day. You can see Vicuña as stacking up next to the large world-class mining operations such as Collahuasi, Cerro Verde, and Escondida. The scale is impressive. However, not only the size and scale of Vicuña, but also the elevated grades that exist in the core of the deposits make it truly unique. At Filo del Sol, there is over 600 million tons at 1.14% copper equivalent in the measured and indicated category, containing 4.5 million tons of copper.
At Josemaría, there is a near-surface high-grade core of 200 million tons at 0.73% copper equivalent, containing 1 million tons of copper, which would likely contribute to the initial years of mining. The mineral resource estimate is a key milestone for the district and will form the basis for the integrated technical report that will outline a combined project that is scheduled for completion in the beginning of 2026. In summary, Lundin Mining has completed a significant transformation to start the year. Most importantly, our existing operations are performing well and are tracking to full-year production guidance across all metals. To streamline our portfolio and position the organization with the ability to focus on the key value drivers for our business, we officially launched Vicuña in partnership with BHP in January.
Since then, we have made solid progress in de-risking and confirming the significant growth potential of the Vicuña district, highlighted by the mineral resource estimate, which was released on May 4. The accompanying technical report will follow within the coming weeks. Subsequent to the first quarter, we finalized the sale of our European assets, generating $1.4 billion in proceeds. This enabled us to repay and cancel our term loan and reduce our revolving credit facility, resulting in a strong balance sheet going forward. As we move into the next phase of growth, centered on the high-potential Vicuña district as well as near-term growth opportunities at our existing operations, we do so with enhanced financial flexibility and a clear focus on delivering long-term shareholder value.
The company is well-positioned for the future with a strong commitment to achieving our operational targets, improving margins through disciplined cost management, and maintaining the highest health and safety standards to protect our workforce. Thank you to those on the call, and I'll now open up for questions.
Thank you. At this time, we will conduct the question-and-answer session. As a reminder, to ask a question, you will need to press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by while we compile the Q&A roster. Our first question comes from Lawson Winder of BofA Securities. Your line is now open.
Thank you very much, Operator. Good morning, Jack and team. Thank you for the update. We spent a lot of time talking on Monday about Vicuña, so I think maybe I'd like to ask about some of the other operations this morning and ask about Candelaria and the expansion. At this point, what remains outstanding in terms of information that you need to gather in order to make a decision on the underground expansion, and what is the current thinking on the timeline? Thank you.
Hi, Lawson. It's Jack here. Thanks a lot for the question, and thanks a lot for the interest on the call on Monday as well. Yeah, for Candelaria, the underground, we were looking historically at quite a large underground expansion that we were dubbing as the QJEG project. I think we've telegraphed in recent calls that we've since kind of modified the approach to the underground expansion and looked at kind of increasing the capacity from the underground in more of an incremental way and through more traditional measures rather than implementing underground infrastructure like crushing and conveying. We're looking at improving the productivity of our underground mining crews and then potentially adding more mobile underground equipment to increase production from the underground incrementally. QJEP, the large QJEP expansion project, has been essentially put to the side.
At our capital markets day in June, we'll be outlining kind of the next steps for how we're going to be incrementally growing production from the underground. It is not going to be a heavy CapEx item. We're looking at a low capital intensity initiative to incrementally increase production, and we'll outline those details in June at our capital markets day.
Yeah, that'll be very helpful. What does that imply in terms of permitting? Does incremental mean a more streamlined permitting process, or do you face the same constraints on that front?
Lawson, this is Juan Andrés. In terms of permitting, the underground expansion was already permitted in the EIA 2040. As Jack mentioned, since we're making some changes from underground material handling system to more mobile-based expansion, we will have to amend some permits, and we're currently working on doing that.
Any sense on timeline to having those amendments?
Not yet.
Okay. Something to follow up with on the investor day in June, that'll be very informative. On Candelaria as well, I wanted to ask about the stream. The dropdown in the percent payout to Franco-Nevada on both the gold and silver is approaching relatively quickly in my model. At current gold and silver prices, we're getting something in the range of an annual boost to cash flow of about $100 million. Is that in line to your estimate at spot prices? What's your current estimate on the timing of that dropdown?
Yeah, morning, Lawson. It's Teitur here. Yeah, so we are currently forecasting that that step down from 68% of the gold down to 40% gold and silver should happen around about towards the end of 2026. Obviously, depending on spot prices at that point in time, yeah, I think your order of magnitude number is in the ballpark.
Okay, great. That'll be nice to have. And then just finally, when you're thinking about the capital to develop Josemaría and Filo, which I mean, I think you made very clear on the last call that it would be done so in an incremental fashion. Nevertheless, have you considered copper hedges as an option to protect downside risk and ensure funding for that process?
The short answer is no. We're not really contemplating copper hedges. I mean, as you've seen from our presentation today, our balance sheet is very, very strong. We are effectively at net debt zero. We have all the flexibility in the world, really, in terms of how we go about funding this. I mean, we obviously will remain very disciplined on cost control and obviously trying to optimize the economics of Vicuña in terms of phasing of CapEx. Hedging on commodities is not on the table at the moment.
Fantastic. Thank you all very much.
Thank you.
Thank you. Our next question comes from the line of Craig Hutchinson of TD Cowen. Your line is now open.
Good morning, guys. I just want to follow up from Monday's call. The integrated technical report that's going to come out in Q1 of next year, is the intent that the phase one Josemaría will be at feasibility level and the oxides from Filo will be at a PEA level? Or do I have that right? I guess I'm just going to ask you if Josemaría is the plan to whatever you put out in Q1, that's the project you're going to move forward with through the RIGI.
Hey, Craig, thanks for the question. Yeah, that's right. Phase one, what we're looking at right now, Josemaría, we're getting the level definition of the study to a definitive feasibility study level. We've obviously been studying Josemaría for a number of years and have much more detail on that project and have significantly de-risked it. We've been also looking, of course, at the Filo oxides. There was a PFS that came out when Filo Corp was in control of the Filo del Sol deposit. We're advancing and redoing kind of the PFS on the Filo oxides. For the Filo sulfide, once we get into large-scale full kind of capacity production, that would be at a PEA level that we would be doing the study at.
All of these three studies that are ran in parallel are at different definitions based on the amount of data we've accumulated and the amount of work we've done to date.
Okay, great. Do I understand correctly the idea is after you've kind of moved through the high-grade zone in Josemaría, your PEA will look at potentially substituting that or the high-grade zone from Filo del Sol?
Yeah, that's exactly right. I mean, we're integrating the deposits together and looking at coming up with the most optimal mine plan based on kind of the mineral resource endowment that both of these deposits have. The plan is for us to, as cost-effectively as possible, get into production at scale and then ensure that we have a robust mine plan so that we're mining for as long as possible the highest-grade material from either ore body. That's why putting these deposits together and building it out in sequence makes so much sense because, as we've discussed, there's a high-grade core in both deposits. For us to kind of capitalize on that through integrated mine planning, we'll be able to come up with the most, I think, economic and robust kind of scenario.
Okay, great. Just maybe one housekeeping item for me. Just the negative $250 million non-cash working capital in the quarter, can you just give some context around that, and do you expect some of that to unwind here in Q2 and Q3? Thanks.
Yeah, I mean, if you look at our Q4 numbers, we had the opposite effect. We had a big working capital cash inflow. Part of the reason was that these two Candelaria-only shipments, which got delayed from December into January, we actually got those prepaid. They were paid upfront, which obviously impacted working capital positively in Q4, but it is reversing in Q1. Just generally, with copper prices having increased, when you have increasing copper prices, your receivables are increasing, so that is always building working capital. Those are the reasons.
Okay, great. Thanks, guys.
Thank you. Our next question comes from Connor Mackay of Vintum Financial. Your line is now open.
Hey, thanks, guys. Thanks for taking my question here. I just want to talk about the investment climate in Argentina that I imagine with the, I think we've spoken in the past that the integrated technical report coming early next year is going to form the basis of the RIGI application for the Vicuña project. Have you been seeing other projects kind of start to trickle into the RIGI process? Is there any color you can provide on sort of how those projects are advancing and if there's anything that you guys are watching out for in crafting your own application?
Thanks for the question, Connor. I think it's obviously super important to understand kind of the climate in Argentina as we look to potentially make a large investment into the country and to San Juan Province.
What we've been seeing is a lot of positive momentum building in Argentina. A lot of the management team will be heading down there at the end of this month. We'll be going to Buenos Aires. We'll be heading to San Juan and visiting the site. All of this is in anticipation of us getting ready to submit a RIGI application. We're working now with the joint venture, with our partners, to kind of identify and align on when we think that application would be optimal to be sent into the government. What we're seeing is, yeah, there are other projects coming in, not just in the mining sector, but any kind of industry that can be applicable for the RIGI regime. There have been a number of applications, not many yet for mining, but we're trending towards being in a position to apply.
Overall, what we've been able to see and what Javier Milei, President of Argentina, has been able to do has been extremely positive for the investment climate for projects like ours. We continue to be encouraged with what we're seeing in Argentina.
Awesome. That's good to hear. I just had a question on cash costs. Particularly, just want to get a reminder. What gold price did you guys assume in coming up with your cash cost guidance for the year? If we do see these elevated gold prices continue throughout the remainder of the year, is there potential for guidance to come down, or are you seeing maybe cost inflation elsewhere offset some of those gains?
Yeah, so we will revisit all our guidance at the capital markets day in mid-June. What we so far have assumed is 2,500 ounces, $2,500 per ounce in gold. On FX, we assumed CLP 900 per dollar and BRL 550
Perfect. Thanks for the detail there. That's it for me. Thanks.
Thank you.
Thank you. As a reminder, to ask a question, you'll need to press star 11 on your telephone and wait for your name to be announced. One moment, please. Our next question comes from the line of Daniel Mejor of UBS. Your line is now open.
Hi, guys. Thanks for the details on Monday, and thanks for the questions. Yeah, I just wanted to follow up a couple on Argentina. I mean, obviously, the integrated technical report is coming. In terms of thinking about the structure of that, we discussed a little bit on Monday that you would look to develop the Filo oxides and Josemaría sulfides in conjunction with each other in the first phase. If we're thinking about scaling the CapEx for phase one, is a reasonable starting point to assume the $4 billion-plus guidance that you'd previously given for Josemaría plus the kind of $1.8 billion, I think it was, Filo guidance from 2023 technical report as a kind of starting point for phase one?
Thanks, Daniel, for the question. Obviously, as we go through the period that we're in right now to fully define and build those capital estimates for all phases, as I discussed, kind of different level of definition, we'll be in a position to kind of firmly announce what those numbers look like. Josemaría phase one, looking to trend at probably a little bit higher than what you've said. The PFS level on the oxides is still early days for us to kind of dictate what that number is going to be. We're working hard to make sure that this is the most cost-effective initial capital project on phase one. At this time, we're not really in a position to reveal more information than that.
Okay, thanks. Then a follow-up on the RIGI and how that fits in with your timeline of potential FID in 2026. If you submitted the RIGI by mid-year, so the deadline for mid-year, I mean, would it be possible to assume that you could FID the project as you've submitted that application, or will it take a long time to kind of process that and have visibility to FID the project? Is it going to be a long timeline for the RIGI to be processed?
No, we don't believe that critical path item will be the RIGI application. I think from what we're studying and what we understand is once we submit that application, it's quite a clear-cut process of going through and getting the enabling us to adhere to that. RIGI is definitely not the hang-up. I mean, we're putting our efforts forward so that we can be in a position to really understand the magnitude of all phases of the project next year, understand the fiscal stability regime that once we sign up and adhere to RIGI. That next year, we'll have all of the information in front of us and able to make a decision on sanction or going into construction or initiating phase one.
Great. Thanks very much.
Thank you. Our next question comes from the line of Ralph Profiti of Stifel. Your line is now open.
Thanks, operator, and thanks, Jack and team, for taking my questions. I wanted to delve into this irrigation rate flow at Caserones, which was behind some of the outperformance on production. Just wondering, is that a design change in leach kinetics, or is this the sort of ore character telling you something? Is there going to be a cost impact to some of these higher irrigation rates? It leads into my second question, which is how close should we be watching this in terms of similar oxide characteristics at Filo del Sol's oxide core and whether or not you're going to be learning lessons on how you take the approach from Caserones oxides to Filo oxides? Thank you.
Morning, Ralph. Thanks for the question. Probably it's good to start by highlighting that Caserones is a dump leach. The kinetic cycle is normally very long, especially with the secondary sulfides. As we dump more secondary sulfides, of course, the extraction becomes a little slower. In general, we're on track with the budget or internal plans on the placement of the leaching material. We are taking advantage of irrigating some slopes in the dump leach. That is why we're being able to produce more cathodes than expected. We're basically on track with our internal plans.
Gotcha. Okay. Thanks very much.
Thank you. I am showing no further questions at this time. We'd like to thank you for your participation in today's conference. This does conclude the program. You may now disconnect.