Good morning, ladies and gentlemen, and welcome to the Lundin Mining Second Quarter 2023 Results Call and Webcast. At this time, all lines are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on Thursday, August 3, 2023. I would now like to turn the conference over to CEO, Peter Rockandel. Please go ahead, sir.
Thank you, operator, thank you everyone for joining today. I will draw your attention to the cautionary statements on slide two, as we will be making several forward-looking statements during the prepared remarks and likely during the Q&A as well. On the call to assist with the presentation and answer questions are Teitur Poulsen, our SVP and CFO, and Juan Andrés Morel, our SVP and COO. Beginning with the key highlights for the second quarter on slide four, we delivered solid operating results across the portfolio, producing nearly 95,000 tons of copper-equivalent metal. As planned, production continues to be modestly weighted to the second half of the year, and we are tracking at or above the midpoint of guidance for copper, gold, and nickel, and at the lower end for zinc. We completed the Caserones acquisition early in the third quarter.
The operation had a strong first half of the year, producing 70,000 tons of copper on a 100% basis and generating approximately CAD 120 million in cash. Caserones is off to a solid start for Q3. The winter season in Chile usually runs from late May to late August. So far, Caserones has yet to experience any seasonal or winter weather impacts. With the second quarter results, we have improved cash cost guidance for Chapada and Zinkgruvan from realized savings, lower consumable pricing, and byproduct credits. We generated attributable net earnings for our shareholders of nearly CAD 60 million and adjusted EBITDA of over CAD 160 million. These results were achieved considering lower metal prices during the quarter and impacts of adjusted realized pricing. Adjusted operating cash flow was over CAD 110 million, including the release of working capital.
Operating cash flow total is nearly CAD 195 million. Our balance sheet remains very strong, with approximately CAD 1.6 billion of liquidity today. As Teitur will speak to, we continue to realize the benefits from our foreign exchange hedging program, with approximately CAD 14 million of gains realized in the second quarter. In addition, the mark-to-market value of the remaining hedges has a current value of over $70 million. In April, we also initiated a diesel hedging program to protect the operating cost structure of Candelaria. With yesterday's financial results, our board of directors maintained our peer-leading regular dividend of CAD 0.09 per share for the quarter, or CAD 0.36 on an annualized basis, which is roughly a 3.1% yield. As announced, we are very excited to have closed the Caserones acquisition early in the third quarter.
Immediately after the announcement in March, we established an integration team, which has been extremely effective and has allowed us to have a very smooth transition during closing. The same team has also been outlining the numerous synergies, which we believe we will start to capture this year. It is clear that many opportunities exist for synergies, especially with our current operation at Candelaria and in the future with Josemaria. We continue to advance our Josemaria copper gold project, with much of the focus in the second quarter on several optimization and trade-off studies, while on-site, also upgrading roads and completing the camp facilities. Discussions with a number of parties continue with respect to potential future partnerships. At Candelaria, study work evaluating the expansion of the underground mine to add roughly 20,000 tons of copper per year has been completed.
We do require approval of our 2040 EIA to proceed, at which time we'll ensure the economic study is reflective of any changes. In short, we delivered a solid operating quarter and are pleased with the improved operational stability of our assets. We have been able to lower our cash cost guidance at a number of assets and are extremely focused on bringing down our cost at our remaining assets. I will now turn the call over to Juan Andrés to speak to a summary of our production results.
Thank you, Peter. As planned, our production continues to be slightly weighted to the second half of the year. Copper production was essentially flat from the first quarter, and going forward, will include our recent acquisition of Caserones. Overall, we produced approximately 95,000 tons of copper equivalent in the second quarter. Let's now look at copper. Copper production was 60,056 tons, which is essentially flat compared to the first quarter of the year. Candelaria had a good quarter, processing 6.9 million tons of ore. Slightly better grades and softer ore from phase XI contributed to the production. We expect the second half of the year to maintain these slightly better grades from lower benches in the pit. Unscheduled downtime of the ball mill at Chapada limited throughput during the month of April.
These issues have been resolved, and we should see a stronger second half of the year. We expect higher-grade material as we will reduce the use of stockpile and prioritize the feed of fresh ore. Copper production is tracking well to annual guidance of 296,000-325,000 tons, and this is including Caserones production. Let's now look at zinc. Zinc production was lower quarter-over-quarter at 36,115 tons. Additional downtime of 11 days at Zinkgruvan was taken to the tie-in of the new sequential flotation circuit. Commissioning is progressing well, and we expect full ramp-up this year. Zinc recoveries are improving from the upper 80s into the lower 90s. At Neves-Corvo, after a strong first quarter, during Q2, unplanned downtime at the SAG mill, together with higher grade variability, impacted zinc production.
Ramp-up of zinc expansion project at Neves-Corvo progressed in line with plans. Production is expected to increase over the course of the year, with initiatives to enable ZEP to consistently achieve nameplate capacity that will result in throughput and metal recovery improvements. For now, we see zinc production tracking to the lower end of the annual guidance of 180,000-195,000 tons. Let's now move to nickel. Nickel production of over 4,686 tons was 25% higher quarter-over-quarter from higher throughputs and grade profile at Eagle. Both copper and nickel production at Eagle were impacted in the first quarter by rehabilitation works at the main ramp, mechanical issues in one of the ball mills, and weather events.
With a slower than planned start in Q1, but a strong second quarter, nickel production is tracking well to our annual guidance of 13,000- 16,000 tons. Finally, gold. Production was approximately 34,000 oz from the second quarter. As mentioned earlier, Chapada had additional maintenance downtime that impacted throughput. We continue to track well to our annual guidance for gold of 140,000- 150,000 oz . All in all, a good first half of the year, as Peter mentioned before. Production will be modestly weighted to the second half, as we are tracking well to meet guidance on all metals. Thank you. I will now turn the call to Teitur, who will provide summary of financial results.
Okay, thank you, Juan Andrés. If you move to slide six , starting with the top line, we generated close to CAD 590 million in revenue. Our sales remains leveraged to copper, generating 65% of the quarter's revenue. nickel and gold contributed 14% and 9%, respectively, while zinc contributed 6%. Lower realized pricing of metals during the quarter impacted overall financial performance compared to last quarter. The realized copper price was CAD 3.37 per pound, versus last quarter of CAD 4.49 per pound, a reduction of roughly 25%. With the price of copper and several of the other metals we produce decreasing during the quarter, revenue was negatively impacted by CAD 75 million of prior period pricing adjustments. A summary of realized copper, zinc, and nickel prices for the quarter are presented in the charts on this slide.
Ultimately, we realized prices of CAD 3.37, as I said, per pound of copper, CAD 0.83 per pound of zinc, and CAD 9.47 per pound of nickel, and CAD 1,842 per ounce of gold for the second quarter, including the adjustments. At the end of the second quarter, approximately 82,000 ton of copper were provisionally priced at CAD 3.77 per pound and remained open for final pricing adjustments. As did over 28,000 tons of zinc at CAD CAD 1.08 per pound, and over 1,700 ton of nickel at CAD 9.25 per pound. On slide seven, production costs total CAD 405 million in the second quarter, which is in line with the previous quarter.
The bottom right chart on this slide presents the relative impact of key drivers on the total operating cost and capital cost by operation for the quarter and demonstrates the material drop-off of costs for diesel and electricity compared to Q4 last year, particularly at Candelaria and Neves-Corvo. Whilst Candelaria's diesel and electricity costs have improved compared to last year, the total production costs during the quarter were negatively impacted by higher maintenance and contracting costs. However, both of these cost increases are likely to be temporary in nature, and we retain the full year cost guidance for Candelaria. At Chapada, production costs improved from new transportation contracts, which saw ocean freight prices drop around 47% to around CAD 50 per dry metric ton. Here we also are seeing the benefit from lower fuel and explosives pricing and somewhat offset by a slightly stronger local currency.
Chapada's cash cost guidance was lowered from CAD 2.55- CAD 2.75 per pound of copper to CAD 2.35- CAD 2.55 per pound of copper. Neves-Corvo cash costs increased during the quarter, primarily due to lower production volumes and byproduct credits. Consumable pricing has been mixed, with savings on diesel and electricity offset by cement explosives and the strengthening euro. Cash cost guidance at Neves-Corvo remains unchanged for the year at CAD 2.10- CAD 2.30 per pound of copper. Eagle's production costs were in line with expectations. However, cash costs were impacted by lower byproduct credits. Cash cost guidance has been revised upwards to CAD 2.30- CAD 2.45 per pound of nickel in 2023 and is primarily the result of the lower byproduct credits from lower realized pricing.
Zinkgruvan's production costs were lower than those of the first quarter, primarily as a result of inventory movements. Cash cost guidance has been revised down to between CAD 0.45- CAD 0.50 per pound of zinc in 2023, as we realize higher byproduct credits, which has offset lower production. The capital expenditure guidance for the year has been reduced by CAD 75 million on a like-for-like basis, with CAD 25 million relating to lower sustaining capital spend at Candelaria, and CAD 50 million lower spend relating to the phasing of activity at Josemaria. As previously announced, the second half capital expenditure guidance for Caserones is CAD 110 million on a 100% basis.
The capital spend during the first half of the year amounted to approximately CAD 525 million, of which CAD 345 million related to sustaining capital, whilst CAD 180 million related to the Josemaria project. Lastly, on this slide, we continue to realize the benefits of our foreign exchange hedging program, intended to provide better visibility on our U.S. dollar requirements of future operating costs and CapEx. In the second quarter, we realized an FX hedging gain of CAD 14 million. In addition, the mark-to-market value of our remaining unsettled foreign exchange contracts amounted to over CAD 70 million at the end of the quarter. Moving on to key financial metrics on slide eight.
During the second quarter, revenue, as I said, was just below CAD 590 million, which was impacted by the lower commodity prices and the pricing adjustment in, in the quarter. We generated adjusted EBITDA of CAD 162 million and adjusted operating cash flow of CAD 111 million, along with free cash flow from operations of CAD 21 million. Details of all these adjustments are broken down in our MD&A. We remain in a strong financial position. We finished the quarter in a net debt position of CAD 230 million, and today have a net debt position of approximately CAD 930 million, factoring in the closing of the Caserones acquisition. Slide nine presents greater detail as to the sources and uses of cash in the second quarter.
Before changes in working capital, our operations, as I said, generated CAD 110 million net of CAD 33 million of cash taxes paid during the second quarter. After working capital adjustments and sustaining capital expenditure, the operations generated CAD 21 million of free cash flow during the second quarter. With two quarterly dividend payments during the second quarter, amounting to, in total, CAD 104 million, in addition to spending CAD 92 million on the Josemaria growth project, the company generated a negative free cash flow of CAD 84 million in the second quarter. With the recent closing of the Caserones transaction, combined with the closing of a new CAD 800 million term loan, the company continues to have significant liquidity headroom of CAD 1.6 billion, with a current net debt of approximately CAD 930 million on a 100% consolidated basis.
That wraps up the financial section, and I'll now turn the call back to Peter.
Thank you, Teitur. Slide 11 highlights the meaningful scale and material growth of our copper portfolio. As mentioned, we are very excited about the Caserones acquisition. Caserones complements our existing portfolio with large scale and long life copper and molybdenum production in a jurisdiction which we already operate. Caserones' proximity to Candelaria will allow us to leverage our knowledge, experience, relationships, supply chains, and potential infrastructure in the region to unlock further synergies. Along with the continued integration, synergies will be a focus for us during the second half of the year. We continue to make good progress advancing our Josemaria copper gold project and are continuing in a deliberate manner to minimize the risks, and will work towards a construction decision at the appropriate time. Candelaria's life of mine has been extended to 2046, with the mineral reserve estimate announced in February.
The base case plan of the corresponding technical report does not include the Candelaria underground project, which has the potential to add roughly 20,000 tons of copper production per year. Lastly, on this slide, in February, we announced the maiden indicated resource estimate for the Saúva discovery and view it as the first of many iterations of increasing mineral estimates to come. We are very excited about this discovery, and will continue to evaluate potential expansion opportunities to best exploit the significant mineral resource base and the growing Saúva deposit. I also want to take this opportunity to highlight the significant exploration potential within the emerging Vicuña District, and specifically to me, on our existing land package. Slide 12 illustrates the extensive land package of more than 58,000 hectares in Chile, that we acquired with the Caserones transaction.
We have identified multiple priority exploration targets, which we will be pursuing this fall. These include higher grade breccia targets near and below the existing pit, and targets adjacent to the Los [Palatos] property, where they've had some of their highest-grade intercepts. The light green and pink shading the map indicates our Josemaria land package and claims. Also illustrated is the planned Josemaria infrastructure, including the process plant, tailings facility, and Batidero camp. We believe Josemaria is well-positioned to be the center of future development and expansion of this emerging Vicuña District. The Josemaria land package also presents promising exploration prospects, notably the Lunahuasi target, which is formerly Pocho Cliffs.
In April, Andex Minerals reported some of the highest grades in the district from this area, and it is on trend with the high sulfidation system observed at Filo Mining. Our plan in 2023 is to drill 800 meters on the Lunahuasi target. Additionally, the Portones target and deeper holes beneath the Josemaria ore body offer clear district level resource potential. We have approximately 2,400 meters of drilling planned for this year and 5,000 meters in 2024. On slide 13, to summarize, we possess an attractive portfolio of high-quality mines and are steadily advancing growth projects in a disciplined manner. The first half of the year showed solid operational performance and supported our strong financial standing, which serves as the foundation for our future growth.
We are currently positioned to meet our full year production guidance and have been able to lower our costs at several of our operations. Going forward, we will remain focused on driving costs down further. While maintaining focus on growth, we continue to exercise a prudent allocation of shareholders' capital, ensuring a balanced and disciplined approach. As previously mentioned, our board of directors continues to support our commitment of providing a leading regular dividend to our shareholders. We remain well positioned, both operationally and financially, to execute on our strategy. In addition to our European and U.S. operations, we've assembled a very strategic package of assets in Chile and into the emerging Vicuña District, which we believe puts us in the driver's seat of one of the most prolific emerging copper districts. With that, Operator, I would like to open the lines for questions.
Thank you, sir. Ladies and gentlemen, we will now begin the question- and- answer session. Should you have a question, please press star followed by one on your touch-tone phone. Again, that's star followed by one on your touch-tone phone. If you would like to withdraw your request, please press star followed by two. Your first question comes from the line of Orest Wowkodaw from Scotiabank. Please go ahead.
Hi, good morning. Good morning, Peter. Wanted to find out how you're thinking about the Caserones acquisition with respect to impacting Josemaria. Obviously, there's some potential there to share infrastructure, and I'm wondering how long you think it might take to get a handle on what those opportunities look like, and then how that will impact your thinking on the Josemaria technical report and how that project moves forward?
Good morning, Orest. It's a good question. I may give you a bit of a long-winded answer. You know, obviously, the first focus, if you will, on Caserones, is the integration of the asset. The team's done an amazing job. They started right away. It was very, very seamless. After the integration, the next focus will be on synergies, but it'll be more targeted towards Candelaria initially. We prioritized, I guess you'd call it the low-hanging fruit. It's probably about 30 different items that we're going after on a bit of a contract-by-contract basis.
It's quite a detailed process that's going to be starting as we speak, and then there's a bit of a further out concentric circle that we're looking at, if you will, and that starts getting more involved with things like the concentrate shipping, and things of that nature, and then more of an organizational structure that we're looking to create. Once we get through that, then we start talking about the Josemaria. Some of the discussions on Josemaria will arguably be a bit time sensitive in the sense that there are elections going on in Argentina. You know, some of the things that you're going to want to have discussions on would arguably involve the government.
So, you know, they got through the provincial election, but you do have the federal one still coming up on October 22nd. Any kind of work in that area, whether it be involved with, you know, desalinated water going from one side to the other, concentrate shipping, things of that nature, they'll probably take a little bit further. We're doing the study work as we speak, but those are going to require engagement from government officials as well.
Peter, when we think about that timeline, does that maybe suggest that the Jose technical report is now more, more likely a H1 2024 type of event?
Yeah, I mean, I, I think that'll be one of the reasons the report gets pushed out a little bit. On the same note, you know, we're kind of finishing off the on-site work right now. It's basically almost done, completing phase one of the camp and some road upgrades. We're spending a lot of time doing trade-off studies right now and optimization studies. Areas of focus would be like plant throughput, up recoveries, but also, as I mentioned, the concentrate transport is one optimization we're doing, and then some conceptual work on supplemental ore studies. All that is going to feed into it. We are getting good results pretty much across the board on this work.
To your point, it probably does push the timeline out a little bit, so that'll affect the release of that information and, and perhaps is also part of the explanation for the reduction in the CapEx.
Okay, thank you. Just one final one, if I could. The technical report on Caserones, the cost profile there, I assume, reflects more the status quo. How much improvement do you, potential do you see with respect to some of these synergies with Candelaria and also, say, reducing some of the SG&A costs, which seemed elevated on a standalone basis?
Yeah, I think all three of us are going to tackle that question because it kind of goes into different areas. On the SG&A, there's probably 50 people positioned in Santiago, which without getting too specific on this call, is arguably a higher number than necessary. We've already come up with an operating model that is gonna put the two companies together, and then there's gonna be key roles that feed into that. You would reduce that duplication pretty quickly, and perhaps you'll see an area where there's leads in certain specific departments. Again, probably not to get into on this specific call. Other areas. I'm sorry.
Oh, I mean, it's tighter here, like, the C1 costs we are guiding have been tweaked slightly versus how Caserones used to classify their C1 costs. Our C1 c osts are now entirely consistent with how we guide C1 costs on other sites. Essentially, the way we've approached this is to look at the historicals at Caserones for now and sort of extrapolate it on that basis going forward. Again, as we've said previously, with all our C1 cost guidance, we took a relatively conservative approach on cost estimation from last year, which was sort of a high point on many of the consumables. That's also what you're seeing coming through now with certain cost reductions on some of the sites.
Yeah, I, I would add that we have just taking operatorship of the site, so that we're in our learning curve beyond what we learned during the due diligence, of course. We will be working with the team in optimizations and applying our operational excellence technique that we use at our other sites. We, in the short term, will probably have a good plan with initiatives to continually improve our costs.
Okay, thank you very much.
Thank you. Your next question comes from the line of Ioannis Masvoulas from Morgan Stanley. Please go ahead.
Yes, good morning, Peter and team. Thanks for taking my questions. The first is, again, on the synergies topic. I think you spoke in the past around potential to use some of the excess desalinated water capacity at Candelaria with, with Caserones. What's the time frame for you to be able to provide more visibility on that? Then on the other aspects you talk around SG&A, operational excellence, et cetera, on the more near-term synergy prospects, should we expect an update before the end of this year, or is it 2024 update from you?
No, I, Ioannis, thanks for the, thanks for the question. I think you'll get it this year because we're well advanced on a lot of it. I mean, we're talking about a very thorough review on contracts that could range from, you know, fuel, lubricants, tires, lime, all sorts of things where we've identified, you know, who maybe has the better contract to buying. Then we're gonna get to economies of scale by consolidating those, and we're, we're, you know, going with whichever team has the, the better approach. That started pretty quickly into the integration process, so we're, we're kind of well advanced on it. I think in our next quarter, we're gonna be able to provide a lot more clarity. We're gonna be at site, both Candelaria and Caserones, with our entire board in September.
You know, and part of that presentation will be a very fulsome review of the potential synergies. I just want to address anything?
Yeah.
Okay.
Perfect. Thank you very much for that. And, just one more question for me. On the MD&A, you talk about discussions on infrastructure for Josemaria, around access road and the power line, and possibility to have a royalty offset on some of these investments. Can you perhaps elaborate a bit here on what you're looking to achieve, and what's the potential net benefit in CapEx?
Well, I think, I mean, I think both Teitur and I will answer that. The one thing I'll say is, I think these discussions are, will be, from a timing perspective, will be a little bit challenging because I, I think I mentioned earlier in the call, you know, on July 2nd, you just had a new governor go in into San Juan. They're very pro-mining. It is a party that's been in opposition for 20 years. While they're very supportive, I think we're gonna anticipate the process for sectoral permits and different commercial agreements will probably take a little time, time to get through, just being realistic. As I also mentioned, you have the federal elections, which are taking place October 22nd.
Yeah, I guess what I can add, I mean, economically, what it boils down to is that whichever infrastructure investments we are making within the province, we can offset that against the, the provincial royalty that we are, we are paying. That is the mechanics of, you know, financially, how that offsetting would work.
I see. Great. We'll wait for that update then. Thank you very much.
Yeah, as, as I say, I think towards the end of the year, we're hopefully gonna be able to give you better clarity on that once the government's all in place.
Thank you.
Thanks, Ioannis.
Thank you. Your next question comes from the line of Greg Barnes from TD Securities. Please go ahead.
Yes, thank you, Peter and everybody else. My question is very much along the same lines. My, my understanding is that Caserones technical report you just put out was really just the base case. Obviously, Aura's talked about the cost, but I'm also talking about the production side of things. What opportunities do you see at Caserones itself, without even Josemaria or, or, Candelaria coming into the picture, to improve the production profile?
Well, I think Greg, thanks for the question. We're very excited about the acquisition. I think with Candelaria, the focus is probably more on synergies for the cost side than necessarily the production side. As mentioned, you know, Caserones did 70,000 tons in the first half, which is a pretty impressive number. We've used a lot of caution in the technical report and in the guidance. The high end of the guidance is basically that number, so again, relatively cautious. I just think being a new asset, you know, we wanted to take a cautionary approach out of the chute, but we're very comfortable with the numbers. I would add a couple other items, which is, you know, in the last two years, they've had some pretty difficult winters.
Of course, prior to that, you had COVID. You look at the five-year average, it was 129,000 tons. The winter in Chile, excuse me, runs from late May to late August, approximately. We've had absolutely no winter weather interruptions so far, which we've factored into our numbers to some degree. In addition to that, they did have a record July for throughput, which is quite interesting. Needless to say, July is starting extremely strong, and I think that puts us in a great position for 2023. As we get more comfort with the asset, if we feel in the third quarter that there's any type of revision that needs to be made, I think we'll make it at that time.
Okay. Just thinking about the pit itself, and you had record throughput in July, is there areas of softer ore or harder ore or anything like that, that would impact that throughput rate on a, you know, an intermittent basis, or is it pretty consistent?
Yeah, it's pretty consistent, but one of the things, you know, there are limitations or had been limitations on how much water they were getting
They've done some rehabilitation and put some new wells in since we got involved with the process. They're now getting significantly more water than they had before. I think that is the biggest impact on why they had record throughput in July.
Okay. Okay, great. Thank you.
Thanks, Greg.
Thank you. Your next question comes from the line of Ralph Profiti from Eight Capital. Please go ahead.
Good morning, thanks, operator. Peter, you know, you mentioned Caserones is off to a pretty good start in the first half, right? 70,000 tons of copper production. Just wondering where cash costs came in, in the first half, if you have that figure. Just trying to get a sense of, you know, tracking first half versus second half and the new technical report. That would be very helpful.
Yeah, we, we haven't given a C1 cash cost as such for the first half, but, you know, just to remind people, the premise of the deal is a lockbox from first of January. We have taken economic interest in the asset from first of January this year, and in that context, we have announced that the, the asset generated free cash flow. I mean, the production, we've announced 70,000 tons for the first half, we generated free cash flow of around about just over CAD 100 million. Within the balances of the lockbox from the beginning, there was a positive working capital of another [CAD 30]. That's how we got to a total cash position of [CAD 130] at the, at half year. It, it looks like, w hen we talk about CapEx, I know you asked about OpEx, but on CapEx, we've guided CAD 110 million for the second half, the CapEx facing is back-end loaded for the year due to the mining sequence and, and distributing that will, that will take place in the second half versus first half. As I said, essentially, that phasing doesn't really matter for us because the deal is effective January 1. Whether we spend more or less in first or second half, doesn't really impact the, the full year outcome for, for this asset for us.
Yeah, yeah. Well, understood. Okay. Yeah, thank you. Peter, total exploration guidance for 2023 was unchanged at CAD 45 million, yet I believe the, the some of the commentary, talked about some Caserones drilling in the fall. Just wondering how those two reconcile. Were you tracking low and now you're coming towards an unchanged category, or can we expect another update on exploration spend later?
No, I mean, right now, I think part of it is, you know, there's a little bit of a cutback at one or two other sites, but I think in the presentation, materials, I thought, did we do it site by site? No, it's just the overall numbers. I mean, I can follow up with you, Ralph, and go through it on a bit of a site-by-site basis. Really, the money that would have been being spent, at Josemaria and Caserones, it, it, it is coming from a small pullback at some other sites.
Gotcha. Thanks, Peter.
Yeah. Thanks, Ralph.
Your next question comes from the line of Gordon Lawson from Paradigm. Please go ahead.
Hey, good morning, and thanks for taking my question. Back to Caserones, just curious how much of the recent fine was anticipated and how much of this issue is expected to persist?
It's actually in our thanks for the question. It was in our technical report. This was very much anticipated, the timing came in, I would say, bang on, when we expected, as did the dollar value. It's going back to some items that were in between 2015 and 2018. We have a 100% indemnity coverage on that, you know, I think it's the fact that it came up early for us is, you know, in a way, a positive. It will be dealt with this week, and we move forward. On a going-forward basis, you know, we are going to be applying Lundin Mining standards, even though they do have high standards at Caserones.
Given our footprint in the Atacama region, we will ensure that, you know, we are deemed to be a partner of choice in the region.
Okay. Okay, thank you. I, I guess there isn't really much more extra scrutiny from the government, as it, as some people may have interpreted. Do you expect any impact on expansion plans at, either project in the country?
No, not at all. You know, again, we're going to be down there in September. We have very good support from a number of different government officials. This was a, you know, historical issue. You know, the fact that we're able to resolve pretty quickly here and, and move forward, I think is a positive. We've done a lot of work at the site to show, you know, what our intentions are on a going-forward basis, and that seems to be well endorsed by the government officials. I, I don't see that as an issue whatsoever.
Okay, great. Thank you very much.
Thank you. Ladies and gentlemen, just a reminder, should you have a question, please press star followed by the number one on your touchtone phone. Your next question comes from the line of Stefan Ioannou from Cormark Securities. Please go ahead.
Yeah, thanks very much. Just, just curious on the exploration front in Vicuña. In terms of, on, on that map on slide 12, the pink area Las Palas, when do you think you might actually have the permit to go ahead and start drilling there?
Our, our goal will be to start drilling this fall, actually. So I think I went through some of the targets, Stefan, during the earlier part of the call. We can sit down with you and go through the maps, but we've got it pretty well figured out, as I said, on that Lunahuasi target.
Yeah.
It's going to be definitely [crosstalk], I know you know it well, how it's sandwiched between the other two projects. We've got some interesting things to go after at Caserones below the existing pit, where they've had some encouraging results. Given that they're not our drill holes, we want to follow up on them, that's [crosstalk].
Sure.
Going to be a focus as well.
Sure. Okay, great. You said you're looking to drill 800 meters at Lunahuasi proper this fall then?
Yes.
Okay. Then, sorry, housekeeping, but you, you mentioned 5,000 meters next year. Is that at Lunahuasi or over the greater sort of area?
That would be the greater area in that region, but not that.
Okay.
Yeah. you're getting into the Portones as well as underneath the Jose pit.
Got it. Okay, perfect. Good luck. Thanks very much.
Thank you.
Thank you. There are no further questions at this time. I'd now like to turn the call back over to CEO, Mr. Rockandel, for any closing remarks.
Well, thank you, operator, and thank you, everyone, for joining us today. I think as discussed over the call, we've had a very strong operational quarter and we're well positioned to achieve our guidance, for 2023, and perhaps even more important, I think we're setting the company up, for success in 2024. Look forward to giving everyone a further update come the fall. Thank you for joining.
Thank you, sir. Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines. Have a lovely day.
You as well.