Ladies and gentlemen, welcome to the Lundin Mining third quarter 2023 results call. At this time, all lines are in 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 today, November 2, 2023. I would now like to turn the conference over to President and CEO Peter Rockandel. Please go ahead.
Thank you, operator, and 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 Jack Lundin, current president and incoming CEO, Teitur Poulsen, SVP and CFO, and Juan Andrés Morel, SVP and COO. As we announced in October, I will be stepping down at the end of the year, so this will be my last conference call. On a personal note, I would like to thank the board of directors for the opportunity to lead Lundin Mining, our employees and partners for their dedication and hard work, and the analyst community for their engagement and support.
I've very much enjoyed the journey and I'm extremely proud of what the team has been able to accomplish during my tenure, and I believe the company is well positioned for continued success as we transition to Jack's leadership. With respect to our office relocation, the move to Vancouver has been completed. This transition began at the start of the year, and all senior leadership positions are now in place. We're very fortunate to have Peter Brady join us as our new General Counsel. Peter was previously the General Counsel for Vale Base Metals. We have also added Ricardo Checura as Vice President of Health and Safety, and Nathan Monash as Vice President of Sustainability. Throughout the year, Jack and I have been working closely, and more recently, we've spent considerable time at our assets and with our major shareholders.
While we will continue working together for the balance of the year, our joint efforts to date will ensure a smooth and successful transition. Moving to our quarterly highlights. Beginning with the key highlights for the third quarter, we delivered record quarterly production for the company, producing nearly 206,000 tons of copper- equivalent metal in the third quarter, which includes Caserones. This is a major milestone for the company and is in line with our growth strategy. Production for the year continues to track at or above the midpoint of our guidance for copper, gold, and nickel. Caserones has been operating very well and produced 34,000 tons of copper during the full quarter and 30,000 tons since the close of the acquisition, which puts us on track to exceed guidance.
Exploration drilling will kick off shortly and focus on some of the high-priority exploration targets within this newly acquired land package. With the third quarter results, we are in a position to tighten our production guidance while increasing our guidance at Caserones and Eagle. We're also lowering our cash cost guidance for Caserones and Eagle from higher metal volumes and byproduct credits. We generated revenue of over $990 million and adjusted EBITDA of $415 million, with adjusted operating cash flow of $316 million. Our balance sheet remains very strong, with approximately $1.4 billion of liquidity today. 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 4.2% yield.
We closed the Caserones acquisition early in the third quarter, and the integration has gone very well. The team has outlined initial synergies that have the potential to contribute annual savings of $20-$30 million per year. Candelaria also received their EIA for the extension of operations. The Candelaria EIA considers several enhancements to the current operation that will enable the extension of the mine-l ife from 2030 to 2040. The approval represents a key milestone towards successfully extending the operational life, including the development of the last final open pit. Together with our strong production results, we are having a strong year with respect to safety. We have been progressing our Fatal Risk Management program, and to date, over 10,000 employees have been trained, or 75% of our workforce.
Our measurements for safety, which include LTIF, TRIF, and AIF, are the lowest levels we've experienced in the last 10 years. We attribute these results to the implementation of FRM, having more leaders in the field, and also better operational discipline in general. On that positive note, I would like to pass it over to Juan Andrés to speak more specifically about our operations.
Thank you, Peter. As planned, our production continues to be slightly weighted to the second half of the year. Overall, we produced approximately 206,000 tons of copper- equivalent in the third quarter, which represents a record production for the company. Copper production of 89,942 tons has grown almost 50% from the previous quarter with the inclusion of Caserones. Candelaria had a good quarter, processing 7.2 million tons of ore. Copper production was in line with expectations and tracking to the midpoint of guidance. The fourth quarter should see higher grades from underground and the Phase 11, which will increase production quarter-over-quarter. Caserones has performed extremely well and is tracking to the upper end of the guidance. During the full quarter, the mine produced 34,000 tons of copper and 1,400 tons of molybdenum.
We're pleased with how operations are going and have revised guidance upward to reflect the performance of the asset to 65,000-69,000 tons for the full second half of the year. Molybdenum will be on the upper end of the guidance at 2,000 tons for the full half. I would also like to highlight that Caserones has achieved the Copper Mark, a designation that highlights our commitment with sustainable mining practices. As mentioned earlier, production at Chapada is second- half weighted. During this quarter, we saw an increase in grades and ore milled that resulted in higher copper production. During the quarter, 5.8 million tons of ore were processed for 12,300 tons of copper. No material and scheduled downtime were experienced. Copper production is tracking well to the annual guidance.
We have tightened the range of copper production to 305,000-325,000 tons. This is including Caserones production. In gold, production totaled 35,000 ounces for the third quarter. As mentioned earlier, throughput at Chapada was strong, which contributed to the overall gold production. We have tightened guidance and continued to track to the midpoint of annual gold guidance of 142,000-152,000 ounces. We move to the next slide. Zinc production was higher quarter-over-quarter at 49,774 tons, the highest level of production in the last several quarters. The sequential flotation at Zinkgruvan is processing higher grades for the quarter, with average grades at 8.2 and recoveries at 90%.
Ramp-up is continuing as operators get accustomed to handling the new circuit, and we're targeting expected recoveries in the mid- to low 90s% by the end of Q4. Production at Neves-Corvo has increased from Q2, but it was still impacted by unplanned downtimes at the SAG mill and equipment availability in the mine, together with higher grade variabilities. Ramp-up at the Zinc Expansion Project, also known as ZEP, is continuing and progressing in line with plans. Zinc production is tracking to the midpoint of the revised annual guidance of 181,000-192,000 tons. Finally, nickel production was 4,290 tons, which was in line with the previous quarter. Eagle experienced slightly lower grades and recoveries, offset by higher throughput.
With a slower-than-planned start in Q1, but a strong second and third quarter, nickel production is tracking to the upper end of the annual guidance of 13,000-16,000 tons. We have moved our guidance up to 15,000-17,000 tons of nickel for the year. We're in a good position for the remaining of the year. The efforts that we have been putting into operations are paying off, and we will look at continue this momentum in 2024. As Peter mentioned, we're tracking well to meet guidance at all metals. I will now turn the call to Teitur to provide summary in our financial results.
Okay, thank you, Juan Andrés, and, good morning, everybody. But before going into the numbers, please note that our third quarter consolidated income statement and cash flows are reflecting Caserones being 100% consolidated from July 13th. So moving to slide eight, starting with the top line, we generated over $990 million in revenue, with Candelaria and Caserones contributing around 30% each. Our sales remain leveraged to copper, generating 65% of the quarter's revenue. Nickel and gold contributed 7% and 5%, respectively, while zinc contribution has increased to 9%. Molybdenum from Caserones has become a meaningful contributor to the revenue mix, and that's why we have seen other revenue increase from approximately 5% to 14%.
During the quarter, we realized prices of $3.71 per pound of copper, $1.19 per pound of zinc, and $9.25 per pound of nickel, and $1,862 per ounce of gold for the third quarter, including adjustments. As most metal prices have been relatively range-bound during the quarter, there is a minimal impact on realized pricing from prior period adjustments. At the end of the third quarter, approximately 120,000 tons of copper were provisionally priced at $3.75 per pound and remained open for final pricing adjustments, as did 31,000 tons of zinc at $1.20 per pound and 1,400 tons of nickel at $8.40 per pound.
You may also have noticed that the company has introduced a process of pre-announcing certain items impacting the company's quarterly financial results, with the first such announcement issued on the October 17th. The goal of this pre-announcement is to provide better transparency and allow, allow analyst consensus numbers to better reflect the company's underlying operational performance, something that we hope to continue in, in the future. Turning to slide nine, production costs totaled $615 million in the third quarter, which is 52% higher than second quarter, mainly due to the inclusion of Caserones. Candelaria's production costs were lower than the previous quarter due to lower sales volumes and a favorable foreign exchange rate.
Production costs were nevertheless negatively impacted by higher maintenance and contracting costs during the quarter, and we have consequently raised our full-year cash cost guidance to $2-$2.20 per pound. Cash costs at Caserones have been revised downwards on higher second-half production guidance to $2-$2.20 per pound. At Chapada, production costs were in line with forecast and are tracking to the lower end of guidance for the year.... Neves-Corvo copper production costs increased during the quarter, primarily due to higher consumable costs and higher sales volumes, and somewhat offset by lower salary costs. Cash cost guidance at Neves-Corvo remain unchanged for the year at $2.10-$2.30 per pound of copper, with the expectation that Neves-Corvo will be in the upper end of this range.
Eagle production costs were better than expected, but are nevertheless higher than the previous quarter, with the continued impact from inflation. The full-year cash cost guidance has improved as a result of the increase in full-year production guidance, with cash cost guidance now being $2-$2.20 per pound of nickel. Zinkgruvan production costs were higher than the previous quarter, primarily due to higher sales volumes, and somewhat offset by a favorable foreign exchange rate. Cash cost guidance for the full- year remains at $0.45-$0.50 per zinc, although we expect to achieve the lower end of this cost guidance range. The capital expenditure guidance for the year has been reduced by another $30 million on a like-for-like basis, with $25 million relating to the lower sustaining CapEx spend at Neves-Corvo, and $5 million lower spend relating to Zinkgruvan .
Total reduction for the year, compared to the original guidance, is now standing at $105 million. The capital spend during the third quarter amounted to approximately $233 million, of which $180 million was related to sustaining capital, while $53 million was related to the Josemaria project. Lastly, 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 third quarter, we realized a gain of $14 million from our hedging contracts. Our key financial metrics are presented on slide 10. As already highlighted, during the third quarter, revenue amounted to $992 million.
We generated adjusted EBITDA of $415 million, and adjusted operating cash flow of $316 million, along with free cash flow from operations of $137 million. Adjusted earnings came in at $86 million, which yields an EPS of $0.11. Turning to slide 11, which presents greater detail on the sources and uses of cash in the third quarter. Before changes in working capital, cash provided by operating activities was $316 million, net of $21 million of cash taxes paid during the quarter. After working capital adjustments and the sustaining capital expenditure, the operations generated $137 million of free cash flow during the third quarter. A quarterly dividend payment of $0.09 per share was made during the third quarter, amounting to $51 million U.S. dollars.
Excluding dividend payments and the Chapada contingent payment and the Caserones acquisition cost, the company generated a positive free cash flow of $71 million in the third quarter. As previously mentioned, the Caserones transaction closed on the July 13th, and the company received an $800 million three-year term loan from nine international banks to fund this acquisition, and leaving the company with a consolidated cash position at the end of the third quarter of $356 million. On the next slide, to follow- up on the closing of the Caserones transaction, this slide outlines the net cash impact on closing and also the anticipated near-term cash conversion from the working capital that was in the acquired company on closing as of July 13th.
The net cash consideration for 51% of the company amounted to $721 million as of July 13th. Once the working- capital position, which consists of receivables, concentrate and cathode inventory and payables, has unwound, the net cash impact is reduced to around $600 million. With the recent closing of Caserones transaction, the company continued to have significant liquidity headroom of approximately $1.4 billion. The strength of our balance sheet with a low leverage ratio will allow us to continue with our growth plans, and following the closing of Caserones acquisition, our net debt to last twelve months adjusted EBITDA ratio remains very solid at 0.9x . That concludes the financial section, and I'll now hand the call over to Jack.
Thank you, Peter, and good day, everyone. Slide 14 highlights the expected savings we are targeting to realize over the next 12 months. We were in Chile with the board of directors in September. Six out of eight of the directors on our board are independent, which includes three new directors that have joined in the last 18 months. We visited both our newly acquired Caserones mine and our largest operation, Candelaria, both in the Atacama region. This was a very productive trip, as Caserones complements our existing portfolio with large-scale and long-life copper and molybdenum production in a jurisdiction which we already operate. Since the announcement of the acquisition on March 27, planning of the integration process kicked off, and after the closing of the acquisition on July 13th, we were able to start on a number of cost reduction and operational efficiency measures.
Over the next 6-8 months, we will look to realize additional near-term synergies that we have identified. As mentioned by Peter, based on our initial assessment, we estimate the annual savings driven by synergies between Caserones and Candelaria to be in the range of $20 million-$30 million per year. These savings were mainly driven by supply chain and logistics and represent the first wave of synergies between the assets. We are in the process of establishing a regional support function unit that will centralize some of the key support functions. This unit will be responsible for leveraging the synergies and economies of scale going forward and strengthening our position in the region of Atacama. This will allow us to realize additional synergies beyond the initial first wave of the $20 million-$30 million outlined above.
If we go to the next slide, we have kicked off the largest exploration program at Caserones since the mine began operations back in 2013, where we will be targeting over 10,000 meters of drilling over the next six months. This slide illustrates the extensive land package of more than 58,000 hectares in Chile, that we obtained as part of the Caserones transaction. We have identified multiple priority exploration targets, which we will be pursuing this fall or this spring in the Southern Hemisphere. These include higher grade breccia targets near and below the existing pit and the Angelica oxide deposit, both to grow it and test the potential for the underlying sulfide potential, which has never been drilled before. On the Argentinian side of the district, drilling at Josemaria will kick off shortly at Cumbre Verde.
In April, to the north of Josemaria, another company reported some of the highest grades in the district. Our plan is, in 2023 and 2024, is to drill 1 or 2 initial holes at the Cumbre Verde target, going after the same structures that potentially run onto the Josemaria property. We expect results in the first quarter of next year. Additionally, we are pleased to announce 2 drills turning at the Portones target. We will also target deeper holes beneath the Josemaria ore body. This program offers clear additions to the district-level resource potential. Portones is off to the right corner, southwestern orientation in the picture, and is a copper porphyry target that is 4 km from the Josemaria deposit. Geochemical sampling and geophysics have highlighted this as a high potential discovery opportunity.
In total, at Josemaria, we have approximately 3,200 meters of drilling planned for this year and over 5,000 meters in 2024, which could grow the with positive results. Lastly, on exploration, we have finished up the borehole electromagnetic survey at Eagle and will be drilling at depth below Eagle East, targeting additional ore bodies. There is a conductive layer in the sediments that interferes with the geophysics at surface. An underground loop was therefore established in the Eagle East deposit, and this was completed and highlights potential targets at depth below the existing ore body. This could have significant impact on the mine- life at Eagle if a discovery is made. In fact, at Eagle, we expect to extend the mine- life to 2029 by switching to an underground bulk mining method.
So the drilling we are doing now would be in addition to the mine- life that we've extended through bulk mining, and we expect these initial results in Q1 2024. Switching to the next slide. I look forward to continuing to drive the strategy that has been developed under the leadership of Peter, in conjunction with the board and the newly established senior leadership team at Lundin Mining. We have a truly unique opportunity in our company with our current portfolio of mining operations and the remarkable Josemaria development project. With a strong toehold in the emerging Vicuña District, we look to remain disciplined and focused on growing our production over time in this region while continuing to maximize the profitability at all of our global operations, which I will touch on shortly. This represents an exciting opportunity for the company.
We hope to be in a position to announce a plan for development of the Josemaria project, which includes fiscal stability agreements, a financing strategy, updated cost and schedule for the project sometime in 2024. We will continue to monitor the climate of our sector and the host nation in which the project is located. At our existing operations, we are undertaking operational asset reviews at Caserones and Candelaria, with the goal to improve and lower operating costs through best practices and operating efficiencies. We want to implement and capture the synergies we have identified at both assets to improve financial performance and move towards the lowest possible cash cost for these assets. As Teitur mentioned, we pay an annualized dividend of CAD 0.36 per share or 4.2% yield, which is one of the highest-paying dividends among our peers.
Our board of directors and management continues to support our commitment to providing a dividend to our shareholders. Since we instated our dividend policy in late 2016, we have returned over $1 billion to shareholders, including share buybacks. The company is on track for a strong year operationally. We tightened the range of our guidance for several of our assets and increased production guidance at Eagle and Caserones, while lowering cash costs at Eagle and Caserones going into the fourth quarter. I am humbled and honored to lead Lundin Mining on the next phase of growth for the company. We will continue to remain disciplined and will always work to maximize value for all of our stakeholders. With that, operator, I would like to open the lines for questions.
Thank you, ladies and gentlemen. We will now begin the question and answer session. Should you have a question, please press star followed by the one on your touchtone phone. You will hear a three-tone prompt acknowledging your request, and your questions will be pulled in the order they are received. Should you wish to decline from the polling process, please press star followed by the two.... If you are using a speakerphone, please lift the handset before pressing any keys. Your first question comes from Ralph Profiti with Eight Capital. Please go ahead.
Hi there. Good morning. Just before I start my question, Peter, I just want to thank you for your, you know, dedication, hard work, and capital stewardship, and I wish you the very best going forward.
Thanks, Ralph. Appreciate that.
Thank you. In terms of the additional synergies that you're working on, and you talked about the first wave, I'm just wondering what, you know, could you potentially quantify what you may be able to get further out of the operating assets? Because I'm just wanna try and sort of separate the successive waves of synergies that are gonna come that are more reflective of the Vicuña District theme in general.
Morning, Ralph. This is Juan Andrés. Thanks for the question. As Jack mentioned, we have established this regional support function unit that will be in charge of evaluating and assessing the potential going forward. These $20 million-$30 million of synergies that we have identified now are the low-hanging fruits, the opportunities that we're able to find this first wave. So at this point, I'm not in a position to give you an estimate of those savings, but as soon as we have that assessment, we'll share it with the market.
Okay. Yes, fair enough. Thank you. Maybe if I could just delve into the Caserones exploration. Do we have a targeted amount of meters or millions of dollars, you know, per year in this specific program?
Hi, Ralph. Yeah, this is, this is Jack Lundin on the call. Yeah, we're targeting, I believe it's, about 7,000 meters of drilling in the, in the Caserones area, between this year and into next year. We'll basically be drilling until the winter season commences, and, we've got a number of targets that we're, that we're going after.
Great. Perfect, I see. Thanks very much.
Your next question comes from Orest Wowkodaw with Scotiabank. Please go ahead.
Hi, good morning. A couple of questions about the cost profile moving forward. You increased production, actually, guidance for Candelaria, both copper and gold, but the cash cost guidance went up about 12%. Can you give us some color what's going on there, and whether any of that you see is structural in terms of cost-elevated costs going into next year?
Yeah. Good morning, Orest. It's Teitur here. I mean, if you look at the performance all year- to- date, you know, our cash cost so far is sitting at around about $2.20 for the nine months, C1 costs. And we've had a certain headwind, you know, big backlog on the maintenance of the fleet in particular, and we were getting some new trucks coming in. They were slightly late in delivery, which meant that contracting costs went up because we had to rent in additional equipment for a limited period of time. So I would say all of those items are sort of one-off cost items that we do not expect to reoccur.
I would also say that, you know, for the fourth quarter or full- year guidance, which we have increased, as you said, we are still remaining relatively conservative on, for example, diesel cost assumptions in the fourth quarter. Also we're having a weaker pesos at the moment than what we are basing our guidance on. So I would say there is some conservatism built into our full- year guidance on Candelaria.
Thank you. And if I could just shift to Caserones, I mean, the cash costs reported in the third quarter, $60, way below the guidance you had given for H2. Is that... Can you give us a bit of color there? Is that just related to some kind of acquisition accounting in the quarter? Because certainly the, even the updated guidance would suggest costs are going materially higher in Q4.
Yeah, I mean, we have more activity in Q4 than Q3, so that's naturally gonna drive both. Similar story if you look at CapEx, actually, because we only posted $30 million in CapEx in Q3, whereas we guide 110 for the full- year. So this very back sort of end-loaded cost profile on both fronts. And in addition to that, we also had, in relation to the closing of the acquisition, we had the fair market value of the inventory on Caserones, which led to, I think it was a $32 million charge to production costs in Q3, which is not sitting in the C1 cost, but nevertheless is reported as a production cost. So, you know, we stick with the overall guidance of $2-$2.20 for the full- year.
But again, similar story to Candelaria, we are being relatively conservative, both on FX and diesel costs on Caserones as well. So I would say it's-
Goodbye.
There's some upside there.
Thank you.
Your next question comes from Greg Barnes with TD Securities. Please go ahead.
Yeah, thank you. Just a couple of questions on the $20 million-$30 million synergies between Candelaria and Caserones. Can you give us some idea of, you know, some point to somewhere that, where those savings are coming from? Pretty substantial, even in the first wave.
Yes, this is Juan Andrés again. Most of them are coming from renegotiations of contracts. For example, concentrate logistics, grinding media. We're working now on the renegotiation of the diesel and lubricant contract. So there were all opportunities that we saw as we gain access to the information that Caserones had in terms of those contracts. And we looked at the rates and fees that we had in Candelaria, and by doing that, we were able to sit down with the different vendors and renegotiate some contracts.
Hmm, okay. And just on Candelaria, and in the presentation, you mentioned you're doing mine optimization for the underground project, CUGEP. What does that mean? Are you moving ahead with CUGEP, or, or where, what is the plan going forward for that, that underground expansion?
Hi, Greg, this is Jack. I can start with the answer, and if Juan Andrés wants to chime in, no problem there. But right now, you know, we're looking at our underground mining method. And as the 2040 EIA was approved, that gives us the ability to advance with CUGEP. You know, there are a number of initiatives that we're taking to just look at, you know, optimizing that underground mine plan. So the intention is very much to go forward with the project, but in the first quarter of next year, we'll have an internal review with our technical team on the underground CUGEP mine plan.
Of course, we need to, you know, update the design and then the numbers around that, now that we've got the green light to advance with it.
Okay. So sometime in 2024, you do expect to move forward with that project?
Yeah. In, you know, the first- half of next year, we'll be able to come up with, come out with an update on the plan to advance. You know, with that would be a CapEx update as well.
Right. Okay. Okay, good enough. Thank you.
Your next question comes from Stefan Ioannou with Cormark Securities. Please go ahead.
Yeah, thanks very much. And Peter, again, wishing you all the best for the future. Just, I guess, just on Josemaria, I think, Jack, you mentioned sort of looking towards next year as having sort of some fiscal stability and a sideline to an updated mine plan and CapEx and all that sort of stuff. Should we still be anticipating seeing an update on Josemaria in sort of a standalone form? Or as you're going through this process, are we seeing more and more consideration for regional synergies? I know obviously Caserones is getting a lot more airtime now, but when we think about what we're going to see out of Josemaria next year, is it still very much going to be in plain within a standalone project sort of way?
Yeah, that's a good question. I think when, you know, we look at the Vicuña District, we very much kind of separate between Chile and Argentina. You know, Caserones, of course, is part of this Vicuña District, and it's the only operating mine in that area. And eventually, we would like to kind of see synergies that could be utilized across border. You know, that looks like it would take quite a bit of time, and therefore, in order to kind of advance with Josemaria, we very much look at Josemaria as being on the Argentine side, and keep it as a standalone there. But, you know, we are doing various trade-off studies. We are looking at what it would look like to transport concentrate or to bring water.
I mean, these are, you know, big picture, kind of big vision ideas for the district, but, Josemaria right now is looked at as a standalone on the Argentine side.
Okay. Okay, great. That, that's very helpful. Thanks very much, guys.
Thank you.
Ladies and gentlemen, as a reminder, should you have a question, please press star one on your phone. Your next question comes from Dalton Barreto with Canaccord. Please go ahead.
Thanks. Good morning, and good luck, Peter. Good luck, Jack. Jack, I want to start with you. Just very high level, you know, as you take over, over the next several years, what can we expect to change at Lundin Mining going forward?
Hey, Dalton. Thank you for the question, and as Peter mentioned in the presentation, you know, we've been working very closely. I was a former director of Lundin Mining for a couple of years before joining the management team in December. You know, we've been working on the strategy for Lundin Mining together with the board. We've got, you know, a relatively new management team in place, but the strategy is to deliver on making sure that we're maximizing profitability at all of our assets. I think when you look at the future growth of Lundin Mining, it's very focused in this new emerging district. You know, we now have a very strong toehold in the district, but also in the Atacama region in Chile.
Juan Andrés is based in Santiago, our Chief Operating Officer, and we're building a bit of a regional presence in that area. So I think, you know, there's a lot to get from our existing operations. We want to maximize the value of those, bring costs down, and maximize profitability there, and then fuel the growth in this region in between Chile and Argentina. So, I mean, I don't think that that changes the strategy has kind of been set and matured over the last 18 months, and Peter and I have been working closely, again, with the board and the management team. We're very aligned on what we believe the direction of the company needs to be. So, you know, it's just continuing what we've been working on, Dalton.
Great. Thanks for that, Jack. And maybe if I can ask a couple of questions on Josemaria. First, can you talk a little bit about... More specifically about some of these trade-off studies you're doing and what you're looking at specifically? And then maybe give us some broad strokes in terms of what the project looks like right now.
... Sure. So, you know, at this point in time, you know, basic engineering is kind of around 40% complete, our overall project engineering. And, you know, right now we are looking at, you know, infrastructure locations. I mean, we've identified where tailings needs to be. We've identified where the concentrator is going to be located. We've optimized and upgraded our construction camp. That's all completed. We've even ordered some of our long lead item equipment. So our mills and our motors, our gearless motor drives, those are all making their way into country. So we are quite advanced on many fronts. However, you know, given the climate, we also want to make sure that we are looking at various trade-off studies, which include kind of placement of infrastructure.
So in the future, if we did want to expand, right now we're considering three lines, about 150,000 tons per day concentrator. If we did want to expand and grow that concentrator to produce more, we would add a fourth line, and therefore, you'd need to make sure you're situating the processing complex in a right way. You know, it's all about building in that optionality while reducing that upfront capital cost. And then, as I mentioned, you know, we've got kind of bigger picture ideas that would likely be implemented more in kind of a phase two of this overall development, and that includes kind of, you know, looking at how we're transporting ore, where we're sourcing our water from.
You know, we're drilling a lot of wells right now to identify additional water sources on the Argentinian side. So, you know, with a mega project, there's always trade-off studies that you can be doing to really look to maximize the value of the project, and eventually you do have to draw a line in the sand and then get ready to move forward. But while we're doing this engineering work, you know, we're obviously looking at what's going on with the elections in Argentina and just wanting to stay close to what's going on and how that's evolving in the country.
That's great. And then just speaking of the elections, how close are you to getting a JV deal done? And, you know, how much of a role are the elections going to play?
You know, right now, when it comes to, you know, announcing a JV, we're very much in early stages. There's not much material to update on that. You know, a project of this size, as I have mentioned before, it makes sense to look at bringing in a partner. We are in discussions with multiple prospective partners. There's nothing material to update on that. You know, of course, anybody that would want to make an investment in a country would have to understand what's going on politically and economically in the region. And so by November 19th, we'll have the runoff election between Milei and Sergio Massa, so the Peronist existing party that's in power today and then the opposition party. So we'll be monitoring that closely.
Early in the year next year, you know, we'll be coming to the newly formed or existing government and look to kind of continue advancing on our fiscal stability discussions. We've had a number of positive progresses that have been made prior to the elections, so you know, we just want to continue that momentum there. But right now, again, in terms of partnerships, there's nothing material to update.
Perfect. That's all for me. Thanks, Jack.
Thank you.
There, there are no further questions at this time. Please proceed.
Thank you, operator, and thank you everyone for participating in today's call. I'd also really like to thank the team at Lundin Mining. It's the team that's put us in a great position to close out 2023. I think 2024 is going to be an extremely exciting year on the production front, exploration front, and development front. The team's in place, and I look forward to monitoring the success next year. So thanks again, everyone, for participating.
Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your line.