Hello, everyone. Thank you for joining us. Today we have our first webinar with Santa Cruz Silver. This week, Santa Cruz released their Q3 financials, and with us from the company, we have Arturo Préstamo, CEO, and Andrés Bedregal , interim CFO, and from Adelaide Capital, we have Magda Gardner. The format will be a presentation from the company, followed by Q&A. If you have any questions, please submit them in the questions box, and before we get started, as always, this presentation will contain forward-looking statements. If you'd like to know more about those, you can find them on the presentation on the company's website, and with that out of the way, welcome, everyone.
Thank you, Olenka. Thank you for letting us share our story with your audience. Much appreciated. We're going to walk through Santa Cruz's story through this presentation, and then we'll be following up on a Q&A session, if it's OK with you all. We'll be making some forward-looking statements, as I apologize for that. Just a brief description. I mean, we are a 4.5, 4.6 million ounces on a quarterly basis producer. We produce zinc and silver mainly as our main revenue streams. We have four producing assets, three in Bolivia and one in Mexico. In addition to the producing assets to the mines, we have an ore sourcing business or company that sources ore out of Bolivia from small miners, and then we process it through our milling facilities.
These multi-mining assets give us, I mean, a de-risk level as a company, and also the multi-country being in Mexico and Bolivia as well. It's something that we feel de-risked the company in many ways. In addition to our producing assets, we have one exploration asset in Bolivia, the Soracaya project, which we'll describe in a moment. And that project will allow us to keep growing organically in the coming years.
Arturo, I think it's important to mention that the group possesses a significant advantage of diversification, as you have said, both on a comparative level and a competitive level, and what I mean by comparative advantage is that we have high-quality mines and processing plants that operate in various locations, and as a competitive advantage, we have our San Lucas business that provides flexibility to our plants. You know, it's very important because it allows us to run them at full capacity or replace production capacity in case of any issues at the mine, so it is important because we don't only have two countries, various cities, different mines, but we also have an ore sourcing business that helps process our milling facilities better.
Well said, Andrés. Thank you so much. Our pillars as a responsible mining company, we are trying to achieve operational efficiencies on a monthly basis, on a quarterly basis, and expanding our mineral assets in Bolivia and in Mexico. We try to reach energy efficiencies every now and then with different initiatives, which I'll describe later in the presentation, and we have a very good relationship across all our mines with the local communities and environment as well. It's something that we definitely are very cautious and careful about. Our Q3 production was 4.6 million ounces of silver equivalent, where we produce around 1.7 ounces of pure silver. On a yearly basis, it's around 7 million ounces of pure silver and 150,000 tons of zinc concentrate on a yearly basis.
Here we have on our chart the contribution per each of the mines and San Lucas, the ore sourcing company, as we described and Andrés described better minutes ago. Our recent financials, Q3, we have revenues for $78 million. We have an EBITDA for $15 million, almost $16 million, $21 million in operating cash flow, and cash equivalents in our treasury around $18 million by the end of Q3. As we keep going, I mean, with today's metal prices, we're building our treasury, and that is definitely something that we're very excited about, how today's metal prices are helping our balance sheet and our P&L in today's environment. This is a brief description of the company and the main assets, how the organizational chart looks. Bolivia, where we hold four of our mines and three of our mills, in addition to the San Lucas Trading Company.
In Mexico, it's very straightforward, one company, one mine. And of course, everything consolidates down into our Vancouver office in Canada. Getting into more detail here into our producing assets, our Bolivar Mine, it's a mine that has been in production for more than 200 years today. It has today around eight years of mine life, six years of mine life under our 43-101 resource estimate report, which we filed now in October. And as you can see in our chart, our idea is to reach every now and then, every month or every quarter, better efficiencies. As you can see, the tons milled in Bolivia have been coming down, but the production has been maintained at one, 1.2 million ounces of silver equivalent on a quarterly basis.
That means savings on raw materials, savings on consumables, and also savings on shipments for concentrate that we need to send over to our ports in Chile. Our revenues by metal in Bolivia are around 50% coming from zinc, 48% from silver, and we have a little bit of lead being produced at the Bolivar facility. This is a long section of our Bolivar Mine. We have two important underground tunnels which take us to these six veins. Technically, as you can see, we have around 6-7 million ounces of, I mean, tons of ore M&I and inferred. That gives us around eight years of mine life. Nonetheless, we keep investing and we keep drilling pretty much on a daily basis, and on a quarterly basis, we review our resources, and our conversion ratio from our inventory to what we are mining; it's 1.5 to 1.
We're always inventorying around 50% more from what we are mining. That's an important premise for our operations. We have in Bolivia the Porco Mine. The Porco Mine is the longest producing mine in Latin America, with more than 500 years of continuous operation. It's very interesting, the amount of years that this mine has been running nonstop. This Porco Mine is quite different from Bolivar in the sense that the vein systems are very narrow here at Porco. Just as a reference, in Bolivar, you have through widths of around three meters, two and one-half meters. In the Porco Mine, the average is one meter and down to half a meter or 0.4 meters. This is a mine that we are bringing back to a more traditional mining system, mining methods. We're mining now with jacklegs.
Back when we bought this mine from Glencore, this mine was more automated, and as such, the dilution was very high at Porco Mine, so we thought that it was better to mine it with more artisanal methods, with jackleg and cut-and-fill kind of methods. That is helping us to bring dilution down and also to make this mine profitable. Technically, we brought it to profitability three months after we took over these operations, so as we speak, we're trying to increase production at Porco Mine with less dilution, but again, I mean, with a more artisanal mining method, so it's on its way. It's a profitable mine, but definitely almost half the size than our Bolivar Mine, and finally, from our producing mines in Bolivia, we have Caballo Blanco Group of Mines, where you have the Don Diego Milling Facility. This is the youngest mine in Bolivia.
It has a little bit more than 20 years of continuous operation. It's a very modern facility across the mine. And of course, the Don Diego Milling Facility is also very modern. So that gives us the advantage of having the best recoveries that these mines can achieve. We have three mines here, which just lastly, after Q2, we decided to run one of the mines, which is Reserva Mine, through our San Lucas Trading Company. Because after reviewing and making a very thorough analysis of the metallurgy, we found out that it was better to run the Reserva Mine together with ore from San Lucas. And Colquechaquita and Tres Amigos Mine, we can still blend it at the Don Diego Milling Facility. Just this change gives us around 5% improvement on the silver recoveries.
As such, it's been an efficiency that we are reviewing across all of our mines to try to achieve better and improve the recoveries in the coming quarters. Caballo Blanco Group of mines, you have around three million tons of resources. With today's milling capacity, it gives you an average of four, four and 1/2 years of mine life. These are mines that we, as I was saying before, we're exploring both from a production point of view, I mean, infill drilling, to an exploration as well with diamond drilling and other methods on a daily basis. We're increasing our resources here as we keep advancing and progressing here. One important achievement at Caballo Blanco that we concluded this year in January was the interconnection ramp at Colquechaquita Mine and Tres Amigos.
These mines were connected by an underground tunnel for around 5 km. This is helping us to achieve improvements in the tonnage, in the efficiencies, as we can have our underground equipment by the main ramp now. Before then, it was a Colquechaquita incline shaft, the only way to get into the mines. So this incline ramp is helping us in a very significant way. And just to give you some rough numbers, we're having savings on a per ton basis for around $10 on the mining cost. So we're very excited about Caballo Blanco and how these efficiencies have been proved to be the right decision. And same as I was describing before, running the Reserva ore from Caballo Blanco through San Lucas ore feed company.
Finally, in Bolivia, we have the San Lucas Trading Company or ore feed company, which technically what it does is we buy ore from all small miners at Oruro and Potosí. We concentrate that ore in our different patios, and then after different campaigns, we run the ore through our milling facilities, either at Porco, Don Diego, or Bolivar Milling Facilities. San Lucas, in addition to being a business for us, it's also a contributor to the communities. It brings the small miners into the formal economy as we pay them in the banking system. Before then, these small miners were working only in the, I mean, without paying taxes in the informality, so the ability that we have by having the most efficient milling facilities in the country is that we can pay better terms to these small miners.
At the same time, we can retain taxes for them and pay them on their behalf to the local government. And by then making them or bringing them to the formal economy. So that's an important contribution to the communities, which we feel it's an interesting business model for us. In addition to that, it always, I mean, it guarantees that we can run our milling capacities, the three mills, at full production the full year round. So that for us is an important contributor, and it's a business model that we feel it blends really well with our business strategy in Bolivia. This is just an example of how San Lucas runs. This is one of our patios. This is a Don Diego milling facility. As you can see, you can see different colors on the bunches of material. Those are different miners bringing their ore to our patio.
The holes that you see on these mountains of ore are the samples that we take to each of the, let's say, of the miners who come and bring their ore. Once we have the samples, we know which ones can be blended with which ones. Then at the right side, on the yellow circle, is where you see this ore blending together. Finally, it's shipped as a campaign to one of our milling facilities. That's technically the process, how it runs, and generally speaking, how we process that within the company. Yes, Andrés?
I think it is important to highlight the rationale behind this Caballo Blanco and San Lucas restructuring. To explain a little bit more, before, Caballo Blanco used to process ore from three mines, Colquechaquita, Reserva, and Tres Amigos. Now, it only processes, since Q3, ore from two mines. Why we have done that?
It is important to understand why. After a complete performance analysis of the Don Diego mill facility and a statistical matrix regression, we were able to find out that the blending of only these two mines gives us better recoveries. And most important, the recovery of silver into the lead concentrate, where it gets more value to us, almost twice as value as getting silver into zinc. So as part of this restructuring, we are focusing on improving the productivity of our mills, not only on a recovery focus base, but on a commercial base as well, how our commercial terms are doing that. Also, San Lucas buys mineralized material from small miners who usually give us higher head grades in the ore.
If we mix lower head grades with higher head grades, the grades that San Lucas is providing now to the mills are what the mills are actually expecting, are usually processed. So this restructuring has increased our revenues, which is very important, our recoveries. And also, it has only, without any investment in CapEx or anything, we have been able, and we are projecting $4 million-$5 million of operating income by just doing that without CapEx. So that shows how we are projecting our operational efficiencies in our mines.
Correct. Thank you, Andrés. Thanks for that good point. In Bolivia, we have a very efficient transportation network. We rely on the railroad to ship out of Bolivia to Arica and Antofagasta our concentrate. 80% of it goes directly on the railroads. All of our milling facilities have railroad tracks.
We load the trains at our milling facilities, and they go all the way to Arica or Antofagasta in a very efficient and reliable way as a railroad. It's more reliable than trucking the ore or the concentrate out of the country. Finally, that's for Bolivia. Now in Mexico, we have, I mean, the Zimapán Mine. This is a mine that is, geologically speaking, very different from Bolivar. It has very wide ore bodies, ore bodies that some of them run as wide as 20 meters. The mining methods here are high-volume mining methods, long hole, semi-long hole drilling and blasting. We have room and pillar. It's this kind of very efficient high-volume mining methods. On the other hand, Zimapán has significantly lower head grades than Bolivar, almost half of them, I mean, half of the head grades that we experience at Bolivar.
Just to give you an idea, we'll see it in more detail in a moment, but around 90 grams of silver, 85 grams of silver, and 2% zinc, 0.4%-0.3% copper. We have some copper here. And as we keep going into the Carrizal Mine, we're experiencing more and more copper. But nonetheless, even though you have lower head grades, the high-volume geology or mining methods that are allowed into Zimapán Mine make this mine a very, very exciting and very profitable one. Over the last year, it's quarter over quarter where Zimapán has been experiencing improvements on its production. And also, costs have been coming down significantly. We made a very important reorganization of Zimapán last year around September, August, which has been paying back and confirming that it was the right decision.
As I was pointing out, we have very wide ore bodies, the skarn kind of mineralization, massive sulfide ore bodies as well. So as we speak, we're mining, and we have just prepared level 960, and we're starting to mine level 960. This level is a very promising level for us. At least we believe it's going to give us the future of this mine for the next 10 years. By next year, most of the ore should be coming from this area together with some high-grade areas as Lomo del Toro, Estacas, and some other areas at the Carrizal Mine. But this is an area where this quarter, we invest a significant amount of money. We built two inclined ventilation shafts. In addition to that, we pretty much changed all the underground equipment at Zimapán in Q3.
That's why you see an increase maybe in our CapEx for this quarter. It's mainly driven by new equipment at Zimapán, underground equipment, ventilation equipment, and other peripheral equipments that are guaranteeing us a very smooth transition to 2025 and the reliability that we need to have on this mine to keep growing on a consistent basis, so we think it was a very important moment to do this, this kind of investments, and we're definitely prepared to start 2025 with a strong production from Zimapán, and finally, I mean, the Soracaya Exploration Asset, organically, we have this project to keep growing. Glencore back then had a PEA study where the PEA suggests around four million ounces of silver, pure silver, of production on a yearly basis once it's reached full capacity.
Today, we're not doing much in this mine, but we have it ready and on standby to make, let's say, minimal investments in the future and bring it to production. We might start production at this mine in a way that we might not have the need to build a mill. So we'll be working maybe with San Lucas, but bringing this mine into production eventually in the future. But important to mention that it's just an asset that it checks all the boxes of a very strong asset. And it's something that will give us an organic growth for the future to come. We're close to San Vicente Mine from Pan American Silver, literally four kilometers from their milling facility and in a very promising area indeed. We believe definitely in values of life and the respect of the people. It's people where we invest significantly.
Communities as our neighbors are areas where we believe that their life needs to be improved once we are there. We have invested for this last over this year so far around almost $2 million in Bolivia alone. In Mexico, we have invested another $700,000, $600,000. And we believe that children are where we need to focus the most. And education is one of the areas where we invest in a significant way. We bring computers to the schools. We bring teachers also at some schools. So all sorts of areas that children and education require, we're trying to be involved in one way or another. Also, we invest in different agricultural projects, which are helping the communities to grow and have an auto-sustainable way of producing their own foods and vegetables.
That's an area that we feel it's really important, especially in Bolivia where the lands are difficult to grow and harvest different agricultural products due to the altitude of where our mines are. Just to give you an idea, Colquechaquita's mine is around 4,500 meters altitude above sea level. So they are areas very challenging sometimes to work around or not to say to grow any kind of produce in the area. Today, our share structure, it's fully diluted, 376 million shares outstanding. We have a strong base of retail investors. As we speak, we're working to bring more awareness from institutional investors into the company, and we have cash on hand as of September of around $18 million as we speak. Our treasury with these metal prices has been significantly increasing.
We have in place and ready to go a bond program in Bolivia, which maybe, Andrés, if you can help me to explain how this bond program works, will be very illustrative, I think.
Yes. We actually have two things. One, promissory notes and a bond program for the San Lucas business. We have $30 million on promissory notes and $30 million for bonds. We are thinking that we're going to go out with these programs next year around January or February. The bonds are for financing CapEx on the medium-term to long-term amounts. And the promissory notes are for operational investments within the year. So yeah, we will access the bond market here in Bolivia, which is very important. We currently are financing by two banks here in Bolivia, showing the trust that the financial institutions are having here in the Bolivian operation.
And also the capital market, which is very important.
Yeah. And part of the idea is also to take advantage of the financing efficiencies. I mean, the implied interest rates of these bonds is around 5% in Bolivian pesos. So we think it's a very, very efficient instrument.
In addition to that. Sorry. Sorry. Do I think it is important in this part to explain a little bit what are these changes have meaning to the, sorry, Santa Cruz, Bolivia, and Mexico operations? We have increased our assets by $37 million since 2023. Of those assets, the current assets are the parts we have increased more, around $26 million. And of those current assets is cash and cash equivalents. And these cash equivalents are coming basically from cash from operation activities, not finance and activities. Finance and activities are helping running the normal business, etc.
But we are building our treasury from our operations. We have EBITDA, strong EBITDA. We have operating income, very solid operating income. And the story is very important to show here. Our first quarter, we have a very strong balance sheet because of the restructuring with Glencore. Our Q2, we have operating income increasing. And our Q3, we're building cash. So I think it's very important because that shows the value that we are getting from our operations. On 2023, we have our record year in production. So I believe it is important to show those things not only because where cash is coming from, but also all the process from the balance sheet to the P&L, as you mentioned, to the cash flow from operations. So I just wanted to highlight that because we believe that that put us in a very strong position.
Our balance sheet ratios, liquidity ratios, leverage ratios have improved significantly. And I think that's something that the investor needs to hear.
Absolutely. And also, I mean, after Glencore restructuring, we are now entitled to keep the value-added tax recoveries, which today are around $56-$58 million. We expect to have the first, I mean, recoveries in the next coming months. And consecutively next year, we expect a significant amount of these to be recovered as well. So we feel our balance sheet will keep building in a very robust way. Just as a brief description, we are in terms with Glencore, as Andrés was pointing out in Q2. And the original terms were very challenging, let me say, or not aligned to what the company was, let's say, appropriately able to honor. But the refinanced terms had really put us in a very strong position.
Definitely, it gives us the flexibility, the financial flexibility, and the ability to keep growing and building a strong balance sheet and treasury. Today's terms are $40 million to be paid on November 1st, 2025, or we can choose to pay $10 million at that moment and $10 million every year after, which means the same as paying the $40 million in November 1st, 2025, considering a 15% interest rate on those $40 million. That's why it gets into eight payments of $10 million. We're going to choose what is best to the company and what is best to our investors. Maybe we're also in a position to make an early repayment of these $40 million. If we have an opportunity to have a discount, we might think about it. But we're in a very, let's say, strong position to manage this properly.
The additional, let's say, portion of the payment to Glencore, it's what we call the conditional value right, the CVR. The CVR payments are conditional value rights. If zinc goes beyond $3,850 per ton, the conditional value rights kick in, and we are entitled to pay, or we should pay $1.3 million on a monthly basis. This is capped at $1.3 million on a monthly basis. It's around $16 million a year. If, let's say, zinc comes down from $3,850, the payments get halted, and we don't pay anything until zinc goes back again north of $3,850. A way that we like to see these CVRs is part of the, let's say, of the considerations that were revised and brought, which now in our favor is, as I was pointing out, the value-added tax. Now we're keeping the value-added tax.
Before this restructure, Glencore was entitled to keep the value-added tax once we receive it. Now we keep it, and it's around $58 million. We got rid of an NSR that was across all the producing assets in Bolivia. That means around $8 million a year. So we got rid of that. And we got rid of the payment of $9 million of inventory that was left when we closed the original purchase agreement. So technically, those three concepts are north of $75 million. So that's kind of a way to see how the Conditional Value Rights got into that figure. But on the other hand, I mean, we have control of the inventory that was left, of course. We have, of course, full control of having no NSR to be paid. So that's a saving of $8 million a year.
We have now the ability to keep all the value-added tax for our working capital purposes. I think that together with what we are experiencing as cash flow generation from our own operations, the company is in a very strong position to keep building a very strong balance sheet and a significant cash flow.
I think that in a nutshell, we talk about present value. We have reduced the present value of the total consideration from $167 million to a $40 million present value as total consideration, which is very relevant. Most importantly, these amendments have reduced Santa Cruz's immediate financial exposure, while at the same time offering Glencore an enticing upside contingent or market performance, which is very important to highlight because this combination assures both parties share a desire for the company's success, creating a partnership based on shared success. That is important.
Sometimes this reduction might seem to go for one side, only Santa Cruz. But this has been a very good combination that shares a desire for success for the company. So I think it is important to highlight that the present value has reduced significantly. That's why our balance sheet is so robust right now. But we have also pushed that further, increasing our operating results. So I think it's a good story that we have to say to the investors.
Yeah. Very well said. Thank you, Andrés. We have an experienced board and definitely a very experienced management team, both in Mexico and in Bolivia. Those are two jurisdictions, as I was pointing out, that we feel very comfortable with. That's pretty much what we have. We have some of our appendix, our financial snapshot for Q3 compared to Q2 and previous quarters.
So maybe you all have already seen the numbers out. So thank you for your attention. I don't know if you want to jump into a Q&A section, Olenka.
Well, thank you so much, Arturo and Andrés, for the presentation. We're going to answer some questions now. The first one is, since acquiring the Bolivian assets in 2022, how has the journey unfolded over the past years in terms of operational integration, strategic alignment, and performance compared to initial expectations at the time of acquisition?
That's a very good question, Olenka. And actually, I think that was instrumental for us to achieve the restructuring that we achieved with Glencore. And the reason for that is because when we took over the assets and literally eight months after, production was higher on a 30% from what Glencore was when Glencore was running these assets.
And the reason for that is, I mean, we are very oriented into underground mining and whatnot. And the team built in Bolivia has a lot of experience into these operations. So that allows us to improve productivity and improve production, which on the other hand, it's more concentrated that we're delivering to Glencore. So I think that somehow they noticed that we were good operators. And as such, that allows us or gives us the benefit to reach an appropriate restructure of our consideration payments.
I think, Olenka, that the acquisition of our Bolivian operation stands out as a pivotal, a highly strategic milestone for our company. We can confidently say that the acquisition of our Bolivian operation has been a success. And to illustrate this, it is important how we have approached this post-acquisition process.
The first year, we have focused to have boots on the ground, have the control of the operation. That's very important. As I was mentioned before, and Arturo has explained it, Bolivia had mines in different cities and different parts of these cities. So it was important for us to take control the first year, strong underground presence. On the second year, we focused on increasing production. I was telling you about that 2022 resulted in the highest annual production from these assets for the past five years, at least. So it was focused on production the second year. And our third year, we are focused on productivity. We were mentioning this Caballo Blanco and San Lucas restructuring, getting more quality of our concentrates, increasing our metal, our silver into our lead concentrate would give us more value.
So this process has been driven by the implementation of a robust, effective plan supported by business intelligence tools, new management procedures. As Arturo was correctly pointing out, I think we have proven to be solid producers, Santa Cruz as solid producers. These three years have had different phases. Now we are on the quality and on our productivity phase. I don't know if I answered your question by that, but I think the question is there.
Our next question is, can you discuss the reasons for the large increase in all-in sustaining costs from Q2 to Q3? Is $27.40 per ounce an appropriate amount going forward?
Yeah. I leave that to Andrés. Andrés, if you can.
Oh, yeah. That's okay. From Q2, from Q3, yes, we have reached 27.4. However, there's primarily two key factors that we need to consider.
As you can see, our Mexican operation has been increasing production quarter over quarter. So what we have done is significant investments focusing on upgrading our fleet and improving our mine productivity. So this investment was strategically implemented during this period of strong cash flow. Now we have strong cash flow. Now we can do these investments to ensure the sustainability and growth of our operation. Also, in Bolivia, we have allocated substantial resources into our primary development activities, which everyone knows are essential for the long-term advancement of our mines. Looking ahead, we anticipate that our all-in sustaining costs will normalize in Q4, aligning with the year-to-date average as production levels will increase and the benefits of these investments in equipment will begin to materialize. We believe this proactive approach will strengthen our operational performance and position us as a company for sustainable growth in the coming quarters.
So we're expecting to do this.
It is important to mention, Olenka, that today we're presenting all-in sustaining as one single number. Next year, we're going to be presenting all-in sustaining on a per mine basis. And in that sense, you will see the mines on each of them, how they run and how efficient they are. Today, having San Lucas within the bulk of production and the bulk of San Lucas, it's, as we said, a trading company. So San Lucas buys ore in the markets to the miners, literally at market prices minus a discount. And as prices come up, have been increased, San Lucas is paying more for the ore. And that also brings the all-in sustaining up in somehow.
Once we break down on a per mine basis, the all-in sustaining, I'm sure that the audience and our investment community will be able to see that our mines are running in a more efficient way. San Lucas, as always, keeps a margin. We run that project as a marginal project, never lose money, but never. I mean, it earns around $5.7 million to the bottom line on a yearly basis. That's what it is because it's a trading company.
This quarter something important has happened. Since we have some logistical challenges at the mines that we're all taking care of, this quarter San Lucas processed more mineral material in our plants.
And as Arturo was well pointing out, if San Lucas processes more ore in our plants, and because of the current prices of this ore that it buys from small miners, that makes the all- in sustaining cost and the cash cost goes up. But that should, on average, be lower than $27.40. It's just because of this quarter. But this also shows how important is San Lucas in our business. Because when we have a challenge in our mines, San Lucas comes in. Without San Lucas, these challenges or these logistical challenges will affect even more in our operation. So I think it's very important. That's what I was pointing out, that we have a competitive advantage and comparative advantage as well.
Correct. Got it.
Thank you. And a follow-up question to that. Gross margins were weaker in Q3 versus Q2. Were they the result of the same issues?
Yes. Yes. Basically, they were. The decline, it's small. It comes from 22%-19%, basically because of these challenges. More cost from San Lucas is lower gross margin. We expect the margins to improve in Q4 as the mine production stabilizes and recent productivity investments take into effect. So yeah, that's basically it. It's what we were explaining before.
Next question. When will Santa Cruz collect the Bolivian value-added tax as the receivable increased by $5 million quarter over quarter?
Okay. I don't know, Arturo, you want to answer or you want to leave it to me?
Go ahead, Andrés. Feel free.
Oh, okay. It is important to point out that to date, we have successfully collected $18 million in Bolivian VAT refunds. Additionally, as Arturo was pointing out in the presentation, we're expecting to collect around $15 million in the next couple of months.
They are currently under review of the tax authority. We have completed everything that they have asked. Sometimes it takes longer. But our primary objective here, Olenka, and investor community is to accelerate this VAT collection at a pace faster than the accumulation of new receivables. Because every quarter, we are accumulating and we are collecting. So we are confident that this process is gaining momentum. And our team is diligently working and engaging with authorities to ensure we receive this fund as quickly as possible.
Okay. Perfect. And have you hedged any of your metals production?
No, Olenka. We're not in the, I mean, we're not hedging. Let's say our own production is not hedged. San Lucas does have a bit of a hedge in short term, one month. And because of San Lucas, as I was pointing out, it's a marginal business.
We want to make sure that San Lucas always exists. So what we do is we buy the ore. It takes one month for San Lucas to process the ore and sell the ore. So we hedge only for that month alone. And we hedge the metal contents because we're paying to the small miner literally the next day when he delivers the ore into our patios. And we don't want to run any volatility risk of the metal prices. So we hedge immediately the contents of that ore for one month. So that's the only thing we do. And we do that just to preserve and to keep always San Lucas in a profitable way.
Arturo, I think it's also important to point out to the investor community that we are not hedging because of the current market prices or if we think they're going down or not.
It is because of the business model of San Lucas and its strategic role within the group. Because let's remember that San Lucas operates as an outsourcing business, ensuring that our plants operate at full capacity and provide basically support to our mines. So what we do is when we buy, we make sure that we will sell that with a profit. So it supports the mine. It's not a hedge for the prices of the current market prices. It's because of the business model that San Lucas is in. I think it's just that. I think that's very important for the investor community to know.
Correct. Okay. Well, thank you so much. Magda now has some technical questions.
So touching on zinc production, why was it a little bit weaker in Q3?
Okay. Why was zinc production a little bit weaker in Q3?
Yes.
Well, Andrés, go ahead.
Some of our head grades were down from a zinc point of view, and also, Magda, from our business point of view, we are trying to get the most silver out of our mines, and we're aligning our, let's say, our mining strategy towards those areas where we can have more lead and silver because the lead helps us to recover the silver in a better way, so that's kind of the main reason, but nonetheless, you will see Q4 with zinc increasing again, but at the same time, silver and lead remaining very, very strong.
Basically, Arturo, and I think it's important for everyone who's in the mining industry to understand that, first of all, there were lower volumes in Q3. However, the veins that were scheduled for extraction during this quarter had lower head grades in zinc. That's a normal process.
However, this was more than offset by the higher silver production that Arturo was pointing out. For this quarter, it was better to have more silver than zinc. But it's basically because of the extraction schedule that we have this quarter. But as Arturo was pointing out, our schedule next quarter, this quarter that we're currently in and the following quarters have more head grades in zinc. So yeah, it's basically it.
Thank you both.
And do you anticipate any changes in metal production over the next few quarters?
In metal production, Magda, by volume, if you mean by volume, we are expecting to have a bit of an increase across all of our mines next year. Definitely. Volumes will increase. Metal content, we will be pretty much where we are today.
You might see silver increasing in Mexico and a little bit more copper, but silver will increase in Mexico, and very likely, as some of the adjustments we're doing in Bolivia, as Andrés points out, the Reserva with Caballo Blanco processing at San Lucas, so those initiatives, we'll keep working on those ideas with the whole intention of increasing our silver contents into our lead concentrate, so if the question is to our final product or our final production, we expect a bit of an improvement going into the silver, and also volumes should increase, definitely, next year.
Yes. As Arturo's mentioning, if we increase the quality of our concentrate that we are doing these quarters, the metal production will increase. Because more recovery, more head grades, etc., more metal production.
So yes, I think we will be in line of the year, the average of the year, maybe a little bit more. Our Q4 has always been very strong in our operations. But yeah, it's a forward-looking statement that we are planning to have at least the average.
Yes. Yeah. And pretty much as I was mentioning on the presentation, Magda, that, for example, in Mexico, we did some important investments over Q3 with underground equipment. We have prepared level 960, which is very important for us. And now it's fully ventilated. It's fully electrified. It's operationally, I mean, we're little by little increasing the tonnage there. So that alone will give you higher silver contents. And so we do expect an improvement.
Thank you. And in an earlier interview, you mentioned the option to purchase a mill to feed with ore from the San Lucas Trading Company.
Are there any further plans to do this in the near future?
Yes. Yes, definitely. And that's in line with the bond program that Andrés has described minutes ago. But definitely, we have identified a mill. We hope to close something there. That will be a mill dedicated to San Lucas, which, on the other hand, will release milling time from our own mines. And that should give you an increase in your production just organically by making this adjustment. But that's our plan. Hopefully, we can conclude it. I mean, we can take it, safe to say, yeah.
And Arturo, I think that, yes, of course, we're considering this option, particularly as the mines are increasing their production. As you remember, San Lucas is there to fulfill whatever the mines cannot fulfill. However, the mines are increasing production, and the San Lucas outsourced business has been successful.
So we want to keep this business running. So we need another plant, another milling facility to process whatever San Lucas is buying from small miners since our mines are increasing their production. So yes, and as Arturo was well pointing out, that's why we are starting these bond programs, etc., because we want to get finance for these kinds of projects, even though we are building cash flow to do it ourselves. However, we need to have a strong cash flow to keep running the operations and increasing production.
Got it. Thanks. And oh, go ahead, Arturo. You were going to say something.
Yeah, just maybe a little bit of a broader explanation on the bond program. As we saw, it was a $60 million bond. We're not planning to issue $60 million by any chance. No, no, no. The bond is, it's like that.
I mean, it's that way because the idea is to, once we reach, I mean, let's say we issue $20 million. I mean, it's Bolivian pesos, but the equivalent in US dollars. Let's say we issue $20 million. At year three, we will issue another program and repay the first one. So that'll give us our ideas to have at least six years of a bullet payment to be achieved with that program.
Okay. Thank you. And just one last question for me, before I hand it back to Olenka. Do you have any updates on the progress on Bolivia's Oruro Zinc Refinery project? This was the question that came in for the audience. The government has said it's counting on zinc supply from your Bolivian mines for that.
We have no real, let's say, solid. I'm not the right person to say about it, but I think it's more of a political discussion down there. No, there's no further, unless Andrés, you have some news regarding that refinery?
No, at the moment, no. I think that, yes, the government wants to have this refinery here in Bolivia. But remember that the current political economic situation in Bolivia, I think this might be a more long-term idea than a very short-term project. But we are not aware if there are any advances that have been done significantly, at least on a construction basis or something like that. I know there were conversations of getting these plants, even for Potosí and Oruro, but there's nothing final right now.
Got it. Thank you.
Okay. So we have a few more audience questions.
The Q3 SEO production was approximately 4.1 million, but payable sales were 3.6 million. Where is the one million difference accounted for in the financials?
Sorry, can you repeat the question?
The SEO production was 4.6 million, but payable sales were 3.6 million. Where is the one m illion difference accounted for?
That's a very good answer. And the sold and the produced ones. Ye s. G ood point.
Do you want me to answer?
Please, please, Andrés. Yes. Okay.
The thing is that they are not comparable. If you think the silver equivalent produced ounces had been calculated using prices, for example, $23 silver per ounce, $1.2 per pound for lead, and $0.1 for zinc. They are not comparable. Why? Because the ounces payable are with an average let me check here had been calculated using the average realized price per ounce of silver equivalent.
The silver equivalent produced had been calculated using other prices. It is important to remember that the silver equivalent produced are basically a non-IFRS measurement that helps you compare quarter by quarter. However, the silver equivalent sold payable ounces is the average that we have been actually paid for those ounces. So they are not comparable, Olenka. The difference is not because of commercial terms, inventory, or anything like that. It's because of how they are calculated.
And actually, Olenka, I mean, together with what we just said about how we will report next year, the all-in sustaining costs on a per mine basis, this is something that we're going to review on how it will be better to report so that our investors can have a comparable analysis and make it easy for them to compare.
Right now, the only way to really compare apples with apples is to do the formula on your own, right? And we want to facilitate it.
They are not comparable at all because we need to think about why we are using silver equivalent ounces. That's in order to understand how our production is going. So we have to have the same prices every quarter in order to be comparable. However, the other one is on an average price that we have sold that quarter. So they are not comparable at all.
Okay. Thank you. And we have time for one more question. Given the positive Q3 results, why is the share price at its current level?
That's a very good one. I think, and let me put it this way, and that's why we are working together with Adelaide Capital. We need to make more awareness about the company.
The company, let's say, with this portfolio of assets, with this balance sheet, with this acquisition that was refinanced in an appropriate way, the company is relatively new in some way. As we saw in one of our slides, our shareholders today is most retailer. Retail, sorry. Sorry for that. So we're working to make more awareness about the company, the good being of the company with institutional investors. We're trying to make more awareness as well with a few analysts to hopefully start getting to know the company and eventually, hopefully, they can or they want to cover the story. But we think we have a very solid story. We think it's more of making more awareness about the company. The Glencore restructure was not an easy one.
Only those who are following the story closely are able to or were able to see the difference because it was a long process. So I think it's lots of homework to be done there and mainly to make more awareness about the company and the good being of the company.
And I also think, Arturo, it's very important to highlight that this Glencore restructuring that has come in Q1, okay, it showed a strong balance sheet. I think the investors look at that. That's correct. Then this Q2, we have in this on a P&L operational profit. That's another good thing to see. And then you have a Q3 that you have a strong cash flow. I think now the story is starting to get out to the investors' minds. And we should see an increase in the price. And that's a forward statement.
If we look at common methods or multiples on a market basis, yes, we believe that they're very undervalued right now, so yeah, I think it's our work now to keep doing this presentation, showing our financials and explaining the financials to our investors' community, and I think that we see the value in this company.
By any metrics, Olenka, you want to get the company valuated? By any metrics, we're extremely undervalued. We have no bank debt. The only bank debt we have is those revolving facilities that we use for convenience to manage our treasury properly, but nothing more than those revolving facilities. We have no NSRs, no royalties to pay to anyone who owns streams, so we're in a very good position to take advantage completely on the metal prices for our investors, so hopefully, we can make more awareness about the companies.
Okay, well, perfect.
Thank you so much, Arturo and Andrés. Is there anything else you guys would like to cover today?
Well, I think not from us. Just thank you all and all the investors who joined the call. We very much appreciate your time, your attention. And we can only say that we'll keep working for you and each of our investors to keep building this company.
Yes. Yeah. Thank you very much. Yeah. We want to, yes, to tell the investors that we will do everything that is in our hands to increase our value, the value for our investors. Anything that we acquire, every project that we go forward has to bring value to the company. And we have shown that, I think, with this Bolivian acquisition. It was not only that we increased our asset base, but also increased the production, increased the value of this component.
That's the way we like to run things in an operation. So yeah, thank you very much for helping us, giving our comments to our investors' community.
Of course. Thank you guys both, too. And if we didn't get a chance to answer your question, you can send me an email at olenka@adcap.ca. Thank you, everyone, once again for joining, and have a great afternoon.
Thank you.
Thank you, Arturo.