Okay, so thank you, everyone, for joining our Day 2025. It's a pleasure to have you here. I know it's quite cold outside, so it's a double pleasure to have you out of your places to come to join us. I'm Natasha, as some of you might know, I'm the head of IR of Aura. And before we jump into the presentation, let's pass through the schedule. So we are starting with our CEO, Rodrigo Barbosa. He's going to discuss the company strategy, growth plans, and then Glauber, our COO, he's going to discuss our operations and exploration strategy. And then we are going to have our project director, Pitágoras, to discuss how we are going to grow in the next year, in the next years. And then we have a break, a five-minute break to have a coffee
And then we are going to have Lina, our special guest, to discuss the gold market, gold price. And then you can have the opportunity to have a Q&A with her. And to close the event, we are going to have our CFO, Kleber Cardoso, to discuss the cash management, and Isabela, our head of people, to discuss our people strategy and how we manage all the communities in ESG. So to recap our team, we are not all here, but it's always good to remember that we are here to represent the Board of Directors of Aura. So for sure, they are going to be very well represented by the management team, but they are here with us also. So now I invite Rodrigo Barbosa. Rodrigo, if you could join us. Thank you.
Thank you, Natasha. Good morning. Glad to be here. Thank you for coming. What are you going to share? I think it's a pleasure to be with all of you and share a little bit more about Aura Minerals. What I would highlight is for you, what we're trying to do here today is not only what we are achieving, but how. How we are achieving those results, how we make our decisions. Because once I think once you learn about how we are making decisions, how we think about how we approach the projects, how we think about the capital allocation and people development, then you can really see, understand what is Aura 360. It's a company that doesn't have extraordinary assets. It has a median average asset, but does achieve extraordinary results.
And the reason for that is that we have a super high-quality team represented here by the leaders, but also a culture that we believe that the human being has an unlimited potential to deliver results. And we give to each of our employees and Aura Minerals room for them to develop and to deliver results aside from what we really expect from them. So that kind of environment is generating significant results and value creation for your shareholders and for the communities and also for the environment. That's, I think, I would invite you to try to understand not only what you're achieving, but how. Right? I think that's as important as what we have been achieving. Aura Minerals, you know, I'll give you here just a summary and then each of the leaders of our areas is going to go more details.
We are a company that has not only the highest growth in the industry, but is the highest growth with the highest yields and returns, with the highest dividend yield, and with the highest ESG standards. What we've been achieving the last four years is exactly right, and we're going to go through the what has how has been the last four years and then project a little bit where we want to achieve. We just updated today that we can reach over 600,000 ounces of production within the next few years. That's over 100% increase compared to what we've had in the last 12 months without new acquisitions, and I would say also that the 600 is somehow conservative because if you just add El Dorado and Matupá, it's not including some expansions, so we still have room to improve from that, not including also new acquisitions.
Some examples of the numbers that we've been achieving, that's the 600,000 ounces of production that we see that we can reach within the next few years. Now it's also being combined of a very high daily trading volume. I wouldn't say very high, very high for the standards that we had in the past, but we just came from $1.5 million of a daily trading volume, now reaching $20-$30 million per day. If in the past I would talk to the major and most sophisticated investors, they would give us the feedback, "Please, Rodrigo, we like the story.
We want to buy your shares, but bring these above $10-$15 million because we cannot get in or out in the minimum investment that we do. That's why we see now, and Kleber is going to share, Fidelity, Capital, BlackRock, VanEck, all of them just in the beginning to buy our shares. I think this still has a long way to run for us, the long opportunity we have to teach them more about our case and then provide them the ability to invest in our shares.
Are you getting $3 a share or a little more?
Sorry?
Are you getting a dividend? How much? $3?
Our dividend is 20% of the EBITDA minus recurring CapEx. We've been paying in 2021, 13%, 2022 was 6%, 2023 6%, 2024 9%, and last 12 months was 7.4%. That's the highest dividend yield in the world in the gold sector. So, and I was also invited to take a look at the moment the Aura is now, is going through a major transformation also in our cash flows. It's a company that produced $136 million EBITDA in 2023, $267 million in 2024. Only the last quarter with the gold price at $3,400 is $152 million. And not including gold price is now $4,200, $700 more than last quarter, plus commercial production that we declare in Borborema. So if you do the math, you're going to see that we are finishing this year already with a significant higher EBITDA and a running rate also significantly higher compared to last year.
On that, I still have opportunity to increase from within El Dorado, Matupá, and a few expansions that Glauber is going to talk. On the resources and reserves, we can grow on production, but we can also grow in resources and reserves. It's a company that is going to grow in EBITDA and going to grow in the life of mine, the amount of years that you're going to use to discount our cash flows. It's a company that has underinvested in the past in terms of exploration. Since 2020, we started increasing our resources and reserves, and we've made a major change in terms of multiplying by three resources, multiplying by almost three reserves. Yet still a lot more to do.
There's still a lot of opportunities that Glauber is going to share with you in terms of exploration for us to increase the life of mine of our mines. Right? I talked already about the dividends that we've been among, if not the highest dividend yield in the world in the gold sector. Our strategy continues to pay under our policy or above the policy if we feel we have extra cash. Right? And last but not least, as I was mentioning, many investors in the beginning were asking us, "What is your best asset?" Right? Because if you see our assets, they're almost same size. Each one has some advantage or disadvantage. But our best asset is the team that is here, is the culture that we are managing this company. Because with that team, that's how we create value.
We buy assets, underperforming assets or assets that have some issues that others cannot develop. And then we can build them or reduce the cost and then generate the value to our shareholders. And that's only possible because of the team that's represented here by our leaders. Looking ahead in terms of strategy, the strategy we have for the next years is exactly the same strategy that we had in the last four years. There's no change. What we've seen, and that's remarkable, what this company is achieving is delivering exactly in each of our strategy. Aura is walking the talk, and I'm very proud of that. In 2020, we laid out this strategy that we're going to grow and deliver shareholders' value on three different variables. Number one, we're going to develop greenfield projects and improve our production and EBITDA with higher-grade projects.
Number two, as I mentioned, we're going to increase the life of mine. We're going to invest in exploration, and then we're going to increase our resources and reserves. Number three, we're going to tackle the multiple. So one, the first one, we increase EBITDA. The second one, we increase the amount of years you discount our cash flows. And then number three, you have a multiple effect over the first two, which is to tackle the multiple. It's a company still not well known for U.S. investors, for European investors, very well known for Brazilians, but not yet in North America. That had a low daily trading volume, low coverage. Now it's improving the coverage. So it's a company that is discounted compared to our peers.
We're not only catch up with the NAV multiple of NAV to our peers, but as we're going to see, we're going to change the peers, and that will also have a boost effect over our valuation during the next years. We're going to grow, we're going to increase life of mine, and we're going to tackle the multiple. That's exactly what we've been doing in the last years in terms of delivering the projects. Few examples. We built Almas on time on budget. Not only on time on budget, but setting new benchmarks in the world, how fast you can put one mine to production. From scratch to commercial production, Almas in 20 months, Borborema in 24, less than 24 months, without any lost time incident.
That's a very significant fast way of building the mines that also Pitágoras is the head of our tech, the team that's building those mines that can share a little bit with you. We also built Almas, Borborema. We acquired MSG. We did the feasibility study of Matupá. We just now released the feasibility study of El Dorado. In terms of exploration, it's not a different story. Right? We are increasing resources and reserves as we speak, and Glauber is going to give you a little bit more details. In terms of multiples, we are tackling also addressing the multiples, which we believe yet we are discounted. But now we have a more daily trading volume. Now we have new analysts covering our company. So gradually we see that we can also improve our multiples. And I won't go in much detail.
Glauber can give the details about our growth plan, but this, we just recently published this new view of where we can achieve without any new acquisitions, so we already know very much how to get above 600,000, so that's more than double the production of 2024. And projects that El Dorado with the gold price $2,400 leveraged, it's over 80% in 10-year rate of return. It's not a project that's providing 20%, 25% in 10-year rate of return. It's a project that's delivering a super high return. And it's the same with Borborema, and will be the same with Matupá. And hopefully MSG, as we improve efficiency, Glauber is going to talk also a little bit more about this, how we can improve. We'll see this company reaching over 600,000 in the next years.
Very few others can present a solid plan that can grow those more than double the capacity. If you do the projections with the gold price, we don't need to issue equity to fund this project. It's fully funded internally with our own cash flows and with our debt capacity that Kleber is going to also present here. In terms of exploration, I presented how we can grow $600 in the exploration. This is an impressive number that we see here. Right? We come from a measured and indicated of 3.5 million ounces. Now with this new acquisition and also El Dorado, we are talking about almost 10 million ounces in measured and indicated. That's a remarkable increase in our resources and reserves when we acquire and also increase investment in exploration.
And it's such a low-hanging fruit in exploration for us because most of our mines have been underinvested in the past. That our cost of discovery is $34 per ounce in exploration. The average of the industry, it's $131. That shows that that's a company. It's not close to not assessing upside in terms of exploration. We are intensifying exploration investment, and the results also have been remarkable here. And at these 9.6 million ounces, I'm not including here doubling the capacity for Borborema because we did the feasibility study over 800,000 ounces in a deposit that has 2 million ounces. And the reason that we could not include more ounces is not because they are not viable. It's just because to be a reserve needs to be available for mining. And there is a road, federal road that crosses part of the pit.
So we were limited at 800,000 ounces. We are advancing discussions with the national authorities so that they provide the license for us to move the road. And immediately we're going to add significant reserves in Borborema. And that 9.6 is not including this additional. We're going to also talk about here underground of Almas that can also add additional resources and reserves. So there's still ongoing increase in resources and reserves in this company while we are also adding new capacity and new production. In terms of multiple, I would highlight here is this. We see this is the average of the analyst. We believe we are even lower than this because the NAV does not include expansions. I think that doesn't have a Technical Report yet. So we are discounted compared to junior producers.
And we don't feel as you get closer to 600, you are junior producers anymore. You go more towards the intermediate producer. So there's still room for us to tackle the multiple in this company. On top of building the projects, on top of extending the life of mine, we're going to also address the multiples. Kleber is going to share a little bit more on the finance side, but just not to lose opportunity, how this company is providing returns to our shareholder. And all of that, it's on the last four years with the gold price that varied. Normally it was at $2,000-$2,200. And listen to what we were able to do is pay $276 million as a dividend or share buyback.
We invested $484 million in expansion in a project that has very high returns or exploration that has a very low cost of discoveries, and yet before our new listing, we were always below one times EBITDA and now going to 0.15. A company that, yes, has been able, when we laid out this strategy to grow and pay dividends, some of our shareholders were skeptical. How can a company do both? We could. We showed that we could, and now with this higher gold price, we'll be even accelerating this process. That's because the project that we have has such high returns and short payback. Once you sequence them, Borborema is already generating cash flows, so we're paying the debt of Borborema, and now it's going to start building El Dorado. The company, the leverage is very fast.
So we can sequence the project and with that do both, build, buy, acquire, and pay the dividends. And that was with the average gold price, significantly lower than it is today. And this, I think it's a very important slide. It doesn't have the information or quantitative, but it's very qualitative. And I like this slide because we like to say we are a simple company. We think simple. I think we do the simplest things, but we do very diligently. Right? And the way we managed Aura, I think it's very different from many other players, not only us doing this direction.
But that is, I would say, what is giving us, providing us this ability to generate extraordinary returns compared to, even if you compare it with the mines that we have, is that we believe that the best way to manage the mines is to invest in the management team at the mine level, provide them with the right tools, with the right KPIs, with the right incentive plan, but then make them improve the efficiency. That gives us a lot of fast speed-making process, but also those that understand the potential of the mines to improve on a daily basis are the ones that are living there on a daily basis. While, on the other hand, corporate need to think in two very important things that corporate need to centralize. Number one is capital allocation. Number two is people development.
Those are the most important things that any corporate company or any corporate structure should focus, not on the day-to-day improvement decisions, but how you're going to allocate smart capital and how you're going to develop the best team. And not only the best team, but also provide the best culture. You need to provide them an environment, safe environment for men to take risks, for them to create new ideas and implement new ideas. Pitágoras can also share a little bit how he's building the project that we've been able to do very, very fast because he has autonomy to make the daily decisions and make corrections on a daily basis. And then just inform us. He doesn't need to consult. So that also gives us a lot of speed.
Isabela is going to share more with you how we think about human development, how we think about also our ESG standards. Kleber is going to also give some examples. Just open the floor here for him to give the examples. Few examples how we think. Right? Again, the strategy is simple. The execution is super diligent. Few examples how we think. There's no need to increase and to assess all the upsides of the project before you build. I see many companies waste a lot of time and capital trying to optimize, optimize. Let's do more drillings. Let's improve more resources. Let's see if we can increase a little bit more the capacity because the market's going to like it. Then time passes. Right? You put more capital. It's more capital at risk. We think it's different.
If the project is good enough to be built and has good return, build it. And then assess the upsides later because then you divest the project, you put less capital, you went faster to the cash flows, and then you restart to invest the cash from the own operation that's already divested, and then you can assess the upside. That's why we see, and Glauber is going to share, significant upsides in Almas. We could see those upsides before, but there was no reason to invest on those upsides before because it would take time and capital. That's why you see a lot of room to improvement. In Borborema, we know the upside for Borborema. And then but we didn't want to wait everything to be state-of-the-art to build those projects.
There is also a very specific agenda for us, understanding that on mining, what you have in licensing by law is not enough. You need to have a social license. It doesn't matter if the president of the country gave you okay. It doesn't matter if the ministers gave you okay. It doesn't matter if the law allows you to build one project. If you don't go with the people that will be directly or indirectly affected by the project and communicate with them and understand you have the reasonable conditions to build, you should not build because then you have trouble. So we take this very seriously. And we learned in many of our mines that's exactly what we've been doing in El Dorado. It's fully licensed. We could start construction today, but we are doing a lot of social work, social assessment, understanding what are the needs.
The shirts that some of you received here is an example of a small part, right, because you need to integrate the company within the community. But not only this, we're doing a lot of other works that are going to be shared, but integrating the company, participating on the sports, on the soccer team, and so on. But that's very small. We have to have a much more profound approach that we are taking with the communities in El Dorado in order to make sure once we start the construction, they are fully aware how we're going to build this mine, how we're going to operate, and how they're going to benefit. Right? Isabela is going to share with you about how we are also approaching our ESG standards, the social work I mentioned, but also the environment.
Aura Minerals today is one of the most well-recognized companies on sustainability in Mexico, one of the most recognized sustainability companies in Honduras, and the most just recently awarded in Brazil by the highest sustainability standards with the project of El Dorado, so it's a company that believes that high returns go hand in hand with a high responsibility on social and also in the environment, with the highest safety standards that Glauber is going to share. A well-managed company will have very high social standards, good safety records, and good results. Everything goes together, and that's the quality and the result of this management team that we are very proud to be sharing here with you, so with that, I finished. I turn the floor to Glauber.
Again, there's a lot of information that we'll be sharing with you, but also pay attention to how we are making our decisions because that's how we differentiate ourselves on the how. And the what is just a consequence of what we've been doing. And Glauber, I'll pass to you. And then by the end, we'll have a room for Q&A, and then I'll go back with the wrap-up.
Hi. Good morning, everyone. Following what Rodrigo summarized in the beginning, my main objective here today is to go through these five steps here. The first one is how Aura 360 culture drives our everyday performance. I will share some real examples that reflect this strong culture and how important it is for our performance and the growth that we are planning.
In terms of operation, how we are improving our technical standards to make sure that we have stable operations and we can deliver the results quarterly over quarterly. The third one is going into more detail in our growth plans to achieve more than 600,000 ounces, this main target, and also bring some examples from the recent M&A that we did. One of those is the MSG case. It's the first case that we acquired an operation in this new Aura era, but we are doing everything based on what we learned in Aranzazu when we went through the same process to make some change, to increase performance that we reflected directly in the results, and the last one is our new chapter. We already proved the capacity to build new projects on time and on budget in Brazil.
It's a market that we have a lot of knowledge there, but it will be the first time that we will build a new project in another country. So it's a new challenge for us, and I will present a little bit how we are preparing to go through that process. First of all, Rodrigo told you that our best assets are the people, and I want to share the results on safety that for me reflects directly how strong is the culture to make sure that we have a safe environment. Here you can see in the chart; this orange curve is the work hours that we have. So we have more people; we have more operations, more people, more employees, and more work hours and more exposure as well.
But even with that, if you look in this green line, it's what we call the lost time injury frequency rate. We have more than one year with zero accidents, with lost time injury in all of our operations. Even building new projects, we have a lot of people, contractors, and everywhere. But we still keep a very good performance on safety. And for me, it's a connection with the culture that we are implemented. And as a reference in the market, we are below the benchmark. We can see here that in accordance with ICMM, that they have the data that reflects the total reportable events, and we are below the average of the market. Why do you say that this is so important? Because we understand that if we have a stable safety result, it means that we have stable operations.
And if we have stable operations, we can have a sustainable growth plan as well. So this is the fundamentals for our plan, for our performance. And we are very proud about that, to be able to share that data. We talk about people, but there is some governance behind those results. It means that we don't have the best assets. Rodrigo already told that. It's our assets, it's a challenge. But to make sure that we deliver the results, we need some framework behind that. Our framework is based on performance, continuous improvement, and innovation. Everything is included in our life of mine plans, our budget, our master plan, connected with what we call the Aura Loop. And the Aura Loop is our design thinking that we test small, that makes us be able to test fast, make some adjustment with a big impact in the company results.
Once it's proved, we can scale. So this is the mentality that we have to make sure that we have an agile process to take decisions. And the principle behind that is basically three. The first one is decentralization. We empower the local management to take decisions. With that, we make sure that they have the best information to take decisions and they have the sense of priority to take that so we can speed up the process to take decisions. Our loop, that is the concept to bring discussion, include diverse team, and speed up the process to take those decisions. And the last one, if with no information, we can do nothing. So all the KPIs, all the information is everything in our analytic center. It's a portal that we have when we have all the information there.
With those information, we empower the operations with insights to take the decisions and make this process faster. Sharing what we did the last 12 months in our operations. We are on track to achieve our guidance for 2025. To guarantee this delivery, we can see that in each operations, we have a lot of actions and a lot of work behind that. Like in Almas, after the first year that we have trouble with the contractor performance, we changed the contractor. We increased significantly the performance. Now we are able to expand the plant and to increase production as well. If you remember, Almas originally was built to process 1.3 million tons per year. We did some improvement to achieve 1.8 million tons per year. Right now, we are running 2 million tons.
With some work that is in the commission phase to achieve 2.5 million tons per year. When we say that it starts small to be faster, to the risk, and once it stabilizes, we are able to grow and we are able to expand. Almas is a good example of this agility. Last year, and I'll show more in detail in advance, but we present that we found the opportunity to develop in Almas underground. Since that information one year ago, we already started the underground development this month. It's one year from the information to start off the execution that represents how fast we are in this process to take decisions and to execute. Aranzazu is stable. It's more than four years delivering production quarterly over quarterly. We are not accommodating.
It means that we're still looking for opportunities like the molybdenum that we already discussed. We are also working with continuous miners to improve mine development performance, to reduce risk, or to reduce costs, to reduce risk, to improve the safety standards. MINOSA is also very stable in deliveries quarter over quarterly. This year, we started the process to re-leach the remaining areas in the pad, the leach pad. We have an inventory of more than 600,000 ounces. We expect that we can recover between 15%-20% of those ounces during the life of mine. This year, the contribution is 1,000 ounces in the current result that we are expecting. Apoena is still growing the life of mine, but also the performance.
We are expanding the mine to speed up the access for the higher grade in the schists in Nosde pit, that I can tell a little bit more in detail in the exploration presentation. Borborema, the brand new operation that we have, is running on full capacity. We did on time, on budget. We are already working on improving capacity. The mine is performing pretty well. The plant, the mill, is performing pretty well as well. We see some room to increase capacity without too many investments. The bottleneck right now is the filter that we already started the assembly for two new filters that will be that with that we will be able to increase capacity in Apoena as well. This is the growth plan. It's feasible. It's completely everything in our hands to be done. We have two ways to grow.
The first one is improving the actual operation performance. As I comment in Almas, we are increasing capacity pretty fast. We're still working in a bigger expansion. We are splitting into two steps. One is practically done. That is to put the plant in 2.5 million tons per year capacity. We are already studying to achieve 3 million tons per year. They studied for that. We expect to deliver in the first quarter of next year. If it's approved, we understand that until the end of the year, we are able to implement. Borborema, the highway, we moved a lot in terms of projects. We delivered the studies for the agency. We have a lot of meetings with them to make sure that we have a robust plan to move the road.
When we move the road, we can unlock a lot of value, bringing those resources that actually we have more than around 2 million ounces of gold that we expect to bring into reserves once we move the road. The other one is Aranzazu. We are planning an upgrade on the plant from 1.2 million for 1.35. 1.35 or 1.35?
Yeah. In the other pillar to grow, we have new projects. I will have a chance to go into detail. In El Dorado, we are advancing the feasibility study, and we are advancing the permit as well and the social license. That is the main issue of this project. And Matupá, we got almost all the permits to start the construction, and we still invest in increased life of mine. And also, we have good results to present here. And acquisition is the other pillar that we already advanced. We also advanced this year. The acquisition of MSG is. It's exactly in the DNA that we have. So we can acquire it, and we can put our culture to bring some improvements.
The MSG case is what we are doing, and included the team that is involved in this process is the same team that did the turnaround in Aranzazu with new people that also bring more energy for that process. The main issue that we have is we need to de-bottleneck the mine. So the reason that the mine is the bottleneck right now, the first one is mine development performance that we expect to address with a very good plan in terms of infrastructure, in terms of prioritize the main ramps, the main access. And also the underground fleet that is under performance. And we are scheduling eight to 12 months plans to rebuild those equipments. And we already started this process that will take eight to 12 months. But the main issue is how can we convert more resources into reserves?
If you can see, we have 0.3 million ounces as measured and indicated. And sorry, it's 0.37 million ounces as reserves and 1.08 million ounces as measured and indicated. So it's actually around 30% conversion rate. And we understand that following those steps, reduce dilution in the mine, being more selective and reduce the minimal mine width from 1.8 to 1.4, we can increase the grade and also bring some resources that with the previous method is not profitable right now and put that as a convert that into a reserve. We are changing the mine method that we will be able to increase the recovery at the mine, left less pillar than actually has been done. And the other one is cut costs, to say, reduce costs. Once we reduce costs, we can reduce the cutoff of the mine.
We can bring much more of those measured and indicated resources that are already proven that are there, but convert that into reserves. What we expect with this plan, we expect a significant reduction in our sustaining costs and stabilizing at 80,000 ounces per year. But we already see room to increase those productions in the near term. El Dorado is the new acquisition, the new project that we acquired in the beginning of the year. We have some new numbers from the feasibility that we will publish. We expected production over 100,000 ounces per year in the average. We have 1.7 million ounces as a resource, 1.7 million ounces as a reserve, sorry, and 0.6 million ounces as a measured and indicated and inferred resource. Considering the CapEx, the production, we expect IRR 35.6%. NPV, it's $1.3 million.
The CapEx for constructions in the new review is $382,000. As we already told before, the main issue in El Dorado is to get the permit to operate. We did a lot of work since the acquisition. From the legal side, the legal side, we have all the permits for the underground constructions. We are missing just the construction permit that is local, in the municipalities, not in the federal government, that we expect to be issued soon. The other is what we call the social license. That is the more challenging one to get. We were able to advance pretty good, better than we expected when we acquired the project, but with a lot of effort. We invest more than 850 hours in communications and meetings with the leaders of the community.
We have more than nine communities engaged, six directly and three indirectly. That's covered all the communities that we have in the surrounding area. We have more than 22 community projects or social projects already defined with the community. It's something that we are building together with them. Four are already complete. We have four ongoing and 14 under structuring to start in the beginning of the year. We also got the main leaders in the community. We invited them to visit Borborema. We had a chance to present how we operate and how we connect with the community where we are. It gave us a very good goodwill with them. They liked a lot of what they saw. The feedback that we received is very positive. They say that we do what we say we do.
It's the walking the talk that Rodrigo commented in the beginning, and as a social integration, we are supporting the soccer team there. It's one way that we see that we can connect faster with the communities, and the shirt that you guys have here is part of this work. Almas. I presented exactly this slide last year, and in that moment, we said that we will start the drilling. And if it's approved, we will start the mine development, the exploration ramp. It's exactly what we are doing, completely in line with the schedule that we planned, and we expect to, in 12 months, we expect that we can achieve the ore in the underground and start the ore development. And also to get position to make more drill holes and extend this underground mine even further.
And Borborema , just to remember the road, here we have the design of the pit. We can see in this white line is the road crossing the deposit. And once we move it, we can assess that area in another day. And we can unlock a lot of resources to be converted into reserves. It shows what we are doing, what we are planning to do. But the other pillar that we need to reinforce is our resources and reserves base. And so with that, I'm going to share how is our strategy to replace the reserves and also extend the life of mine. Just to have an idea, since the anomaly that we find for one hour to become a target, normally take 10 years in the industry average. But just 0.1% is converted into a target, really. So there is a lot of effort.
We as Aura, we do not invest too much in this phase. Normally, we are engaged in some project that has some feasibilities, is ready to build, but in the near mine, we need to develop new targets as well, and from when Aura became a target until the production, normally the average of the industry takes 25 years, so what it means, if you do not look to the future, we will not have time to develop new targets to keep the life of mine of our operations, so it's what we actually invest. Part of the exploration CapEx that we have is for the definition drilling to convert resources into reserve, but in the average, 30% is greenfield investment, so what means greenfield is new targets around our mines, but targets that are not under production yet. Here is the evolution.
Even as we are increasing production, we also are increasing our life of mine. Apoena, I will show the example, so when we assume Apoena, the life of mine is three years, and nine years later, we have a four to five years life of mine mining those nine years, so it's to show how robust our exploration plan is. In Almas, I comment on the underground, but the potential is much bigger than that. If you compare with some similar areas in Brazil, like the Crixás Greenstone, the Pilar Greenstone, that are under exploration for many years before the Almas greenfield, they have between 1.1, 6.65 million ounces, and Almas that we just start is 1.1 million ounces, but we have a lot of targets around the mine that we are working in exploration to bring that as a mine in our life of mine plan.
With that, we can extend the life of mine or increase the production. What we are expecting to do is both. Apoena, as I comment, all those names, Japonês, Japonês Oeste, Nosde, Lavrinha, are mines that we mined or are still mining. In the center area below the Nosde is the focus that we have right now. We can see those dotted lines in blue and the red represent the mineralized horizons that we have. We call the blue one middle trap and the red one the lower trap. We mined just the upper trap in Nosde. We have very good intersections confirming the continuity in the middle and the lower trap. This is to say that we have a very, very huge potential to increase life of mine in Apoena as well.
And here about what I say about greenfield projects, we have many targets in this trend in our radius of 50 km that we are investing in exploration. And we see a lot of anomalies, a lot of good intersections that can be converted into resources and reserves in the future. Borborema, during this year, we did some exploration as well. And we found in the surface a very good intersection in the north part. That is the opposite part of the road. It means that if we move the road, we can expand for the south part. But we start to drill in the north part that we believe in this continuity. And we can increase the pit for the north direction as well. Matupá, it is in our growth plan. We already have X1 that is the target that supports the current plan that we have.
But we are very, very advanced in Serrinhas and Pé Quente. With those, we believe that we can more than double the reserves that we have right now. And the focus is in working that definition, but also look for new targets. Because if you can see in this picture here, in the 50 km radius from the X1 plant, we have a lot of targets with good surface samples that we expect to advance on that as well. So with that, we can see that we improve a lot in terms of predictability. We are consistently delivering the results. We have a very, very clear plan to achieve more than 600,000 ounces in three pillars. That is the improve, the expand, and improve the current operations. That I showed a lot of opportunities on that, that we are working, building new projects. We just finished Borborema.
have Aranzazu and El Dorado and Matupá in the pipeline to start. New acquisitions. We just finished the acquisition of MSG. We started the turnaround process. We're still looking for new opportunities for new M&As as well. Now I pass the floor to Pitágoras. Our projects are the fundamentals for our growth plan. He can show a little bit how we are being able to deliver on time and budget those projects in Almas, in Borborema, and also in the expansions in the current sites. Thank you.
Hello, everyone. Good morning. My name is Pitágoras. I'm in charge of the projects and the construction of Aranzazu, not only the greenfields, but the most complex when you have more complexity of the brownfields. I will talk a little bit, as Rodrigo said, about how we do the things.
Considering our future, we have five main pillars. We started the things thinking people. We start the discussion in the engineering, how we build our project since they are fast track. How they are fast track, we have a lot of activities in parallel, and we need to take care of the people to not have any incidents, and we also discuss the operational phase to avoid any problem during the operation, and the next step is how we will deliver for the company the projects on time and on budget, and also with a lot of care and confidence. The third pillar, we talk about the growth, the support the growth. We need to structure ourselves to build the projects considering the goals of the company. The third pillar, we need to think about costs.
We need to think from the beginning in the acquisition, kept it on the construction and engineering to have the highest considering the lower bottom of the second quartile and the top bottom of the first quartile. And the fourth one is related to people. When we start the project, that's the moment that we have the best opportunity to implement our Q3. We need to get it right from the start. And so we select the right people to share our Q2. And the last one is the most important one, is not the less, they have less importance, is to listen to the community. We need to understand them, what they need, implement the ideas, and do a win-win work with them. And talking about safety, we have currently more than 1,250 days without LTI and more than 7,600,000 hours worked without LTI.
When higher is this number, we know more close we are to an incident statistically. And so we have a strong management to try to avoid an incident and start from the beginning. The main point is the lessons learned. Each project that we start, we do a rehearsal with the operational, with the construction team, and update our main risks and involve the management team and implemented our safety needs. We already have identified what are the main risks for each one of the phases of the construction. And talking about our way to do the things, we started our first greenfield that was Almas in 2022 with the goal to deliver it on time, on budget, and with quality.
When we start to discuss how we can achieve our goals, since we need to start the earth moving during the rain season, the team started to discuss and decided, oh, we can do that. It's not conventional, but we need to do some change. One of the changes that's not conventional that we've done, we decided instead to hire a contractor to do the earth moving. We decided to do it by ourselves. We rent the equipment and do the earth moving in the rainy season. And yeah, but heavy rain. And we had success on that. Without that, we had a lot of claims, a lot of issues, and were not able to deliver it at the time. As Rodrigo said, it was a decision of the team in the field. And we support them and success that. The other point was the mill.
We have an existing mill that it was acquired, but not put in use, and have a lot of issues. We quoted with the main suppliers, and the price that they gave to us was 80% off a new one. We decided in the field, no, we can do this refurbish it with specialists, and we do that. The team decided. They have all the independence to decide, and we, again, had success, have success. The mill is still operating and with a higher capacity than it was designed for. This third example, and the most important one, was the team. This picture is a picture of the day that we started up the plant. We do not have one operational, one construction team delivering a project for the operational team. We have a unique team working together to deliver one project as best as possible.
Do not have a handover for the construction team to the operational team. Everyone was working together to put the plant to operate according to the project. The handover never happened because it happened during the execution of the startup. Suddenly, the operational team was operating the plant, achieving the ramp-up that was in five months. The handover never happened because we are too integrated that it was not necessary. We acquired MSG in the Q4 of 2022 during the conclusion of the construction. We do the lessons learned and all of the things, not only the lessons learned, but the best practices we improved and implemented in MSG. In MSG, we had two main challenges. The first one was the lack, the lack of water. We have a project that it was never implemented.
They have good results, economic results, but there wasn't water. And we decided to look for a solution to use the gray water. But we not considered the gray water. We have a proposal for big companies. And we also have opportunity to develop this project with a local company. And we decided, considering our future, to develop local suppliers and develop local people to build this plant with one local company and to implement it. Currently, its operation is in operation with the nominal capacity. The other thing was the filtering. In Brazil, since we have the accident with the dams, we started to operate, got licensing on to operate with dry storage facilities. And the main problem of these facilities is the humidity. No one of the projects that we visited and do the benchmarking achieved the humidity from the beginning to start to stock the pile.
We've done a lot of work, a lot of benchmarking, to all of the implementation, development, implementation of the contingency plan. As Glauber said, we started to operate without any issue related to humidity to stack the pile. It was only a decision and implementation and work for the local team, considering our way to work. We also bring the community development. We developed in Almas and trained during the construction more than 600 persons. Here in Borborema, we do the same from the beginning. The persons that we trained there, 60% were absorbed for the company. On top of the 60%, 30% was already promoted, considering our meritocracy. Now we have a new challenge, as Glauber said, that is El Dorado.
It's a project out of our jurisdiction that we got all the lessons learned, not only related to community, but our best practice to build projects and started to implement it. And in summary, from January to September, January 2022, from September 2025, that have a total of 45 months, we built two projects from the scratch and have the expectation with our lessons learned, with the challenge to being in another jurisdiction to implement with the same quality. So that's it.
Now we have 10 minutes break. If you want a coffee, bathroom, and then we are back to have Lina. Thank you.
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[inaudible] Hi guys, let's go back. Are you ready?
So now I will pass the word to Rodrigo to invite Lina. It will be a pleasure to have you here. Thank you so much for joining us.
As you could have noticed, I did not talk about gold projections, copper projections. Normally you expect CEO to talk about this environment. I humbly say that if we knew about gold price, shut down the mines and go to stock market because it's a lot of work to produce gold, a lot of work to plan, and you've seen a few examples that you're going to see more. But then a much more complicated job that I have is to project the gold price, although it's getting easier, right? The trend up is getting easier to feel, but I'll pass to Lina, one of the best analysts for gold price.
Please join us and share a little bit of our view.
Hi everyone, and thank you I could be here. It's a pleasure to meet you all. At Goldman Sachs, I lead the precious metals coverage. And a little bit about myself, before actually being a researcher in precious metals at Goldman, I was actually an academic researcher before. I have a PhD in economics. I spent a whole lot of my time thinking about safe haven assets while I was doing research and teaching at Harvard. There's definitely still the link with gold given as also sort of like the safe haven assets. Now, talking about our gold price, let's dive right in. We're expecting gold to go to $4,900 by the end of 2026. I do want to caveat this that this is actually, in our opinion, a fairly conservative forecast.
I will explain towards the end of the presentation why this is actually, in our opinion, even though we're bullish, still even a conservative forecast. We think that there's a lot of upside risk here as well. Now, to understand a little bit why we have been rallying so much in gold, we kind of have to go back a little bit in time to 2022. You can kind of like see before 2022, we had this very strong correlation between the inverse of interest rates and gold prices. Makes a lot of sense. When interest rates go higher, gold should go lower because gold doesn't pay an interest, right? Now, that was the case before 2022. Then the magical day, February 24, 2022 happened, and this relationship seemingly broke down. Now, what happened on that day?
That's when the freezing of the Russian central bank assets happened. What happened is that a lot of central banks worldwide, especially emerging markets, looked at their own reserves and said, well, if this can happen to us, we have a huge problem. They started to buy a lot of gold, especially China. The accumulation sort of like led those gold prices went higher, even though those investors were selling off their gold as interest rates went higher as well. Now, just to give you an idea, the US, Germany, Italy, France, they all have 70% of their reserves in gold. How much do you think that China has? Any guesses? Less than 10%. Yeah, less than 10%. So 7% is what they say. We think it's around 10% because there's a lot of underreporting, which we will also show you.
For China, there's still a long way to go if they want to diversify. Now, you can actually see what I just told you a little bit under the hood in gold prices. We have here sort of like shown you net managed money, which is in dark blue, that's hedge fund money. You have then the investor holdings of Western long-term investors, ETF holdings. Then you have in green the central bank holdings. You can see that in 2022, when interest rates went higher, that actually the investors started to sell off their gold as you would expect. What happened instead, because the gold price didn't go lower as you would expect, instead what happened is that we had a five-fold increase of central bank purchases on the London OTC market, which is where most central banks buy their gold.
And so the gold price went higher. So basically what happened between 2022 and 2024, investors selling, central banks buying, gold prices went up. In 2024, what happened is that investors stopped selling because the Fed was expected to cut. Central banks still buying a lot, and so it went up 30% in one year. And now we're in 2025, and we see that central banks are still buying, but now also investors are buying because the Fed is cutting and more recently also because of the debasement trade theme. And so we have two big competitors, two conviction holders, central banks and Western investors competing for the same bullion. And that makes it we're up more than 50% this year in 2025. Now, on the central bank part, as I said, there's a lot of unreported buying. This is, for instance, China.
China, in the PBOC, the Central Bank of China, in red is what they say that they're buying. In blue is what we see that they're buying. It's always around the same time, but it always starts earlier. It's always more at the rate they're doing, and it always ends later. Now, you may wonder why being secretive about this, why not being secretive about this altogether, right? Being like half secretive about this. Well, there's a bit of a dual incentive for China. On the one hand, they want to tell other countries like, look, the renminbi is internationalizing, we're a strong currency, it's backed by something else than just the euro and the dollar. But at the same time, they also want to make sure that you're not sort of like attracting too much attention from the West by buying too much.
For instance, Russia, right before invading Ukraine, what they did was they bought a lot of gold. They went from 8% of their reserves in gold to 20% of their reserves in gold. We didn't feel that much in the gold market because Russian reserves are small. They moved all the gold back home because normally a central bank actually keeps their gold in the New York Fed or in the Bank of England because then they can get a revenue on their gold. They forwent that interest. They moved everything back home. The governor of the Central Bank of Russia even said, guys, we moved everything back home. Nobody can freeze it. And then they invaded Ukraine and then their assets got frozen. So usually when central banks start to buy too much gold, it becomes a bit of a red flag for the West.
Now, the big question is where is China heading? Because China is actually the biggest buyer in our central bank nowcast from what we see of central banks buying reported and unreported on the London OTC market, and China's accounts for almost half of this. Now, where do we think that China is heading? A conservative plausible target is that China may want to go to 20%. 20% seems to be, from talking to central banks, sort of like a good balance between insulation, still having liquidity, etc., and so also what Russia targeted right before invading Ukraine; it's a global average. China may be targeting 20%. And we think that they're currently, with all the buying that they have been doing, including the unreported buying, that they're around 10%. There's two ways to get to 20%. Either gold prices go up.
If we wake up tomorrow and the gold prices double, then they're there. Or they just buy more quantities. So what we do is we basically do a mental exercise of how long it will take for China to reach 20%, assuming that they keep buying at the pace that they're buying, assuming that other central banks are also buying at the pace that they've been buying, that that together has an upward impact on the price. And then price x quantity, how long will it take for China to get to 20%? And the answer is two to three years. So this, in our opinion, is a longer-term trend. And it gets us to our forecast of 4,900.
Because as you can see of the contribution, a big part comes from the central bank buying because we're expecting central banks to keep buying at the pace that they've been buying, mostly because China is, in our opinion, under positioned in gold and has bigger targets of reaching it, so we think that this is a big part of this, and actually before that, I should actually go back a little bit to understand why we're forecasting gold prices this way. We have three buckets. As I said, hedge fund money, the ETF holdings, so the long-term Western investors, and the central bank purchases, and together these three buckets, we call them the conviction holders, they really move the gold price, they explain 70% of gold price moves on a monthly basis.
So that's why we look at these three buckets and sort of like make an assumption or like take a stance of where these three buckets are going. And that is what we do here in our forecast. So we take a stance on the central bank buckets, which we think is going to keep accumulating, mostly because China is so under positioned, as are other emerging market central banks. Say that even we have a peace deal between Russia and Ukraine, and that even the assets of Russia would be unfrozen, even then we don't think that these central banks are going to stop buying because the risk calculus has changed. Just the fact that they have done it just sort of like makes that they think completely differently about this and sort of like want an insulation. Now, that is on the central bank side.
On the gold ETF side, so on the Western long-term investors, that's where the, in my opinion, or like in our opinion, where we are very, very conservative. We're expecting gold ETFs to rise as the Fed is cutting based on our U.S. team's projection of Fed cuts, and that historically works very well. Actually, the entire reason why we had the gold- interest rate relationship is purely because of these gold ETFs. They really follow interest rates, but more recently, there is a lot of talk about the debasement trades and diversification and what about Fed independence and all of these other sort of like questions about fiscal concerns, not just in the U.S., but also in the U.K., Japan, Europe, where investors typically may look for a store of value outside the system, which is gold, and we're not including that at all in our forecast.
The 4,900 forecast is just base case without these debasements or perception of diversification just because that is not the house view of Goldman Sachs, so that is pure upside risk. Now, to understand a bit how big that upside risk could be, well, you have to keep in mind that the gold markets, the gold ETF market is quite small compared to the U.S. equity markets and the privately owned U.S. Treasuries. It's only 1% of the privately owned U.S. Treasury market and 0.5% of the U.S. equity market. That means any small diversification into the gold market can be quite disruptive for gold, and we've actually seen that in the 1970s as maybe the example that is sort of like maybe closer to what we are having today. In 1971, Nixon, who was the president of the United States back then, broke the gold standard.
Gold was trading at $42 an ounce. There were a lot of inflationary policies. On top of that, the Fed was pressured to lower interest rates in a fiscal expansion. The Fed was not independent at all. Private investors started to look for a store of value outside the system. Gold was sort of like the only alternative. Gold went up to $200 an ounce by 1978. In 1979, what happened is a second shock that occurred, which is the Iranian central bank assets got frozen. A lot of central banks worldwide also said, uh-oh, that means that the dollar is not geopolitically neutral. They also started to buy a lot of gold. All of a sudden, we arrived at $850 an ounce by early 1980. Basically times 20 in less than a decade.
Just because gold is something that you cannot easily pump, it's not easily something that you can increase in supply. That's the reason why gold is gold, and so when everybody sort of runs to it, you get sort of these massive price increases. What's very interesting today in the 2020s is that in 2022, we already had central banks diversifying. That shock already occurred with the Russian central bank assets being frozen, and now in 2025, we're seeing sort of like some hints of investors talking at least about wanting to diversify. We haven't seen too much of those inflows yet that has been, in our opinion, really diversification inflows. Like so far, it has been sort of like what the rate implied level based on interest rates would expect.
But if we were to have a lot of investors jumping into gold, and especially pension funds and all of those big institutional investors jumping into gold, that would be quite disruptive. So that's all upside risk to our, in our opinion, fairly conservative forecast of 4,900 by end 2026.
What was the impression you got from you on Tether and what they're doing? Like apparently they're buying lots of gold for their own accounts and buying it back for US, whatever it's called, USDT. And do you guys think that that's contributed at all to that big run?
Yeah, so if you look at Tether, I think what they contributed was about 20 tons, I think in one quarter. In that same quarter, we saw ETF holdings increasing because the Fed was cutting potentially some diversification. There we were around 150 tons.
So it is kind of like small compared to actually the bigger drivers. That being said, I think it's a very interesting thing to track, something that we don't track yet. Very interesting to track for the following reason. We think that sort of like is this gold Tether will become bigger. It's kind of like a gold ETF. It's kind of like going to be Western investors that are going to put their money into gold Tether. It's physically backed, same as a gold ETF. So it won't be that different. There may be some people that instead of choosing for a gold ETF, will choose for gold Tether. And so therefore, it's important to sort of like track both of them. And maybe on the margin, you'll see maybe, especially from the crypto community, that thing that becomes more accessible to them.
And so you may see more inflows into gold, but it's sort of like more on the margin. Okay, thanks. And once it gets to 4,900, you say China's at 20%. Do you think that it drops? Oh, China will not be at 20% at 4,900. It will be another two, three years to get there.
Oh, so four, okay. So I guess if China question is if China stops buying, do you think the gold price goes back down?
No, because we would need to have sellers for that.
Right. All right. Okay. All right. Cool. Thanks.
What is the tonnage that you think China has?
Tonnage? So they say 2,000 something tons. We think it's 3,370.
And what do you think China's strategy is related to purchasing gold?
Yeah, very good question.
Something that is always sensitive to talk about in reports, so that we usually talk more about face to face. There's two options here. On the one hand, it's possible that China just wants to do financial insulation, that they don't want the U.S. and the West basically having any leverage over them. Because if the same were to happen to them as happened to Russia, it would be quite disastrous for them. That basically would mean that the renminbi would become monopoly money. And it's sort of like it completely would break their economy. That's a huge leverage for the U.S. to have over them. It could be financial insulation that they want to go to 20%. There's, however, another option, which is something that we're wondering about.
Actually, if you just read what the Chinese are saying, because that's actually fun about reading China, is that they always say what their plan is. So one of the things that China is saying is that they want to compete with the U.S. dollar, that they want to become a dominant currency. What we have seen over the course of history is that when countries want to become the new dominant currency or the new leader, it's kind of difficult to sort of like tell other countries, trust me and trust my financial system. That's actually what the U.S. did after World War II. What they basically did was when they overtook the pound sterling as the dominant currency, they said, you don't even have to trust us. You just have to trust that the dollar is as good as gold.
Over time, then they could sort of like remove the gold. But then the entire system was already built around them. That's another possibility that China is sort of like eyeing something way bigger, trying to sort of like instill some financial trust in themselves by basically encouraging other countries to use the renminbi in trade, by using the renminbi as a reserve asset. One of the big reasons why you wouldn't want to do that is you may perceive China to be a prison. That's one part. The other part is also that you may perceive that it's a little bit risky because if the Chinese assets were to be frozen or if the U.S. or Europe would fiscally default or whatever, that they would sort of like, if the U.S. were to sneeze, that they would sort of like catch a cold.
And then you, by having renminbi exposure, would still also be exposed to that. So that's another possibility.
Lina, I have a contrary question for you. What do you think the chances are gold could be down substantially in 2026? And what could cause it?
Yeah, so very good question. And not that easy to answer. So if you have suggestions, I would be happy to listen to it. I think on the speculative side, there isn't all that much speculation in the markets currently. Like a lot of them have actually already left the markets. You can see sort of like if we look at net long managed money, we're not like at highs here. So we're sort of like at the lower percentile. So that's on the spec side. So it's not going to come.
We may sort of like drop $100 on speculative side, but it's not sort of like going to drive us all the way to $3,000. So that is on the spec side. Now, what are the other two possibilities? Thinking to our framework of central banks and Western ETF holdings. On the Western ETF holdings, one possibility is that we would have a Fed hike, which is not something that we're expecting at all. But a hike, a rate hike, an increase in interest rates from the Fed, which is unlikely. But if that were to happen, you basically would remove two parts. First, you have a hike. So investors may want to go to bonds instead of gold. So they would sell their gold because gold doesn't pay interest. A.
And B, especially in today's environment where there's a perception about Fed independence, around concerns around this, that you may, that also investors sort of like would remove this perception of Fed independence being damaged or potentially being damaged because if the Fed is hiking, then they clearly are independent because the administration prefers lower interest rates. So that would sort of like cause a sell-off in investor holdings, which would make gold prices drop. The other possibility is central banks. We don't think that central banks are going to sell anytime soon. But in the more longer term, we may have, so that is more 10, 20 years out. But we have to keep in mind that central banks always go from net buyers to net sellers.
In the 1970s, they accumulated a lot of gold because of the freezing of the Iranian central bank assets, all sort of like flocked to gold. Then during the hyperglobalization era of the 1990s, they said, why do we have all that gold? Such a relic from the past. Let's get rid of this. And then in 2019, with the global financial crisis and some central banks wondering whether the U.S. and Europe with the debt crisis, what if these bonds that they have, these treasuries, what if they become worthless? We want to insulate ourselves against this, start to become net buyers. And then in 2022, with the freezing of the Russian central bank assets, the geopolitical reason also sort of like got switched on. And we had like more buying. So over time, maybe in 10 years, we go again to a hyperglobalization era.
Central banks may become net sellers again.
Taking the other half of the equation, what do you think chances are that supply could rise substantially in 2026? We talked about demand, not supply.
Yeah. In aggregates, we actually find that mining supply is fairly inelastic. So this is annual mine production in aggregate over the world. This is the lagged four-year price. You can see the relationship isn't that great. You also see that here on this slide too. That's actually the entire reason why gold is gold. If gold was something that you can pump easily, it wouldn't be gold. For instance, I had this in the, if you go to Washington, D.C., there's a Washington Monument, a big column there. On top of that monument, there's a little pyramid in aluminum. Why aluminum?
When the U.S. sort of like was founded, the founders sort of like, when they sort of like put this Washington Monument on there, they thought, oh, aluminum, that's sort of like the super, super expensive thing. Like if we put it on top of our monument, then we can showcase the wealth of the United States. Just because they really thought this was super valuable. Then they learned that aluminum is something that you can produce actually fairly quickly and is not that important. So now that the pyramid maybe costs a few bucks, but not more than that. That's sort of like different in gold. Gold is sort of like the assets where over time we have tried to increase its production by a lot.
but that's entirely what makes gold gold the fact that it's sort of like something that you cannot easily inflate.
Very hard. It's impossible to expand capacity.
Very difficult, yeah.
Try the best. What if sort of a million people like me built by customers? It's always possible. It's always possible. And then I'll make one.
I have some questions about your contention that China, the PBOC, is buying much more gold than it's reporting. Prior to 1999, a lot of central bank gold activity was very secretive. But between 1999 and 2012, there were a series of central bank agreements. The IMF and the BIS were involved with various central banks. The PBOC signed on to them. And it was all aimed at increasing transparency of monetary reserves, changes in monetary reserves. Obviously, the creation of the ECB on January 1st, 1999, had a lot to do with it.
The Swiss and UK gold auctions from 1999 to 2006 had a lot to do with it. The financial crisis from 2008, 2011, really, crises had a lot to do with it, and the PBOC basically signed on, and there were several actions from 2000 through 2015 that the PBOC made, moving non-central bank gold into the PBOC monetary reserves. In 2015, the PBOC, then you had that big spike.
That was because the
PBOC made a major announcement about the way it was viewing the RMB and the yuan, and it widened the acceptable trading range. It tried, and it said that it wanted to more internationalize the use of RMB, and it also added 19 million ounces of gold that had been in trading inventories outside of the PBOC's ownership to its monetary reserves.
Everything that we see suggests that the PBOC and other central banks continue to abide by those series of agreements that they made between 1999 and 2012 about increased transparency. So we look at other people's views of secret central bank purchases by the PBOC and others, and we don't see them. In addition to that, the PBOC has said repeatedly, and you made a comment which I really caught me as a surprise, because from 1949 until, as far as I know, the present, the PBOC's policy has always been that it does not want the RMB or the yuan to be the reserve currency de facto or de jure because it's watched France, the U.K., and the U.S. destroy its economies by having de jure and de facto gold reserves.
So you said that they have said they want the yuan to be the reserve currency in the future, which I've never heard them say, which surprised me. So I'm just confused because I don't see that. In addition to that, the PBOC has this policy, you know, the gold in China stays in China, and we buy most of our gold within China. So if you're saying that the Chinese central bank has been buying not 10 million ounces in 2023, but 30 million ounces or whatever your number is, I don't think in tons. Anyway, there's not enough gold in China to meet that demand.
That's very bad on the London OTC markets. So they would.
But we're not seeing it.
No, on the London OTC markets, we can see.
We're seeing private investors buying enormous amounts of gold in the OTC market, which you don't have in your equation.
No, indeed. Two things. I'll give you our gold market primer, which explains how we can see the London OTC purchases of gold by the PBOC in London, which is where central banks buy gold. It's not where the retail of China buys gold. Where does retail China come into our model? They're kind of a residual. Chinese households and Indian households, they are quite opportunistic buyers, we call them. You can see sort of like the imports of retail into China and India that sort of like whenever there is a gold rally, they step back. Whenever the gold price dips, they sort of like jump in and buy. Now, does that mean that they don't matter at all? No, they do matter.
If you sort of like look here at three main factions, central banks, ETFs, and the hedge funds, they explain 70%. What explains the remaining 30%? Let's look at the gold price residual, so the remaining 30%. We can correlate that quite well with sort of like the wealth indicator or like the, we call it the current activity indicator, which is basically some GDP indicator of Goldman in emerging markets. As they become wealthier, it takes, you need to sort of like discourage them more by higher prices to make them stop buying. That can sort of like explain the residual. They do not explain the gold price direction, which is why we don't have them in our core model. They explain the residual through their wealth.
We are running out of time, but she's staying here with us.
You can question more. We have two more questions, and then we'll continue with the Trevor.
Quick one on my side, actually two quick ones. So first, I want to hear your views on who sold gold at this recent drop, sold off $4,400-$3,900. Do you think it was only retail? And who bought the dip? So I'm really interested on that. And I wonder on your long-term gold price, do you consider that prices extend further from these $4,900 in the long run? And if not, why?
Yeah. So first on who bought the dip. Unfortunately, net managed money is delayed because of the closure of the government. So we don't have that updated. But the dip that you were talking about occurred actually around the 21st of October. We saw a massive sell-off in hedge funds selling on positioning.
So there was a huge sort of like taking profit there. And we can sort of like see a little bit like what happened later with open interest, which follows a little bit net managed money, but it's not perfect. But sort of like what happened was sort of like a big sell-off from the hedge fund side. On sort of like going forward, so we don't have a forecast after 2026, but we're expecting gold prices to rise further because we're expecting central banks to keep buying for the reasons that I gave from China. And other central banks as well. We see even central banks in the Middle East, Turkey and Iraq also coming in.
And then we're, I think from the ETF holdings purely based in base case, just because we're just doing it based on interest rate cuts and we're not expecting further interest rate cuts in 2027, that we will have no pressure from there. But then you have again this upside risk of the debasement theme, etc.
Yeah. Hi, a couple of questions. What happens if there is a settlement and unfreezing of Russian assets? What does that do to your formulas and your balance equilibrium? And secondly, is there a trigger price that gold will have to get to to materially increase production? I know it takes years to bring on production. Are we talking $8,000, $7,000? Is there a trigger price that people are thinking would bring on reserves production?
So on the trigger price, unfortunately, I do not know the answer.
I think our gold equity analysts at Goldman may know more or the CEO may know. We just sort of like see that it's kind of difficult to ramp up production and that they're fairly price insensitive. On sort of like what would happen if we were to have a Russia-Ukraine peace deal, we expect to be mostly on the day of such a peace deal, a lot of selling from the sort of like speculative community, sort of like a temporary sell-off. They don't really explain long-term gold prices. They sort of like goes up, down, up, down based on sort of like headline risk and uncertainty. So we may sort of like see a temporary sell-off. But do we think that central banks will stop buying? No. Mostly because the risk calculus has changed for a lot of central banks.
So, even if you were to unfreeze it, even if you were to give it back, we think that for a lot of central banks that are underrating gold, and actually when we talk to central banks, it's something that they say themselves as well, that for them sort of like the risk calculus has changed, that's sort of like making it so salient that this could be frozen, that sort of the world is sort of like deglobalizing a little bit and that they want to have an insulation, that that sort of like is causing them to keep buying at a similar pace. So we don't think that that is going to be a big trigger. The one thing though that could happen is that there is gold produced. Russia is a big gold producer.
Russian-produced gold was actually something that we thought, well, if that hits, because that's sanctioned, we thought if that hits the markets, then we may have like an impact. That was actually the, we were looking for a bear case. What we actually realized while we were looking for this is that Russian-produced gold is already hitting the market through rerouting, just like in oil. It goes through like these third countries that before 2022 did not have any of that gold showing up. Actually what is very funny is this chart where you then actually, if you combine it all, sort of like you sort of like puzzle together what is then actually the Russian gold exports. What's funny is that before 2022, they're around 100 tons. After 2022, they tripled. Why did they triple?
Russian newspapers said that's because the energy revenues were low in 2020. Remember, oil price went negative, and so they had to sort of like counterbalance, so they exported extra more gold. And then since 2022 onwards, even though there are sanctions, we see a lot of export, like a lot of Russian-produced gold hitting the market. Why is that the case? Yeah, energy revenues for Russia, especially on top of that, the discount that they're selling at is very low. They have a war to fund, and on top of that, a lot of exports are very easy to trace. Gold is sort of a very hard to trace commodity, so that makes that sort of like, they may sort of move a lot into Russian-produced gold exports. That's not the Russian central bank's Russian-produced gold exports.
After a peace deal where the sanctions may be lifted and therefore that they can diversify into other exports, not just gold, we may potentially even see less gold exports instead of more gold exports out of Russia.
I have one final question. I think you touched it very well. The consequences of the weaponization of the dollars, which seems irreversible, right? And then you touch a little bit on the debasement of the currencies. But I've been surprised in the last couple of months how many generalist investors we are starting to meet. And it seems that would be my question that, and they are now starting to position with the what if, what if the US dollar, the U.S. cannot meet the debt?
How do you see this current deficit over the top of the current debt ratio, plus higher interest rates swapping low interest rates treasury with a higher one? When this is going to be addressed or if it doesn't address, what can happen?
Yeah, so that's a big question that we get from clients as well, and actually increasingly so. I remember that we flagged this upside risk of Fed independence and sort of fiscal concerns, and everybody was laughing at us for like a year. And now sort of like we're really getting these requests as well, sort of like the what if case diversification in the portfolio. Pension funds, big family offices, in it, a lot of institutional investors are very interested.
The question there is also like the question that we have with clients, and it's a little bit tricky because remember like sort of like how in the 1970s, the U.S. sort of like was in a similar problem. Fed independence was clearly damaged. And you also had like these Iranian central bank assets that were frozen. Yet they got out of it. And the way that they got out of it in the 1980s was through Volcker, who really raised interest rates with 13%-15% and really making it very clear like I'm happy to induce a recession just so that sort of like the confidence can be restored in the currency. In today's world, that's a little bit tricky because if you do that, your debt is also going to increase due to the interest payments.
So you sort of like sit a little bit in a difficult situation where high interest rates aren't fantastic because it also increases your debt. Low interest rates sort of like will sort of like also increase inflation, which is actually good because then you can inflate your debt, but then people sort of like don't trust your currency. So you sort of like sit a little bit in a tricky situation to navigate. The best thing that can happen for the U.S. is a lot of AI growth because through growth, you can in that way sort of like can sort of like get out of it in that way by R&G.
So thank you. Thank you, Lina. And that she will stay with us. Welcome to contact her after we finish.
Thank you. Thank you, Lina. It was amazing. For sure, we learned a lot.
Thank you so much. I will come back to the presentation here. Just one second, please. Now I will invite our CFO, Kleber Cardoso, to talk about cash management. Thank you, Kleber.
Okay. Morning. Morning, everyone. Morning. Good morning, everyone online. Thanks for coming here. It's good to be the first to present after Lina. No, thanks, Natasha, for that. I'll do my best. Let's see. One more. Okay. Okay. Here in my presentation, I'm going to touch on three highlights of our financial strategy, our view on how we allocate capital and how we try to use capital allocation to maximize shareholder value. The second point, I'm going to talk about costs, where we are in the cost curve compared to peers and also the impact of increasing gold prices in our margins.
The third one is the strategy behind listing on NASDAQ to increase the average daily trading volume and what to expect going forward. First, on capital allocation, this is a simplified way to show the buckets, different buckets we allocate capital. The first one, business maintenance, is what every company is expected to do on day-to-day. The investment we do in sustaining CapEx to keep our business, how much the minimum we have to invest every year at least to replenish the ounces that we deplete by production, tax payments, and others. Then the other two buckets is where we focus on the return to our shareholders. The first, direct to shareholder return is for those who don't know, Aura has a dividend policy. We have been paying and we pay dividends on quarterly basis.
We have a minimal dividend policy in which we, in most of the last five years, we have exceeded the minimal dividend policy. We have a dividend yield, as Rodrigo mentioned, is probably one of the highest in our industries, 7.5% in the last 12 months if we include share buybacks. But more important than having this high dividend yield in the last 12 months is how consistent high has been our dividend payments. If you take it from 2021 to today, so in the last five years, we had years in which we paid at least 6.5% in dividend yields up to 13.5% dividend yields. So the dividends have been robust, not just because of gold prices, but have been consistently robust now in five years, I would say.
The last one to highlight is an investment that also generates shareholder return: the investment to expand our business, which includes the investments we're doing not only to keep the life of the mines, but to expand the life of the mines. As Glauber showed, we have been accelerating the investment in geology, more than doubling the reserves, doubling the measured and indicated resources in the last four or five years. Also, we have been very active in terms of making acquisitions and also building new mines, as Pitágoras was showing. That is growing the company, generating shareholder value. On this business expansion, we have very good examples on our mindset on what we take into consideration when we make a new investment. When we are deciding to make one acquisition or building a new project, we don't focus on size. Of course, we want to grow.
Every company wants to grow. We see there is a value for growing. But the decision-making is based on financial KPIs. When we make a new investment decision, what we take into consideration is, okay, which decision I'm going to make that's going to maximize my internal rate of return, is going to minimize the payback we're going to get from this investment and reduce risk. So many times we even decrease the size of the project to start so that we can decrease the CapEx while allowing room to then pursue for expansions or optimizations once the project is de-risked. For this, I bring you two interesting case studies. This is the case study for Almas. I think it is a very nice example that explains very well how we think about capital allocation.
Here we bring what happened in the past when we started planning for this project, what we're executing today, and what to expect going forward. A little bit of history about Almas. Almas was a project at that time. It was not in operation. We acquired it in 2018. When we acquired Almas, there was a feasibility study at the time. It had been produced two years earlier for a mine with production capacity at the plant of 2 million tons per year. We had at that time an expected CapEx of $93 million, which in today's money would be about $120 million. After the acquisition, we did a new feasibility study as we do for all assets we acquired with that in mind, okay, which project is going to maximize internal rate of return, reduce payback, reduce CapEx, and then we decrease the size of the project.
Then we decided to build a mine that was going to produce from the beginning 1.3 process, 1.3 million tons per year at the plant while leaving the plant flexible enough for potential future expansions. You'll see the CapEx will reduce from today's money $120 million to $73 million. So there was a meaningful reduction in the CapEx. The NPV even increased and the internal rate of return optimized. We increased it from 33% to 44%. Yeah, no, here was even less, was $1,600 the gold price for Almas when we did the feasibility study. Then what we did with that plan, so we executed exactly what we planned. We built on budgets in the time expected. First year of production was exactly what we expected, 54,000 ounces. Maybe that was higher because, of course, gold prices benefited us.
And then once it was in production, generating cash flow, we decided, okay, let's replan and go for the optimizations now. Earlier this year, we issued a new feasibility study already planning to increase the production capacity to 2 million tons per year from 1.3, going back to that initial project, but now much more de-risked, which, of course, delivers a higher production and a higher NPV. But we're not stopping there. Now we're planning in the future, we're planning to go even further. So we're now operating already at 2 million tons per year, planning already to increase to 2.5 million tons, as Glauber mentioned, potentially even 3 million tons and making all the investments to keep expanding the life of mine, the potential, the underground, and so on and so forth. This is for Almas. When we go to Borborema, Borborema is one step behind Almas.
We just declared production, commercial production in Borborema. But the mindset was very similar. So Borborema, when we released the feasibility study, the gold price was $1,900, was already a very good project in terms of returns. It would yield a 22% IRR with a payback of about three years. If you take what we planned in the feasibility study with higher gold prices, of course, the internal rate of return increases significantly. With a simulation with $2,600 gold prices, the payback would be already below two years. And then we went ahead and executed this project again on time, on budget, with no accidents. It's already one of our lowest in sustaining cash cost mines. And we are in the phase now that we were one year ago with Almas to plan for potential increase and potential optimization expansions.
Working to move the roads, as Glauber was explaining, which can increase very significantly the reserves and resources. Still investing to increase even further the resources in the north area. Then once that's accomplished, we can just like with Almas to plan for expansion in production capacity. These are just two examples, but you can expect a similar approach for the next future projects, El Dorado, Matupá, and potential new projects that we might acquire. Always optimizing the internal rates of return and payback, try to reduce the upfront capital that we put to minimize the risk. Then once the risk is reduced, look for the upsides. This, just to close this chapter, [is] just an overview of that first page that was showing in terms of capital allocation, the shareholder return through dividends in the business expansion, how much we have invested in the last five years.
So we paid in between dividends and buybacks since 2021, $300 million. We invested in expansion, building new projects, accelerating exploration program and acquisitions over $600 million since 2021. So returning together more than $900 million in a few years. And what's very important without stressing the company, with a healthy cash position and a very healthy leveraged net debt over EBITDA ratio, never reaching one time in the past. Despite in the past, in 2021, 2022, gold prices were at a much lower level.
415 minus 351 is 65. You have 150. Where's the rest?
Sorry?
415 of gross debt minus 351 of cash leaves $65 million. Down at the bottom, you have $150 million. What's the difference? No, in the bottom is the left. That's where it is now. Is the ratio?
Yeah. Yeah. The 0.15.
But then, just to conclude now, so the secret that we did in the past to pay substantial dividends and grow the company without stressing our balance sheet is investing in projects with quick payback, high internal rate of return so that when one project we have the returns, we can go to the next one and we don't leverage our balance sheet. The next topic is about cost. And cost, if you take the last couple of years, especially the last two years, we all saw, of course, gold prices going up very fast. And when we see the margins generated by gold producers went up as well. But in general, if you take the industry average, not in the same proportion. What we're seeing is also increase across the board in cash costs for the industry.
This we have been fighting very strongly to keep our cash costs in the same level or similar level so that this increase in gold price can go to the P&L. We have been successful in this period. Oh, sorry. What did I do? Yeah. So if you take again, last two years, there is a lot of information here in this page. But here in the bottom, we have in red is gold price quarter by quarter in the last two years. In gray is the cash cost, not the OE, the cash cost per ounce. And what we see is, of course, as we all know, gold price is increasing quarter after quarter, now Q3 about $3,500, not $4,000 yet. And our cash cost pretty much in $1,000-$1,100 range. So having successful keeping the cash costs down.
And then as a result, we see here on the bottom. We have the net revenues and the COGS, the total cost much more stable or varying according to the production so that we're benefiting from the increase in revenues going to the margins of the company. So it creates this, we call the alligator mouth effect. This look internally. When we look externally, we have a similar message. Here we have a chart of the AISC sustaining cash cost curve of the gold mining sector. We see that Aura has been well positioned in the second quartile of the industry. If we take the same chart three or four years ago, we were in the third quartile and we have been working to push out to the second quartile.
When we do a more selective peer analysis comparing with other mid-tiers or large companies with significant operations in the Americas as well, we see we're among the lowest cost as well, and looking ahead, we have opportunities because we have a project like Borborema. Borborema now is in production, but we're going to have just one quarter of commercial production in 2025. In 2026, it's going to be full year production is in the first quartile. The new projects, El Dorado and Matupá, are also in the first quartile of the cash cost curve. So as this new project comes, we're going to remain competitive, and here it's an opportunity as well to touch on other pieces of our strategy.
Our strategy has been to bring online these mines with low cash cost profile or acquiring mines such as MSG that currently have a high cash cost profile, but making the acquisition at attractive levels, good entry points, and then working to reduce over the years the cash cost to more competitive levels as well. Okay. And then the third topic is our focus on increasing daily trading volume. This has a direct relationship with the NASDAQ listing. So what was behind was mainly over the last couple of years, we have been meeting many investors or potential investors in Brazil, North America, Europe. Many global investors liked our case, our approach to generate value. But we got consistent feedback that our daily trading volume was too low for them to invest.
And then we came up after studying, okay, how can we address this issue with the daily trading volume? And then the solution appeared, okay, maybe we should list in the US, which is considering the stage of the company the right time is, of course, by far the most liquid market in the world, while the listing from TSX, because three listings for us would be too much. And that was mainly the main reason behind the NASDAQ listing. And as we can see, it was very successful. We were coming early this year with $2-$3 million trading a day. Now we have over four months trading over $20 million a day. Now in December, already even exceeding $30 million a day.
With these new liquidity levels, we opened a door for many global investors, large assets and managers and funds, which couldn't invest in Aura before when we had a lower liquidity. Now they can stay or they are getting comfortable to start adding Aura to their portfolio. We're saying Capital World, BlackRock, Fidelity, TRS, and others. This creates a positive effect because we have also an opportunity now being listed in the U.S. and with this liquidity to be added to many potential indexes, which we are still not part of. 2026 is going to be a lot of our focus on being added into many of these indexes, which is going to reinforce the cycle. Being added to index is going to keep our daily trading volume high. Then it's going to open the door for more and more investors.
This is going to help. It's not going to be the only solution, but it's going to help also close the valuation gap that we have with our peers. Okay. So in short, yeah, we just saw our focus on capital allocation by returning substantial dividends and buybacks to our shareholders while investing in projects and acquisitions with high returns. Then we can pay the dividends without leveraging the company while keeping our costs at low levels with opportunities with new assets that are going to come online. And the opportunities now with increasing daily trading volume to bring even more and more investors and help to close the valuation gap we have so far. Okay. With this, I end my part, my session, and call Isabela. Thank you.
Thank you, Kleber. I am Isabela. I'm going to talk about our future, our people, and also sustainability actions.
This is the last session before we move to Q&A. And I would like also to give some examples of how we make this happen in ours, so how to balance this people-first culture with the high-performance culture. The mandala is how we drive our decisions. So we consider the impact in our employees, in the community, in the environment, in our partners, and also the investors. And the accountability with autonomy is a great; it's an important pillar of this people-first culture. So here are some examples to understand how it works in ours. When you arrive in our offices, in our operations, there are no walls, no separate rooms, open space offices. The communication style and the decision-making is much faster and considers everybody. There is no hierarchical symbols in Aura. You can see also the examples from operations and also the office in Miami or São Paulo.
They have the same layout. Another important action we have monthly: the senior manager has breakfasts to talk with the frontline employees. He can listen, understand their issues, try to find solutions, a very close and trustable relation with the frontline employees. We also include families in our events because we know when an employee moves to a different city, the family also needs to adapt to that new city. When we include the family in the actions, it's much easier. We also reduced our turnover to 50% from last year to 2025. This action was important to reduce this turnover. We also use the innovation as part of our DNA. We bring everybody to participate using AI solutions and bring solutions for real problems.
We had hackathon sessions in our operations, and it is a symbol of how we use innovation in our routine. The people-first culture considers also the transparency. The 360 Feedback is a central process to make sure we are preparing the next leadership pipeline to support our growth, and we are increasing, and it's a very major process. We have been increasing the number of people that are participating in this process. 100% of the leadership, 100% of specialists are evaluating and have their feedback to know how to grow and how to make sure they are making the right things to grow together with the company. As a result of this process, we have 80% of senior managers coming from internal promotions, and when we go to a level down, their leadership, we have 37% coming from internal promotions. We are working to increase this 37% number.
We have two important initiatives. The first one is the mentoring program. We have senior leaders developing young future potential leaders. It's a mechanism who is growing, growing year by year. We also have the training program who is being very mature also to prepare this new leadership for the future. The people-first culture applies also for the communities we are working. Sorry. I want to talk about the compensation policy. We reward great performers, and everybody knows what are the tools with transparency. We have, of course, our core benefits, but we also have three important benefits, three important tools to recognize the great performance workers: the high, high bonus, the short-term bonus, and the long-term bonus. Again, everybody knows how it works. It's easy to understand how I can arrive in that top of the performing work.
The community is also very important for us. We have more than 6,000 people working in our six operations currently. 65% of these people are local. We're hired locally. And we spent only in the three first quarters of this year, we have spent more than $127 million in the local with local partners. Of course, we are working to prepare better this community. We train year by year these suppliers to make them become our partners. And we also train people from the community to work within Aura. Oops. Sorry. There's something. Just a second. Yep. Sorry, there's just one slide missing, but no problem. I just wanted to close giving you three examples of how sustainability works in our routine. I wanted to talk about three different operations with three different times of life. The first one is MINOSA in Honduras, has been more than 50 years operating.
We are also thinking about how that community is going to be when we leave that community. One day, the mine is going to close like the other mines in our company. We are preparing the community testing grape seeds plantation for the wine production. It's a totally new activity for that region, but it's a way to give to that community a different economic activity. To be clear, more than 90% of that operation has local people working in that operation. The dependence level of this community is so high. We are really concerned about how this community is going to develop when we will not be there anymore. We are testing this new activity. We expect to have good results in the next year. The second example, the second case I would like to bring is the Borborema.
It's a super new operation. We just started to produce this year. We know the water is an issue for that region. The lack of water was a concern of the community. We now have a solution. We use the gray water. We treat this gray water, and we not compete with the community. We use 0% of the water that the community is of the water that is available for the community. In this way, we have water to produce, and the community also is not a problem for the community. And as the last case, Glauber also already said about a unity that is El Dorado, where we are going to produce in the next years. And we are already listening to that community. We are expanding this people-first culture not only for the employees, but also for the community.
To finish, I would like to show you a video that represents everything we have been talking about, and I'll be happy to discuss with you all these matters. Thank you.
We believe that what lies beneath the surface can transform what happens above it. It transforms quality of life, education, health, the environment, and tax generation. It transforms the future. We are Aura, a gold and copper mining company focused on the development and operation of projects across the Americas. In Brazil, we operate gold mines in Apoena, Mato Grosso, Almas, Tocantins, and Borborema, Rio Grande do Norte. In addition to the gold project, Matupá, Mato Grosso, and the copper project, Carajás, Pará. In Colombia, we have the Tolda Fria Gold Project. In Honduras, the MINOSA Gold Operation. In Mexico, the Aranzazu Copper Gold Silver Molybdenum Operation.
In Guatemala, the El Dorado Gold Project, along with corporate offices in São Paulo and Miami. Our mission is to find, mine, and deliver the planet's most important and essential minerals that enable the world and humankind to create, innovate, and prosper. Wherever we operate, we are guided by the Aura 360 culture mandala, which connects our stakeholders, values, and practices, putting people first, fostering respect and care for the environment and communities, and strengthening ethics and innovation to generate value for everyone we impact.
At Aura, we have three clear ways to generate value to our shareholders. Number one, develop the greenfield project that we have in our portfolio on time, on budget. Number two, intensify the investment exploration to increase our resources and reserves. And third, to continue to grow through acquisitions.
[foreign language]
[foreign language] We are a great place to work, certified in every country where we operate.
We continue to support women in mining, promoting respect and inclusion for women throughout our organization. Because for us, diversity brings different perspectives, strengthening our decision-making. [foreign langauge] It's no coincidence that Apoena has been recognized as the company that hires the most women in its region. At Aranzazu, Romana began as a cleaning assistant. She studied, dedicated herself, and through merit, today she operates the control room. In MINOSA Honduras, the Seeds of Hope Project is exploring a new vocation for the region: a vineyard, a positive legacy, and an economic alternative beyond mining. [foreign language] Aranzazu and M INOSA have been recognized as socially responsible companies.
Aura operates in line with the principles of the World Gold Council and the United Nations Global Compact.
At Aura, we believe in the unlimited potential of the human being. For that, we created the right environment for our employees to make their decisions and give their best potential. All the decisions understanding what will be the impact over the environment, the impact over the communities, and of course, to their own employees. This is Aura 360.
Well, very well. I think we are heading to the final part of the meeting. Just make very quick final remarks and then, of course, open the floor here for Q&A questions. Just remind what we've been sharing and what we've been delivering to the market. This is one of the highest growth stories in the market, number one.
Number two, not only the highest growth story, but with probably the highest yield on the new project that we are developing. We saw the returns of Almas at gold price $1,600. We saw the returns of Borborema at gold price $2,400. We just released El Dorado also with a leveraged internal rate of return of 80%. We are not only delivering growth, we are not only delivering high return projects, but we are also delivering the highest dividend yield in the world. Highest growth, highest yield on the project, highest dividend yield, and all of that with the highest ESG standards. We've been recognized as one of the most responsible companies operating in Mexico, operating in Honduras, operating in Brazil. I was also recently invited to talk at the United Nations about human rights.
Very, very few CEOs are invited to that forum that happened in Geneva two weeks ago, which is another recognition from the United Nations that we are definitely moving in the right direction. And what I like to say is that we are just in the beginning. This is a company that started the story nine years ago with $20 million market cap. We are now $3.5 billion market cap. And we are just in the beginning. The amount of value that we can continue to generate is extraordinary. And we'll do so with the highest ESG standards. For those that are good, that like to do calculations, I'll just invite you just to do a quick calculations. Last quarter, gold price $2,400, 74,000 oz of production, EBITDA $152 million. Gold price today is $4,200. And Borborema was not fully operational and commercial.
So if you add the new gold price, put the Borborema in full production, you'll see that we are already significantly higher than $152 per ounce. But there's another thing that happened. We just acquired MSG that is already producing for us. We closed the transaction last week. We don't expect a very high production next year, but we will already generate interesting EBITDA and cash flows. But then you add El Dorado, then you add Matupá, then you add the expansion of Borborema, then you add Almas, and not including new M&A. So this is a unique opportunity of the company that is just in the beginning of delivering extraordinary results to our shareholders. And we do so because of the team that you are meeting here. Of course, we have now with MSG 6,000 employees, but the amount of results they deliver is impressive.
This is by far the best team I've ever worked with, and still hiring new people, still improving ourselves. We are not the best, but we want to be the best, and we're working hard for that. Thank you.
So thank you for our attention. Now we are starting the Q&A section. I will invite all the management to join me up here, in the place, on the podium, and then you can receive the questions. Just waiting for the chairs.
The chair is good, but we can stand.
Yeah. First one. Okay.
Hi. Hi, everyone. Edgar from Itaú BBA. So maybe we can start with El Dorado. We saw the updated feasibility study today. Very strong numbers above the PEA. I want to understand, Rodrigo, how significant is the updated feasibility study in terms of securing the final permits for the project?
You mentioned that the only pending permit is a municipal one. Have you already submitted the request there? And how are all the social permits that you need? And also, when is the deadline for you to decide whether to proceed with Matupá or El Dorado? Because now you have Borborema completed, right? And probably 2026 will be a year with new projects. So probably you want to move further with any of those. So when is the deadline? And then I can do the second one.
El Dorado, we've been doing since early this year a lot of social work. On the framework for Guatemala country, it's already licensed and needs a local authorization to start, which they're required by law to grant to us. There's back and forth. We expect that it can happen anytime soon. Nevertheless, we continue to do social work.
Our decision will be very much based on how we feel the communities are supporting us. So far, so good. I think we've made significant progress. We had community leaders visiting our operations in Brazil. We had government officials also understanding more about Aura. So it's things that are getting together that we can make a decision anytime soon. Difficult to say when. If we feel we don't have the right environment to start the construction of El Dorado in the next two or three months, we're going to do it with Matupá. So we don't want to wait too much in order to make that decision.
Okay. Thank you.
The second one, Rodrigo, given your final remarks, we know that you have been generating a lot of money, very strong free cash flow generation, very strong growth potential, not only with the assets that you shared today, but also there are other assets within the company, Altamira, Serra da Estrela, and so on and so forth. I want to understand, Rodrigo. You shared that Aura is still trading at a discount to the peers, even to junior peers. So why do you think that? What could we be losing here? Why do you think that Aura is still at a discount? And what do you think we could do and you could do to improve further the valuation metrics here?
Yeah, that's a bit frustrating, of course, to be with the multiple behind our peers.
And we are changing the peers, which is a good opportunity for investors, right? It's not always that you can find those kinds of situations. It's a mixed feeling why this is. I think it's a new story. We've been growing so fast in the last year, last couple of years. Sometimes investors say, "Well, but I lost the run, right? You already came from $700 million that was three years ago, now $3.5 billion. I lost the run." And then I tell them, "Listen, see what's happening with our cash flows. It's growing even faster, right?" So it takes a while for investors to get more comfortable with those kinds of situations. There was a, I think, a variable that we had to address was daily trading volume. It's very good, $1.5 million for small family offices and small funds, but not enough for big guys and ETFs.
Now we are on their radar, and we had no coverage also in the United States in terms of equity research, and now we are improving this. Lawson is here also, so he's covering us, and I'll invite you all to take a look on the reports, and then you'll see the consistency of what we've been delivering, so down the road, I expect not only to close this gap of NAV, but we're changing the peers, so we still have a lot to do, and we talked about here 600,000 ounces that is already mapped or above, but we feel we can continue to grow with that high returns project, at least at a million ounces. That's what we are going to pursue.
Next, yeah, so Lawson Winder here from Bank of America. Rodrigo and team, thank you for today. This has been a really, really helpful update.
I think we've all learned a lot of insights about your company and how you guys operate. I wanted to ask about M&A. So congratulations on closing MSG. What is the company's desire to acquire further assets at this point going forward? And what opportunity sets do you see? Would you describe there as being a significant number of opportunities? And then just related to that, the hedging. So the hedging has resulted, and fully acknowledging you've done it for very, very good reasons, but the gold price now up $1,500 since the last time you put hedges in place or more. It's resulted in a drag on earnings. So with the current robust gold price environment, when you think of doing your next acquisition, do you think using hedges again will be part of that?
Okay, I'll answer the first one, and I'll let Kleber answer the second one.
In terms of M&As, we are clearly America players, right? Either Latin America, South America, or North America. You should not expect Aura to go to Africa or Asia or Australia. We feel that we have the Latin America DNA or North America, right? I wouldn't expect North America anytime soon because of these discounted multiples. Assets here are worth more than the Latin America, which is fair. But yet the gap of the multiples is too big for us. It'll be too dilutive to our shareholders. I think we have homework to do in order to narrow this gap in order to go to North America. We like either assets that are very close to engineering level or feasibility study, as was El Dorado, with no geological risk, or projects that are already in operation. So very good examples of what we've done.
The acquisition of Borborema, a project that was very close to feasibility study. We updated the feasibility study. We built and then we produced, and MSG is another good example, a mine that has been operating, and we saw room for significant improvement in resources and reserves and also adding value by reducing the cost. Either we acquire something that's close to construction or something that is already in production. Of course, the more we grow, the more you should see larger and larger assets, right? We wouldn't enter in projects that would deliver now 40,000-50,000 ounces. Probably we're now going more 50,000-100,000 or even over 100,000 ounces if we see very good, interesting value creation to our shareholders, right? We like both copper and gold, right? The fact is gold is way more fragmented. There are more opportunities in gold compared to copper.
That's why in copper is higher prices, lower returns, fewer projects. That's why it's very few ones that we entered in our earlier stages, Serra da Estrela, which still has a few years to develop and exploration, but that's on copper and can be sizable. Kleber, I'll let you answer the other one.
Yeah, on the hedges, just to put a context. So we don't do hedges on an ongoing basis of our business. At that time when we decided to enter in hedges for the Borborema project, at the time our cash position, we were a smaller company. We had a smaller production, less mines, and our cash position was roughly $100 million. We are making a CapEx decision of $190 million. So that was a big decision that if gold prices had gone into the other direction, it could have put the company at risk.
It was the right decision for that time to protect the company. As both Aura grew and also gold prices at new levels, we have more alternatives. Depending on the investment we're going to make, maybe we don't need to do hedges because if things don't go the way we expect, we have a much more robust company with several operations or a much more diversified company today than we were in the past. We have also alternatives instead of doing zero-cost collars or forwards, for example. We might analyze acquiring put options, for example, because now with gold prices over $4,000, so to protect a project. Taking as an example El Dorado that we released the feasibility study. The all-in sustaining cash cost is below $1,200.
So to guarantee a payback, you don't need to have a floor that is too close to the current spot price. So we might analyze alternatives if we decide, okay, it's prudent to do a hedge for a new project. We might analyze buying put options, for example. So now I would say we have more alternatives and we not necessarily are going to follow the same direction, considering our preference not to be hedged as long as then it doesn't put at risk Aura as a whole.
Hi guys, thank you for the opportunity. Thank you for the opportunity, Ricardo Monegaglia from Safra. I have two questions. First, to Rodrigo. I agree that you guys should trade above NAV because you have more growth, higher yields, higher returns, and also your approach towards risks.
And I think that balances that you don't have a flagship asset, but why not having both the returns, yields, and also a flagship asset? So I wonder if you guys consider that. And I understand Canada and the U.S. are restrictive in terms of valuation, but what about Mexico? A lot of things going well in the country, in the mining sector, so I wonder if you guys consider.
No, flagship asset normally costs a lot. If we find the flagship asset that the entry price is good enough for us to have good returns, of course we're going to do it. What we don't want is to overpay for flagship assets. Then it all depends on how you generate value on those projects, right?
If the flagship asset you have good entry price or have good optionality either to reduce the cost or to increase resources and reserves, maybe it'll be considered. Normally it's harder to find those, right? What we've seen in other projects is returns are so high in other places that yet we have not decided to that direction. Second question, you made with us?
Yeah, so the second question I have not asked, but to Glauber or Pitágoras, you have success with your creative engineering such as the sewage water treatment. So I wonder if you guys came up with ideas on how to tackle the challenges in MSG or even El Dorado that you could share with us.
Yeah, in MSG, what we expected is much more from the operational side, so improved performance. As I comment, so the main issue there is the bottleneck, the mine.
In the presentation, it shows pretty much clear that the tons feeding the plant is dropping along the next few years, so it means that the spare capacity is still there, and what do we see with those conversions in the resources into more reserves? With the same mine development that we have, we can access more ore than actually they are accessing and have more ore available to feed the plant. So if we do a roughly calculation, if we can increase the ton that we feed in the plant in 30%-35%, that is the lag between what they are doing right now and they did in the past, we can increase significantly the production. Even if we can feed a bit lower grade or something like that, but it's everything there. So it's just this is the main driving for our turnaround in MSG.
For sure, that structurally the companies Anglo used to manage in a different way: a more robust infrastructure, much more control as a big company, more bureaucracy. That is in a different way than we operate, and we are pushing down everything to the sites that we believe, and it's proven in the operation that we are already running that we can speed up the processes to take decisions that can bring more efficiency, and the bottleneck will be better production with lower cost. Fewer people, yes, but in the management side, a lot of things were done the way Anglo used to do in the corporate, and we are pushing to the operations. So from this support area and administrative mailing, we will increase that, but we can reduce on the other side in operation with better performance.
At the average, we should keep or reduce a little bit the headcount. Yeah, the main driver will be increased performance.
Related to the cash costs, what are the main levers you have in cash costs to be able to maintain your cash costs in the range that you're at now? And then secondly, in the 600,000 ounce production estimate for 2028, is it fair to assume a cash cost in the range that you're at currently?
Yeah, the way that we are being able to keep the cash cost in the level that it is right now, it's a lot of effort for sure. The main reason is the discipline that we are having, keeping things simple, and our strive for different alternatives. I showed here like in Aranzazu, for example, we are delivering results for the last four years.
So even with that, the team is still looking for opportunities to improve performance, to reduce costs as the continued miners that I commented during the presentation. It means that those kinds of things on a daily basis, like negotiation with the contractor, we always bring them to the table to share the risks and to be something helping for them, and help for us as well. So working in a partnership, besides in other cases that you just hire the service and let them operate, but we go into their management system, we share things with them. So it's much more a partnership. And we give to them some comfort that if something went bad, we can back to the table and discuss again. It's not something that once you sign the contract, for example, you need to live with that forever. So we are always negotiating with them.
They need to get their margin, but they can get their margin with lower costs as well. So it's the kind of mentality that we use to share with them. And the new projects like Borborema is the lower our sustaining cost and the lower cash cost that we have. And with the new project that is getting in, as Kleber mentioned in their presentation, so we will have the new operation that is come, we expect lower cash cost and lower our sustaining cost than the operations that are running right now. Maybe MSG will be a little bit higher than our average right now, but Borborema fully with lower cash cost will also reduce the total cash cost for Aura. And El Dorado, we expect a lower cash cost as well.
Thanks.
So yeah, I was going to ask that question, but another question is just quickly on Almas specifically, is the idea there to double production or to take the production up to a proportionate increase in the amount of the throughput, or would you be processing lower grades there with the higher throughput? That's just a quick question, right? Because you're planning on increasing the throughput to 2.5 million tons per year from, like, what is it, 1.75 or something now? So would the production go from the 55,000 to 75,000 ounces there when you do that?
Yeah, we are continuously improving capacity in the plant because the reason that when we changed the original feasibility that was in place when we acquired the project for 2 million tons, when we did the analysis, we had some concern about the capacity of the mine to deliver enough ore in the plant. And to optimize that and also to reduce the initial CapEx, we decided to decrease to 1.3. But right now we are proving that we can go further. So we are running the mine with more than 2 million tons of ore per year, and we see capacity to go even further. So it's why we are confident that if we increase the plant capacity, we can increase production. Remember that the ore from the underground has higher grade. It means that with fewer tons, we can produce more ounces.
And also the targets that we are exploring in the surrounding area or around the actual mine, we see potential to bring something with higher grade. So Almas is promising. So we understand that Almas has potential to be big, and we can reduce even more the cash cost and the sustaining cost.
And just to kind of turn the question around, because as a potential investor, they do seem kind of like average assets, like you're saying, and with a lot of potential and have to figure that out. But is there one that you would say has the least potential of all of them?
I mean, that might be a way because we hear about all of them that have some, but is there one that might have that has like a short life and you're getting ready to put it to go to the plant to do the grape seeds or that kind of thing?
I think where we see less upside potential until today is in Honduras. Although we can extend life of mine a couple of years or we're doing a re-leaching old pads, but compared to the upsides we have in the other projects, I think Honduras is where we are a little bit more limited. Although we continue to invest to understand the potential for, it's the same geology of El Dorado. So we are now, maybe there's some high grade, and we know that some high grade veins.
So we need to drill and see if there's potential for underground in that area. But it's so early stage that we don't like yet to communicate because the risk is super high of not having, right? Everything, again, everything we laid out here today, it's tangible stuff that's already been studied, analyzed with evidence that we can perform. You've seen that I haven't talked about the potential for underground in Honduras. We have not talked about Serra da Estrela, which can be an interesting mine. So everything that we are putting here is something that has very tangible analysis behind with very good evidence that it was going to be feasible.
Yeah, if I can add something on that. So if you look today, so for example, Apoena, we are producing 35,000-40,000 ounces per year.
So the management attention is the same or even higher than the other operations that are producing 80,000, 100,000. But when we do these analyses, for sure that we cannot just look in the actual performance. When we see the potential that has in the area, for example, to increase reserves, encourage us to keep the operation in this level that they are. And we know that in the next two or three years, we will get back to 50,000, 60,000 ounces. But it's still a lot of potential because it's a very prolific area.
The artisanal miners that are in the region, not in our areas, but in that region, it's always the meaning that there are good grades in that zone, free golds that we didn't explore to say that there is no potential to bring an Apoena to even the higher level of production than we had in the past.
Excuse me, I have two questions. Of all your heap waste, what percentage do you think you could recover into gold now? The old heap dumps. Everybody has some.
Yeah, we are investing in MINOSA because MINOSA, we have more than 50 years of operation there. They are piling in the same pad that we are using today. An inventory that we did with the historical information is around the 600,000 ounces there.
We understand that thinking in 15%-20% recovery of this ore can be recovered during the life of mine is there that we have more addressed that. The other operations like Aranzazu is more complicated. We try to study and analyze something, but we don't have too much success on that yet. And the other operations are new operations. So there is not that much history of tailings that was processed.
I thought I heard 50. The waste, not that the tailings dump, but the waste was not worked. MSG potentially has a lot.
MSG, we identify some old waste dump that have decent grade that can be feasible. So 15%-20%? In MSG, no. In MSG, we have some specific waste dump that we are evaluating and doing the estimation to understand how many gold we have.
Elsewhere, is it? I didn't understand.
15%-20% elsewhere?
In MINOSA, 15%-20%. And MSG.
600,000 or 15%-20% of 600,000?
15%-20% of 600,000. So 120,000 or 100,000.
Yeah. Okay. I misunderstood. And do you know what the cost might be per ounce? No, not yet. Okay. Here's my second bigger question. This happened last week, so I want to know what's going to happen in Brazil. No, not if, when. Zimbabwe increased the royalties from 5% to 10% and changed the taxable depreciation from one year to the life of mine. Every government in the world, including Lula's government, Trump's government, Carney in Canada, Sheinbaum in Mexico, want more money. Is there talk in Brazil yet of such a movement? Yet.
Well, all the government wants more money. And let's say that all leader, administration of any business, and government is a business, needs to raise revenues and decrease the cost, right?
Government sometimes doesn't like to reduce the cost, but also. So, this is to say that government in Brazil has talked about raising royalties for over 20 years. That's not new. Over 20, 30 years. Every time there's a change in government, they talk about raising royalties. But if you look back in the last 16 years, there was probably two or three rounds on the Senate, on the House. And at the end of the day, royalties were raised from 1%-1.5% or 0.75%-1.2%. So there has been some raises, but not significant. And in countries, that's why we like some well-established democracy. It's not a government decision. It's not the president's decision. It needs to go through the Senate and the House and the discussions happen, and the whole government then balance.
If you should raise, they're going to be too much, and the investments are going to be low. So the fact that this has been tried, the government has, Brazil has tried many times, and the result is, yes, some raise, but not significant. Has not been significant raise, right? We're talking about 1.5%-2.2%, 0.75%-1%. So it's right. But you should expect those kinds of initiatives in every country, every country.
All right. Thank you. Graham Tanaka, Tanaka Growth Fund. Your revenues are in hard currency, dollars. What % of your costs are in sort of a soft currency, and to what extent is that a benefit for you every year? And I'm just wondering what the inflation rate is. It's much higher in Brazil, etc. So how does that balance out? Thank you.
Yeah. So it depends on the jurisdiction.
If you take Honduras, they have mostly a fixed rate as well. Most of the cost is dollarized. In Mexico, it's about 50-50, no? And I think in Brazil, it's mostly in local currency. 75%-80% is in Brazilian reais. And then outside Brazil, it's more and more half and half or more in dollars.
So you have that in terms of cost pricing. You have that benefit every year of a cushion of some sort. I'm just wondering what the inflation rate is for labor, etc., in Brazil, etc. And to what extent do you have to overcome that to maintain all-in sustaining costs? Thank you.
Is it for good or for bad, right? If the exchange rate is good, if it devalues, it's bad for us.
But in the end of the day, if it happens, high inflation means that the currency is going to devalue compared to the dollar. And the interesting thing that's happening now, that I'm not sure if everybody's following, but with the devaluation of the dollar, the currencies of developing countries have appreciated compared to the dollar. But that's because dollar is devaluing and the gold price is increasing. So overall, I think you cannot be more protected against any kind of inflation, devaluation, local currencies by investing in gold.
Thank you. My other question is, I'm just wondering in general, you've got a lot of moving parts, but what the internal rates of return on prospectively for M&A versus internal projects like exploration? Thank you.
Yeah. So in general, we look for at least 20% internal rate of return in general for new projects.
Of course, we adjusted that depending on the risk. And this is looking usually long-term consensus prices, not spot price. The higher the risk can be either in terms of, okay, one acquisition that is going to require significant turnarounds or depends on the jurisdiction, or if it's a greenfield that we have to build, the higher we try to push this 20%. So this 20%, I would say, is the minimum. But if you take the investments we did in the last four or five years, all of them were way beyond above the 20%. So again, I think it depends. Internal, usually it seems, for example, if we're talking an internal, which is a greenfield project in a new jurisdiction, that's much riskier. If it's expansion of production capacity in Almas or Borborema is much lower risk. So it depends a lot. Internally, usually seems more comfortable.
But if it's a greenfield in a new jurisdiction, not necessarily.
We take a very holistic approach on risk and return. We just don't say 20% and above, right? It depends on risk assessment. Each project is individual. I think that's where you see all maybe differentiating. And we know that some projects you can accept lower returns, but others you need to be higher returns.
Just going back to the hedging issue, right? Today, my partner just priced it. You could lock in $3,000 minimum price over the next 12 months and give up $50 if the price goes over $5,000. Zero cost. Now, you have a low AISC, $1,200. But if you look at $3,000, you have to understand a year ago today, the price was $2,500. And we were never over $3,000 except for the last nine months.
I don't think this is a bubble in the gold price. I think that the gold price doesn't go back to $3,000. But this sort of catastrophic insurance where you're giving up 1% or your policy is costing 1%. And if the price did fall, say to $3,800 or $3,700, as some people think, you could always sell that, put back for several hundred dollars, additional profit. Does that not make sense financially?
To acquire, let's say, an option for $3,000, for example, to hedge against downside risk. We don't speculate on where gold price is going. And like I said, we understand we should be exposed to gold prices as much as possible because our investors, many of them have a positive view or have a leaner view on gold price.
Individually, each investor can, the investor can itself buy instruments, okay, to be long on the company, short on the commodity. We leave that option for the shareholders. We just buy this kind of insurance because a derivative is an insurance and has a cost. Historically, we just have done when we have justifications to show, okay, this is a very big investment for the company. If things go in the other way, can put the company at risk, then in those situations, we do hedge. Other than that, we leave it for the investors then to hedge themselves if they have a similar view, for example. Thank you. If I could just wanted to ask one follow-up question, and that is, as we approach year-end, you guys are doing a lot of work on your reserve and resource statement.
We've seen one of your peers, El dorado. They increased their gold price assumption by 17%. Got a nice benefit from that on a couple of their assets, giving them the ability to extend those mine lives. Have you guys gotten to a point where you've made a decision on what your year-end gold price assumption will be? And are there any assets that might stand to benefit in terms of a potential life extension from a higher gold price assumption?
No. He asked if we have extra room to increase resource and reserves by increasing the gold price in our projections and decreasing the cutoff. Yes. There are some interesting rooms. Depends on asset by asset. They're not the same. Depends if the grades are very fast or has a more tail curve. But we do have room to increase resource and reserves by reducing the cutoff.
I think El dorado is a very good example. What can happen? We come from a million ounces of reserves to 1.75 million ounces of reserves by doing not only this, but also reworking on the mine plan. So yes, that will be. But we do not manage on the yearly basis on the operations with that cutoff that is on the Technical Report, which is 2.2-4.0. When we go to the mine, we know that the gold price is $1,300-$1,350. We already replan according to that. And then if it's low grade, but still viable, we put in a inventory. That's why you'll see inventory also growing up in Borborema. You saw that also in Almas. It's because we're reducing the cutoff. We have a lot of what was waste in the past, now it's not. It's an inventory of a low grade. So that's happening.
Another effect that might happen sometimes is, depending on the mine, when you reduce the cutoff, it means that you increase resources and reserves. But at the same time, you reduce the average grade. That will have a negative impact on our All-In Sustaining Cash Costs. But that's because we chose, right? But we will try to keep our All-In Sustaining C ash Costs at the same level and then start bundling high grade with those lower grades in order not to dilute too much the grade.
That's a high-class problem if you're only based on gold at 4,000.
It's a good problem to have, right? It's a good problem. No. No. No. Very well. So again, thank you for being here. And thank you for the team for the great presentation. It's extraordinary what we've been achieving. And we are just in the beginning. Thank you.