Okay, good morning, all, again, thank you for being here with us to, so that we can explain and go through the quarter's results. As we already predicted, now we go through this was very important quarter for us. Despite a weaker production that was already projected, we generated cash flows. We are moving significantly forward on the projects that I'm going to, to share with you. First, going to the results and the production by itself, as we already released in early July, the production of this quarter was close to 48, 48.5 thousand gold equivalent ounces, and that is lower than the first quarter, mainly because of EPP, when during last quarter we assessed lower grades.
This was already projected since the beginning of the year. We knew that this quarter would be weaker in EPP, and that we will be reaching higher grades in Q3 and in Q4, significant higher grades. I'm gonna show you that's exactly what happened in 2021 and 2022. In 2023, we should also have a strong Q3 and even stronger Q4, not only by higher grades in EPP, but also. We expect the start of commercial production for Almas very soon, plus a gradual increase in Honduras and a stable production in Arantzazu. We maintain the guidance for EPP despite this weaker quarter, as it was already planned.
Again, for those that are, invest in Aura, now, recently, mining gold, different from other, for iron ore, for example, you sometimes you reach higher grades and lower grades. The grades are not very spread out equally, on the, on the, on the site, so sometimes you will have higher and lower grades. This is very common in gold, companies, and of course, the more assets you have, this will be smoothed out, and we are growing number of assets and producers, so we should see this movement smoothing out along the next years. In Sa n Andres, we had, we continue to increase production, we continue to improve the productivity in the site. If I remind everybody, the, the last quarter of last year, we produced close to 12,000 ounces.
First quarter of this year, we produced 14,000 ounces, and this quarter, slightly over 16,000 ounces. We are gradually improving, and we should continue to do so, move to 18,000-20,000 ounces of production now in Q3 and also Q4. However, as we had a more challenging start of the year in San Andres, this ramp-up is according to our expectation, but we started at the lower range. In the end, this will affect our production guidance for the year. We are changing the guidance of the year for San Andres, around 10,000 ounces. Now with the guidance is to be close to 62,000-69,000 ounces for the year.
Understanding that we will continue to improve, and the Q3, Q4 will be higher production should be higher production than Q1 and also Q2. In terms of EBITDA, Cleber will go more in details. We reached $26.6 million, which is lower than the last quarter, mostly because of EPP, that we reduced production by grades. San Andres, we increased production, and in Arantzazu, now we are very stable as well. In terms of all-in sustaining cash costs, we had a few different variables that affected the all-in sustaining cash costs.
Number one, the lower production affected our all-in sustaining cash costs, it increased by 3% our guidance on the middle of the range because of the lower production expected for the year in San Andres. In other hand, the valuation of dollar against mainly Mexican peso and Brazilian reais. In Honduras is more linked to the dollar. There was no significant devaluation, in Mexico and also in Brazil, there was a devaluation of the dollar that also affects our costs, and it increased, impacted by projected for the year by 6%. We are reviewing the guidance of our all-in sustaining cash costs on the middle of the range by 9%, being 3% due to lower production in San Andres, and 6% because of exchange rate.
As to, as the metal should react, once you have on the, on the, on the top line, if we increased the cost in U.S. dollars because of the valuation of dollars, on the other hand, the gold and copper prices has also appreciated compared to what we had, predi- pre- forecast at the beginning of the year. In the end of the day, either gold and copper is working against protecting the valuation of dollar and also, inflation.
Despite this weak production, that we projected for this quarter, when you see the results, we continue to have a robust cash flows from operations, and that gave us an opportunity to fulfill our commitment to our shareholders to pay the dividends, which we paid $10 million in June as a dividend to our shareholders. Now, according to the Q3 and Q4 results, we should also be paying, by the end of the year, a new dividends, as we are now committed to pay twice per year our dividends to our shareholders. If we move a little bit from the results on the quarter, and now we see what is happening, on the projects or development, on the value creations that we're doing to our shareholders during the quarter, this was very important.
Number one, we finished, in Q1, we finished the construction of Almas on budget and on time, you know, in a moment that the whole world was a scarce of products and labor, and many project was delayed, we could fulfill our commitment to be on time and on budget. Not only that, the ramp-up has been very satisfactory, and we're already operating above nominal capacity in only less than 4-5 months, when we should be declaring commercial production for Almas very soon. We are already operating at nominal capacity, and also, the recoveries on gold has been also above 90%, 92%, sometimes 93%, we are feeling very comfortable to declare commercial production very soon.
Almas is going, moving forward as expected, and we should be delivering the results and commercial production soon, and we will be added to the results in EBITDA for the second semester. Number two, Borborema is also moving forward according to our expectations. We are about wrapping up the numbers for feasibility study of this project, and we should be announcing soon. Not only that, we already started some land works to prepare the site to receive the investments. Two, we are closing the funding very soon to start the to the construction. To the market as we move forward in the exploration process for all our projects. Before I get to the numbers, in terms of safety, very important, we continue in Q2 to have a zero lost time injury as we had in Q1.
In either in Almas, in EPP, it's been one year with no also lost time injury. In terms of stability of the structures, every month, we have external review on our geotechnical structures, and all the geotechnical structures are audited by a third party, has been at a satisfactory level for all our structures. When we compare on the left side of this slide, the production, we had the Q2 49,000 gold equivalent ounces. As you can see, in Q4 2021 and Q3 2022, Q4 2022, we once we reach higher grades, we will be increasing production by Q3 and then Q4. We should expect now the lowest the last 12 months, and then we start going up in the upcoming quarters.
On the right side, as I mentioned earlier, we see that the, the decrease compared to Q1 production, gold equivalent ounces from 53,000 ounces to 49,000, came mostly and exclusively by EPP when we reached the lower grade. In EPP came from 13,000 to 7,000, and then we should be reaching a higher grades above. Should they expect to be 20,000-25,000 gold production on the, the upcoming quarters, if not more. In Arantzazu, we are very stable production, despite changes in, in the prices of gold and copper that affected negatively, the production was somehow increased so that some offset these lower production. We are very even in terms of production of Arantzazu. It should continue to be very stable.
In San Andres, again, we're coming from 12,000 ounces of production per quarter, 14 last quarter, first quarter this year, and then now 16, and this should be reaching 18,000-20,000 now, gold equivalent ounces in, in the upcoming quarters. In terms of all-in sustaining cash costs, as you see in Q2, we had an increase compared to Q1. This increase comes from two variables. Number one is the lower production in EPP, as we could see 7,000 ounces, and this will be reduced as we will increase the grades during Q3 and Q4. The second variable is the devaluation of the dollar, so that also impacted our all-in sustaining cash costs, mostly EPP and then the valuation of the dollar....
In terms of the guidance, and here we gave a lot of information. I'm not going to go through all the numbers here, but everybody feel free to access this presentation that will be on the website. I'll give the main message that we are reviewing the guidance for the year for consolidated production, more exclusively by the challenges that we had in San Andres in the beginning of the year. The ramp up now, it's at the lower, started with the lower production, but now it's moving according to our plans, and we should continue to increase. We are revising the guidance by 5% only for the year, despite the challenges that we had in Honduras.
That lower production in Honduras has impacted our, our, our cash cost. We implemented significant measures to reduce cash cost and somehow offset the higher cost coming from lower production. If we use only the same exchange rate and compare, our all-in sustaining cash cost is increasing by 3% only, while the production was 5% lower. Then we have the impact of exchange rate, either in Brazil and also in Mexico. That impacted, again, additional 6%, as I mentioned earlier, in terms of our all-in sustaining cash costs. Now we are projecting the guidance for cash costs from $897-$973, and all-in, $1,162-$1,261.
Understanding, now with the, either Almas, Borborema and Matupá, all of them has all-in sustaining cash cost below the average that we have today. We should see the new projects coming in and moving these all-in sustaining cash costs at the lower production. These numbers already, we've put us on the second quartile. We want to be even lower, but the whole industry is moving up, and we've been able to somehow control our cash costs to keep our company, to keep our at the second quartile. In terms of CapEx, we had a previous guidance, $80 million and $93 million. Now we have $85 million-$95 million.
We are already planning some expansion in, in Almas and some other mine development for Almas, so that increased a little bit. We are aiming to achieve a higher production in Almas very soon. As I mentioned, we are very proud what is what we've been delivering in Almas. We already have over 1,000 employees. 55% comes from the very close area, 80% from the state and the regional states. We've been investing significantly in training local team. We also took some of the managers to EPP to learn, and they came back, and they are running this plant very, very satisfactory, and they are contributing significantly for us to have this successful ramp-up.
I would highlight again that we reutilize 100% of the water that is on the tail end, come, come back to the, the production. Occasionally, due to evaporation, we will access water from the river, but that will not be more than 10% of the total water that we, we use. The, the start of ramp-up was in April. 16 months, actually it was 14, because the first two months we waited because of the heavy rains, and now we are out, which is among the, the, the fastest plants to be in the mine to be built in the world. Till now, we are above the theoretical curve in terms of ramp-up, also setting new, new benchmarks to the market, once we should be declaring commercial production in the upcoming weeks.
As we can see in the numbers on the left side, are the production per week at the plant. We are ramping up very fast since June. In late June, we already reached over 20,000 tons, and then gradually improving, and then now in July, above 25,000 tons, 26, and last month, 24.7. The nominal capacity depends a little bit on the month, but it will be around 25,000 tons per week. In terms of tons per hour, the nominal capacity is close to 160 tons per hour.
As you can see on the right side, in the last one, two, three, four, five, six weeks, we are already operating above our nominal capacity in terms of tons per hour. We, we started increasing the grades and to see the reaction in the recoveries, and now we've been seeing the recoveries at 90, 92, 93%. Very, very much in line with what we expected. That give us comfortable to maintain and look carefully the next two weeks, and then declare commercial production if that continues to be very stable. Cleber, I'll turn the floor to you.
Excuse me, Mr. Cleber, could you please open your microphone?
Hello? Can you hear me?
Yes. Yes, please proceed.
Okay, thank you. Good morning, everyone. Now we're gonna share a summary of the main financial results. On this page, we bring the main financial KPIs the company tracks. We have the results for the current quarter, the last few quarters, and accumulated the last 12 months at the end of each reporting period. In line with what Rodrigo was explaining, was a more soft departure in terms of production, mainly due to mine sequencing at EPP. We see that reflecting in the results of the quarter, with revenues achieving $85 million and adjusted EBITDA, $27 million at the second quarter. Despite the challenge, we still reported a positive net income of $11 million on this Q2.
Regarding the cash and net debt position of the company, we still ended the quarter with a strong cash position of $110 million, after paying $10 million in dividends in June and investing $21 million in expansion during the second quarter. The net debt achieved $114 million at the end of this quarter, and we'd like to highlight again, this is probably we're seeing the peak in terms of the relationship of net debt and adjusted EBITDA. Now, with Almas very close to declaring commercial production, which is gonna add additional cash and EBITDA for the company. Also, with improvements of grades at EPP, in the next few quarters, we should see the trend changing with a reduction in net debt and a improvement in the EBITDA.
Here we present an analysis showing the main items between the adjusted and adjusted EBITDA and net income of the second quarter. As we saw previously, adjusted EBITDA was $27 million. For the second quarter, we highlighted again the performance of Arantzazu, has been consistently a strong performance, both in terms of production, cash cost, and also EBITDA, was our highest EBITDA in the quarter, $18 million. Another positive note on San Andres, in the last two quarters, because of the ramping up of production, the EBITDA was very low. Now it's back to $11 million, although has not reached its full potential, but still, we're at a positive note. EPP, $3 million in EBITDA, despite the lower production due to mine sequencing.
Moving to the other items, amortization and depletion expenses at $11 million and financial results of $3 million came in according to our expectations and really consistent with what we have seen the last few quarters. In terms of other results, the company is recording a positive $3.4 million gain in the second quarter, which is associated with a promissory note Aura has in its favor. The outstanding value of the promissory note is $12 million between principal and accrued interest, which we expect to collect this month of August. Before Aura had recorded in its balance sheet $8.6 million associated with the expected receivable of this promissory note.
Now considering we're very close to collecting it, we're recording the additional $3.4 million. Again, more than the accounting impact, the positive note is there will be a non-recurring flow of $12 million to the cash of the company during this third quarter. Net income tax expenses of $2 million, consistent with the results, bringing net income up to $11 million at the end of the quarter. Finally, we bring again, as in every quarter, a detailed analysis with the change in the cash and equivalence of the company through all the quarter. On the far left side of the page, the cash position at the beginning of the quarter at $103 million.
In this left side of the, of the page is what we call adjusted free cash flow to Firm, which is the free cash flow to Firm generated by the three mines in commercial production, not including investments in expansions of the business. That portion of the business, despite a, a weaker quarter in terms of production, we did generate $50 million. Then in the middle of the chart, the investments for growth, we invested $7 million in exploration. As a reminder, this year of 2023 is the, the, the year we're investing the most in exploration to increase our reserves and resources and life of, of mine of the company. We're seeing substantial investments, quarter after quarter.
Expansion CapEx of $21 million, which is mainly related to the final phase of construction of Almas and capitalization of ramping up costs. This number should reduce significantly for Almas from Q3. More to the right side of the page with the financial items, proceeds from debts of $30 million related to the ongoing liability management of the company, and the dividends that we paid at the end of June, $10 million, bringing the cash position to $110 million at the end of the quarter.
With this, we end our presentation, open to questions. Thank you.
Thank you. We will now begin the question and answer session. If you have a question, please raise your hand on the platform. We also receive questions from the webcast. Our first question comes from Mr. Edgard Souza, Itaú BBA. Please proceed.
Hello, everyone. Thank you for the question. My first question is about Borborema. I know that you are still working on the feasibility study, but if you could give us some qualitative information about the project, it could help us. Are you already proceeding with pre-construction works at the site? When do you expect to start with the construction, and how long do you expect the construction to take? Still on Borborema, if you could please provide some color on the expected timeline for the CapEx of the project. How should we model the CapEx for the project? I mean, which % of the total CapEx is expected to be disbursed in 2023 and in 2024? My second question on Honduras. Congrats for the stabilization of the production in Honduras.
I think this is an important milestone for this operation. My question goes more to the medium term. At which levels do you expect production in San Andres to stabilize ahead? That's it from my side. Thank you.
Okay. No, thank you. Thank you, Edgard. First, Borborema. We cannot yet disclose the precise numbers. We are wrapping up the feasibility study. It's coming in the next couple weeks. Then we will be releasing all the financials of this project, and then later on, we will file the full report on 43-101. What I've been sharing, and it's very important to mention is, number one, we already-- as you asked, we already started the land works, preparing the site, and we continue to do land works, preparing the site for the investment. We also order the mill, because the mill was the bottleneck in terms of delivery. That is, what would be struggling if we were not ordering.
The mill will be delivered by the end of 2024. Production coming in the end of 2024, but mostly now in 2025. In terms of... I will also add, because I saw there's a question that from Rona about the CapEx. We are in inflationary pressures, right? We, we could see some of these movement, inflationary pressures, and also impact on exchange rates on the CapEx. As we did for Almas, we are working very hard in order to optimize the CapEx so that we can maintain or if not reduce what had Big River project earlier. We are now in this direction. We already revised the mine plan, so everything is coming together as we expected.
We'll be releasing the feasibility study together with the pre-economic assessment of extension of production. All the feasibility study is being done for 2 million tons per year. However, as I mentioned to the market, this project has already close to 900,000 ounces of reserves, but could be double of this if we remove one road, few kilometers, and also get more water access. We are doing feasibility study with the 2 million tons, with 900,000 ounces of reserves, despite over 2 million ounces of resources and reserves.
On the year three or four, after we projected, and we are already taking all the initiatives in order to ask and get more access to water and also to move the road. We believe that in three years, it will be accomplished. The PEA will access our 3.5 million tons, more or less, of production on year three and four, and that will significantly also increase our gold production that year. This is coming in line, and again, coming very satisfactory. The precise numbers, Edgar, we'll be disclosing to the market in the next couple of weeks.
I ask you to stay tuned, then we also do a call with the analysts to explain in more detail about this project, which is a very important for our, you know, growth path. You asked about San Andres. San Andres, we should continue to increase production to 18,000-20,000 gold equivalent gold ounces per quarter. As you compare to 2021, we are now somehow lower average grades compared to 2021, so we should not see on running rates if we don't expand capacity. With this capacity, we have already reached 80,000-90,000 ounces production.
We should not be at that level on the running rate as we are today. We should be around 70-75, 65, 75 thousand ounces of gold. We are doing now, start some exploration in other areas to understand the potential to access higher grades and to understanding the potential also for to expand the capacity of the plant so that we could then increase also production. At these running rates and the capacity that we have now, that will be at the range.
Okay, thank you. Thank you very much, Rodrigo and Kleber.
Thank you. Our next question comes from Victor Shen, Safra. Mr. Victor Shen, your microphone was activated. Please proceed.
Hi, Rodrigo. Hi, Kleber. I don't know if you can hear me?
Yes. Yes.
Okay, great. I'm not sure if the, if the camera's working, but I'll, I'll go ahead. Thank, thank you for taking my question, Rodrigo and Kleber. I have a question on Almas. Hi, Rodrigo, Kleber.
Yes.
I have a question on Almas. I had a few technical issues, sorry if the question is a repeat. Almas is close to reaching commercial production, and I, I'd like to know how, how is the operation ramping up? Is everything according to expected? We have the production contribution for Almas for 2023, I wanted to know what we can expect for the annualized production for Almas, if possible, to disclose. My second question is on Borborema. You, you guys mentioned in the release the longer-than-expected delivery times for a ball mill, which is pushing the startup of Borborema to the beginning of 2025. I'd like to know some more detail on that, because it seems like this was not your fault.
This was due to external factors, so I just wanted to for you guys to touch on that. On the subject of the withdrawal of the 2024 production guidance, was this delay in Borborema the only factor, or were there any other factors in that decision of the withdrawal of the 2024 production guidance? Thank you.
Okay. First, Almas. Yes, it's actually the ramp-up, it's above our expectations, in terms of the last three to four weeks, in terms of production and also our recoveries. That makes us very comfortable to think about the commercial production very soon. Actually, we were expecting to do that by the Q3, as we projected, the end of Q3. Now, we can push more to do this now in August. The production on Almas, on the project and the feasibility, take us on the annualized production of 50,000 ounces of gold to be yearly per annual production. We are...
As I mentioned earlier, we could see, we already saw some opportunities to increase production, so we are now investing so that we can see what could be a higher production for next year. But yet, the 50,000 is the annual annualized production for for Almas in the first three to four years. But after expansion, that can increase. You mentioned about Borborema. Yes, the sole reason that the production is pushed to very, very early 2025 is the delivery time for the mill. That should be delivered by the end of 2024, then you need to install, start some preliminary tests so that we can start the operation and the ramp-up in 2025.
The, the, the, the single reason that we withdrew the, the projections for 2024 is exactly this. This is only because of Borborema being delayed by two or three months, and we were projecting to start production by late 2024. Now, it's early 2025. That's the only thing that affect. Also, we are reaching close to the 2024 guidance. We are now by the, the end of 2023, and by when we finish the result of Q4, then we will give the guidance for 2024, as we do annual, annual based. The, the, the reason that we withdrew is exclusively because of the Borborema lead time for the, the mill.
Great. Thank you, Rodrigo. Thank you, Kleber.
Thank you. Our next question comes from the webcast, from Roman Rossi. Good morning. Thanks for taking my questions. I have a couple, if I may. Regarding Borborema, you mentioned that you are expecting to make the investment decision shortly. Are you expecting to have the financing in place during 2023? Can you give us some more guidance on CapEx or how it compares to the existing technical report, particularly considering the FX and inflationary pressures?
Thank you, Roman. We cannot yet disclose the numbers. We are wrapping up. As I mentioned, there was some inflationary pressure. There's some impact on the exchange rate. On the CapEx, on the other hand, we saw opportunities to optimize as we did in Almas. We don't see major changes compared in terms of CapEx, compared to the latest number that Big River disclosed. We also revealed the mine plan. We also looked in other alternatives in order to optimize. Most importantly, we also could see, and we will prepare this plant, and as we did Almas, very flexible with the 2 million tons, and then to increase to 3.5 and more in the year three and four.
There was a second question that he made that I forgot here. Can you- Did I cover everything?
About hedges. On hedges, no?
hat we do, Roman, is, as we did with Almas, we like to guarantee the payback of the projects. So in Almas, we could see the payback on equity in one year, and the payback on the full project, including the debt, in two years. So we hedged the first two years of production in order to guarantee that either our equity investment is going to have the return and also the debt is going to be paid. And we should apply the same logic to Borborema to guarantee the payback of this project at reasonable levels of price of gold. We normally do hedges as our zero-cost collars, and that's the idea that we are already exploring to do for Borborema.
In terms of funding for Borborema, yes, we, we should announce construction, together with the funding, guaranteed for us to proceed, with the project. That will be a full package that we are preparing with the feasibility studies funding, and also the returns to, to the project.
Thank you. Once again, if you have a question, you can click on the icon Q&A on the platform, and then you can raise your hand. You can also send questions through our webcast platform. Please hold. Our next question comes from Terence Orland: Can we speak about inflationary picture on operation, labor, and for supplies and services?
We... The, the inflationary pressure that we felt mostly was 2021, 2022, and 2023, it seems to be more. The, the, the impact we had on the cost was mostly because of the devaluation of dollars, and we published the numbers in dollars, while part of our costs are in Brazilian reais in Brazil, and part of the costs are in Mexican peso. We don't see very high inflationary pressures now, along the year of 2023. Kleber, do you have anything to add?
No, I agree. I think that the pressure in 2021, 2022, where we implemented most of the initiatives to fight back inflation. What we are seeing, it's less inflation, more for effects impact, the appreciation of the Brazilian real and the Mexican peso, which is on the other hand, being partially caused by our weaker dollar, which is also contributing to the increase in metal prices as well. Other than that, I think no, no, no major inflationary pressures.
Thank you. Our next question comes from Philip Lehan: How is the debt amortization schedule being addressed? We see a significant amount to be paid off in less than one year.
Kleber.
Yes. It's our, we work with local banks and with different many banks in each jurisdiction. Historically, we have had a significant portion of the maturities in the short term that has been even improving in the last three or four years. Every year, we have been able to push the debts a little bit longer by doing liability management with the local banks. What we are doing right now as we speak, we did some in Q2. I showed that we raised $30 million for the liability management.
Let's keep doing the same program, working with the local banks in each jurisdiction, so that we can take advantages of both the capital liability and the tax shields, and doing the liability management in each term that we do the liability management, we push the debt a little bit longer. That's not a concern for us.
Thank you for the questions. Now, I pass the floor over to Mr. Rodrigo for his final considerations.
Okay. Thank you all for the earnings call. We reinforce, despite a weaker production, as we predicted for this quarter, we produced a healthy cash flow from operations that allow us to continue to invest and also to pay dividends. As I reminded, our case since the IPO we did in Brazil is to generate value to our shareholders by number one, growing production and implementing the greenfield projects. Number two, increase resources and reserves in all the mines that we operate. Number three, while we can also pay dividends. We've been growing production. The project is being delivered. Almas is there. We started the ramp up on time, on budget, and we expect very soon to declare commercial production.
Two, we are moving forward with the Borborema project. Numbers should be coming in and published, very soon. While we continue to develop Matupá. Our long-term project, despite this 5% review on guidance, the long-term view in the company is being very consistent, and we reaffirm our guidance to be at the 450,000 ounces of gold equivalent production, annualized by end of 2025. I thank you all, and then I would invite you to stay aware, stay tuned. We hope to be delivering news in the upcoming weeks. Important news, as we were questioned here several times about Borborema and also about Almas. Thank you.
Thank you. We now conclude the Aura Minerals' conference call. Have a nice day.