Lundin Mining Q2 2023 Earnings Call Transcript

Quartr
Provided by Quartr
August 3, 2023

There are 10 speakers on the call.

Operator

Good morning, ladies and gentlemen, and welcome to the London Mining Second Quarter 2023 Results Call and Webcast. At this time, all lines are in a listen only mode. Following the presentation, we will conduct a question and answer session. This call is being recorded on Thursday, August 3, 2023. I would now like to turn the conference over to CEO, Peter Rockendale.

Operator

Please go ahead, sir.

Speaker 1

Thank you, operator, and thank you, everyone, for joining today. I will draw your attention to the cautionary statements on Slide 2, as we We will be making several forward looking statements during the prepared remarks and likely during the Q and A as well. On the call to assist with the presentation and answer questions are Tyler Polson, our SVP and CFO and Juan Andres Morel, our SVP and COO. Beginning with the key highlights for the Q2 on Slide 4. We delivered solid operating results across the portfolio, producing nearly 95,000 tons of copper equivalent metal.

Speaker 1

As planned, production continues to be modestly weighted to the second half of the year, and we are tracking at or above the midpoint of guidance for copper, gold and nickel And at the lower end for zinc. We completed the Casaronis acquisition early in the Q3. The operation had a strong first half for the year 70,000 tons of copper on a 100% basis and generating approximately $120,000,000 in cash. Caserone's is off to a solid start for Q3. The winter season in Chile usually runs from late May to late August.

Speaker 1

And so far, Caserone's has yet to experience any seasonal or winter weather impacts. With the 2nd quarter results, We have improved cash cost guidance for Chapada and Zincgruvan from realized savings, lower consumable pricing and byproduct credits. We generated attributable net earnings for our shareholders of nearly $60,000,000 and adjusted EBITDA of over 160,000,000 These results were achieved concerning lower metal prices during the quarter and impacts of adjusted realized pricing. Adjusted operating cash flow was over $110,000,000 Including the release of working capital, operating cash flow totaled nearly $195,000,000 Our balance sheet remains very strong with approximately $1,600,000,000 of liquidity today. As Tiger will speak to, we continue to realize the benefits from our foreign exchange hedging program with approximately $14,000,000 of gains realized in the Q2.

Speaker 1

In addition, the mark to market value of the remaining hedges has a current value of over $70,000,000 In April, we also initiated diesel hedging program to protect the operating cost structure at Candelaria. With yesterday's financial results, our Board of Directors maintained our peer leading regular dividend of CAD 0.09 per share for the quarter or $0.36 on an annualized basis, which is roughly a 3.1% yield. As announced, We're very excited to have closed the Castoronius acquisition early in Q3. Immediately after announcement in March, We established an integration team, which has been extremely effective and has allowed us to have a very smooth transition during closing. The same team has also been outlining the numerous synergies, which we believe we will start to capture this year.

Speaker 1

It is clear that many opportunities exist for synergies, especially with our current operation at Candelaria and in the future with Jose Maria. We continue to advance our Jose Maria copper gold project With much of the focus in the Q2 on several optimization and trade off studies, while on-site also upgrading roads and completing the camp facilities. Discussions with a number of parties continue with respect to potential future partnerships. At Candelaria, Study work evaluating the expansion of the underground mine to add roughly 20,000 tons of copper per year has been completed. We do require approval of our 2,040 EIA to proceed, at which time we'll ensure the economic study is reflective of any changes.

Speaker 1

In short, we delivered a solid operating quarter and are pleased with the improved operational We have been able to lower our cash cost guidance at a number of assets and are extremely focused on bringing down our cost at our remaining assets. I will now turn the call over to Juan Andreas to speak to a summary of our production results.

Speaker 2

Thank you, Peter. As planned, our production continues to be slightly weighted to the second half of the year. Copper production was essentially flat From the Q1 and going forward will include our recent acquisition of Casa Rones. Overall, we produced 95,000 tons of copper equivalent in the 2nd quarter. Let's now look at copper.

Speaker 2

Copper production was 60,056 tons, Which is essentially flat compared to the Q1 of the year. Candelaria had a good quarter processing 6,900,000 tons of ore, Slightly better grades and softer ore from Phase 11 contributed to the production. We expect the second half of the year to maintain these Slightly better grades from lower benches in the pit. Unscheduled downtime of the ball mill at Chapada limited throughput during the month of April. These issues have been resolved and we should see a stronger second half of the year.

Speaker 2

We expect higher grade material as we will reduce the use of stockpile and prioritize the feed of fresh ore. Copper production is tracking well to annual guidance of 2 to 325,000 tons and this is including Casa Dones production. Let's now look at zinc. Zinc production was lower quarter over quarter at 36,115 tons. Additional downtime of 11 days at Zinkgruvan was taken to the tie in of the new sequential flotation circuit.

Speaker 2

Commissioning is progressing well and we expect full ramp up this year. Zinc recoveries are improving from the upper 80s into the lower 90s. At Neves Corvo, after a strong Q1, during Q2 and planned downtime at the SAG mill, together with higher grade variability impacted zinc production. Ramp up of zinc expansion project at Neves Corvo progressed Production is expected to increase over the course of the year with initiatives to enable ZEP to consistently achieve nameplate capacity that will result in throughput and metal recovery improvements. For now, we see zinc production tracking to the lower end of the annual guidance of 180,000 to 195,000 tons.

Speaker 2

Let's now move to nickel. Nickel production of over 4,686 tons was 25% higher quarter over quarter from higher throughputs And grade profile at Eagle. Both copper and nickel production at Eagle were impacted in the Q1 by rehabilitation works at the main ramp, Mechanical issues in 1 of the ball mills and weather events. With a slower than planned start in Q1 By the strong Q2, nickel production is tracking well to our annual guidance of 13,000 to 16,000 tons. Finally, gold.

Speaker 2

Production was approximately 34,000 ounces from the Q2. As mentioned earlier, Chapada had additional maintenance down We continue to drive well to our annual guidance for goal of 140,000 to 150,000 ounces. All in all, a good first half of the year, as Peter mentioned before. Production will be modestly weighted to the second half as we are tracking well to meet guidance Thank you. I will now turn the call to Teitur, who will provide summary of financial results.

Speaker 3

Okay. Thank you, Juan Andreas. So if we move to Slide 6, starting with the top line, we generated close to $590,000,000 in revenue. Our sales remains leveraged to copper, generating 65% of the quarter's revenue. Nickel and gold contributed 14% and 9%, respectively, while zinc contributed 6%.

Speaker 3

The Lower realized pricing of metals during the quarter impacted overall financial performance compared to last quarter. The realized copper price was $3.37 per pound versus last quarter of $4.49 per pound, a reduction of roughly 25%. With the price of copper and several of the other metals we produce decreasing during the quarter, revenue was negatively impacted by $75,000,000 prior period pricing adjustments. A summary of realized copper, zinc and nickel prices for the quarter are presented in the charts on this slide. Ultimately, we realized prices of $3.37 as I said per pound of copper, dollars 0.83 per pound of zinc And $9.47 per pound of nickel and 18.42 dollars per ounce of gold for the Q2, including the adjustments.

Speaker 3

At the end of the second quarter, approximately 82,000 ton of Copper were provisionally priced at $3.77 per pound and remained open for final pricing adjustments. We have invested over 28,000 tons of zinc at $1.08 per pound and over 1700 ton of nickel at $9.25 per pound. On Slide 7, production costs totaled $405,000,000 in the 2nd quarter, which is in line with the previous quarter. The bottom right chart on this slide presents the relative impact of key drivers on the total operating cost And capital costs by operation for the quarter and demonstrates the material drop off of costs for diesel and electricity compared to Q4 last year, particularly at Candelaria and Nevis Corp. Whilst Candelaria's diesel and electricity costs have improved compared to last year, Total production costs during the quarter were negatively impacted by higher maintenance and contracting costs.

Speaker 3

However, both of these cost increases are likely to be temporary in nature and we retain the full year cost guidance for Candelaria. At Chapada production cost improved From new transportation contracts, we saw ocean freight prices drop around 47% to around $50 per dry metric ton. Here we also are seeing the benefit from lower fuel and explosives pricing and somewhat offset by a slightly stronger local currency. Chapala's cash cost guidance was lowered from $2.55 to $2.75 per pound of copper to $2.35 to $2.55 per pound of copper. Nevis Corvo cash cost increased during the quarter primarily due to lower production volumes and byproduct Commercial and Cool pricing has been mixed with saving on diesel and electricity, offset by cement, explosives and the strengthening in euro.

Speaker 3

Cash cost guidance at Nils Corvo remains unchanged for the year at $2.10 to $2.30 per pound of copper. Equals production costs were in line with expectations. However, cash costs were impacted by lower byproduct credits. Cash cost guidance has been revised upwards to $2.30 to $2.45 per pound of nickel in 2023 and is primarily the result of the lower byproduct credits from lower realized pricing. Zincrewman's production costs were lower than those The Q1 primarily as a result of inventory movements.

Speaker 3

Cash cost guidance has been revised down to between $0.45 to $0.50 per pound of in 2023 as we realize higher bioproduct credits, which has offset lower production. The capital expenditure guidance for the year has been reduced by $75,000,000 on a like for like basis, With $25,000,000 relating to lower sustaining CapEx spend at Candelaria and $50,000,000 lower spend relating to the phasing of activity at Tosca Maria. As previously announced, the second half capital expenditure guidance for Casaroni is $110,000,000 on a 100% basis. The capital spend during the first half of the year amounted to approximately $525,000,000 of which $345,000,000 related to sustaining capital was $180,000,000 related to the Jose Maria project. And lastly on this slide, we continue to realize the benefits Our foreign exchange hedging program intended to provide better visibility on our U.

Speaker 3

S. Dollar requirements of future operating costs and CapEx. In the Q2, we realized an FX hedging gain of $14,000,000 In addition, the mark to market value of our remaining unsettled foreign exchange contracts amounted to over $70,000,000 at the end of the quarter. Moving on to key financial metrics On Slide 8, during the Q2, revenue, as I said, was just below $590,000,000 which was impacted by the lower commodity prices and the pricing adjustment in the quarter. We generated adjusted EBITDA of $162,000,000 And adjusted operating cash flow of $111,000,000 along with free cash flow from operations of 21,000,000 Details of all these adjustments are broken down in our MD and A.

Speaker 3

We remain in a strong financial position. We finished the quarter in a net Debt position of $230,000,000 and today have a net debt position of approximately $930,000,000 factoring in the closing of Slide 9 presents greater detail as to the sources and uses of cash in the second quarter. Before changes in working capital, our operations, as I said, generated $110,000,000 net of $33,000,000 of cash taxes Paid during the Q2. After working capital adjustments and sustaining capital expenditure, the operations generated $21,000,000 of free cash flow during the Q2. With 2 quarterly dividend payments during the Q2 amounting to in total $104,000,000 In addition to spending $92,000,000 on the Jose Maria growth project, the company generated a negative free cash flow of $84,000,000 in the Q2.

Speaker 3

With the recent closing of the Casa Ronen transaction combined with the closing of a new 800,000,000 dollar term loan, the company continues to have significant liquidity headroom of $1,600,000,000 with our current net debt of approximately 930,000,000 100% consolidated basis. So that wraps up the financial section and I'll now turn the call back to Peter.

Speaker 1

Thank you, Tyler. Slide 11 highlights the meaningful scale and material growth of our copper portfolio. As mentioned, we are very excited about the Casaronis acquisition. Casaronis complements our existing portfolio with large scale and long life copper and molybdenum production In a jurisdiction which we already operate, Casa Roni's proximity to Candelaria will allow us to leverage our knowledge, experience, Relationships, supply chains and potential infrastructure in the region to unlock further synergies. Along with the continued integration, Synergies will be a focus for us during the second half of the year.

Speaker 1

We continue to make good progress advancing our Jose Maria copper gold project And are continuing in a deliberate manner to minimize the risks and will work towards a construction decision at the appropriate time. Candelaria's life of mine has been ended at 2,046 with the mineral reserve estimate announced in February. The base case plan of the corresponding technical report does not include the Candelaria underground project, which has the potential to add roughly 20,000 tonnes of copper production per year. And lastly, on this slide, In February, we announced the maiden indicated resource estimate for the Syuba discovery and view it as the first of many iterations of increasing mineral estimates to come. We are very excited about this discovery and we'll continue to evaluate potential expansion opportunities to best exploit the significant mineral resource base and the growing Sowebay deposit.

Speaker 1

I also want to take this opportunity to highlight the significant exploration potential within the emerging Ticuna District and specifically on our existing land package. Slide 12 illustrates the extensive land package of more than 58,000 hectares in Chile that we acquired with the Castorones transaction. We have identified multiple priority exploration targets, which we will be pursuing this fall. These include higher grade pressure targets near and below the existing Okay. And targets adjacent to the Los Olados property where they've had some of their highest grade intercepts.

Speaker 1

The light green and pink shading in the map indicates our Jose Maria land package and claims. Also illustrated is the planned Jose Maria infrastructure, including the process plant, tailings facility and Batadero Camp. We believe Jose Maria is well positioned to be the center of future development and expansion of this emerging Vicuna district. The Jose Maria land packages also present promising exploration prospects, notably the Unawasi target, which is formerly Pojo Cliffs. In April, Angax Minerals reported some of the highest grades in the district from this area, and it is on trend with the high sulfidization system observed at Filo Mining.

Speaker 1

Our plan in 2023 is to drill 800 meters on the Llanowati target. Additionally, the Portone target And deeper holes beneath the Jose Maria ore body offer clear district level resource potential. We have approximately 2,400 meters of drilling planned For this year and 5,000 meters in 2024. On Slide 13 to summarize, We possess an attractive portfolio of high quality mines and are steadily advancing growth projects in a disciplined manner. The first half of the year showed solid operational performance And supported our strong financial standing, which serves the foundation for our future growth.

Speaker 1

We are currently positioned to meet our full year production guidance And have been able to lower our costs at several of our operations. Going forward, we will remain focused on driving costs down further. While maintaining focus on growth, we continue to exercise a prudent allocation of shareholders' capital, ensuring a balanced and disciplined approach. As previously mentioned, our Board of Directors continues to support our commitment of providing a leading regular dividend to our shareholders. We remain well positioned both operationally and financially to execute on our strategy.

Speaker 1

In addition to our European and U. S. Operations, We've assembled a very strategic package of assets in Chile and into the emerging Vicuna district, which we believe puts us in the driver's seat at one of the most prolific emerging coffer districts. And with that operator, I would like to open the lines for questions.

Operator

Thank you, sir. Ladies and gentlemen, we will now begin the question and answer Your first question comes from the line of Orest Wowkodaw from Scotiabank. Please go ahead.

Speaker 4

Hi, good morning. Good morning, Peter. I wanted to find out how you're thinking about the Casa Ronis Acquisition with respect to impacting Jose Maria, obviously, there's some potential there to share infrastructure. I'm wondering how long you think it might take to get a handle on what those opportunities look like and then how that will impact Your thinking on the Jose technical report and how that project moves forward?

Speaker 1

Good morning, Orest. It's a good Question, I may give you a bit of a long winded answer. Obviously, the first focus, if you will, on Caserone's is The integration of the asset, the team has done an amazing job. They started right away. It was very, very seamless.

Speaker 1

But after the integration, the next focus We'll be on synergies, but it'll be more targeted towards Candelaria initially. We prioritize, I guess you'd call it the low hanging fruit. It's probably about 30 different items that we're going after on a bit of a contract by contract basis. It's quite a detailed process that's going to be starting as we speak. And then there's a bit of a further out concentric circle that we're looking at, if you will.

Speaker 1

And that starts getting more involved with things like the concentrate shipping and things of that nature and then more of an organizational structure that we're looking to Once we get through that, then we start talking about the Jose Maria. Some of the discussions on Jose Maria We'll arguably be a bit time sensitive in the sense that there are elections going on in Argentina. And some of the things that you're going to want to Our discussions on would arguably involve the government. And so they got through the provincial election, But you do have the federal one still coming up on October 22. So Any kind of work in that area, whether it be involved with desalinated water going from one side to the other, concentrate shipping, Things of that nature, they'll probably be they'll probably take a little bit further.

Speaker 1

We're doing the study work as we speak, but those are going to require engagement from government officials as well.

Speaker 4

So Peter, does that when we think about that timeline, does that maybe suggest that the Jose technical report is now More likely an H1-twenty four type of event?

Speaker 1

Yes. I mean, I think that will be one of the reasons The report gets pushed out a little bit. But on the same note, we're kind of finishing off the on-site work right now. It's basically almost done completing Phase 1 of the camp and some road upgrades, but we're spending a lot of time doing trade off studies right now and optimization studies in areas of Focus would be like plant throughput, recoveries. But also, as I mentioned, the concentrate transport is one optimization we're doing And then, some conceptual work on supplemental ore studies.

Speaker 1

So all that is going to feed into it. We are getting good results pretty much across the board on this work. But to your point, it probably does push the timeline out a little bit. So that will affect The release of that information and perhaps is also part of the explanation for the reduction in the CapEx.

Speaker 4

Okay. Thank you. And just one final one, if I could. The technical The cost profile there, I assume, reflects more the status quo. How much Improvement do you potential do you see with respect to some of these synergies with Candelaria and also Reducing some of the SG and A costs, which seemed elevated on a standalone basis.

Speaker 1

Yes. I think all 3 of us are going to tackle that question because it kind of goes into different areas. On the SG and A, there's probably 50 people positioned in Santiago, which without getting too specific on this call, is arguably A higher number than necessary. So we've already come up with an operating model that is going to put the 2 companies together, and then there's going to be key roles that feed into that. So You would reduce that duplication pretty quickly, and perhaps you'll see an area where there's leads in certain specific departments.

Speaker 1

Again, Probably not to get into on this specific call. Other areas, I'm sorry.

Speaker 3

I mean, it's tighter here. Like the C1 costs we are guiding have been tweaked slightly versus how Casa Rona used to classify their C1 costs. Our C1 costs are now entirely consistent with how we guide C1 costs on all other sites. And essentially, the way we have approached this is to look at The historicals at Casa Roni for now and sort of extrapolated on that basis going forward. And again, as we've said previously, with all our C1 cost guidance, We took a relatively conservative approach on cost estimation from last year, which was sort of a high point on many of the consumables.

Speaker 3

That's also what you're seeing coming through now with certain cost reductions on some of the sites.

Speaker 2

Yes. I would add that we have just taken operatorship of the site. So there we're in our learning curve Beyond what we learned during the due diligence, of course. So we will be working with the team in optimizations and applying our Operational excellence technique that we use at our other sites. So we in the short term, we'll probably have a good Plan with initiatives to continually improve our costs.

Speaker 4

Okay. Thank you very much.

Operator

Thank you. Your next question comes from the line of Ioannis Masoulis from Morgan Stanley. Please go ahead.

Speaker 5

Yes. Good morning, Peter and team. Thanks for taking my questions. The first is again on the synergies topic. I I think you spoke in the past around potential to use some of the excess desalinated water capacity at At Candelaria with Caserones, what's the time frame for you to be able to provide more visibility on that?

Speaker 5

And then on the other aspects, you talk around SG and A, operational excellence, etcetera, on the more near term Synergy prospects, do we should we expect an update before the end of this year? Or is it 2024 update from Europe?

Speaker 1

No, Anup, thanks for the question. I think you'll get it this year because we're well advanced on a lot of it. I mean, we're talking about A very thorough review on contracts that could range from fuel, lubricants, tires, lime, all sorts of things where we've identified Who maybe has the better contract to buying and then we're going to get the economies of scale by consolidating those and we're going with whichever team has the better approach. But that started pretty quickly into the integration process. So we're kind of well advanced on it.

Speaker 1

And I think in our next quarter, We're going to be able to provide a lot more clarity. We're going to be at site, both Candelaria and Castoronies with our entire Board in September. And part of that presentation will be a very fulsome review of the potential synergies. I just wanted to understand

Speaker 5

Perfect. Thank you very much for that. And just one more question for me. On the MD and A, you talk about discussions on infrastructure for Jose Maria around Texas Road And the power line and possibility to have a royalty offset on some of these investments. Can you perhaps elaborate a bit here on what you're looking to achieve?

Speaker 5

And what's the potential net benefit in CapEx?

Speaker 1

Well, I think I mean, I think both Tiger and I will answer that. But the one thing I'll say is, I think these discussions are will be, from a timing perspective, will be a little bit challenging because, like I mentioned earlier in the call, On July 2, you just had a new governor going into San Juan. They're very pro mining, but it is a party that's been in opposition for 20 years. So While they're very supportive, I think we're going to anticipate the process for sectoral permits and different commercial agreements will probably Take a little time to get through, just being realistic. And then as I also mentioned, you have the federal elections, which are taking place October 22.

Speaker 3

Yes, I guess what I can add, I mean economically what it boils down to is that whichever infrastructure investments we are making within the province, We can offset that against the provincial royalty that we are paying. So that is the mechanics of financially how that offsetting would work.

Speaker 5

I see. Great. We'll wait for the update then. Thank you very much.

Speaker 1

Yes. And as I say, I think towards the end of the year, We're hopefully going to be able to give you better clarity on that once the government's all in place.

Speaker 5

Thank you. Thanks, Thomas.

Operator

Thank you. Your next question comes from the line of Greg Barnes from TD Securities. Please go ahead.

Speaker 6

Yes. Thank you, Peter and everybody else. My question is very much along the same lines. My understanding is that Caster Ennis technical report you just put out was really just the base case. And obviously, Orest talked about the cost, but I'm also talking about the production side of things.

Speaker 6

What opportunities do you see at Casa Roni's itself Without even Jose Maria or Candelaria coming into picture to improve the production profile.

Speaker 1

Well, I think the it's Greg. Thanks for the question. We're very excited about the acquisition. And I think with Candelaria, the focus is probably more on synergies for the cost side than necessarily the production side. But as mentioned, Kasseronis did 70,000 tonnes in the first half, which is a pretty impressive number.

Speaker 1

We've used a lot of Caution in the technical report and the guidance the high end of the guidance is basically that number. So again, relatively cautious. And I just think Being a new asset, we wanted to take a cautionary approach out of the chute, but we're very Comfortable with the numbers? I would add a couple of other items, which is in the last 2 years, they've had some pretty difficult winters. Of course, prior to that, you had COVID.

Speaker 1

You look at the 5 year average, it was 129,000 tonnes. And the winter And Chile, excuse me, runs from late May to late August approximately. We've had absolutely no winter weather interruptions so far, which we've factored into our numbers to some degree. In addition to that, they did have a record July for throughput, which is quite interesting. So needless to say, July is starting extremely strong, and I think that puts us in a great position for 2023.

Speaker 1

And as we get more comfort with the asset, if we feel in the Q3 that there's any type of revision that needs To be made, I think we'll make it at that time.

Speaker 6

Okay. Just thinking about the pit itself and you had record throughput in July, is there areas of Soft ore, hard ore or anything like that, that would impact that throughput rate on an intermittent basis or is it regular Pretty consistent.

Speaker 1

Yes, it's pretty consistent. But one of the things, there are limitations or have been limitations on how much water they were getting. And they've done some rehabilitation and put some new wells in since we got involved with the process. And they're now getting significantly more water than they had before, and I think that is the biggest impact on why they had rapid throughput in July.

Speaker 6

Okay, great. Thank you.

Speaker 3

Thanks, Greg.

Operator

Thank you. Your next question comes from the line of Ralph Bricetti from 8 Capital. Please go ahead.

Speaker 7

Good morning. Thanks, operator. Peter, You mentioned Caseronis is off to a pretty good start in the first half, right, 70,000 tons of copper production. Just wondering where cash costs came in, in the first half, if If you have that figure, just trying to get a sense of tracking first half versus second half and the new technical report that will be very helpful.

Speaker 3

Yes. We haven't given our C1 cash costs as such for the first half of just to remind people, the premise The deal is a lockbox from 1st January. So we have taken economic interest in the assets from 1st January this year. And in that context, we have announced that the asset generated free cash flow. I mean, the production we've announced 70,000 tons for the first half.

Speaker 3

So we generated free cash flow of roundabout just over $100,000,000 And then within the balance sheet of the lockbox from the beginning, there was a positive working capital of Another $20,000,000 So that's how we got to our total cash position at $120,000,000 at half year. It looks like so when we talk about CapEx, I know you asked about the OpEx, but on CapEx, we've guided $110,000,000 for the second half and the CapEx phasing is Back end loaded for the year due to the mining sequence and the stripping that will take place in the second half versus first half. But as I said, essentially that phasing doesn't really matter for us because the deal is effective for January. So whether we spend more or less in first or second half Doesn't really impact the full year outcome for this asset for

Speaker 7

us. Yes, yes. Well, understood. Okay, yes. Thank you.

Speaker 7

And Peter, Total exploration guidance for 2023 was unchanged at $45,000,000 Yet I believe that some of the commentary talked about some Caseronis drilling in the fall. Just wondering how those two reconcile. Were you tracking below and

Speaker 1

now you're

Speaker 7

coming towards an unchanged category? Or can we expect another update on exploration spend later?

Speaker 1

No, I mean, right now, I think part of it is, there's a little bit of a cutback at 1 or 2 other sites. But I think in the presentation materials Do we do it separately? No, it's just the overall numbers. So I can follow-up with you, Ralph, and go through it on a bit of a site by site basis. But really, the money that would have been being spent At Jose Maria Casa Ronis, it is coming from a small pullback at some other sites.

Speaker 7

Got you. Thanks,

Speaker 1

Peter. Thanks, Ross.

Operator

Your next question comes from the line of Gordon Lawson from Paradigm. Please go ahead.

Speaker 1

Hey, good morning. Thanks for taking my question.

Speaker 8

Back to Casarones, just curious how much of the recent fine was anticipated and how much of this issue is expected to persist?

Speaker 1

Okay. So that it's actually in our thanks for the question, but it was in our technical report. So this was very much anticipated and the timing came in, I would say bang on when we expected as at the dollar value. So it's going back to some items that were in between 2015 2018. We have 100 percent indemnity coverage on that.

Speaker 1

And so I think it's the fact that it came up early for us is In a way, a positive, and it will be dealt with this week and we move forward. On a going forward basis, we are going to be applying Lundin Mining Standards, even though they do have high standards at Casterroni's and given our footprint in the Atacama region, we will ensure that We are deemed to be a partner of choice in the region.

Speaker 8

Okay. Okay. Thank you. So I guess there isn't really much more extra scrutiny from the government as some people may have interpreted, but Do you expect any impact on expansion plans at either project in the country?

Speaker 1

No, not at all. Again, we're going to be down there in We have very good support from a number of different government officials. This was a historical issue. And The fact that we're able to resolve pretty quickly here and move forward, I think is a positive. And we've done a lot of work at site to show What our intentions are on a going forward basis and that seems to be well endorsed by the government officials.

Speaker 1

So I don't see that as an issue whatsoever.

Speaker 8

Okay, great. Thank you very much.

Operator

Thank you. Your next question comes from the line of Stefan Ioannou from Cormark Securities. Please go ahead.

Speaker 9

Yes, thanks very much. Just curious on the exploration front in Vicuna. In terms of on that map on Slide 12, the Pancari Lost Tallis, when do you think you might actually have the permit to go ahead and start drilling there?

Speaker 1

Our goal will be to start drilling this fall, So I think I went through some of the targets, Stefan, during the earlier part of the call. We can sit down here with you and go through the maps, but we've got it pretty well figured out, as I said, on that Lulu Wassey target. It's going to be I know you know it well how it's sandwiched between the other 2 projects. We've got some interesting things Go after a castorone's below the existing pit where they've had some encouraging results. But given that they're not our drill holes, we want to follow-up on them, but that's going to be a focus as well.

Speaker 9

Sure. Okay, great. And you said you're looking to drill 800 meters at Wassey proper this fall then?

Speaker 1

Yes.

Speaker 9

Okay. And then sorry, just sorry, housekeeping. You mentioned 5,000 meters next year. Is that over is that at Lunawasi over the greater sort of area.

Speaker 1

That would be the greater area in that region, but not that. So you're getting into the Portonis as well as underneath the Jose.

Speaker 9

Got it.

Operator

At this time, I'd now like to turn the call back over to CEO, Mr. Rockendale, for any closing remarks.

Speaker 1

Thank you, operator, and thank you, everyone, for joining us today. I think as discussed over the call, we had a very strong operational quarter, and we're well positioned to achieve our guidance for 2023. And perhaps even more important, I think we're setting the company up for success in 2024. So look forward to giving everyone a further update come the fall. Thank you for joining.

Operator

Thank you, sir. Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines. Have a lovely day.

Speaker 1

You as well.

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Earnings Conference Call
Lundin Mining Q2 2023
00:00 / 00:00