Earnings call: Aura Minerals boasts record production in Q4

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Earnings call: Aura Minerals boasts record production in Q4
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Aura Minerals Inc. (TICKER: AURA) has announced robust financial and operational results for the fourth quarter of 2023, with record production levels and significant free cash flow. The company reported its highest ever quarterly production at 69.2 thousand gold equivalent ounces and generated $88M in free cash flow. Despite a net loss of $6M primarily due to non-cash items, Aura Minerals emphasized strong adjusted EBITDA growth and a solid cash position. The company also highlighted its commitment to environmental, social, and governance (ESG) initiatives and its strategic plan for continued production growth into 2024.

Key Takeaways

  • Aura Minerals achieved record production of 69.2 thousand gold equivalent ounces in Q4 2023.
  • The company generated $88M in free cash flow and reported a 37% increase in adjusted EBITDA.
  • Cash costs decreased by 9%, with a net loss of $6M due to non-cash items.
  • Aura ended the year with $237M in cash and a net debt of $85M.
  • Production guidance for 2024 is set at 244 to 292 gold equivalent ounces.
  • Significant progress on the Borborema project, with ramp-up expected in Q1 2025.
  • Commitment to ESG initiatives, including planting grapes in Honduras for community income.

Company Outlook

  • Aura Minerals projects a steady increase in production, aiming for 244 to 292 gold equivalent ounces in 2024.
  • The company plans to enhance its ESG efforts by replanting trees and creating new income sources in Honduras.
  • Production is anticipated to grow from 2 million tons to 3.4 million tons by 2025.
  • Dividend payments are projected for 2024, adhering to the company's policy.

Bearish Highlights

  • The company reported a net loss of $6M in Q4, attributed to non-cash finance expenses.
  • Non-cash items included $28M related to gold collars and higher gold prices.

Bullish Highlights

  • Aura Minerals remains on track to meet its production guidance ramp-up for 2024.
  • The company has successfully completed construction of Almas on time and within budget.
  • The ongoing construction of Borborema is fully funded, with key milestones reached.

Misses

  • Despite strong operational performance, the company faced a net income loss due to non-cash items.

Q&A Highlights

  • The company reaffirmed its production guidance of 450,000 gold equivalent ounces by the end of 2025.
  • Aura Minerals addressed production challenges, with Almas now running at full capacity and plans to increase production at Apoena in 2024.
  • The Matupa project is progressing towards construction, awaiting licensing and board approval.
  • Investors were invited to follow updates on resources-reserves and Borborema milestones.

Full transcript - None (ORAAF) Q4 2023:

Operator: Good morning ladies and gentlemen. Welcome to the fourth quarter 2023 earnings call. This conference is being recorded and a replay will be available at the company’s website at auraminerals.com. The presentation will also be available for download. This call is also available in Portuguese. To access, you can press the globe icon on the lower right side of your Zoom (NASDAQ: ZM ) screen and then choose to enter the Portuguese room. After that, select ‘mute original audio’. [Portuguese instructions] We would like to inform that all attendees will only be listening to the conference during the presentation, and then we will start the question and answer session, when further instructions will be provided. Before proceeding, we would like to clarify that any statements that may be made during this conference call regarding the company’s business prospects, operational and financial projections and goals are the beliefs and assumptions of Aura’s executive board and the current information available to the company. These statements may involve risks and uncertainties as they related to future events and therefore depend on circumstances that may or may not occur. Investors should be aware of events related to the macroeconomic scenario, the industry and other factors that could cause results to differ materially from those expressed in the respective forward-looking statements. Present at this conference, we have Rodrigo Barbosa, President and CEO, and Kleber Cardoso, the CFO. Now I’ll turn the conference over to Rodrigo Barbosa. You may begin your conference.

Rodrigo Barbosa: Thank you. Good morning. We are here to talk about the fourth quarter results and the year end 2023, and also share our guidance for the year 2024. First, the year 2023 was not only important for achieving important financial results but we did that under the highest ESG standards. First and foremost, we achieved during the year 2023 zero lost time incidents in all our operations. We now have four operations, we finished building Almas, we started building Borborema, and we could achieve significant results by not having any lost time incidents and making sure that one of the most values that we have, which is safety first for our employees, we are taking care of everybody that works with us, not only for our own employees but the third parties that come to our operations, we have extensive training for them to achieve these goals. This is a long term goal that we’ve been working across the operations for three, four, five years significantly on a daily basis, that could result in this zero lost time incidents for the year. We aim to maintain this. It’s challenging, but we aim to maintain zero lost time. Until today, we had zero lot time incidents, so we aim to achieve this in 2024 as well. Again on ESG, we also innovated one initiative to help and to bring to Honduras a new source of income. That area in Honduras that we operate is very similar to an area in San Paolo that is producing high quality wines. We brought some experts and we could test the soil and the weather that in the mine where we operate in Honduras could also provide a chance for the people that work around that area to produce high quality wines. We did that--this initiative is we’ve planted, we’re going to show those grapes in the area that we’re already mining, and then instead of planting trees, we are now planting--we will plant grapes and see if that could become a new source of income for the communities around us. They already produce coffee, so transitioning to wines could be important for them. In terms of production in Q4 and also results, we achieved the highest production for the quarter at 69.2 thousand gold equivalent ounces in the quarter. This is 7% higher than Q3 last year. We were projecting to be the last quarter the highest one, and we did that, and that generated $88 million for the whole year in terms of free cash flow recurring. Going operations for the year, we achieved 235,000 of gold equivalent ounces, and as we’re going to see for 2024, we aim to continue to grow and achieve higher production, as we will share guidance, as we now have--Minosa is on a running rate in the last quarter, we already implementing initiatives to increase production in Apoena, Aranzazu continues to be stable, and now we have full year at Almas so we should be--continue to grow in 2024. Aranzazu in the quarter, very much in line with expectations, very stable. We will see a minor reduction in production that comes from mine planning, but it’s not meaningful in terms of changes. We continue to achieve very, very strong results in Aranzazu. What we will see for the year ’24 in Aranzazu in terms of cost, we will see some increase in cost from Aranzazu basically for three different variables: one, it’s the exchange rate, so the Mexican peso is appreciating compared to the dollar, so that pushed our costs up. There’s some inflation - we are fighting against inflation, but some inflation is going through our costs, and then third, it’s mine sequencing also, but that will not be significant. In Minosa, we achieved 17.918 thousand ounces of production in the quarter, a near 2% increase compared to Q3. Remembering that we started the year in Minosa very challenged - if you compare last quarter of ’22 to the last quarter of 2024, this equals 47, 50% increase, so during the whole year of 2023, as we were disclosing to the market, we will gradually improve the operations, fixing the reduction in productivity, and this will--every quarter we were able to increase production and now believe that we are reaching some running rate and already starting the year of 2024 very strong at the running rate that’s supposed to be in Minosa. In Apoena, again we were expecting to increase production due to going to Ernesto pit, so we increased to 15,000 ounces of gold produced - this is 36% higher than Q4 2023, but also a reduction compared to Q4 2022, and also because in fourth quarter of 2022, we were a full quarter on very high grade of Ernesto, now we work [indiscernible] on this high grade of Ernesto. We delayed entering the Ernesto pit due to the heavy rains during third quarter of the year, and so some of this high grade was pushed to the first quarter, which we are now mining during 2024. Almas, we reached close to 10,000 ounces of production of gold - that is a first full quarter in production, reminding that in Q3 we had a partial quarter once we declared commercial production during the quarter. Almas, as we shared during IR day, we were very high production during Q3. Once we reached fresh rock, more hard rock, we had a reduction in productivity that also affected the fourth quarter production, which was although an increase compared to Q3, it was below our expectations and below the running rate. I would highlight that this reduction in productivity during Q4 is already addressed and we are--we finished December already at above 1 million tons on the mine, so we are very strong in the running rate as we’re supposed to be, so we’re starting the year of 2024 very strong according to our plan. In terms of all-in sustaining cash cost, we saw our cash cost at $1,311 - it’s a 9% decrease compared to Q3 as we were projecting, very much in line with our guidance that we gave to the market. This reduction comes from the high production in Apoena, high productivity also in Minosa, and now we can--we expect the year for 2024 to be very much in line with the year 2023, perhaps a little bit below or a little bit higher, depending on the situation or according to the operations during the year. In terms of adjusted EBITDA, we had $41 million of EBITDA, the strongest EBITDA for the year as we were projecting to have a stronger EBITDA during the fourth quarter. This is a 37% increase compared to Q3, and that is a result of increased production in operations, as I mentioned, higher gold prices and lower cash costs. In terms of growth, I will highlight the company continued to cement our path to the production of 450,000 ounces of gold equivalent. That will, as I was sharing, comes from the development of three projects: Almas, Borborema and then Matupa. Almas, the first greenfield project that we built on time, on budget. We finished the construction during 2023, we ramped up in five months, we built in 16 months, setting new benchmarks in the market compared to other mine that are being built, on budget, on time, and is already in full production. Borborema, [indiscernible] feasibility study. We published the feasibility study. We raised the capital to fund Borborema and we already started the construction and we’re already at 18% of the whole construction complete, and very much line with our expectations in terms of so far on that deadline, and also budget, so we continue to path our way to continue to grow during the year ’24, ’25 and ’26. Again in terms of safety, it’s something that we are very proud. It’s an achievement that belongs to the whole team that’s working on a daily basis to achieve those numbers. In Almas, we achieved this in June 2023, Apoena in July, Aranzazu in September and Minosa in October, so we are own four operations with zero lost time incidents over a year, because we finished the year and we continue to be at zero lost time incidents until now. On stability in the structures, as we shared with our board, as we shared with our employees and as we shared with our investors, we have strong management of all geotechnical structures that is being analyzed on a monthly basis by external parties, by a consultant, and now we have the online monitoring system all across our operations and we are--[indiscernible] Soteria, which is one of the most well known consultant firms for checking stability of geotechnical structures, and we are [indiscernible] all across our geotechnical structures, which means on the tailings dam, on the leech pads, on the pits and underground also developments. As I also mentioned, we had a significant coverage by the national press in Honduras with this new initiative to bring high quality wines, which at the end of the day, what we want is to bring a new source of income for the communities around us, so that they do not depend so much on the mines so they can have other initiatives to have other sources of gains. We know that mining and gold mines, one day we will finish mining there and we will replant 100% of the areas, and then instead of leaving them with only trees, we would like to leave them also with a new source of income that they can benefit from these new initiatives. Of course, this is a three, four-year test that we need to understand if it’s going to work, but we are very positive that this can help significant, not only in the area but it can grow the whole country of Honduras and other countries around Honduras. The picture that we see in the corner right, this area that has already been mined in the past, so we are now using this area for planting grapes and test if they can be a source of high quality wines. In terms of production, going into details here, but on the left chart I would highlight on the bars is the production by quarter, the line is the last 12 months of production. On the quarter, we had the highest quarter in the year, even higher than Q4 of 2022 once we have now Almas in production, but very importantly is that from Q2 to Q3, we inverted the curve that we were having a reduction in production over the last 12 months due to the challenges that we had in Honduras in the beginning of the year, then the rain we had in Apoena. But now, we could start to increase production again with the 65 gold equivalent ounces production in Q3 and 69 in Q4, so reaching the bar of 228 gold equivalent ounces produced on the last 12 months on Q2 2023, increasing 234, 236, and is very to expect this continues to grow along the year of 2024, once we are now [indiscernible] we’re entering the year with strong production all across our operations, plus now we have Almas that has contributed to a production increase during the year. I would invite you also to look, if you want to see two years ahead, then in 2025 we will see Borborema also production kicking in along the year, so we should continue to grow during the year 2025 as well. Next one, I already explained--no. So in terms of cash cost, Q2, we had an increase compared to Q1, then in Q3 another increase mostly because we passed, as we explained, low grade stockpile in Apoena that had--although we made cash doing that, the cash costs are increased. Now we started having a higher grade in Apoena again, we don’t expect to have that low grade that we had in Q3. We don’t have this in the stockpile anymore, so in Q4, it’s mostly Apoena that we could decrease our cost and somehow at Minosa to $1,311, which is as we expected to the market. In terms of our guidance, so we saw the year of 2023 production of 236 gold equivalent ounces, and now we project to the market it should be 244 to 292. Entering the year with Minosa at the running rate, Apoena also, we will do some improvements in the plant, we will reach hard rock ore that has impact on our productivity in the plant. To compensate that, we are expanding a little bit the plant in order to achieve higher production that we had in the year of 2023. Aranzazu continued to be very stable and Almas is kicking in, in the year, so we should have full production in the year for Almas, that already started the year very much in line with our expectation at the running rate that is expected, that we finished the year of 2023. In terms of cash costs, very much in line with the year 2023. There is difference between the mines, as I mentioned - there will be a decrease in Minosa, there is a decrease in Almas, there is an increase in Aranzazu due to the exchange rate and some inflation. All-in sustaining cash costs, also very much in line with the year 2023, and then when we project the capex for the year 2024, we see sustaining very much in line with 2023, but now we need to add Almas, that also needs to do its sustaining capex in operations. Exploration slightly below the year of 2023, and then when you see the new projects and expansion that we are now including Borborema that is under construction, that is why you see this increase from 56 to 144, $169 million. Most of the capex of Borborema goes to the year of 2024 and some remaining for the year of 2025. In terms of development of the project, again we not only finished Almas on time, on budget, but we did that setting a new benchmark in the sector. We are now [indiscernible] 17%, 18% of completed in Borborema and we expect to start the ramp-up in Q1 2025. Most of the land work has already begun and we are already initiating civil works, so we have more than 350 people at the project, and most as we have--as we did also with Almas, we focused on hiring people locally, so we have about 70% of the employees working at the site coming from the city that’s nearby, [indiscernible], which is the closest city to our operations. Also very importantly is that as we are progressing in the project, although it is built 18%, 17%, we already have negotiated or have a very strong already information about the total capex, over 61% of the total capex we already enter contracts, so we are very much in line with what we were projecting, yet there’s no deviation. We continue to be on time, on budget in this in project, and hopefully we’ll be able to start the ramp-up by early 2025. In parallel, I would highlight very importantly to the investors is that this project, it starts with reserves around 815,000 ounces of reserves, but we have over 2 million ounces of resources. You cannot say that you have--for reserves, the area needs to be fully licensed. As one road crosses close to the pit, we are limited on the feasibility study to have only 850,000 gold equivalent ounces of reserves, but as we move one road, that reserves can be more than doubled and reach across 2 million ounces after we get the license for moving this road, and all the process of moving this road, which is already regulated by law, is in place. It takes time, but we already initiated all the conversations with the NEC, the national department for roads, in order to change--it’s not a significant change, but we required some time to reach that. That’s the overview. I will come back for the questions and answers, and now I’ll pass the floor to Kleber, that we will share the highlights more the financial results.

Kleber Cardoso: Thank you Rodrigo. Good morning everyone. We are going to start with sharing a page with the main financial KPIs the company is reporting with the market. In terms of--starting with net revenues, we reported $124 million in revenues on Q4. As Rodrigo explained, it’s following the same trend as we saw for production, so it’s the third increase in a row, increasing faster than production because of more favorable gold prices during Q4. In the year, we are exceeding--our revenues are exceeding $415 million, increasing 6% compared to 2022. When we go to adjusted EBITDA, it’s a similar trend, the strongest EBITDA in the year at $41 million at Q4. We also see this trend of the adjusted EBITDA improving over the last two quarters, a combination, as Rodrigo presented, of both stronger production, more favorable gold prices, but also a reduction in the cash cost on the last quarter. Then in Q4, we’re reporting more or less the same EBITDA we reported the same quarter last year, $41 million, and also for the year we are closing stable compared to 2022 - that’s $134 million for the year. When it comes to net income, we’re reporting this quarter a loss of $6 million, which derives mainly from non-recurring and non-cash items related to the mark-to-market adjustments of Borborema, of Almas project good collars of $28 million. I’m going to go at the end of my presentation in more details of this number, but again it’s a non-cash and not expect to be in the future a cash loss. Excluding that impact, our net income for the quarter would have been $22 million positive, also would have been the strongest in the year. Then finally in terms of cash and net debt, we closed the year strong [indiscernible] reduction in the net debt position coming from $112 million by the end of Q3 to $85 million at the end of the year, despite the fact that we paid $18 million in dividends in December, and we finished the year also with a strong cash position of $237 million. Now understanding the main items impacting adjusted EBITDA and net income for the quarter, as we saw on the previous page, adjusted EBITDA of $41 million, of which Aranzazu once again is our strongest business unit, reporting EBITDA of $18 million during Q4. I would highlight also the improvements in Minosa and Apoena - Minosa, we are seeing for the fourth quarter in a row increase in production, but also especially in the last quarter reduction, significant reduction in cash cost and a further improvement in EBITDA, exceeding $10 million in the quarter. Apoena, also we have important improvements of EBITDA compared to the last quarter. $9.4 million, and that was despite the challenges. We reported a $5 million EBITDA, positive EBITDA in the quarter. Amortization and depreciation, once again it’s been consistent over the quarters at $11 million. Finance--we recorded a finance expense of $37 million, of which, as I said, $20 million is non-cash related to the gold collars Borborema and Almas, which I’m going to go over more in detail later. On this quarter, we are reporting income tax gain of $4 million. This is mainly due to the recognition on this quarter of deferred tax assets of $7 million at Almas, and this is because Almas, before it reached commercial production, it incurred losses for a couple of years as it had no revenues. Those losses in Brazil, they generated income tax assets which could not be recognized on our balance sheet before Almas’ declared commercial production and was profitable, so we see that as positive news, recognizing the $7 million which are going to become cash savings in the future. Then other items, $3 million expenses, bringing the net loss in the quarter at $6 million, but again the pro forma excluding those mark-to-market items would be positive at 2022. Then on this page, we bring a detailed analysis showing the changes in the cash and equivalents positions of the company throughout the fourth quarter of the year. Here on the far left side of the page, we see we started the quarter with $179 million in cash, then more to this left side of the page is what we call adjusted free cash flow to firm, which is the free cash flow to firm generated by the four mines in production, excluding the investments we do to expand our operations and any exploration, so we see it was a strong quarter. The mine is in production, generated $30 million. We already highlighted this from our EBITDA, also positive working capital generation in the quarter. Here in the middle of the chart, what we called investment for growth, how much we invested, for example in acquiring the shares of Altamira, [indiscernible] exploration and expansion capex, the total for the quarter was $9 million, which is going to be much higher for the next quarters as the construction of Borborema advances this year. To the right side, the financial items which I will realize, the $21 million we received at Borborema related to the royalties and the payments of dividends we made in December of $18 million, bringing the cash to $237 million at the end of the quarter. Then looking at [indiscernible] that has showed for the quarter, this was for the entire year of--this page shows it for the entire year of 2023. We see that the adjusted free cash flow to firm, the mine is--the operation generated $88 million, which was more than enough to pay for the investment for growth of the company. We invested $74 million to grow the company, of which $25 million in exploration, which are going to increase our mineral reserves and mineral resources and increase the life of mine at the company and the final phase of Almas construction and Almas ramp-up, and then to the right side, again the items--the free cash flow from financing activities, highlighting mainly the proceeds from that, that we raised to build Borborema mainly this year, and the $28 million cash flow--cash outflow dividends, which we paid in June and December. To conclude, so this is the analysis I was referring to, the more detailed explanation about the $28 million non-cash finance expenses which we recorded at the quarter. To understand it, starting the explanation with the top side of the page, what happened in the business, so in September, the company had about 175,000 ounces in gold collars in its books, mostly related to the Almas gold collar risk management program, which we entered a few years ago in the first phase of the Borborema hedging program. In December, that 175,000 ounces increased to 298,000 ounces, so it was an increase of 70% because we completed the Borborema gold hedging program, going from about 80,000 ounces of gold collars to 215,000 ounces. At the same time, during the fourth quarter we saw a sharp increase in gold prices, which is very good for our business. Gold prices appreciated more than $200 between the end of the two quarters, so the combination of having more gold collars in our books and higher gold prices at closing had a different impact on our balance sheet and P&L--in our P&L. On the balance sheet, we see the impacts of a $14.5 million cash gain, a revenue, which was the premium paid by the banks to participate in the Borborema hedging program. We collect already--out of those $14.5 million, we collect already $4 million in ’23 and are going to collect another $10.4 million by June 2024. On the other hand, following IFRS standards, at the end of each quarter we needed to do a mark-to-market adjustment near our balance sheet of all outstanding positions. Because of the increase in gold prices, the mark-to-market position of those open derivatives generated a liability of $43 million at the end of the year, which we consider and we expect to be a non-cash liability because of two reasons. The first, of the open positions we have in our books, the strike prices are off--these gold collars that call, strike prices are way above spot prices, so spot is around $2,000, $2,030 now, and the same prices for these derivatives are above $2,400. The second, we expect to hold all those positions until maturity, which means if market conditions stay where they are, this liability will disappear over time without cash impact. With this, we end our presentation, and open to questions. Thank you.

Rodrigo Barbosa: Very well, so just a few summary. As you could see, a very important year for Aura. First, we generated $88 million on recurring free cash flow to firm, that was more than enough to fund the growth, but we also can leverage to fund the growth and also pay the dividends, and we did all of that under the highest ESG with zero lost time incidents, doing the right thing on the ESG standards. As important as the result is, we set the standards on the fourth quarter, we increased production in Minosa and Apoena, in Almas, and we set the standard to start the year of 2024 very strong, very much in line with our expectations, and now we’re having Almas in full production and then Borborema to start ramp-up in early 2025, so it was a very important year which we achieved important results and setting the path to 450 gold equivalent ounces annualized by the end of 2025.

Operator: We are going to start the question and answer section for investors and analysts. [Operator instructions] Our first question comes from Ricardo Monegaglia with Safra. You can activate your microphone.

Ricardo Monegaglia: Hello, good morning. Can you hear me?

Rodrigo Barbosa: Yes.

Ricardo Monegaglia: Okay. I had a couple of questions on EPP. Do you expect more volumes coming from Ernesto in Q1 relative to the Q4, and maybe what is the timeline for the plant’s capacity expansion that you mentioned in the press release, maybe some budget for this expansion would be nice. Second question on Borborema, I understood the project is on time and on budget, but just to get a sense of what are the key milestones on the project execution that could define if the project remains on time and budget. Lastly, a quick question, are there any legislations under discussion in Brazil that could affect some sort your exploration works? That’s it, thank you, guys.

Rodrigo Barbosa: Thank you Ricardo. First in Apoena, there is a remaining award in Ernesto that we are now mining in Q1, not necessarily be more than we mined in Q4 last year, and now that which we’ll be switching more toward [indiscernible] has a harder rock that decreased somehow productivity at the plant, but we are doing investments to upgrade the plant and increase the capacity, so that we can achieve even higher production compared to 2023 during the year of 2024. Borborema, I’m not sure if I understood the question. Can you please repeat?

Ricardo Monegaglia: Yes, sure, so what are the key milestones in the project execution or construction that could--that you’re seeing in 2024? What will define if the project remains on time and on budget? What are the key deliveries for 2024?

Rodrigo Barbosa: Yes, it’s daily deliveries, but I think the first one is finishing land work, and this has been accomplished, so now entering the civil works, and then during the second semester, we will also start building and assembling the plant. One important milestone is the delivery of the mill, which is expected for the fourth quarter of 2024, which will allow us then to start commissioning and ramp up during 2025. All civil works and starting assembling--civil works during this quarter, this semester, starting assembling during second semester, and then finishing assembled with the mill to be delivered in the fourth quarter of the year. Our team has already visited the supplier in China, very impressed with how diligent they are on schedule, on program. They are ready, and the mill is being built also on time, on budget. We don’t expect to have any kind of delays. Then you asked about the regulation in terms of to affect exploration. I am not aware of any regulation that would affect our exploration program for near mine. Most of the areas that we are mining or doing exploration in this area that has a--it’s a farm not close [indiscernible] area, not close to highly protected areas in terms of forests, so we do not expect the regulation to interfere in our exploration program in Brazil.

Ricardo Monegaglia: Thank you.

Operator: The next question is from Roman Rossi with Canaccord Genuity. You can activate your microphone.

Roman Rossi: Good morning guys. I have a couple of questions. Regarding Borborema, Rodrigo, you mentioned that once you move the road, you will double the amount of resources. Do you have any sense on what this could represent in terms of NPV?

Rodrigo Barbosa: Yes, we are upgrading the feasibility study. We will publish as we do that, yet we cannot do all the disclosures. But you’ll have--I would invite you to understand and just make a simulation in two ways, right? The first is if we extend the reserve, we can do that before moving the road. We can increase our reserves just by having the permit to do that, but of course you can just put in production as we move. But we don’t want these new reserves to be added at the end of the life of mine, so that’s why what we are doing, we’re doing--building a plant flexible enough for us to increase our capacity once we have these permits to move the road, so that we can advance those kind of reserves into the production in the year 4, 5 or 6 of Borborema. Again, three years, three, four years to move the road, and then you can start thinking about increasing production in the project, going from 2 million tons production up to 3, 3.4 million tons of production by the year of--after four years.

Roman Rossi: Okay, perfect. The second one is regarding hedging - this is probably for Kleber. You have 10,000 ounces hedged at EPP with $2,100 ceiling prices, and this is expiring between March 2023 and December 2025, so I was just wanting to get a sense on how these derivatives are expiring, because for example for 2025, [indiscernible] target prices above that ceiling, right, so I just wanted to understand what could be the potential impact if gold prices go above $2,100.

Kleber Cardoso: Yes, it’s--between now and the maturity date, they are about straight line, Roman, expiration, so they are not concentrated in ’24 or ’25. It’s on part basis, there is--they are spread.

Roman Rossi: Okay, perfect. Perfect. Finally regarding dividends, based on your current policy, it seems like you wouldn’t be paying any dividends during 2024. What are you seeing for the year?

Rodrigo Barbosa: No, we don’t have this policy that would limit us to pay dividends in 2024. Our policy is 20% of EBITDA minus recurring capex, and we should keep with this policy except if we find a new M&A opportunity that would require more than the cash that we project, so we continue to project dividend payments, yes, for 2024, according to our policy, which is 20% of the EBITDA minus recurring capex.

Roman Rossi: Okay, awesome. Thank you guys.

Operator: The next question is from Diego Castillo. Good morning, thanks for the presentation of fourth quarter 2023. When are you expecting to start Matupa and how are you expecting to deliver the guidance of 450 production in 2025? Was this guidance postponed?

Rodrigo Barbosa: No, it’s not postponed. Matupa is in the process--the final process of licensing. We expect to have the license to start the construction by the end of the semester, by June-July this year, so that we can start construction right after, and then we will enter production by the end of ’25. We continue to after Matupa production and Borborema in full annualized by the end of ’25, reaching that 450,000 of gold equivalent ounces of production. And again, as you could see, we did not put the construction capex for Matupa in our guidance because this still requires licensing, then needs to be approved by the board to start construction, so then we will revise the guidance for capex, but we are now moving the process to reach those milestones.

Operator: I would like to remind you that to ask a question, you need to click on Raise Hand. Once again, to ask your question, you need to click on Raise Hand. Our next question comes from [indiscernible]. You can activate your microphone.

Rodrigo Barbosa: If he’s making a question, he’s on mute.

Operator: I’m afraid he gave up. [Indiscernible], you can activate your microphone.

Rodrigo Barbosa: Okay.

Operator: Please wait while we poll for questions. Next question is from Guilherme [indiscernible] with A40 Club Investimentos. You can activate your microphone.

Unknown Analyst: Hi, so this is Guilherme [indiscernible]. I have one question here. What do you guys expect for Almas operations, given the contractual issues that you faced during the last quarter? Just to make sure I understood, we could expect operations to be normalized in first quarter 2024, so starting the year with normalized operations to be on track to deliver the production guidance ramp-up for 2024?

Rodrigo Barbosa: Thank you for the question, Guilherme. Yes, we finished the year with the movement of the mine at the speed that it should be, so we already entered January and Q1 of ’24 at the expected speed of production in Almas, so we are very much comfortable to be reaching the full year of production of the year 2024 production guidance.

Unknown Analyst: Thank you.

Operator: The question and answer section is over. We would like to hand the floor back to Mr. Rodrigo Barbosa for the company’s final remarks.

Rodrigo Barbosa: Thank you all. As I mentioned, very important year, important milestones, zero lost time accidents, $88 million of recurring cash flow, $28 million of dividends paid - that’s 60% [indiscernible] third year in a row that we reach the highest dividend--one of the highest dividend yields in the sector, in the world. We finished construction of Almas on time, on budget. We ramped up on time, on budget, setting new benchmarks in the world for building greenfield projects. We started construction of Borborema, fully funded already during Q3, and we did all that with zero lost time accident, so very proud of what the team is achieving. Yes, we had some challenges in production. I would invite you to see that we finished the fourth quarter without those challenges. We fixed that operation in Minosa, Almas already at full running rate. Apoena also with a very strong plan to increase production during the year of 2024, and Aranzazu very stable for the year of 2024. We continue to build Borborema, in ’25 we will add production of Borborema on the year, so we will continue to show growth in every quarter from here until we complete the Matupa project. I thank you all for the quarter and invite you also to follow up with our updated resources-reserves that will be on the AIF, and then we will be updating the market also with the milestones as Borborema is being built. Thank you again, and feel free, if you have any additional questions, you can send a message to our Investor Relations and we will be glad to answer your questions. Thank you.

Operator: Our conference has now closed. We thank you for your participation and wish you a nice day.

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