Operator: Good morning, and welcome, everyone, to the First Quantum Minerals Second Quarter 26 Results Conference Call. Today's conference is being recorded. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. If you would like to withdraw your question, press 1 again. At this time, I would like to turn the conference over to Bonita To, Director, Investor Relations and Capital Markets. Please go ahead.
Bonita To: Thank you, operator, and thank you, everyone, joining us today to discuss our second quarter results. During the call, we will be making forward-looking statements. And as such, I encourage you to read the cautionary notes that accompany this our MD and A and the related news release. As a reminder, the presentation is available on our website and that all dollar are in US dollars unless otherwise noted. On today's call are Tristan Pascall, our chief executive officer Ryan MacWilliam, our Chief Financial Officer; and Rudi Badenhorst, our chief operating officer. And with that, I will turn the call over to Tristan Pascall for opening remarks.
Anthony Tristan Pascall: Thank you, Bonita, and thank you, everybody, for joining us on the call today. it is been a very busy half or the first half of the year for First Quantum and in the broader markets. So I am pleased to have this opportunity to discuss these updates alongside our second quarter results. During the second quarter, continued to deliver steady operations and it was pleasing that the S3 circuit at Constancia continued to operate above expectations. which Rudi will discuss later in the call. We remain well positioned for firmer production in the second half of the year with continued solid performance from S3 de-bottlenecking work at Sentinel, and the processing of stockpiled ore at Cobre Panama. With our hedging program concluded, as Ryan will discuss later, we are once again fully exposed to spot copper prices. Alongside stronger production, this will position the company for improved free cash flow generation at current copper prices. We remain well positioned in terms of our cash flow liquidity and balance sheet to cope with ongoing market volatility. Even as we continue our focus on cost management across the business. At Cobre Panama, we continue to work on the stockpile process program during the quarter. With an acute focus on safety, equipment integrity and operational stability. This measured approach allowed for the successful recommissioning of 1 of the site's 3 milling trains, train 3, in May, and production of first concentrate in June which is earlier than our third quarter target. I am very pleased with this performance, and I would like to thank the team at site including the approximately 1 thousand skilled Panamanians who have rejoined or newly joined Cobre Panama. This achievement reflects their hard work and the effectiveness of the preservation and self management program we maintained over the past several years that enabled a high level of readiness and reliability across the operation. Following the successful recommissioning, focus was on operational stabilization, And I am pleased to report that Train 3 achieved stable operations a total of 2.1 million tonnes of ore was processed through the second quarter, to produce approximately 3.2 thousand tonnes of copper in concentrate. Stockpile processing through Train 3 has performed well with both mechanical and operational performance tracking within expectations. Cobre Panama now has approximately 3 thousand people on-site, and we have restarted procurement amongst local Panamanian suppliers. Our activity to date continues to provide confidence in the team and in the asset. Environmental stewardship remains a core priority and the stockpile processing will mitigate environmental and operational risk associated with a prolonged on-site storage of mineralized material. During quarter 2, the remaining unit trains, Train 1 and 2, along with the regrind and column areas were undergoing inspection, repairs, and preventative maintenance to support the next phase of the stockpile processing program. So far, indications are that the extent of the repairs are similar to Train 3, and the other concentrate common areas, respectively. Subsequent to the quarter end, processing was successfully swapped over from milling train 3 to milling train 2 as part of the maintenance cycling strategy. The power station and port continue to operate well, we expect our first concentrate shipment in August. Concentrate grades will be lower while we continue inspection, repairs, prevention, and maintenance of the regrind and column area of the Cobre Panama process plant. Due to the global shortage, there is strong demand for the concentrate, and additionally, at the current processing rates and spot copper prices we expect free cash flow from Cobre Panama to be neutral to positive. Moving forward, we will remain focused on maintaining this conservative and measured approach in order to ensure the highest quality operations. With an estimated 38 million tonnes of mineralized ore containing approximately 70 thousand tonnes of recoverable copper, we anticipate there will sufficient stock stockpile to support around 12 months of processing at current rates Also in quarter, the comprehensive audit of Cobre Panama was published. And is now available to the public on the MiAmbiente website. The order process span approximately 8 months involved the preparation and submission of thousands of documents. Participation in interviews, and support from numerous site inspections and field visits. This was undoubtedly the most extensive and rigorous independent review ever undertaken at Cobre Panama and 1 of the most thorough independent audits of any mine globally. The audit concluded that Cobre Panama is a professionally managed and tech technically sound operation with a high degree of regulatory compliance. Achieving an overall score of 87.73 out of 100. Importantly, the report found that the project's core systems, infrastructure, controls, and management processes are functioning effectively. As with any comprehensive review of this nature, the order also identified areas where further improvements can be made 361 out of 372 units were fulfilled with 7 areas being in partial compliance, but with no areas fundamentally absent. Improvements required in these areas are related primarily to long term reforestation, biodiversity, and restoration programs that are correctable and not considered acute environmental incidents. We welcome these findings as continuous improvement has always been a fundamental part of how we operate, and we view the recommendations as a valuable opportunity to further strengthen an already robust operation. The order is now being reviewed by a high level ministerial commission led by the ministers of Commerce and Industries, Economy and Finance, and the Environment. As communicated publicly by government, the Ministerial Commission is undertaking a comprehensive technical evaluation of the audit findings and will provide an informed recommendation in the future of the mine to the President in due course. In the meantime, we remain focused on the safe execution of the stockpile processing program and we remain ready to engage constructively with the Government of Panama to achieve a fair and durable resolution for the mine. Additionally, we continue our outreach efforts and workforce and community initiatives in Panama. It is pleasing to share that our recruitment initiatives to support the hiring staff for preservation activities achieved over 60% participation from communities in the mine's local area of influence and the participation rate from women was approximately 17%. Our educational program added over 500 students during the quarter, and now supports over 4 thousand students in Panama. While our entrepreneurial program graduated over 700 individuals during the same period. Taking the total of 1 thousand graduates to date. We have also launched a new environmental education initiative which is expected to reach more than 50 thousand students. in schools across Panama. Moving over to Zambia, I want to thank the team at Kansanshi for co-hosting the 26th International Mining Rescue Competition. This was a significant achievement not only for Kansanshi and First Quantum, but also for Zambia as it marked the first time an African nation has hosted this event. The competition brought together 22 teams from 10 countries across 4 continents and tested participants under real world emergency response scenarios. We are proud to have played a role in bringing the global mining community together in Zambia, towards improving safety performance across our industry. Continuing with Zambia, I am proud to share the 2026 marks a significant milestone year for First Quantum, as we celebrate 30 years of partnership, investments and shared growth with the people of Zambia. Over the past 3 decades, we have invested not only in world class mining operations, but also in people, communities, local suppliers, and local businesses helping to create lasting value and opportunities across the country. Our success is closely linked to the success of the communities in which we operate and that belief continues to guide our approach today. A recent example of the handover of infrastructure learning materials valued at more than 12.9 million kwacha to several schools in Solwezi, helping create better learning environments and opportunities for young people. Ultimately, it is the talent, dedication, and ambition of Zambians that power operations and position us for the future. As we celebrate our 30 year milestone, we remain committed to operating safely, responsibly, and transparently and continue to be a long term partner in Zambia's development. Thank you. And I will now pass the call to Rudi to discuss our operational results.
Rudi Badenhorst: Thank you, Tristan. Higher production at Sentinel and the commencement of stockpile ore processing at Cobre Panama led to a 4% quarter-over-quarter increase for total copper production of just over 100 thousand tonnes in the second quarter. Copper sales totaled 93.3 thousand tons, approximately 7 thousand tons below production due to timing differences between sales and production. At Kansanshi, copper production in the quarter was 44 thousand tons, down approximately 1 thousand tons from the previous quarter due to lower throughput as the S3 and mixed circuits underwent planned maintenance during the period. The S3 concentrator, however, delivered the highest monthly throughput in May since commissioning. And operated above design capacity throughout the second quarter. This performance was driven by increased operating time strong utilization and milling rates, which supported the processing of long term lower grade stockpiles. S3 continues to take a high proportion of feed from surface stockpiles which are tarnished and lower grade than freshly mined ore. Copper production guidance for 2026 remains unchanged at 175 thousand to 205 thousand tons, whilst gold production guidance is 110 thousand to 120 thousand ounces. This will be supported by continued strong performance at S3. Additionally, while ore will continue to be predominantly sourced from low grade stockpiles fresh ore from the Southeast Dome that is harder and higher in grade will be gradually introduced in the S3 circuit in during the second half of this year. Also at Kansanshi, we opportunistically sold surplus sulfuric acid during the quarter. Through proactive management of higher asset consuming oxide ore, and asset inventories we generated surplus acid available for third-party sales totaling approximately 36 thousand tons. And expect sales to continue into the third quarter. At Sentinel, copper production was 50 thousand tons, an increase of 5 thousand tonnes from the previous quarter This increase was attributed to higher grades in the recoveries offset by lower throughput A result of the planned 5-day total plant shutdown at Trident that was completed in June. We continue to effectively manage through bolt fatigue with Bormel 2, and expect to resolve the issue permanently during the annual planned maintenance downtime in 2027 with a replacement of a section of the third can and discharge end. Production guidance for 2026 remains unchanged at 190 thousand to 220 thousand tons of copper. Production is weighted towards the second half of the year with improving mill throughput and an improvement in grades as mining progresses within stage 2 of the pit. Enterprise, produced just over 11 thousand tons of nickel. A 9% decrease from the previous quarter mainly due to the aforementioned total plant shutdown. Production guidance for 2026 is maintained at 30 thousand to 40 thousand tons of contained nickel. We are continuing to focus on improving all quality and grade control through ongoing RC drilling while also refining mining practices including reducing the ore bench heights to minimize dilution and enhance recovery. All grades at Enterprise are expected to be lower in the third quarter but in line with the mine plan. The development of permanent ramps is underway to improve mining productivity and the pit dewatering stage tank pad is scheduled to be handed over to our projects team in early July after which mining activities will focus on increasing the ore footprint through lowering current cutbacks, some development and self wall mining in preparation for the oncoming rainy season. Lastly, looking at Guelb Moghrein, copper production was 2,000 tons and gold production was 6.1 thousand ounces. Which includes output from reprocessed tailings through the CIL plant. Production guidance for 2026 remains approximately 7 thousand tons of copper and 30 thousand to 40 thousand ounces of gold. The operation will continue processing sulfide copper ore plus gold containing tailings through the CIL plant. With intermittent stockpiled oxide gold ore treatment to support the most favorable transition to full oxide or gold production. In summary, as Tristan noted, we delivered consistent operations in the second quarter and we are set up well to deliver stronger copper production in the second half of the year. Thank you. And with that, I will turn the call over to Ryan MacWilliam for the financial review.
Ryan L. MacWilliam: Thank you, Rudi. The copper price remained strong in the second quarter. Trading between $5.50 and $6.40 per pound. This was due to tariff related stockpiling in The U. S. A tight copper concentrate market and sulfuric acid supply concerns. Continued strong demand meaning global warehouse inventories declined significantly towards the end of the quarter. With a 62% drop in SHFE deliverable inventories quarter over quarter. Turning to our financial performance. Revenue increased by 8% to $1.5 billion driven by higher copper prices and increased sales. As Rudi noted, we opportunistically sold our surplus sulfuric acid contributing around $12 million in revenue. EBITDA increased by 23% to $400 million, as stronger revenue more than offset the impact of higher fuel and contractor costs. It is also worth noting that EBITDA was impacted by hedge losses and P&SM costs at Cobre Panama. Both headwinds will fall away for the second half of the year. With the hedge program now complete and Cobre Panama stockpile processing underway. With first shipments expected in August. Excluding Cobre Panama, our copper C1 costs were $0.03 lower quarter over quarter. Benefiting from improved Zambian production, which is partially offset by higher fuel costs and reduced gold byproduct credits. Including Cobre Panama, C1 cash costs were $0.03 higher, with a $0.06 impact relating to elevated production costs from stockpile processing. As expected, increase in fuel prices was a headwind on costs. Along with the weakening gold price. Diesel prices through the quarter averaged $1.59 per liter in contrast to the $0.91 per liter paid in Q1. With the 2- to 3-month lag in fuel deliveries, elevated fuel prices are expected to continue flowing through our cost base in the third quarter. While Q2 saw pockets of improved diesel availability, and some easing from peak prices, recent developments in Russia and The Middle East have reintroduced volatility in global fuel markets. As a result of this unpredictability, we have left our C1 cash cost guidance unchanged. However, as disclosed last quarter, should current fuel, Kwacha and gold prices persist, there is a roughly $0.25 upside risk to our cost guidance. Our capital guidance which already includes Cobre Panama stockpile processing also remains unchanged. We have incurred around $60 million for the Cobre Panama processing program to date. This is within the $250 million of required spend previously guided to. In the rest of the business, capital spending broadly aligns with expectations at the start of the year. Our hedge program for both copper and gold is now complete. We incurred hedge losses of $159 million for copper and $5 million for gold during the quarter. This program was put in place to provide greater cash flow services through the S3 project delivery period. With strategic hedge book now fully settled, we have no further hedges in place. giving us full exposure to spot copper and gold prices going forward. As Tristan Pascall noted, stronger production expected in the second half of the year. With that stronger production, we are well set up for free cash flow generation at current copper prices. On the balance sheet, we were pleased to close out the Cobre Las Cruces and Trely transactions during the quarter. These sales reflect our disciplined approach to portfolio management and focus on our core strategic priorities. They delivered a gain on disposal of $271 million with the net proceeds deployed towards short term debt. Net debt increased by $123 million to $5.4 billion This reflected planned CapEx, tax and interest outflows partly offset by EBITDA generation and favorable working capital movements. We closed the quarter with a strong liquidity of about $2 billion including $771 million in cash, and $1.25 billion of undrawn revolver capacity. Overall, it was a solid financial quarter. With strong execution driving resilient margins. We are maintaining a disciplined approach to capital management, keeping balance sheet strength, liquidity and a continued focus on deleveraging at the center of how we make decisions. Combined with our full spot copper price exposure, this positions us well to navigate market volatility while continuing to advance our strategic priorities. With that, I will hand the call back to Tristan Pascall.
Anthony Tristan Pascall: Thank you, Ryan MacWilliam. Onto our development projects. During the quarter, we were very pleased to publish a technical report for our La Granja project in Peru. The report provided an updated mineral resource containing an estimated 23 million tonnes of copper, 600 million ounces of silver and 6.7 million ounces of gold. Which positions the project as the second largest greenfield copper resource globally. The report also included geological and metallurgical work that indicate that a significant portion of the arsenic mineralization is structurally controlled and associated with higher grade copper zones. Based on work completed to date, we believe arsenic can be effectively managed by segregation, blending and through commercial offtake arrangements. And that as a result, the mine can be developed at a large scale open pit operation with a conventional flotation flow sheet. It is still early days for La Granja. However, technical report underscores the project's potential to become a Tier 1 multi-generational mining operation. Our focus is now on advancing the permitting process and our key priorities include the progression of baseline environmental and social studies continued stakeholder engagement and preparation for the detailed environmental impact assessment. At Taca we continue to progress work to derisk the project. This includes the mining ESIA which is expected later this year, following completion of the public consultation process. In parallel, ongoing water supply assessments are evaluating incremental supply opportunities that could provide greater flexibility. We are also finalizing our application under R&D team's rigging investment incentive regime and intend to submit it once the ESIA approval and required water use concessions have been secured. As I noted earlier, it has been a busy first half of the year with our operations and development projects. However, our priorities remain very clear. First and foremost, is the priority to progress towards the durable resolution at Cobre Panama; Secondly, maintaining safe, lean and productive performance across our operations. And thirdly, strengthening the balance sheet to ensure the company is well positioned to support future growth in a disciplined manner. With that, operator, I am happy to open the line for questions, please.
Operator: Thank you. We will now begin the question-and-answer session. If you have dialed in or would like to ask a question, please press [Inaudible]. We will take our first question from Orest Wowkodaw at Scotiabank.
Orest Wowkodaw: Good morning. Hoping you could provide us an update on Cobre Panama. And wondering specifically if there is any expectation on when you would expect the government to move in terms of the next steps of their audit review. In terms of conclusion moving forward. And then secondly, I am also curious if you can comment on the media report recently that spoke about Panama setting up a state mining company that was looking for interest in the mine. Thank you.
Anthony Tristan Pascall: Hi, Orest. Thanks for the question. Sure. In terms of timing of the audits process and the recommendations coming out of the ministerial commission, Our engagement with the government of Panama has been focused on the preservation and safe management plans and more recently on the stockpile processing programs. The ministerial commission that was announced on July 14 has established a regular schedule of meetings They have made public statements on their goal to produce results as soon as possible, and that the recommendations around that need to be holistic, need to look through the technical reports and look substantial amount of effort involved in the thousands of pages there but also associated economic, environmental and legal implications of the audit reports and around the mine. Boris, we remain ready to engage as the process advances and the government, but it will be the government that determines the next steps and timeline We do not have a clear timeline as yet regarding the decision making process, but we know that they are very focused on this topic. And now with all the facts in hand from the audit, we think they are moving into a decision making phase. But what for us and while we await next steps from government, our focus is on executing the stockpile processing program safely and responsibly preserving the environments at the site, working with the communities around and ensuring the integrity of the assets at Cobre Panama. In terms of your second question, around yeah, we saw the article from Reuters. As you know, Orest, we do not comment on media speculation. As I said, the government of Panama had completed that audit, and they formed the ministerial commission to review those results and make recommendations on the future of the mine. President Mulino has been clear that decisions regarding the mine will be communicated by the government once that review is complete and not before. And until then, yeah, I would suggest any updates from unconfirmed sources. I just speculation and should be treated as such.
Operator: We will take our next question from Ian Rossouw at Barclays.
Analyst: Orest. Thanks for taking my question. Just a follow-up on Cobre Panama. I guess in terms of the final audit, was there anything specific that surprised you or anything that you were not expecting that may cause you to sort of change the plan going forward in terms of the prep work that you are you are doing ahead of a decision from the government?
Anthony Tristan Pascall: Hi, Ian. Yes, thanks. Look, the audit overall was a very thorough process. We were very satisfied with the level of engagement from SCS, the independent auditor, but also with government as we went through a lot of interviews, lot of site visits, it was extremely comprehensive. I think overall, the mark the 87.7 out of 100 score, think reflects a high level of compliance. There was 361 areas of full compliance, and then 7 areas of partial compliance. I think there are 2 areas of misallocation, but it is 7 areas of partial compliance. And but the areas that were drawn out in particular rehabilitation, biodiversity, that we were aware of. So, for example, on rehabilitation, reforestation, I am sorry, we were aware that you know, during the during the period of closure of suspension of the mine that we have not been able to do that work. So it is no surprise that some of those reforestation areas had slid backwards. We were at some 54.7% completion of the target, which was over the life of the mine. But we had lost ground because during this closure, had not been spending money on those areas without the lack of clarity. Similarly on biodiversity, ecosystem conservation, species protection, we are very aware, and we think this provides the opportunity to strengthen what is a very high level of compliance already. What we did see is those non compliances. What was not any broader breakdown in environmental management. It there were no environmental issues that were of major concern. Instead, really, they identify areas of further work where we need to document further. And we are reviewing and identifying those areas. And, certainly, we are keen to address those and ensure that we continue to improve the standards of Cobre Panama. Orest. Thanks. And on the costs, $60 million incurred in the second quarter. Intact for the full year guidance. The cash cost expectation of $450 million is that still on track? Or is there anything that you have seen maybe scope that you could do better than that? Ryan, do you want to take that question on costs so far at Panama?
Ryan L. MacWilliam: Yes, sure. So Ian, in short, the circa $4.40 C1 cost we have expected at Cobre Panama, we still expect to be in line with that through the balance of the year. So let's say we are on track for guidance. We are on track for costs in Panama following the successful ramp up of the stockpile processing in Q2.
Operator: We will move to our next question from Lawson Winder at Bank of America.
Lawson Winder: Sure. Thank you very much, operator. And hello, Tristan Pascall, Rudi, and Ryan MacWilliam. Thank you for today's update. Just on Cobre Panama, again, just thinking around timing, what is your latest on how long it would require to ramp up Cobre Panama to run rate once the fiscal framework is in place and all approvals secured. And then you noted the workforce at 3 thousand people, but that is really impressive. How do you expect that ramp up to trend for the balance of the year? And I am just trying to think of like what place you might be in at year end in terms of total employment and that ability to ramp up the mine? Thank you.
Anthony Tristan Pascall: Thanks, Lawson. Thanks for the question. First thing to note is we are not in that mode yet of a full Like I said, we will wait for governments around that timetable. If and when that comes through, in terms of our timeline to full production, the stockpile processing activity now covers most of the areas. Really, it is mining, the mining activity in particular drill and blast, or waste stripping, or full fleet mobilization that we are not involved at this stage. The fleet has been well maintained during this period of closure. But ultimately, the full restart will depend on our ability to restart mining both in Botija and in the Colina area to catch up with those processing rates. that is really the challenge. So that will come back to people, which you point out there, onboarding and training the workforce, getting operators and maintenance personnel back. We have been very pleased with how the Panamanians have responded and come back into the workforce. Some 1 thousand people already Most of those or everybody on a truck right now that is involved in the stockpile processing as a truck operator was previously hired at Cobra Panama, and we are very excited to have those people back and give the again, meaningful employment in the context of a large unemployment number in Panama, some 10% of the country is searching for unemployment. For employment. So it is a working age population of Panama is 2 million, that is 200 thousand people that are out there looking for work. And I think that gives us opportunities to bring people back. We will need to get up to some 6 thousand people in the event we do move to a full production ramp up, But the constraint will be how quickly we can bring people on board and train them. Think it will be the highest level skills that will be the hardest. We will certainly be able to get to 80% or 90% of our throughputs within the 6 to 9 months that we have spoken about, and we think that guidance remains relevant as good as we have for the time being. But the last 10 to 20% of optimization will take time and rely on really those high level of skills. So Lawson, that is how we see it. Would still take 6 to 9 months, we think.
Operator: We will move to our next question from Matthew Murphy at BMO Capital Markets.
Matthew Murphy: Hi. More questions on Cobre Panama. So and congratulations on the restart. But this ministerial commission okay, so first, it is a regular schedule meeting that is happening between the ministers Do you have any insight into when those meetings happen? How frequently And then, is it your understanding you could be engaged any time? Or like, presumably regardless of what they say, they will have to engage with you. But you know is your expectation that process has to finish, there has to be some recommendations made to the President and then you would be consulted? And then if you have any insight into what is on the government's agenda, right now? Do you think the mine is like first and foremost? Or are there other events going on in Panama? Yes.
Anthony Tristan Pascall: Thanks, Matthew. So look, in regards to ministerial Commission, certainly, the commission has established a scheduled regular meeting and I do not think they not all of those are published, but the indication when they first announced around July 14 was sort of 2 to 3 times a week. there is a lot to go through. I think at that time when Minister Mulino, the Minister of Commerce spoke around what was involved, he made it very clear how much effort would be involved going through in a diligent way through the entire comprehensive audits. We respect that process. We do not necessarily think that there cannot be engagement in parallel, that would be an opportunity. However, we will take our guidance from governments around this timetable. And, certainly, there is an indication from the minister of commerce, around their commitments to go through this in a serious manner and report back to the president their recommendations for what the future of the mine will be.
Operator: We will take our next question from Anita Soni at CIBC World Markets.
Anita Soni: Thank you. Good morning and thanks for taking my question. Tristan. So my question was just around restart costs. So I think we established, or you guys have indicated that was around $250 million including working capital to get that processing plant restarted. The second leg, as you restart the mining operations, could you give us an idea of what the capital would look like for that portion of it?
Anthony Tristan Pascall: Sure, Anita. Thanks for the question. And again, we are not at that phase yet, and we will follow government process around engagement and you know, the steps forward from here. But if and when that happens, we said previously before that we think the total involved would be some $350 million to $500 million of which this $250 million for the initial stockpile processing would be inclusive. And the we have no reason to change those numbers at the moment. We think that reasonable. Ryan, we gave some guidance around the cost of those operations. Maybe you could just fill in on the cost side of things.
Ryan L. MacWilliam: The operating cost side. Yes, sure. So as you said, Tristan, dollars $250 million in terms of that ramp up is appropriate. We have spent around $60 million of that as of June 30. The rest of that will come through in the balance of the year. And then to go from there, if we get to the point that as Tristan said, we are moving to full operations, that is an incremental $200 million split across additional operating costs, working capital and CapEx. But in that respect, we are obviously waiting for the government's guidance on next steps before we get into that. But broadly, in line with expectations in terms of Cobre Panama stockpile processing across both ramp up and start up costs and the operating costs we are seeing coming out of that.
Anita Soni: Okay. Thank you. I think that is it for my questions. Most of the other ones have been asked.
Operator: We will go next to Ian Rossouw at Barclays.
Ian Rossouw: Thank you. Just coming back to Cobre Panama and the stockpile processing. Just sort of curious, what determines the decision in terms of the throughput rate? Obviously, you say it is 38 million tonnes with the, I guess, 1 that is basically the 1 line for a year. But if you wanted to increase the throughput rate would you be able to do that and perhaps treat 2 lines? Just wanted to get your sort of thoughts around that. And Ryan, just on that sort of spending within, you mentioned in the $60 million I see you stripped out some of that by $40 million out of EBITDA. Will you do that again in Q3? Or is that just a 1 off Thanks.
Anthony Tristan Pascall: So yes, in terms of what could be done with the stockpile ramp-up, we were pleased to have the first production in through from Train 3. And I guess it is testament to the amount of efforts by the team there on the preservation activities over the last 2.5 years and the investments made by the company to ensure asset integrity that we have been able to see those start up well. there is been a lot of acute focus on safety, really a focus on making sure we do things reliably rather than with velocity or with excess speed. Really that we build a solid platform and training 3 started up very well. We had-- we had liners there that we want to exhaust, and we have now used those liners. So we have now taken Train 3 down. We are moving across onto we have already moved across onto train 2. And question is whether we could bring on, say, train 1 as we are going to do the reline on Train 3. And that is a possibility. it is really limited by people and bringing people back. At this stage, the 3 thousand that we have on-site feels appropriate. We are only able, for example, to give out 6-month contracts at the moment because of the nature of the limited activities that we are allowed to do. And so you know, at the high skill level, you know, that will be a challenge until and if and when we get a green light that we will be able to provide people greater clarity around their employment. And so you could potentially add another train, but at this stage, we are focused around moving now on train 2. And at that level, we consider we have enough stockpiles for around 12 months of operation. In terms of the costs, Ryan, could you take that question?
Ryan L. MacWilliam: Sure. So Ian, the $250 million in restart for the stockpile processing is broken up in 3 components. The first is $50 million of working capital outflows. So that does not report to EBITDA. The second is $100 million of CapEx, that also does not go into EBITDA. And then to the crux of your question, the third, $100 million of operating costs associated with the commissioning. that is what we have adjusted EBITDA for. We have taken that out of adjusted EBITDA. You saw a $40 million adjustment in Q2. And we expect to take the balance, the $60 million adjustment as we spend that in the second half of the year out of EBITDA. So in short, none of that $250 million is flowing through adjusted EBITDA.
Operator: We will move to our next question from Myles Allsop at UBS.
Myles Allsop: Orest. Thank you. Yes, a few quick questions. Maybe first on Taca, is there-- should we be concerned that the ESIA and the water permits are taking longer to come through? I mean, is this could it take another 12 months and we missed the RIGI deadline and we are in trouble? I mean, what is happening there? that is the first question.
Anthony Tristan Pascall: Yes. Sure, Myles, thanks. So Taca, yes, there have been some slight delays. We applied for the ESIA and water permit with the provincial authorities in Salta. There have been some role changes there. And so as new people have come in I think it is natural that they take a while to get behind the desk. But as we see things, we in terms of questions and backwards and forwards, we think we are sort of through that question round. And our understanding is the process will move forward in due order. We have we have had confirmation that the application is under review, and we have not received any further information requests for some time. So that says to us that it is now in the series stage of review. Obviously, with those role changes, it has taken a little longer, but we are not concerned about that given the feedback that we are getting from Salta.
Myles Allsop: Okay. Reassuring. And maybe secondly, a question for Ryan MacWilliam on the unit cost inflation. You say that you got $0.25 kind of risk from currency and fuel and additional risk if current conditions persist. So, if we say midpoint of guidance is what, $2.28? At spot, kind of diesel and currency, how much should we kind of think unit cost will be? Is it $0.30 to $0.40 higher than the midpoint of the current guidance range?
Anthony Tristan Pascall: Ryan, do you want to take that? Yes.
Ryan L. MacWilliam: Thanks, Yes. So in short, that $0.25 is if you take our current guidance and you inflate the rest of the year costs for spot fuel, spot Kwacha and spot gold. So we get a slight tailwind on the gold side. But headwinds on both fuel and the Kwacha. So I would take the midpoint of our cost guidance and add the $0.25 in if we assume we see higher cost environment that we are seeing today continue in a pretty static manner for the balance of the year.
Operator: We will go next to Cody Hayden at Deutsche Bank.
Cody Hayden: Hello and thank you for taking my question. Just on Taca, I think you have previously spoken about the potential to bring in a strategic partner. Was wondering if your thinking has evolved on this or if there are any updates you can share regarding partnership discussions or funding considerations at this stage. Thank you.
Anthony Tristan Pascall: Thanks, Cody. Thanks for the question. Ryan, do you want to talk about potential partners and partnership with Taca?
Ryan L. MacWilliam: Sure. Our real focus on Taca at the moment is on derisking the project. Those activities are the ones that Tristan's talked about around the ESIA work, around preparing the RIGI application. From a funding perspective, I think we are fortunate that we have a range of options. We have previously talked about the fact that we can look at putting a project finance in place. We have signed a working agreement with IFC in preparation for that potential work stream. We have talked about the fact that we could bring a partner in. We have talked about the fact that there are significant gold byproduct credits associated with Taca that would be amenable to streaming. And we will consider all of those options in due course, but it is early stage in terms of looking at funding options. that is our real focus at the moment is on derisking the project in advance of those considerations.
Cody Hayden: Got it. And secondly, if I may, just back to Cobre Panama, following the environmental audit, have you observed any meaningful shift in public sentiment towards the mine through your community engagement? Just kind of wondering how that maybe progressed with recent updates. Thank you.
Anthony Tristan Pascall: Sure, Cody. So on the public perception side, yeah, we actually logging a new poll just in the last 24 hours or so. So that was a group called Doxa. They are 1 of the authorized holding companies in Panama, alongside Gallup. And so it is not quite the same methodology as Gallup, but what we have seen compared to the last Gallup survey in May, which was a 55% approval rating, the doxa we are reporting this 63% favorable opinion of Cobre Panama. Alongside that, some of the questions that were asked, 55% of Panamanians supported President Mulino negotiating a new agreement with Cobre Panama. 68% of people believe mining creates jobs, 63% believe it contributes to economic growth and 67% believe it generates significant revenues for the country. that is in the context Cody, where we have been continuing our outreach efforts and social media campaigns, live events. I think to date, or since this year and last year, we have had some 420 thousand direct engagements with people since suspension. And really, that is been about educating people around the benefits of the mine. To discuss, you know, the sovereignty of Panama over its national resources. To talk about contribution to the economy and what that means in a local context on the ground with people. And our commitments to mining responsibly with the highest standards.
Operator: Our next question comes from Craig Hutchison at TD Cowen.
Analyst: Hi, guys. Thanks for taking my question. I just wanted to ask on the African assets, sales have lagged production here for a couple of quarters in a row. Can you just maybe talk to some of the logistical issues there? Whether you think we could see that reverse itself in the third quarter? Thanks.
Anthony Tristan Pascall: Thanks, Craig. Ryan, do you just want to talk about production versus sales?
Ryan L. MacWilliam: Yeah, sure. So Craig, where we saw the big difference was in Q1 and that was really just a function of ending the year end last year with very low finished good inventories. And I would say to some extent, what you have seen is that normalized through mostly Q1, but also coming into Q2. So the export channel is working well through the variety of transport corridors and ports that we are using. And as I say, that delta is principally driven by the low starting inventories at the end of last year. And we expect fairly stable sales based production for the balance of this year. Okay. Okay. And just on the sulfuric acid, you flagged potential surplus in Q3 here. Is that something that could be material and potentially lower cost? Or is it is it fairly small volumes? Ryan L. MacWilliam: Yep. Craig, so what we saw is an $18 million benefit from selling that sulfuric acid. In Q2. We are seeing that continue. So in Q2, that had around a $0.05 benefit to our C1 costs because the asset reports as a byproduct. We see potential for similar sorts of sales through the second half of this year. So potentially another $0.05 benefit But obviously, that is very contingent on what happens in The Middle East and do we see sulfuric acid come back to the market. But I would say Q3, we both expect higher diesel prices to hit our costs, and that will be a headwind. And then we do expect some sulfuric acid sales in Q3 to somewhat offset that those diesel costs.
Operator: And we will move next to Marcio Ferri at Goldman Sachs.
Marcio Farid Filho: Thank you. Just a quick 1 on my side. I know you have talked about the cost to process the stockpile at Cobre Panama at $4.50 per pound. In terms of Q1, and we have talked about the CapEx and operating cost for the ramp up as well. Just wondering if it is maybe too early, but how should we think about once Cobre Panama is eventually at steady state and nameplate capacity? How should we think about the C1 and operating costs for that operation? Considering maybe 3 to 3.5 years of cost inflation that we have observed globally that would be great. Thank you.
Anthony Tristan Pascall: Thanks, Marcio. Ryan, are you able to take that question on costs?
Ryan L. MacWilliam: Yes, sure, Marcio. Yes, I think it is too early to put out specific guidance. As Tristan Pascall noted, we are laser focused on the stockpile processing, doing that in a stable, environmentally responsible and safe manner. If the government takes next steps, at that stage, we will consider both more detail around the ramp-up cost to full operations and also the operating costs associated with those operations. 1, we would expect the operating philosophy and approach would be similar to what it previously was in terms of cost performance. So if you take those operating costs that we saw 3 years ago and inflate that by what you have seen across large copper mines in the industry, I think that would be a sensible way of considering what would that look like on a full restart. So you are getting closer to the probably sub-$1.50 C1, and now we are probably going to be somewhere between $1.50 and $1.80 C1. Okay.
Marcio Farid Filho: that is great. And a quick follow-up, obviously. The gold and copper hedges come to an end this quarter. Fully exposed to spot now. Is that a plan to eventually review the hedging policy and add some hedges again? Or planning just to stick with spot exposure for now? Thanks, Ryan MacWilliam.
Ryan L. MacWilliam: Yes, sure, Marcio. Philosophically, we think about hedging as an insurance tool. We have put in hedges when we have had periods of high capital spend combined with leverage on the balance sheet, and we did see that last year with Panama offline. And S3 project underway. With S3 now being completed, the strong copper price has meant that we have let those hedges roll off. Now I think our plan would be to stay unhedged we always have that as a tool in the toolbox if we see capital spending coming or we think the balance sheet needs extra protection, we will revisit that. But as I said, as we sit here today, because of the strong outlook for the second half of this year, it is strong copper prices into next year. there is no near or medium term plan to go back into hedging.
Operator: And we will take our final question today from Myles Allsop at UBS.
Myles Allsop: Thanks. Just a quick follow-up question on Cobre Panama. I mean, obviously, if the government gets too aggressive with the proposal, as and when it comes, I mean, how quickly can you revert back to arbitration? And how confident are you that you can kind of defend shareholder value here? Thanks.
Anthony Tristan Pascall: Sure. Look, our arbitration remains in suspension, but all the companies rights are protected there. And we can reinitiate that. The panel was established But what we see is that we have seen constructive progress in Panama. there is been good progress to date and we can point to really concrete progress milestones around the preservation and safe management plan approval last year and then moving into concentrate sales, restart of the power plant, and then more recently processing of the stockpiles both for to ensure integrity of the assets and also environmental stewardship, but that is a step forward in terms of reemployment, hiring back 1 thousand people. So we see that as good faith. Arbitration is not the preferred outcome, and we would look to deal with the matter in a constructive mode. And in terms of aggression, we think that it needs to be balanced between economic realities and reputation but also consciousness of providing benefit to Panamanians and full transparency around that process. So that is our focus. As I said, arbitration is not preferred outcome, but all our rights are protected there.
Myles Allsop: Orest. Thank you. Good luck.
Operator: And that concludes our Q and A session. I will now turn the conference back over to Tristan Pascall for closing remarks.
Anthony Tristan Pascall: Thank you, operator. And thank you everybody for your valuable time today. And this concludes today's conference call.
Operator: Thank you for your participation. You may now disconnect.