Atalaya Mining Copper, S.A. (ATYM) Earnings Call Transcript & Summary

Good afternoon, and welcome to the Atalaya Mining Q1 Results Investor Presentation. [Operator Instructions] Before we begin, I'd like to slip the following poll. And I'd now like to hand you over to Alberto Lavandeira, CEO. Good afternoon.

Good afternoon, everybody. Thanks for being here. And we're going to -- we would be going through the presentations of the -- related to the first quarter of the year. But I would like to take the opportunity to also comment a little bit about our growth plans. And of course, we will be very happy to answer as many questions as possible within our time limitations. With me, I have Cesar Sanchez, which is the CFO of the company. And -- I will start with a small summary of what happened in the first quarter. It was a tough quarter. It was a quarter where we had a strike in Spain due to the high diesel prices that created some issues with the transport supply chain of line. We had to stop. So we produce less copper than we had planned, 11,000 -- almost 11,500 tonnes. As a result of that, higher costs due to reduced volumes, but also specifically due to the high -- extremely high energy prices, electricity prices plus also diesel, explosives. Still, overall, we are seeing some softening in these conditions during the end of the year, and we believe the production is going to be recovered. So we are maintaining the full year guidance, very likely going to be in the lower range of the guidance from a production point of view. But so far, we think we can -- we still have time to recover it. EBITDA was 27 -- around EUR 27 million -- and important to mention that most of this EBITDA went to free cash flow of EUR 20.7 million. That tells you a little bit that our cost structure really makes us flow all the costs directly from the EBITDA to the balance sheet because we don't have too many other overheads or similar things. Our balance sheet continued to strengthen close to EUR 87 million at the end of the year. And liquidity improved a lot because we had one of the historic shareholders, [indiscernible], run into some trouble with its parent company. It was distressed and had to sell their position and that created a big opportunity that has been taken by lots of institutions and individuals and our liquidity has improved dramatically. Right now, only one big shareholder has 22% of the shares of the company. And the rest is all institutions, which is helping the liquidity quite a lot. We were strengthening for the future. So we are starting to build our E-LIX plant, the Phase 1. We are starting the construction of the solar plant. We have been continue with exploration. Exploration is going to get a very important aspect of this company in the near future. Masa Valverde satellites surrounded the 70 kilometers from Rio Tinto. And then we have already started announcing the resource -- significant resources that we have both in Masa Valverde and in the satellite deposits of some San Dionisio, San Antonio, that are immediately besides our current [indiscernible]. No issues with the COVID and we try to continue to improve the efficiencies at Rio Tinto. And a very important point is that we published a first sustainability report, which is now on our web page, and we have just hired a non-Executive Director, which is highly specialized in ESG matters with a broad experience in the industry, which we believe is going to be a huge addition to this company. As I said, the sustainability report is published in our web page and I encourage you to take a look at it because not only it's nice, but it gives all kinds of data first. For us, transparency is a key ingredient of a mining company, especially when you are looking at the future. This has been prepared by ERM, which is a worldwide recognized expert and has been audited by Ernst & Young. Looking to our production results, you will see what I mentioned before. The first part is that we produce a little bit less tonnes of copper. But as you can see, most of it is due to the lower throughput that was due to the 10 days strike in -- basically in the whole Spain of the transport sector. That point us to stop the mill because we don't have any line. Recovery was better than previous quarters and that compensated the lower throughput. Of course, as a result of that, revenue sales were lower than previous quarters. And EBITDA was significantly lower, obviously, due to the 2 factors: one is lower production and another important point is the incredibly high electricity prices. And I'm happy to speak about that in a second. Having said that, you can see in the last graph, it's extremely important that, that graph is how our net cash position has always been negative while we were reconstructing. It means we're looking at sending all the cash flows generated by the operations into the project without diluting our shareholders. As soon as we started production with the expansion, our cash position started going up. We gave a EUR 50 million -- almost EUR 50 million dividend. That's why you've seen the second bar from the right, that was lower. Otherwise, we would have been fantastically high. And important is that even after that, our net cash position will continue improving because, as I said before, our EBITDA reflects immediately to the cash flow. Right now, we have EUR 120 million working capital surplus, which is quite a contrast of what we used to have of even up to minus EUR 40 million just a couple of years ago. Let's talk a little bit -- I'm sure you would like to hear about the electric supplies in Spain. It's -- Spain is kind of island in Europe. And incredible enough, we only produce electricity from gas and coal for less than 10% and going down. But the rest is coming from nuclear, from wind, big time, solar and other 10% hydraulic. So as you can see, renewals and non-CO2 related. But due to the system that we have, which is the marginal production system, which means the higher cost producer sets the price for everybody. We have been exposed to this high -- incredibly high prices. In the last 10 years, the electricity prices in the base case has been around between EUR 50 and EUR 70 per megawatt hour, actually going down, as you can see, the trend due to the high input of wind in Spain. But since last year, prices of gas started spiking up and reached certain points with the war of Ukraine of around EUR 300 per megawatt hour, which is, as you can see, is 6x, 600% higher than what we had historically. Well, what's affecting us? The effect is that until now -- until last year, our -- the cost of electricity was represented only 10% of the -- around 10% of our costs and this year it has gone up to almost 30% of the cost. Actually, in the first quarter, the cost of electricity at the plant was higher than all other costs together that we had in the last year. That tells you how important it is. So we have been trying to do our best optimization at the plant but we have a consumption of around 24-kilowatt per hour per ton of production and it's not much we can say that we can do. Prices have eased a little bit, both in gas and electricity and around 200 as we speak. But were lower in some -- in the weekends. And the Spanish government has been given the okay, although not finally settled, but giving the cap to limited gas prices, Spain in Portugal at around EUR 40 per -- EUR 40 to EUR 50 per megawatt hour, which means prices for electricity would be around EUR 130, EUR 120, roughly half of what we have right now. This is going to have a huge impact. And this is only going to happen during the second part of this year. Going forward, we are in a much better position. We signed during the first quarter, a long-term agreement with our main supplier in Visa at around EUR 52-megawatt hour for around 33% of the needs. This 33% of the needs -- excuse me, I'm going to go back again here. 33% of the need combined with construction of the solar plant. It means that from 2023, 53% of our costs -- electricity costs are going to go back to normal -- actually to even under what was been normal during the last 10 years. So hopefully, the situation of the gas is going to be disappearing. Other inflation points like diesel, which basically has doubled although there is more help from the Spanish government of EUR 0.2 per liter. Explosives. They have an important effect, but maybe 10%, 15% of the global cost of binding. So it's not that significant as the 500% increase in the electricity prices. So with that, we had a guidance that we are maintaining and we'll show you a little bit why. We had -- the guidance is composed of -- production and costs are composed basically by already get through the plant grade that has that ore, the recovery of that copper and that gives you the production depends on the production and your costs, you have your cash cost and your all-in sustaining costs. Well, we believe we are going to be in the high end of the ore process. So we'll be able to catch up a little bit what we lost in the first quarter. The copper grade is also expected to be improving. The recovery rate is higher. Right now, it's around 86% accumulated. So very likely even with a slow start during the first quarter, we will be probably in the lower part of the guidance in production, but we will be there. Cash costs depends on the assumptions for electricity and that's why we gave such a wide guidance. We're basically talking about $0.50 variation, which is basically what it means having EUR 100 per megawatt hour variation. As I said before, I will expect that the second part of the year is going to be closer to the EUR 120 million, so half of what we had in the first quarter. So the guidance will be cash cost and also in sustaining costs are expected to be lower -- substantially lower than we had in the first quarter due to the higher production and due to the lower expected costs. As I said before, important factors to reduce electricity are the construction of a solar plant in the -- in an old dump close to the plant, the plant is seen in the Slide 11 in the center. All the civil on the right side is finished. It's been completed in the north side, all the equipment has been ordered. In addition to that, we have signed this power purchase agreement with Endesa. And we are looking at some additional other initiatives, a specialized company has made a study of 4 wind turbines sitting between [indiscernible] and in our tailings in the Hill. There are measurements -- station with 20 years measurements that we have used. They are not high altitude measurements. But based on the studies, it looks like it would be economic. It will be 4 wind mills at 6-megawatt hour for 6 megawatts each. We will be studying this in the next few months. And if it's positive, we believe it may be positive. We will pass it to the Board. This has the special advantage that have been self-consumption and you can use the wind also at night. Not only will be economic from a long-term point of view, but it will all be in our land, but it will also be very important from the sustainability. And I believe we will be one of these companies that has most of the power self-generated from sources that are renewal. An important point that I wanted to highlight today is the growth. I mean I think people are starting to realize that this is not only Cerro Colorado that we are mining, where we have, let's say, mining for another 10 years. But we have a pipeline of projects that are real, not only total that's been permitted, but also our San Dionisio initial which is committed to Cerro Colorado and Masa Valverde plus exploration that we are at. So for those of you who are not familiar with it, we are mining in the central part at Cerro Colorado. We have another base called San Dionisio just left, just east of the -- sorry, just West of Cerro Colorado and underground deposits in San Antonio. Why we believe this is very important. Well, the grades of the overall reserves at Cerro Colorado, when you look at $4 per pound prices are 0.38. We are -- will be mining around 0.41, 0.42 and leaving the stockpile very end. This will give us around 12 years life. But what we haven't set an issue on the open pit side, it's around 0.9% copper. So it's very evident that if you could substitute some of these tonnes of San Dionisio and blend them with Cerro Colorado, we would have a much higher grade with the same installation through the same mill. We will be able to produce much more copper. The open pit section of San Dionisio contains 2 zones -- one, at the upper zone contained was higher copper and the lower zone contains copper and zinc. So if I show you in the graph how it looks like, this is the old Atalaya pit. San Dionisio deposits is basically what has been mining in the past. It's in the center of the pit. It was a very high grade zone that was mined in the last century. And they left the -- what they call lower rate, but it has basically around 1% close to the stops. And an [ allo ] of around 0.8% average. You can see in the section on the right side of Slide 16, that the center core has been mined out, but they have left all the right side with only copper. And in the bottom part, you start getting massive sulfides that also contain lead and zinc, mainly zinc. So you can see that it's not an aggressive pit. We are using slopes that's similar to what they are right now in Cerro Colorado and [indiscernible], but the mineralization starts basically from surface. The San Antonio deposit is underground lens located immediately west from Middle East from Cerro Colorado. We can access it with an underground ramp and very simple. It contains copper at zinc. It's quite high grade. It starts at 200 meters from surface to 500. More or less it's quite easy to mine flattish, and it's open to the right, which means the East, it's just north of the Nerva Village. In San Dionisio, as mentioned before, it contains 2 zones. One is copper with around 0.8%. Another one is contains copper and zinc, which is quite significant high grade and also contains certain zones of underground that can be mined underground with 1% copper and 2.5% zinc close to some lead. There are some indications in the presentation. I'm not going to read Page 18 of how this can be mined. But the idea is to blend 1/3 of the capacity of our current mill with this open pit from San Dionisio, so we can increase the grade of the existing feed and produce more copper with the same installation. Once we get into the zinc, we'll have to add a flotation circuit to recover the zinc or the E-LIX -- and the E-LIX. And this will give us an additional production of zinc and lead, which basically is a byproduct. So the copper equivalent production will be much higher. We will be doing a preliminary economic statements this year, actually, hopefully, starting in this next quarter and we'll have it before the end of the year. And Masa Valverde is a another deposit, which is located 25 kilometers southwest of Rio Tinto, we gave some preliminary estimates based on independent company -- specialized company. It's a substantially big massive deposits, almost 90 million tonnes open in certain directions. And it's a combined copper, lead, zinc in some areas it's higher grade, some areas it's lower rate. The importance of this is that it contains some very high-grade intercepts of copper that can be put directly into our plant. How is this going to be developed? It is going to be basically ramps starting from surface to the shallow area of [indiscernible], which is high-grade and shallow and small. And then that ramp will continue to be able to drill the lower part of Masa Valverde as well as develop it and be able to extract these ramps either through a belt or trucks directly from surface. The importance of these 2 deposits is that it can be mined -- they can be mined directly without having a plant, and that's why you can get special higher revenues from this deposit early on. We could start mining the higher portions of copper and feed them into our existing mill without any significant investments in constructing a new mill. The area is -- the deposit is quite well defined, but still wide open because in some areas. It has -- the intercepts are very wide, but contain some higher-grade zones, clear high-grade zones, including the presence of gold, which still needs to be assessed and we are not considering at this stage. The importance is we contain some sort that has copper only, which can be fed into the plant without the need a problem. We are also starting the completion of a preliminary economic study as soon as possible. Very important to be able to recover this, this very important to recover this polymetallic is the development of this E-LIX system, which has been working for 2 years in a pilot plant that some of the pictures are shown here. And we have just started the construction of our industrial plant, which should be ready at the end of the year. This slide that I'm going to -- excuse me, let me jump this slide because this slide should not be here. With these initiatives that I just mentioned about production without being considering E-LIX, what is going to happen is that we expect to have a production uplift from our existing deposits of between 70,000 to 75,000 tonnes of copper. So I see ourselves where we are in '22, mid-22s, I see ourselves in '24 producing from Rio Tinto 70,000 to 75,000 tonnes of copper in addition to what we can get from total around 30,000 tonnes. Why we can do that is because we add around 5 million tonnes of high-grade material of open pit from San Dionisio. Basically, we are blending 5 million tonnes at 0.78%. You can get 16,000 tonnes of copper more. And if we can mine from San Antonio 1 million tonnes at 1.32 we're getting 8,000 tonnes. So there is potential to increase the production from Cerro Colorado without any significant investment. So those are the key initiatives for the year. Solar plant PEA Masa Valverde, PEA San Dionisio, Touro continue to permit exploration, big exploration spend in Ossa Morena and [indiscernible]. Let me go back to the slide. This slide that should be at the end. This slide is our progress of the initiatives -- to the initiatives to improve the water quality at Touro. In Touro, we have -- we got 2 years ago, a negative environment activation. That was due to the anti-mining groups making a lot of noise and stating things that were not true. The main one was that the mine was going to be polluting the area. We had assumed that we were going to be taking care of the liabilities, and this was going to be done after we got the permits. After lots of dialogue with all the implied parties, including associations from the area, fishermen, they said look show us that this can be done, and this will be very positive. So we engaged in more approval approved to construct that water treatment plant to treat the water. It's coming from operations that were finished 37 years ago, which are not that relevant, but they make a very bad picture like you can see in the center part of the picture, where it says before, a small creek of around 1 meter wide that contains some massive water. We started immediately the treatment. And right now, only just few couple of weeks after starting our operations. They already creek is starting to turn green again and the waters are clear. In addition to that, we are building a water treatment plant for all the other rivers or small creeks in the area, the water treatment is so much finished. You can see some of the pictures in that Slide 24. And this will be shown the community. And it will be an important step of credibility before we submit all the paperwork for the permit. As I said, we are doing this in theory and related to the permitting process itself, but certainly will add credibility to our proposals. So that's in a nutshell the plan that we have. And of course, there are some few other data in our presentation that our views as needed depends -- depending on the questions.

[Operator Instructions] Alberto, we received a number of pre-submitted questions from investors, and I want to start off the Q&A session with these. The first one read as follows. When will the Spanish government implement the gas price cap? Will the Spanish electricity cap be passed on to the businesses or only to customers? And is Atalaya Mining planning to revise its cost guidance range once the cap has been implemented?

According to the news, what has been published in the official website. This thing is going to be affecting everybody because it will affect directly the electric companies. So the electric companies are doing or have the system that we have is that the marginal price, which means the higher cost producer sets the price for everybody, for everybody that doesn't have a fixed price. That's our case. So by setting the maximum the gas price, which is always the higher cost producer, it is believed it's going to be set initially at EUR 40, and electricity price means that's basically 2.2x the gas price. It means that electricity is going to range EUR 120, EUR 130, so roughly half. This is expected to be start to implement in -- it was expected to be started implement in May. Yesterday, I'm out of the country, but I read in newspaper that they still had needed some approvals from the EU, although it had been approved already. So we expect this, let's say, starting in June. It will affect everybody including us. So it will be a strong change. We'll be updating the guidance, well, probably yes, but we have already given the guidance depending on the electrical between EUR 100 and EUR 200. So we have already assumed that this was a very wide range, and we will be, let's say, in the lower part of the range. Roughly speaking, around EUR 100 per kilowatt hour change means I think it was like $0.40 per pound change. It's quite significant in our case.

The next question is around Touro and has there been new project proposal being submitted yet? And if not, what's the catalyst the company is waiting for?

We have not submitted yet because we believe that 1 month, 2 month, 3 months, whatever is not relevant. What we wanted to do to be is, for sure, it's going to be a yes. We're in constant dialogue with the different departments of the administration, the communities, the affected communities of the coast, the municipalities and we believe we are seeing the wave of positive news coming in. What we said is, look, we're going to show you that the water problem is not a problem actually. With an investment with somebody putting money in, it will not cost money. It will not cost any Euro to the taxpayers of Galicia, and this thing is going to be fixed and forever at our cost. It was something that we had already assumed we're going to be doing as part of the CapEx. So the only thing we are doing is advancing it at our own risk. We will submit the papers when we have a full -- when everybody is agree verbally that these things are being done in the right way. I think the credibility that we are gaining is huge. And the problems or the potential issues that were raised in the past, assuming that this thing would not be fixed will be demonstrated that are being fixed and that they have -- of course, they have solution. So that argument of the questions, Mark will not be ahead. So we want to make sure that everybody understands that this is a good project in the right metal, in the right place, long-term quality mining that can be made on like it's done in any other modern country. So only when we are 100% sure that this will go ahead, will -- and everyone is happy with it. We'll submit all the paperwork. The paperwork is basically ready almost 10 months ago with a new project, which has an enhanced project with a higher factor of safety without any water on top of the tailings, which means there's no possibility of catastrophic event with [indiscernible] discharge system. Now we are adding a few other things. We are adding the use of sewage waters from -- farms from the area to our process. So we will be -- we're also adding a solar plant. It will be a project that will be a model for the generations in the future. So we are showing that slowly. And then we had it very likely soon, very likely 1 month or 2 months, not longer than that. We'll present all the papers with the proof of what we have done. You want to make sure this time is a yes.

The next 2 questions are really around M&A and the first one, read as follows. According to the geological Mining Institute of Spain, Spain has an estimated 70,000 tonnes of rare earth. Is this a commodity group that Atalaya Mining would consider? If not, which commodities would you consider besides copper and zinc?

We couldn't consider any commodity in general. Of course, we wouldn't go buying going to rare earths. We don't have any rare earths in our portfolio. But we have -- we will be very happy to look at them because it has out of future. But so far, the only reason why we have not gone into that is that within the concessions or investigation permits that we have, we don't see potential for those. But you're right, there are a couple of deposits that are known one in Galicia and one in the central part of Spain that are very well known. And of course, we will be very happy to participate on them if it was possible. But right now it is not in our plans. We are looking at, obviously, copper, lead, zinc, gold and silver simply because that's what we have in our investigation and exploration permits.

And the second question around M&A reads as follows. Have you considered investments in select African countries such as Morocco as a first step into the African continent?

We have looked at things in Morocco that have been offered to us, but so far, nothing that was interesting. We looked at things in Botswana and actually we even submitted an official bid it to the acquisition at a certain time, and we were happy with that. From my team, part of my team has been involved in the construction of the Tasiast project in Mauritania back in 2005 and '06 and '07, which is a world-class gold deposit in the middle of the desert. So we are not shy of that. The former Chief Operating Officer of the company was the general manager of that project will be in construction. So we're not unhappy with that. Morocco specifically, we wouldn't mind but we have not had the opportunities. As a way to come in, for example, we started in Mauritania simply because we like the project at that time, there was another company obviously. And because it was quite close to get through [ Huri ] Islands, which was a way to do it was very successful, and it was followed by Kinross later. Morocco itself happy to look at it, but we have not found any good opportunities so far.

Next question is really around share schemes and ask, have you considered implementing an employee share scheme to help productivity and loyalty?

We will have some stock options to key people, not only the, let's say, the executives, but also all the general money from the company have general managers or managers or departments have an auction scheme. Certainly, with the past shareholders that we had in our company were 4 big private shareholders that were not very keen in those type of incentives. I think it was a mistake because I believe like ever has this asked this question that this is a very interesting system to incentivize performance and align with shareholders. Yes, I think, yes, we have consumed now it's a bit more than it used to be in the past. By the way, with independence of that, we have a very loyal team. Some of the people that are working with our team, I know for over 25 years link with companies linked with where I've been working. And we have a very, very, very low turnover. It's a company that really people are happy to work and they work very hard. I'm extremely happy with the existing team.

And the final piece of that 3 question asks, what portion of your costs are denominated in euros?

Well, I would say all the operating costs that are site costs. So all that's planned mined and G&As. And from the offsite costs, which are the transport TCs, RCs, only they transport to the coast and loading at the port are denominated in the euros. So for example, roughly speaking, if the costs, offsite costs around 0.50 -- used to be EUR 0.50 per pound. Now they're around EUR 0.60 due to the diesel prices. Those are treatment charges, refining charges, smelters and sea freights. Most of them are in -- are denominated in dollars. The only around EUR 20 per tonne of concentrate are denominated in euros. All of the rest is in euros. I would say, to put it in a simple way, 25% to 30% of the costs are in dollars, the rest are in euros.

That concludes the pre-submitted questions. And as you can see, we received a number of questions throughout today's presentation, and thanks to all the investors for submitting those. Alberto, could I just ask you to read out the questions and give a response to where it's appropriate to do so. And then I'll pick up near at the end.

Excellent. Yes. I have one question here from Sat. It says this is a strong dollar against euro, a positive or a negative for profitability of the company? It's a positive for us because we sell in dollars and then most of our costs as I just explained are in euros. So actually, one of the reasons that would also help our guidance from a cost point of view is that initially in this year, the predictions were going around $1.15 per euro. And right now, we are in around $1.05. So that, let's say, around 10%, it relates into, let's say, 70% or 65% of that saving goes into our cash costs in dollars per pound. So it's better for us. We are exporting in dollars, and we are paying in euros. Then we have another question here for the remainder of this calendar year. What can you do to lower our production costs. Well, we are doing initiatives like the first thing is to try to increase the grade. Second is to try to modify the plant, increasing the grade of the mine. What it does basically doing a much stricter way control. What it does is you produce more, your denominator is higher than your costs are lower. Another thing we can do is lower the distance of transport dumps because this is a very important factor. So modify the plant a little bit instead of a very normalized plant, try to minimize the distance from the loading point to the discharge point that lowers the mining cost a little bit in the [ rest ]. Other than that, at the plant, we have been implementing things like the recovery of water to reduce energy and to reduce the lime consumption, which is also an important factor. And other than that, the rest of the costs are very variable, not much you can do there. Of course, increasing the recovery also helps. And I have another question from Paul, which says any progress or yet to retreat your negative gold operating tests at Rio Tinto. We have done lots of tests recently of leaching those gold [ things ]. So far, the indications, the response have not been very good. The gold recoveries were around 40%, 50% and the silver were quite low in the range of 10%, 15% recovery with a standard leaching. So far -- and the grades were around 0.3% -- 0.3 grams per tonne gold they were around 35 to 40 grams of silver. And in total, we had around 29 million tonnes, if I remember well, around 30 million tonnes. So the operation was just marginal for -- in order to be better, I think we would need better copper and more important silver prices. And we will also need some sort of technology that we will be able to unlock that value to increase the recovery, which so far, we don't know. We'll know about it. There has been some major speculation that there were - they were going to be using some novel technique. Well, there was probably something that somebody could there, but it was not us, certainly. Why do you think that the share price does reflect the -- how do you think the share price does reflect the excellent progress of the company stake. Well, mark, just I don't know if it does not reflect. I think it's slowly it's reflecting it. I think we have seen a slowdown in the share price due to several things. One is the sale of the Chinese shareholder at a discount created a created big volumes, very likely this was sold at the discount, very likely some of these institutions, maybe hedge funds came in are probably realizing some profits. So we had kind of slowdown there. But on the other hand, most of the copper names have seen their share price going down, similar to us due to the slowdown in the copper price and the reflection of perception of a slowdown in activity in China due to the COVID restrictions, which we believe is temporary. And we believe, I personally believe that the copper price is going to see huge increases even this year, but certainly next year. Does the company -- another company -- another question from Roy, does the company intend to increase the plant size to raise the production from the current levels to increase profit and offset a drop in the copper price. The increase in the size of the plant is difficult due to the restrictions or limitations in electricity supply and water supply. What we can do is to pass better tons, higher-grade tons to the same installation. That's what we are proposing to do. So we will be producing more copper but without having to both land size increase, which is actually is better because you don't need to have huge capital expansions and it can be done immediately. So we will see and important in the next year or 2 years, we see an important increase in production of copper without having to raise the plant size and we'll see a subsequent reduction in costs and of course, increase of profits. Walter is saying by how much should all-in sustaining costs dropped by 2024 due to the new it's incorporated. Well, if we -- let me put you a few numbers with a rate of 0.42% copper. As you know, all things are the same, assuming costs of power EUR 100. I'm happy to go into the detail, if you want, you have my private e-mail. If we assume that with 0.42% we were getting with high cost of energy, let's say, 250 all-in sustaining costs. If I just made the blend of 0.55% -- and I'm doing right now in the computer of 0.55%, which means we're blending a little bit of this copper in, the net effect it will go from 255 to 208. So just this increase from going out upgrades at 0.42% copper to 0.55% copper. That small thing, keeping all the things the same, means almost $0.50, $0.40-something lower all-in sustaining cost as a result higher production. And that would take our production levels at 72,000 tonnes of copper. It's a huge effect. That's the reason why we are quite comfortable that we are going to be seeing production levels of around 70,000. If anyone wants to get more details on this, I'm happy to people have our contacts, and we'll organize a call to look through that. Paulo is asking do the company use any hedge policy for the copper price or just take the spot value of the market? Thanks. No, we have been using only spot. There are some our -- sometimes it's a bit difficult to correlate production with what we get simply because the way this works is that you submit certain shipments. And the buyer agrees when is the price going to be settled. So declares a quotational period, it means, okay, I'm shipping now in May. But the price will pay you for this shipment will be June or July. So we say in July, they say both plus 2 in July, the average price of LME multiplied by your production here. So sometimes it goes out lower, sometimes it goes higher. Overall, around the year is more or less flat. It's the same thing. It doesn't really matter too much. We cannot predict the future, but they may have -- the buyers may have some views, and that's why they use it. So it doesn't go in -- it's not exactly coincide with the direct coverage. And we are not using hedging and we have thought of that due to the extreme volatility that the lower stocks that were available just a few months ago, we didn't want things to happen like it happened with nickel where suddenly there's no stock in the price floats and then you have to -- your subject to margin costs if you are selling in the future. So hedging is a novel edge sword, we had to be a little bit careful. We believe that our shareholders are buying our stocks of our company because the exposure to copper, and that's what we are doing. It wouldn't be good also to have hedged when it was at EUR 360 and everybody was saying it was a fantastic price, and then we saw it going to EUR 450. As for the same reasons we prefer to be exposed, and we are strong believers in the long-term price good long-term price. And I believe there's no more questions here.

Thank you very much for that. I think you actually and to address all those questions from investors. And of course, the company will review all questions submitted today, and will publish those responses on the Investor meet company platform. But just before we direct investors to provide you with their feedback, which knows particularly important to the company, Alberto, could I just ask you for a few closing comments?

Well, I would say, thanks to all those support and all the shareholders for being with us all these years. It has been a tough quarter, I would say the toughest quarter that we got through because it came very suddenly it came -- it was not foreseen. It was coming in a period where copper prices were going up, and we saw this inflation really like a wave. So I think it's important that we really appreciate the support that we are seeing in our shareholders. Besides that, we strongly believe the company -- the future of this company is very strong. We recently had a site visit by 6 institutions that cover our stock, about 2 weeks ago, all of them have published their notes. I encourage those interested in this company to read them because I think during the year, they -- in the field, we are able to show them what our plans with more detail. And I think I've seen some notes saying that this company has a great future and a very -- great future, let's say, it's in a growing mode. So thanks very much for being in the good times and in bad times. That's all.

Thank you very much for updating Investors Day. Could I please ask investors not to close this session as you now will be automatically redirected to provide your feedback in order for the management team can better understand your views and expectations. This will only take a few moments to complete and I'm sure will be greatly valued by the company. On behalf of the management team of Atalaya Mining plc, we'd like to thank you for attending today's presentation, and good afternoon to you all.

Thanks.