Aura Minerals Inc. (ORA) Earnings Call Transcript & Summary

Okay. Good afternoon, and thank you for joining us today. I'm Taylor Combaluzier, mining analyst at Red Cloud Securities. Today's webinar focuses on Aura Minerals Inc., which is a gold and copper production company that focuses on the development and operation of gold and base metal deposits in the Americas. The company's producing assets include the San Andres gold mine in Honduras and the Ernesto/Pau-a-Pique gold mine in Brazil as well as the Aranzazu copper mine in Mexico. Its Gold Road project in Northern Arizona is also expected to reach commercial production by the end of 2020. Today, I have with me on the webinar, Gabriel Catalani from Investor Relations at Aura Minerals. The format of the webinar will be that Gabriel will provide an update on oral minerals and give us some insight on the transformation that the company has been undergoing for the past 3 years and what the opportunity is for investors going forward. We'll take questions live then, so please send us your questions via the chat, and we'll get to as many as we can. To start, we'll handle the disclosures and then get into the presentation. For Aura Minerals, there may be some forward-looking statements made on this call. I would direct listeners to the cautionary note on Page 2 of the Aura Minerals corporate presentation located on the company's website. For Red Cloud Securities, Inc., I would highlight that this webinar is for information purposes only and should not be considered a solicitation to purchase or sell securities, or a recommendation to buy or sell securities. And we note that this call does not take into account the particular situations or needs of individual investors. Participants should rely on their own investigations and seek their own professional advice before investment. For Aura Minerals, I would note that in the last 12 months preceding the data of this webinar, Red Cloud Securities, Inc. has performed investment banking services or has been retained under service or advisory agreement by the issuer. So now I'll turn it over to Gabriel to update you on Aura Minerals and what investors have to look forward to with this company.

Thank you very much, Taylor. I would like, first of all, to thank Red Cloud. I thank Taylor for the opportunity for this webinar and to -- with all this audience with us today and have the opportunity to show a bit about our case. So my name is Gabriel Catalani. As Taylor mentioned, I'm one of the Investor Relations Officer for Aura. I've been with the company for over 4 years now, working for corporate strategy and head of financing in our operation in Honduras, and now I'm here for taking over the Investor Relations department together with the financial plan. So I think one of the first things that we like to mention about Aura is that -- and this is very important for us is this first page that mentioned, that we have a vision of being the most trusted, responsible, well-respected and results-driven mining companies. And [ these mean ] for mining because it's very important for us to that we want to be one of the best mining companies. We want to have a well structure and a deep -- deep well-structured culture here in our company to do -- to be a model -- to have kind of a modern culture for our company. We do believe that the mining sector in -- it is very important for the mining sector and for Aura to develop a strong well-structured culture in order for us to build a reliable and long-term growth for our company. So this is very important to have meaningful mining concern. We always say to all the investors, to all the audience that the world, and we -- everybody needs mining for us to keep promoting progress on our society. And the thing is how we do it, we want to do it right. And this is really, really important for us in here. So first of all, I would like to show the main overview of Aura. So we are a diversified, multi-mineable copper producer. So now we have 80% of our revenues come from gold and 20% of our revenues come from copper. Those 20% come from -- we've been producing copper in Aranzazu in Mexico. This is where we have our underground copper, gold mine. In all our other operations, EPP here in Brazil, San Andres, there in Honduras and also Gold Road in Arizona U.S., they are all pure gold producers. So now we have the operations in 4 countries, 3 of those already in commercial production, EPP here Brazil; Aranzazu in Mexico; San Andres in Honduras; and the fourth one, Gold Road, which is expected to achieve commercial production through December now. Also, we -- it's important for us to show that -- I will show you through the presentation that we are a company that is expected to significantly -- working and building growth history, a growth track record that we do believe that will take us to -- here in Q2, we want to be -- want to reach 400,000, 500,000 ounces. We do believe that with our projects that we have right now, we can reach that level of production within the next 3, 4 years. Also with this growth, it comes a lot of opportunities for reducing cash costs. So [ a division ] that we operate at, that we have most of our cost at local currencies, and we have been benefiting from depreciation of those currencies. And we still have room to reduce our cash flows in the near future. EBITDA less sustaining CapEx and exploration CapEx as dividend, we usually like to -- we have some analysts [ essential ] from the market that calculates about 5% or more percent of the dividend used already starting next year. So this is -- we do think that this is very important that Aura joins -- puts together a case of growth, together with a dividend payer company. So for investors, we do think this is very attractive, right? We've just listed our company here in Brazil, in July this year. So this is very important for the liquidity of our shares. Last month throughout November, we've reached some kind of a -- we reached about $5 million -- $4 million to $5 million average daily traded in B3 here in São Paulo. And we do think we can -- we have lots of room to grow also in Canada and U.S. for the next months. And this will be our focus. We'll be focusing on U.S. and Canada markets for the next year in order to boost the liquidity on those markets as well as same as we did here in Brazil. And together with all, we do think that this is very important for us to have a strong management. We have a management with excellent track record. So we have an increased annual production and EBITDA by 57%, and that's 57% of production and 274% of EBITDA increase since 2017. And this comes with the new management team that started early 2017 when Rodrigo Barbosa assumed the position of CEO for the company. And since then, we have built a whole turnaround story here in Aura. We do believe that since we -- the new management assumed the company, we have a whole different story now for Aura, and I'll tell you more about the story on the next few slides. Together with this, we also have a controlling shareholder, Paulo de Brito, which is the founder and developer of Yamana Gold. He's the controlling shareholders, and it's a great advantage for Aura for the development of our projects, also for opportunities for new projects and it's Paulo de Brito, he's a person well-known in the market, and it helps us. And it gives us a strategic advantage for Aura that is very important. So now for you to see overall our operation, as I mentioned, so we have the operations in Honduras, Mexico, Brazil and Arizona. Our office headquarter is in Miami, and we also have an offices here in São Paulo, Brazil, where we are right now. We have project in studies in different stages of development. One in Colombia and 2 others -- 3 others here in Brazil: Matupa, Almas and Sao Francisco. And [ beyond ] production, as you can see here, if we take the COVID effect out of 2020, and we annualize the expected results for the second half of the year of 2020, we've been reaching about 240,000 to 270,000 ounces equivalent for annualized. So this is what means our -- we do believe our running rate right now for production. And though from those like 1/3 from coming from Brazil, 1/3 Mexico, 1/3 of U.S. And U.S. will be on a ramp-up phase. And next year will be taking a more relevant position on our operations into our production. So this is all coming since 2016, right. It's a big. It's a huge advance and an increase on our story. And how did we build this story as well? What we say is the idea of our growth comes from 3 pillars that Rodrigo likes to mention. That it's not rocket science, what we think with those 3 pillars. But what is our advantage is that we execute those 3 pillars with -- very diligently with lots of discipline. So we do think that a strong company that will be sustainable and will be growing for the long term, it needs high-quality assets and projects. That's something that we have right now, and we've been building our portfolio for -- of projects. Since we took -- since we changed the management in early 2017. We made strategic deals. We had a sale of project -- of Serrote project for $40 million in our -- because we do -- we didn't believe that it was not -- it was a good project, but not -- do not fit in our [indiscernible] at that moment. It will take more than $300 million to start the construction of that project into not -- it was not a good timing for Aura and it was just dragging cash from our operations. So what we decided is to sell Serrote. And at the same time, like 1 or 2 months later, we merged with Rio Novo, bringing 3 new projects to our portfolio in order to build our pipeline of medium and long term. And Rio Novo brought together with -- brought together with the company, Almas, Matupa [ for the 3 year ]. And then we started developing at our growth pipeline for near term, for those -- sorry, for medium term and long term. So those are high-quality assets and projects. We've been developing Almas, and I'll mention later that we have an IRR of more than 100% yearly. So it's -- we've been working on great assets with great returns. And also we developed the restart of Aranzazu. Aranzazu is the mining in Mexico. It was temporarily closed from since 2014. And then in 2017, we started to -- restarted the mine. 2018 we started operating again, with a rate increase on results that are also shown. The second thing is a strong balance sheet. We also -- when Rodrigo was in early 2017, the company had a lot of its bets into the corporate -- at the corporate level. So the first thing was to take those debts into the operations, reducing corporate risks and also taking advantage of tax benefits on our operations, tax shields and also reducing the cost of our debts. I mean we -- when we just joined company, we had a 12%, 13% yearly rate for -- of interest rates for our debt. Now we have reduced debt to, say, about 7% interest rate. So we have a way more wealth -- healthy debt structure in our company, all -- they are all spread out through the operations. And it was very important for us to start -- to start building and generating cash flow to reinvest into the company. And the third pillar is business building culture. So as I mentioned before, huge culture is very important for us to have people engaged into our mission, to our brands, to our vision so we can work together. We can -- we have a culture of performance. So we have aggressive -- we tried to structure the bonus system with a 360 evaluation program through a lot of different human resources tools in order to move them, to bring people to pay attention on performance and go after. What we really want is, which is not -- which is more simple structure of bonus, more simple structure of targets, so people can be really focused on what matters for the company. And then what we would do then after that, we have also acquired Gold Road this year in March 31 this year. It was a great opportunity. It was a project that we bought for $1, and we assumed project finance for the project of $32 million. So it's also -- the project finance was also like the other guarantees was only the project itself. So we did not bring any guarantees or liabilities to corporate, also always thinking about reducing corporate risks for the company, and we've been developing Gold Road. And it's been a great case for us, also great returns. And that's what we will be focusing on our projects to bring great returns to our shareholders. And this year, we did the IPO only here in Brazil, as I mentioned in this call. So the case that I was mentioning, Aranzazu, that shows how these new management since 2017 -- that has joined the company in 2017 has changed and switched the whole idea, the whole structure of Aura, bringing some kind of new directions to move to the company. And also a new face to Aura, right? That's -- in Aranzazu, I think, is one of the new great track records, great story that shows how Aura. Now, it's a different, more modern, more clear, more clean company that is focused on results and simplifying and try to focus on cash flow on a more simple management structure. So when we assume that -- when we restarted Aura after 4 years of inactivity for the company, we were very focused on having a well-detailed geology for the project, in order to not commit the same mistakes that they did in the past. We are always thinking about how to optimize the cash flows. So always thinking about how can we go after the good grades and how do we optimize the mine plan for the project. And with this comes -- and for this, we need discipline on geology, discipline on mapping the ore body, mapping the whole underground of the project, and that's what we did, with a great team that we brought for the project with great people. We were able to increase the production from 2014 to -- from 28 (sic) [ 28,000 ] tonnes of concentrate, we have now -- we've just delivered about 43,000 tonnes in 2019. So it shows. And together with this, as I always mentioned, optimizing cash flow together with production, together with operational numbers. And it comes from grade. So we went from 0.86% of copper to 1.4% of copper in 2019. So this is -- this is -- basically, this is margins, right? This is pure margins. So with that, we could reduce our cash cost from $2.87 in 2014, which was one of the main -- one of the main factors that took the project to be closed back at that time. We took it to half of this cash costs to $1.41 in 2019. So this is also, again, discipline and execution, we are diligent bringing good people, bringing great team to develop the project. And then being very disciplined planning very in detail, and then that's the results for a great work that we've been seeing in there. And now at Aranzazu, we are -- we have already disclosed that we are increasing the capacity of the project in 30% by late this year. So -- so next year, 2021, we'll be running at 30% more capacity at this project, and we'll probably see even greater results in there. And that's the result of -- as a consolidated results. So we released the Q3 2020 results in last November. So we now -- if you take the EBITDA annualized from Q3 2020, we've been reaching $443 million. And this is coming out of -- coming from $157 million into 2017, right? So this is huge to be trying for production. We are aiming to deliver between 200,000 to 210,000 this is our guidance for gold equivalent ounces this year. And this is how much we're growing. Production we've just delivered in Q3, the 58,000 ounces, and we are aiming to deliver from 60,000 to 80,000 ounces, now the last part of 2020. So ranging 200,000 to 210,000 ounces this year. And then on EBITDA, sorry, also talking about net revenues before, and now the EBITDA were $176 million Q3 2020 annualized. So this is all in yet, we had some minor impact of COVID this year, Q1 and Q2 in Honduras mainly. We had to close our operation, hoping for some governmental requirement. We had closed, shut down the operation for 2 or 3 weeks, if I do recall. And it had a minor effect in our production for the year. And from then, from what we have right now from 60,000 to 80,000 ounces in Q4 2020, we still have a lot of -- lots of room for growth. Gold Road is already in place. We have just produced the first volume in September this year. And now December, now this month, we are aiming to reach commercial product for Gold Road. This is a project that at this first moment will produce around 30,000 ounces. Also next year, we will have the increase of capacity of Aranzazu, as I mentioned, 30% of capacity. So we already have a lot of projection and expectations for our growth of our production already next year 2021. And after 2021, we will have the development of Almas project, which is a growth project here in Brazil that we will be delivering about 50-plus thousand ounces a year. And we also have the high-grade project international here in Brazil that we're also taking EPP project to reach about 100,000 ounces in our expectations on year -- yearly basis. So this is a lot of growing for the next 1 and 2 years. And after that, for the medium and long term, we have, as I mentioned, we have also -- this is our path of our growth, what we are expecting for the long-term targets. We do believe that -- with what we already have in our in-house of our projects, we will be able to be doubling our production level within the next 4 years. And a lot of that, we also, like as I mentioned recently, this year, we had an IPO here in Brazil. So we got some funds from the primary offering. So we also -- we have a potential for M&As, which will be an upside out of what we have in here describing what we aim to describe through these -- this is slide, right? So we have the Gold Road. First step is the Gold Road development that we will be next year, delivering about 30,000 ounces, as I mentioned. We have the 30% capacity growth for Aranzazu, and we have Ernesto high-grade project for next year, which will already taking us to a significant and relevant growth. And after that we will have Almas, that will be probably start producing by second half of 2022. So it will be about 50,000 ounces more year -- on a yearly basis. We have -- at Gold Road, we have already provisions of the licenses and permissions to operate at twice the -- what we are operating -- of the capacity that we are operating now. So Gold Road, I'm showing that it has -- potentially has geology enough or enough. We will be able to also take Gold Road to 50,000 or 60,000 ounces a year depending on the geology. And after that, we have also a potential for increased capacity in Aranzazu for another 50%. We also have permissions and everything. We will be -- we can and we will be developing another second step of capacity increase in Aranzazu for 2022, 2023. After that, we also will have Matupa, which is another gold project here in Brazil that we estimate that it has -- it will be the -- it will be around our size, producing around 50,000 ounces as well. This is according to our estimations. And we will have Sao Francisco is a project that we have here in Brazil. It's 40 kilometers away from EPP project. Sao Francisco has already -- was already in the best producing. So it has -- it has produced more than 100,000 ounces a year, back 10 years ago or something. So we already have the whole infrastructure in place. And now we will be working for next year and in the next years on developing the geology in there, because the previous management did not invest so much in geology in Sao Francisco South. And then the project needs to more -- to more mine mapping in there in order to restart the project. And that's what we're aiming for 2024, 2025. And then we have also Tolda Fria, which is our project in Colombia, and this is more in an early stage. So we will also be on the next years, developing the geology and exploration in the area in order to understand better what size and what potential is that project about. And plus, we have also, as I mentioned, opportunity acquisitions from -- after the IPO that we just made. So this is how huge our growth for the long term, and we do believe that Aura can reach another level of in double size for the next 3, 4 years. And we think what we mentioned that we can double our size bit of the projects that we have in-house is also -- and I think that this slide shows why and how. Because we do think in EPP project, we have explored yet only about 80 -- 8% of our mineral rights; at Aranzazu, only 4%; Gold Road, only 6%; San Andres, only 10%; Almas, only 11%. In Matupa -- yet we still have 100% of our mineral rights to be met. So our incoming house projects, we have a lot of -- a lot of potential to grow. And it will have -- we've been building a track records of increasing our resources and reserves in order to build a long-term, long-term pipeline for the project and sustain our growth on the long term. We do believe for the next years, we're putting effort, we're putting money into exploration. So we can do the case, a long-term case. And we'll start increasing the life of mine of our projects throughout the next years. And with that, we have now a strong balance sheet and share performance has been delivered throughout this year with the IPO here in Brazil, we've been noticed by the market, also here in Brazil, also in U.S. and Canada. Our share performance has been increasing -- has been great this year. So we delivered 600% of price performance. And we still have a lot of room to increase. We have Crédit Suisse, Itau, Banco Safra and some -- a few other banks that are covering our shares in here. And we are talking about 80%, 70% increase on our -- to reach our fair price yet. So there's still a lot of room to increase. We do not think that we are -- we have reached our fair market value yet. We are yet far from that. So we do think it says a lot of opportunities in here for Aura throughout the next years to reach the fair value. And this is always supported by, as I mentioned, our strong management, our world-class Board of Directors. So we have Rodrigo Barbosa that was awarded with the turnaround. The turnaround of the year here in Brazil 5, 6 years ago. He has an MBA in Southern California. We have Kleber, our CFO, with which is -- who has an MBA at Kellogg; Sergio Castanho coming from McKinsey, Anglo American, MBA in INSEAD; and Glauber Luvizotto, who is our COO, that has worked in for AngloGold Ashanti, Yamana Gold and had studied in Canada and so all of them with great backgrounds, also the Head of Operations with great backgrounds and a strong and well-diversified Board of Directors. So this all helps us, and it brings us the great expectations for our case. And as I mentioned, competing value, we still have room to grow. All the markets, if you see -- if you compare the measures and the indexes, still -- yet Aura has been traded with a discount if you compare to group average. And these -- and we do believe that we have room to be traded with some premium in order with all this track record that we've been building in all the perspectives and expectations for the company. So yes, it's a great time for joining the company. So overall, now I'll be just wrapping up and I will give a -- I will open the floor to -- for Q&A, for questions from the audience. So we are -- as I mentioned, so now we are 3 -- we are cash -- we are cash flow generating. We are already generating -- operating cash flow mines that they are generating cash for the company. We are already paying dividends for our shareholders. We have a room for cash cost reduction, and we do think it is yet a great attractive value from our -- on our share price. It's a great time to be part of Aura. So this is most of our presentation. And I'll open the room for Taylor and the Q&A. Thank you all for inviting me.

Perfect. Thank you, Gabriel. [Operator Instructions]. So we did have a few questions just coming in about the presentation. Will you be making that available on the Aura website as a PDF or?

Yes. So we have all our presentations and this presentation as well. It's available on our IR website. So it's ir.auraminerals.com. So you'll have it all available there. Also, just Taylor, my contact is [email protected]. So feel free if you want to ask -- if you want to ask for any further information, I'll be available.

Perfect. So another question that came in from Richard. He says congratulations on listing in Brazil. Are you looking to list on the OTCQX or QB in the U.S.?

Yes. No, that's interesting. I just said in our call this morning. We've been going forward with this. So we have a ticker, ARMZF, in the U.S., but it's not a sponsored ticker. We do -- we think we are discussing that idea. And actually, my personal expectation is that for the next months, we can go to OTC. But yes, we will have some discussions to make. This is not -- it is not certain yet. But we have -- I personally have good expectations that for the next months, we will be negotiating OTC to help us a lot -- will help a lot of American investors.

Okay. So now just kind of turning back to what you were talking about at the end of the presentation on some of your growth projects. There's a question from Brian. He says, "Is there a plan for drilling at Matupa and Tolda Fria?"

Yes. So Matupa is a more well-developed project. So this next year, 2021, we are expecting to invest more in Matupa. Tolda Fria yet is a more early-stage project. So Tolda Fria is probably more -- in a more long-term future. So Matupa is the one that we are aiming to invest better this year, 2021, in order to convert resources to reserves in order to have a better idea of the project. We have -- we must yet develop to find more resources and to convert the resources that we have there in the reserves, in order to start building and start investing on the implementation of this project by 2022, which is our expectation. Tolda Fria, we will be investing but in a more shy way with less investments next year, in order to have a first meeting of the ore body in order to have a first meet of the potential of that project.

Great. Just kind of turning now, I guess, to your operating mines. There's one question. I know you're not a technical expert, but they're wondering, kind of, if you could maybe just recap each mine and what it is, whether it's the commodity. And if you have an idea of what the grades are. I don't know if that's something to...

So in Honduras, San Andres is a mine that we've been producing, it's around 80,000 ounces a year. So we have the grades there. We operate -- it's a low-rate mine. So we operate at 0.5 grams per ton, it's a heap-leach. So we operate there. It's open-pit and heap-leach mine. And there in EPP here, EPP project is a project that is running also around 70,000 to 80,000 ounces a year, it depends. But in here, we have a higher rate, we operate at 1.4, 1.3 grams per ton average. It's also open pit. But in here, we have the processes at those carbon in leach. We have, with Ernesto coming with, with the -- the next 2 we'll have Ernesto project to EPP that will take the average from 1.4 to 2.3, 2.2 grams per ton next year. And this is mainly due to this Ernesto project, which is also an open-pit project that will be developed and will be in place next year. Aranzazu is a copper-gold project. So 2/3 of the project is copper, and 1/3 is gold. It's an underground -- underground gold mine with slope -- with the process that the [indiscernible] with the flotation. They produce -- we produce a concentrate of copper plus gold, so we do not sell the proper -- the final product. We sell a concentrate. And we have the grade in -- there is about two, if I'm not mistaken, 2%, 2.4% of copper on a concentrate. And gold is about within their concentrate itself, it's about 6 grams per ton, if I'm not mistaken or something. And then we have Gold Road, which is the project that we are already operating, which will be around 30 -- we expect to have around 30,000 ounces of yearly production. It is an underground mine with also a carbon and leach process. So yes, this is. And the grades in Gold Road, they are also -- they are high, they are around 4% to 5% -- 4 to 5 grams per ton.

Great. I guess looking kind of more in depth, maybe -- I know at Aranzazu your -- there's been a lot of operational improvements that have been going on there. And the objective was to kind of increase production by 30%. Could you maybe give an update on that because that's kind of coming -- you're kind of near the end of that process, right? But...

Yes. So we've been investing the time frame, the schedule for the capacity increase is on time. So we were expecting already for this Q4. So we have some -- to take advantage of some of those -- of that increase. And throughout the next few months, we expect to -- for this 30% increase to be concluded by half of next year, I don't know, about half next year. But already taking advantage of those of that increased capacity throughout the first semester. But it's on time. We do expect that we'll -- the production for next year, we'll take advantage of some of the increased capacity, especially on the second half of the year.

Okay. And then, I guess, looking kind of moving more towards your recent results. I know last quarter, it kind of marked the return after your impacts from COVID kind of earlier in the year. Last quarter was really good. And it seems like, I guess, maybe if you can just comment on how Q4 is looking in terms of -- I know you mentioned the slight impact from the hurricanes, that's going to be a minor impact on production. But maybe you could kind of just view how operations are going at?

Okay. So we expect Q4 to be the strongest quarter for 2020. We were a bit affected by the hurricanes in Honduras. So we did have some -- a few weeks of shutting down -- of shutting down our operations in Honduras. So Honduras will probably be affected by the hurricanes. But we will be -- we probably will compensate some of that -- some of that effect into great -- having greater results in Brazil and Mexico, and it may compensate that loss in Honduras. So we have a guidance growth of 60,000 to 80,000 ounces -- or equivalent ounces for Q4, and we do expect that to be accomplished.

Okay. So -- and then right now, you haven't put out guidance yet for next year, right? That will be kind of early -- beginning of next year.

Yes, early. Exactly. Exactly. We just like -- as a regular process in any company. We just -- we're just concluding the approval of our budget and our operational plans for next year in details. So we expect early next year to be -- to be releasing our guidance for the year.

Okay. Yes, maybe keeping on that theme, maybe you could outline some of the key catalysts that investors have to look for over the next few months with the company?

Yes. So for -- I think one of the main subject for Aura for the next -- for the next months to keep track on is that first, the start of the commercial production for Gold Road, which will impact our production positively. We do expect this month to be -- to start commercial production. And then -- and it will also -- so this is one of the first things to have your mind on. The second one is Ernesto project. So Ernesto project is -- will be part of EPP project. So we will be feeding the plant of EPP project with Ernesto. You will see that on the Q3 results we have already mentioned that we have started producing and filling up let some of Ernesto in Q3, but it was not relevant yet. We started commercial production -- we declared commercial production of Ernesto October right now. So we have a Q4 with some of -- with some of the ore feed in EPP project from Ernesto. So you'll be expecting from these better grades for EPP for Q4 and that -- offering that also for next year because Ernesto will be -- will be continuing next year. And the third one is Aranzazu, is Aranzazu project, the capacity increase so the capacity increase in Aranzazu will probably take our production high, and we'll take our cash cost down. And the success of this project is very important for us to -- for the next year plan. So I think those are the 3 main subjects. And in Honduras, unfortunately, we have our COVID impact, we have the hurricane impact. But it's also a high potential project to reach better levels of production. And that comes from no areas that we have been expecting to explore in there, because [ Esperanza ], [indiscernible], those areas are very important for us to take the average grade from 0.5 that we are at now to 0.6. So the success of those new areas is very important also for us to take Honduras to better -- to increase 20% to 30% production analysis.

Okay. And I guess with that, the impact from COVID, as you said, those have kind of been resolved. And I see like everything is resolved on that front, and there's no kind of expectations for future impacts. I mean we can't predict the future. But as far as you can see, you've kind of move past that, right?

Yes. We don't think so. Here in Brazil, we did not have any effect from COVID. So the area that we operate at, we are -- we never did not have -- not have any requirement or request from government to first stoppage. In Aranzazu, the government asked for us to stop the mining operations. But we were lucky we already had a lot of stockpiling there, so we could operate the processing plant while maintaining most of our employees and third parties outside the operations in order to reduce risks, in the end producing what we're expecting. So the effects were very reduced. And in Honduras, it was a bit more affected, we're really had to tweak the operations. But at this point, we do not expect so we already have differently from first and second quarter where the world was not prepared yet for this COVID. Right now, we have put in place a lot of procedures to reduce risk, to reduce -- we have all our employees, they have daily to fill -- to fill who have them talk to, who have then be around, friends. So if someone -- if at some point that someone has COVID, we can in a matter of a few minutes, already know who else can be -- can be with COVID, and we can put them or to be tested. So we do think that we can -- we've been reducing our contagious risks on those procedures, not only on those but on all the operations, we've been doing all that. And also, all this distance -- social distancing and all the things that is expected from a mining company.

Right. Okay. Well, perfect. I think that was a great presentation going over the -- really laying out the transformation that Aura is gone through and providing a lot of upcoming catalysts, and there's a lot to look forward to, I think. So with that, I'd like to thank Gabriel from Aura Minerals for taking the time to host the webinar today with Red Cloud Securities, and thanking everybody else on the line for tuning in with us. So one last reminder, our next webinar will feature Cerrado Gold tomorrow at 2 p.m.

Thank you very much, Taylor. I just remind everybody, we have our website is ir.auraminerals.com, which is our IR website and we have auraminerals.com, which you can see press release, as you can see all the news, you can join our many lists there to be updated on our list and our news. My personal e-mail is gcatalani -- it's [email protected]. If you need any information, I'll be available and I'll be glad to help on any information you need. Thank you very much, Taylor. Thank you very much Red Cloud for this webinar. It was a great pleasure.

Okay. Thanks. Bye.

Bye-Bye.