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

Good morning, everyone. We wish you a very warm welcome to Aura Day 2021. It's a great pleasure for me to be here with you today at this event focused on investing. And now we're going to talk with executives here in São Paulo as well as in Miami and other operations here of the company in Honduras, Mexico and throughout Brazil. We're going to talk about some of our projects and our plans for the future. I am very happy to be here with Rodrigo Barbosa, CEO of the company. Good morning.

Good morning, Fabiana. How are you?

Well, we're going to share lots of information with the investors today.

That's right. We have lots to talk about. We're having a great year, and there's still a lot to share.

Yes. And that's something that's really amazing is how transparent Aura is.

That's right. And we also have some of our colleagues from Aura with us. We have Glauber, COO; and Paula Gerber, Head of People and ESG. Good morning, folks. How are you?

Hello. Good morning.

Good morning, everyone.

We'll be back with them soon and share their presentations with you. It's a great pleasure to have all of you here from this pair of cities, São Paulo and Miami. And now let's just explain to those of you watching our presentation today. We're going to talk about the results and the plans for the company. Rodrigo is going to talk about the corporate strategy side of things. Glauber is going to talk about operations. Paula will talk about the 360-degree culture that Aura has, and Kleber will talk about financial results and policies. And in between these presentations, we will bring to you live the employees and other staff at the operations. We also have some gold experts such as John Reade, who will explain all about the gold market, if you're looking to invest. And after John Reade, we will have Chad Williams, who is an expert in investing and knows all about the main options for investing around the world and especially with Aura and how Aura compares to other gold producers around the world. And before we start with these presentations, let's watch a very quick video so you can learn more about Aura. [Presentation]

Wow, very cool. It's really interesting to see the brief overview of Aura, and we have so much more to share. And so I'm going to pass the floor on to Rodrigo so he can talk about the company's corporate strategy.

Thank you, Fabiana. Once again, it's a great pleasure to be here. I'm going to stand because everyone who knows me knows I love to talk standing up. So we've shown so much of the interesting things we've developed over this year, some of our projects. We're also going to bring Paula, Glauber and Kleber and talk about every aspect of our company. And that's what's on the agenda for today. And so as you know, we are Brazilians. And so we are native Portuguese speakers. We will have live translation into English. Well, folks, so I'm going to be sharing with you today some of the highlights of what we've done over this year. So moving to the next slide now. I think there's something very interesting here. I want to highlight this photo. Look at this picture of the satellite. This is the brand-new James Webb telescope. This is a telescope NASA is launching next year, and you can see this golden bit over here in the center of the image is gold. And so gold is used for investing, for technology and for jewelry. So this is some of the gold that you can see that is going to be launched by NASA next month. So to recap a little bit, as I mentioned in the video, and Paula is going to go into a lot more detail about our values, but basically, our dream is we want to be recognized as one of the best, if not the best, companies in the sector. Whether that's in logistics, ESG, human resources, we want to be the best in everything, not just for shareholders but also for our employees and the communities in the locations where we operate. We want to create value for everyone. And this is going to guide our growth sustainably. Now for a brief summary of our growth points and our strengths. After that, we will go into detail for each one. So Aura is a company that -- it was re-IPO-ed last year here in Brazil, and it's worth approximately CAD 1 billion. So we have quite a bit of cash, and we can finance our growth and developments without needing to reach out necessarily. And we are the company that has paid out the most dividends in the industry this year. We have returned 8.3% without compromising any of our business. We have had no negative postings. So this is a company that has a very solid growth project. We started in 2017 with 120. We are now operating at a considerable growth compared to year upon year, and I'm going to go into more detail. We have seen growth in brownfield and in greenfield projects as well. So those are new projects we're going to develop over the next few years. And all of this growth has also brought cost reductions, whether that's economies of scale or other aspects, by reducing costs for intakes, for new projects that are developed right off the ground with lower costs. The next point is we are multi-asset. And so this gives us a real cash flow stability because this is an industry that is, by nature, not uniform. Sometimes you will see variations and oscillation due to rain, for instance. And that's just a natural part of our industry. And one operation offsets the others, and that gives us a lot of stability for generating cash flow. The next point is we are the first gold company to be listed in Brazil. Brazil's capital market is quite deep. There is a great deal of investor appetite, and investors are just now starting to get to know us. And previously, we have seen that the iron investment market has been a lot stronger and more established than gold. But you'll see that the complexities involved in gold extraction are a lot gentler than those involved in iron. So gold is worth a lot more per ton than iron, obviously. For gold, we can sell 30 grams, which is an ounce, for a much higher cost than we will see with iron. And we can ship this product out even by helicopter. We don't have any of the logistics complications that we see with iron. Our goal, as I mentioned, is to strive for perfection. And we have a very significant agenda for Aura 360 degrees, and that's the Aura ESG. Paula is going to talk to you a lot more about that. And we are leaving decisions much more in the hands of managers, and you'll see why that's a great thing. Just to give you a quick overview now of our achievements so far. And then later, I will talk about our projections. So our whole strategy, as those of you who have been following us have seen, is quite simple. We're a company that, like any company, needs 3 very solid pillars: Projects and assets for one, we need a very strong balance sheet, and we need a team and a management culture that is very robust as well. No company can grow without these 3 pillars. You can't have just 2 and miss 1 of these 3. All 3 are essential. So we need to very rigorously follow and build up each of these pillars. We have seen quite a number of restructuring projects over the past few years. I'm not going to go into details, but they include the whole gamut from mining operations to administrative restructuring. And all of this has been focused on reopening the IPO for the company, which happened last year in Brazil and to do so with a very solid project, business plan and cash flow. So what we've been doing is executing a very simple strategy: assets, balance sheet and people. So what have we achieved in terms of these 3 pillars over the past year? Well, we are growing in terms of reducing our cash. We are -- we have currently reduced cash costs by 7% over the last 3 years, and this will soon put us between the first and second quartiles in terms of cash costs. We've also implemented 2 very important projects, the Almas project, which has been published in report 43-101. This is an outstanding project. This has an NPV that is 3.6x higher than the investment value. So the payback on equity is achieved in just a year and over 50% in returns and as high as 100% over the year, year-over-year. And so we have a lot of operations that are ready to be developed with incoming investments. We have produced a preeconomic project, a viability study. And all of this shows a lot of robustness in terms of payback, invested value and return on investment. Our project is still very young, at its very starting stages, and we have been able to generate equity very quickly. And that's our plan, to very soon come back and give you the returns that you're looking for. We have been increasing the company's life of mine. We are really expanding our foundations so that we can enhance and lengthen the -- each mine's life of mine. Today, our life of mine is lower than other companies -- compared to other companies, but this is something we've inherited from previous generations. And you will see that we have been increasing life of mine over the years, while other sectors have been reducing their life of mine. So if you pay attention to this, this will be very interesting. In the third quarter, we had, unfortunately, a stoppage for a couple of weeks. But if it weren't for that, we would have posted results that were the best ever. And what you'll see is improvement in recovery and improvement in levels. We also have to talk about projects that didn't pan out very well, and that means Gold Road. We knew it was risky, and we opened this investment up out to people who were interested in it. And after a certain amount of investment in the Gold Road, we concluded that it was not producing the results we expected. And so we concluded that investment. And that, again, is another benefit of our corporation because we know what constitutes short-term and long-term goals. We started the year paying 8.3% dividend yields in 2021, and we were able to deleverage over the year while still finishing the year pro forma with $40 million in negative debt. So if you consider 2 events, the nonconsolidation of the Gold Road debt and the incoming assets of worth $10 million, this was -- these were funds that were advanced. And these -- the corresponding assets were sold. And this allowed us to recoup the investment quite significantly. We've also been investing considerably in our 360-degree vision. And Paula is going to talk a lot more about that, which of our BUs have the best performance, who needs the most help. We started with less than 100 leaders, and now we are up to practically 175 leaders who are actively engaged in furthering their careers and doing so equitably. The innovation awards were also another example that was a very, very cool demonstration of what we expect from these leaders because they have some ideas that are amazing, others that have 0 cost and others that are quite complex but that stand to bring us a lot of value. And we're interested in all of that from our employees so that we can keep developing the 360-degree program. Growth projects. Over the year, we have basically updated how we are looking forward to the next year. So we have these news about the Gold Road, but we also have some good news that really override the bad news from the Gold Road. Even if you discount the Gold Road assets, we still see positive results. We have -- if you're following our production, you'll see that we've improved our performance considerably in terms of recovery, piling and other projects. The EPP mine, it's basically led by Ernesto, which was able to increase the number of ounces. That is going to expand the capacity, and this even goes beyond the average grade. And we can operate on this mine for 1 or 2 years with a higher average grade than we have today. So the Almas projects will start the construction phase at the end of December. We planned on starting in the second quarter of this year. There was a delay in that because there was some discussions with the state that delayed us, but we didn't waste any time. We continued by getting the licenses and the engineering and procurement and also reserving some pieces of equipment so that once we started construction phase, we could expedite this phase. So this delay of 6 months will ultimately become a 3-month delay for the beginning of production, which is not so relevant for the NPV of the company as a whole. And now there is clear indication that the governor of the state of Tocantins has publicly committed to this project in December of this year. Matupa was not quantified. We talked about the potential of this project, and now we're able to quantify it. It's expected to have a 70% return in the year only with 7 years of life of mine, and that's because we don't have a lot of the geological information at this point. But what we know so far is enough for us to start producing, generating cash and then increasing our investments to expand the life of mine. So we can go above 400,000 ounces by 2024. Before I complete, I would like to highlight some of the projects we have and the capacity of payback, how financially interesting they are. So Almas and Matupa, rarely, investors will see projects that will give a leverage payback of 100% in dollars during the 16 years of the life of mine. And also, we'll talk more about that because there is potential for enhancing the capacity, the grade in the light of what can be discovered in the region. For the Matupa mine, we have recently published the PEA. And when we see the NPV/CapEx ratio is below average, this is a decision we have made. We decided not to invest in geology to expand the life of mine or expand the grade because it will be faster to go faster to production, take the risk, the payback in 2 years. And the 6 years of life of mine is enough for that payback. And then as we go, we can expand our geological knowledge and clearly increase the NPV/CapEx ratio. And the last comment I'd like to make, so that you can compare the quality of our assets, has to do with the brownfields. Here, you see greenfields marked in green and the brownfields marked in gray. They were announced in the market. You see Aranzazu, what was done with Aranzazu. You see the NPV/CapEx ratio is 5.5x in relation to the capital invested. We have been able to recover capital in 6 months, and there is so much to do yet. I talked about Matupa, but I would like Glauber to elaborate on it. Glauber will comment about the geological potential. This is a product that starts with the potential returns that are very positive, and there are evidences that it can expand significantly the life of the mine. So let's put us to work briefly. There is this licensing process, the details so that we can start 2023, working on that and start production in 2024. So we are very pragmatic in terms of risk capital, its allocation, and then we can invest and expand, as we've been doing with other assets comparatively. And we can go back to that at the end. You see that if you compare Aura with our peers, our peers are companies that produce 200 to 4,000 ounces with $500,000 or $200,000 of daily liquidity. So here, we mark the discounts compared to the group average. So here, you see the net asset value average, and we are of about 0.4 when the average is 0.6. We know we can do much better. We have close to 40% to 50% discount when compared to our peers based on cash flow or price/NAV ratio. The NAV is going to expand once we have more geological information, and we are going to close the gap when compared to our peers. But we can go beyond. We have good cash generation. The projects we're going to develop will not consume our whole funding and leverage capacity. We want to take steps through mergers and acquisitions to grow. We want to do things right because by doing that, we know that we can change our peers. You see that peers are companies that produce up to 400,000 ounces and with liquidity under $1 million are in the level of 0.6. When you reach more than $5 million in invoice, then you get to a new level. And then you're going to have 50% more appreciation in the P/NAV multiples. We are aiming at that, but we're going to do this responsibly when we find interesting opportunities for our shareholders. So I would like now to turn over to Fabiana, who's going to call Glauber Luvizotto. So I hope that we enjoy our meeting. We are going to have a lot of information to share with you. I hope that you'll like it. We are going to bring some direct images from our mine. So it's -- so we are here -- we work really without any desk. Everybody is the same here. And we are going to bring images from our office in Miami as well. And you're going to see live images from our operations, so I hope you enjoy that.

Rodrigo, that was very interesting. It was great to hear your presentation, all the accomplishments made by Aura so far and, of course, hearing in the path that you're projecting until 2024. Before we move on, I would like to expand this debate with you and understand today what will be the main challenge for you today? Why is that the company is devaluated in comparison to its peers given the fact that there are so many positive points and such growth?

There are 3 major challenges for us. Going back to the 3-pillar strategy, our plan for growth is very concrete. The projects are aligned, and the market is looking at that. And they wonder, are they going to implement that? Are they really to be trusted? So we need to deliver those projects and their results to show the growth that we are promising. We grew by 30% this year. And with the next projects, we plan to grow even more. Our second challenge has to do with capital allocation. We see that we are going to be able to grow, pay dividends, and we're still going to have robust cash generation to be distributed. What are we going to do with this surplus capital in the future? That's the challenge, of course. We want to pay our shareholders. But should that be through acquisitions, through dividends, through payback? So how -- we will want to do this diligently. And finally, the other point has to do with people, attracting and training talent, giving them freedom to work, freedom to grow, giving them clear paths for growth. And this is aligned with all our pillars. We want to deliver results. We need to allocate capital well and to have a good team that is excited about their work. This is a new industry for Brazilians. And we hope to close the gap in terms of understanding of our investors and getting their trust, both in Brazil and in Canada. Those are interesting challenges, and it's good to have cash to distribute. It's good to have good professionals aboard, and it's important for Brazilians to know that there are job positions open in that field so that this company can grow even more in serving the market. As we saw in the initial video there, a lot of areas in the economy that are served by this industry. So let us learn more about the Mato Grosso operations. Apoena has a video to show you. [Presentation]

That was very nice. And to learn more about what Aura does in the communities of Mato Grosso, we are going to talk to Samir Castro, the Finance Secretary of Pontes e Lacerda. Mr. Secretary, good morning. I would like you to tell us more about how COVID-19 affected your region? And what was the support of Apoena site to fight COVID-19 in your city, in your region? Welcome.

Good morning. Thank you, Fabiana. I'd like to greet CEO, Rodrigo Barbosa, and also the other participants of this meeting. Before I talk about the pandemic, I would like to tell you about how Apoena site is significant to our region. Since it began its operations, we've noticed how many changes the company have brought to our region. So this is true in terms of labor relations, the contracts with service providers. I think that in our region, we had access to a new model of business because we live in the countryside in an area that is not developed, and we were able to learn more about labor relations and contract with providers. So companies, they need to become more modern to work with Apoena. That was very important for the region and for our city. In addition to that, Apoena also brings an important contribution in terms of tax collection and also services that they provide to the community. So Apoena is one of the major taxpayers here in our region. So we -- both pay in tax on services and tax on merchandise. So Apoena's presence is very active in this community. That's very significant for us. Well, about the pandemic, as anywhere in the world, we were caught by surprise. We didn't have any equipment. We couldn't even understand at first what was going on. Apoena was very helpful and effective in helping the city and the state understand what we needed to do and what was our share. And we had good financial resources. But there were so many things to do, so many people to serve at the same time that without the help of other important players like Apoena, we couldn't have done it so fast in fighting COVID-19. Apoena had a significant participation to that end. It helped the health secretariat at the city and the hospital called Vale do Guaporé. This is a nonprofit hospital that serves not only our city but the whole region of the Guaporé Valley. Apoena has contributed greatly with quick tests, kits, PPE for the workers of the Guaporé hospital, also addition of 40 beds because people were being treated at home because there was no place at the hospital. And the company has helped us increase the number of beds available. Also, when oxygen cylinders were required, we couldn't buy any. And the company has provided oxygen cylinders to the municipality to help those when there were no beds available anymore at the hospital. It is difficult for us to have some access to the market because of the level of red tape and all the processes that the municipality needs to go through in the purchasing process. So it was very good that the company focused on this social role and helped us. And that's what Apoena did and has always done whenever necessary. Their doors are always open to help us and to help take care of the population.

Thank you, Samir Castro, for your testimony. It was very important to hear everything that's being done in your region. Congratulations on your work. For those who are at Pontes e Lacerda, good morning. And once again, I would like to thank the secretary for his participation. Now let's move to Miami to talk to COO of Aura, Glauber Luvizotto, who is going to talk about the company results and the plans for this operation. Good morning, and welcome.

Good morning, Fabiana. Thank you very much. Good morning, everybody. And so I'm really happy to take this time to share with you the status of our operations and also to talk a little bit about technology and what we've been doing to grow. But I really -- I can't start having these conversations without talking about safety, first and foremost. This is something that is immensely valuable for us. We always want to guarantee the safety of our employees. This year, we have had 6 accidents leading to time off work. And we know that our target of having 0 accidents is possible. And although we strive constantly to have low-impact procedures and work, we have, nevertheless, been intensifying our safety work. And a great deal of these accidents, they happen to people who are outsourced. And -- but they are, nevertheless, part of our team. And so they're very important to us, even though they are not strictly speaking employees. We have, therefore, been increasing our efforts to develop our safety measures. Another topic that's really important to us and that we always like to emphasize is the management of our geotechnical structures such as dams. Of course, this is inherent to the type of activity we undertake. And you will note that our management style and all of our practices follow the best practices on the market, including regulations, which have been changed considerably over the past few years as a result of certain incidents. And so you'll see that our dam system, our alert and emergency system and even simulations, everything we do is in compliance with the Brazilian mining agency. And we employ all existing technology, automation, radars, everything we can to make sure that in the event that there is some kind of incident, that we can take preventive measures. And as well, something that has fortunately stabilized quite a bit, but we are still far from the end, that is COVID, of course. And thankfully, we have seen -- we have had absolutely no time off work due to COVID. So that's very fortunate. We are glad to say that we have weathered this period quite well. We have been employing every single safety measure that exists, and our target is still quite high. Our controls are still very strong, and we are doing everything in our power to ensure, and we have been ensuring, that we are free of COVID-19. And that includes, of course, focusing on immunizations. In terms of operations, I'd like to talk a little bit about some of them. And well, one is Apoena, and we started the year relatively well. There were some bumpy periods. There were some heavy rains that were unexpected for the period, and that is something that will have consequences for an open pit mine. And we have, however, been able to get back on track. We are at the -- we're currently looking at 61,000 to 63,000 ounces estimated for 2021. In Aranzazu in Mexico, this is a very iconic mine because a lot has been happening at the same time. There is -- we are improving the dams there, which is a very important project. We are working on disciplines and competencies. We are working on renewing contracts for operators, which will take into account inflation and all manner of different financial indicators. And this work has been performed with a great deal of skill since 2020. We have installed a new grinding system, among other improvements, that have led to considerable growth. Compared to the first quarter, we've seen approximately 30% increase in plant capacity, and our expectation for this coming quarter is even better. We have gained access to locations with even better grades, and this should keep the numbers for Aranzazu quite high. In San Andres, we had an interruption that lasted almost a month. As you've seen, however, we still have all the indicators aligned to make 2021 a great year. We are implementing the Aura management system. And although we have left this operation for last, and there were, of course, all the impact of COVID and the human concerns resulting from that, we do have a very strong commitment. And we have been working nonstop to improve immunization all across our staff. And this will allow us to really do our best. So these are results from our operations. But it doesn't really do us any good to have efficiency if we can't find the minerals to explore, right? So looking at the geology -- well, actually, first, just before I wrap up the year-to-date, we hope to have 260,000, 270,000 ounces, which is a very strong result. As you saw, our previous record in a quarter was approximately 60,000 ounces. So that's a lot lower than what we're seeing now. We are now looking at maybe 75,000 or 76,000 ounces per quarter, and this is something we expect to see over the future as well. We are putting Apoena back on track and really going to capitalize on all these gains in efficiency, and this makes us very calm and gives us a lot of peace of mind as we move into the future. And now talking, in fact, about the -- really are the foundation of our work, which are the mineral resources, of course, we have excellent management, but that doesn't really do anything if we don't have the requisite minerals, of course. So some of the highlights of what we've been doing with a really growing trend of investments, we're actually quite away from the standard that we see in terms of our peers' investments. And that's because we really understand that we need to have a very solid geological basis to build a pipeline to give you the results that we're all looking for. So we will look at a 20-kilometer radius around the site where we're working. And over this past period, we have seen an incredible potential in what we call the near-mine regions. These are locations that are located very close to the mine, and that's the case for almost all of our mines, and that includes Ernesto. So we have been conducting exploratory drills, and we have been putting together a really detailed report on the reserves that we have access to. And that will be published next year. So we have some very positive results in that report. And that is combined with some of the mines like Lavrinhas and Japonês that we are already working on. We have been successfully bringing in resources that have return levels that are -- they're a little bit more conservative, but that will really ensure our continuity of operations. And the big news, I think, for this year, is Matupa, which I will go into detail about later on. I know some of you are really looking forward to that. So moving on to the next slide, we'll see here specifically in the projects for Almas, the Almas project that we're really focusing on, and the Matupa project. If we could zoom into Almas specifically, from the geological point of view, we have something called a greenstone belt, which is a type of geology that is among the biggest reserves in the world. We have the iron quadrangle here in Brazil, and that's very famous for being one of the biggest iron reserves and having a very, very big maturity levels. But we can trace a parallel with some of the greenstone sites located in the northeastern region of the state. This is a greenstone site that has produced a lot and still has something like 11 million ounces. But in order to do that, they had to invest almost 11 million meters of probing. And we have done so much by spending so little in terms of probing. We are looking at grades on the order of 1 gram, but we actually have some projects that are almost twice that high. Recently, with some of the concessions that we have won, we have been able to absorb some regions. And we've been able to really do lots of research in those areas and expand our deposits and consequently bring in higher grade targets. And remember that as part of the project, we limited to approximately 1 million tons, but the project is -- has the capacity for as much as 2 million. And that includes all of the equipment that have already been allocated or are ready to be allocated without any losses due to that. This is a region that is -- that has a lot of potential. We have a really strong and old history of gold panning in the region. We have some -- we don't have official numbers, but there is a very strong tradition of gold mining there. This is basically a hill, and that's what the mine consisted of. And nevertheless, this is a very robust project. And there's a really -- there's a strong expectation, and our forecasts for continuity are very good. Our focus. And so it has been on exploring this site. I'll show you some more details later on, but we expect Matupa to need about 2 years of exploration first. And then after that, something like 3 years of good production, and that's in the first level alone. And that will give us plenty of time to look at more options in terms of developing investment in this region to increase the life of mine, which is currently rated at 7 years, but we really expect that to increase long before that time reaches us. Just to wrap up talking about the Almas project. We really focus on doing our work every single day of the year and capitalizing on every opportunity. So we have really robust, really mature operations today. Of course, every mine has its challenges especially in terms of maturing engineering, but we have been able to invest in our opportunities very well. And the impact of inflation, which is a very strong potential danger for us, this has a direct result on our CapEx. And yet with reductions and increases in scope, we have been able to stay very, very close to the estimated CapEx. And for Matupa, we have recently published -- during the preliminary economic report, we have seen that there is still a lot of work to be done, a lot of research still to be done, viability studies. The official project report is still -- has still -- has a lot of fruits left to bear. But differently from Almas, this is a project that we started from -- basically from nothing. We didn't inherit this project at all. And so we need to collect samples, water samples, biodiversity samples in -- and that's in different seasons, dry seasons and wet seasons. So that's why there is a long lead-up time. But we really are looking at start of operations in 2024. And that is perfectly in line with our plan that Rodrigo set forth. It's also supported by the geology, the levels of production that we find to be available, something like 300,000 ounces. And so Almas and Matupa are what we need to reach 400,000 ounces. And that's, again, talking about the 2024 period. So Fabiana, I hope that this has been informative.

Yes. Glauber, it was very clear, the potential for exploration and the Almas potential and the other mine as well. But I want to ask you a question. Why did it take us so long to really get a good picture of this?

Yes. This is something that is often asked. That's a great question. And actually, there are 2 reasons. If you look at the 2 operations, the 2 regions that have been in operation for longer, which is the case of Aranzazu and San Andres in Honduras, they have a more robust life of mine. The useful life of this venture is longer because it's better known and more developed. This has been going for over 10 years, but Apoena is a very new deposit. We are still at the very early stages of understanding the geology, and geology is something that is highly variable. And every single location has its own specific identity. In terms of gold, this is something that requires a really heavy investment because you need to develop your target and bring that up to a really good confidence level in order to start operations. And it also requires a lot of time because you need to understand what the structure looks like, what it can support. So it's a highly specialized project done by our team of geologists and prospectors. So there is a slight gap. We have seen low investments over the past few years. And now recently, we've been -- in more recent years, we've been investing more heavily. So this has a reflection, and that reflection is not seen today. But it will be seen over the future 2 to 3 years to come. And this will undoubtedly result in expansion of the life of mine, and that will be done sustainably. It's one thing to really skyrocket your number of ounces, and it's another to do that sustainably. Gold deposits in and of themselves require some time to mature. They need investment, and they need time. And that's what we've been putting into these mines.

Thank you very much for your explanations, Glauber. And I'm going to take the opportunity, since you mentioned Aranzazu, I'm going to show the operations in Mexico at the Aranzazu mine. So we're going to have a short video so you can get to know it better. [Presentation]

To understand the growth plans of Aura, let's talk live with Francisco Carmo, the Technical Services Manager of Aranzazu. Good morning, Francisco. Welcome to Aura Day. You saw our video of Aranzazu that show the expected growth. But I would like you to tell us about your growth plans. Is it possible to increase the production capacity even more?

Good morning, everyone. Yes, it is possible. Since 2018, when we restarted operations, we started our growth plan, we had a 30% growth in 2021 vis-à-vis the same period last year with a good technical quality in our team and with a good training program that is constantly upscaling our team to prepare them for future projects. I would also like to highlight our routine management and internal projects in the geometallurgical projects, for example. Despite this ramp-up and the 30% growth in the last year, we also focused on improving our drilling with better quality to our final customers. Also, we worked with external consultants in geotechnical engineering to provide more safety and higher productivity for our underground operations. We also made a massive investment in geology in our concession areas in Mexico. We are investing in new geology technologies, working with geophysics and geochemistry and also drilling, whether it is underground drilling, surface drilling and also in deep drilling. GH is our main mineral body as well as other near-mine bodies that we have close to our mine have shown the capacity to increase production in the future.

Thank you, Francisco Carmo, the Technical Service Manager in Aranzazu. I'd like to thank you for your participation and the explanations you have given during the Aura Day. I wish you a great day and a great day to all of those in Aranzazu. Now let's go back to Miami to talk with Paula Gerber, the Head of People and ESG. She's going to talk more about the 360-degree culture at Aura and how does that work in practice. She is now connected to us. I turn over to you, Paula. Technical problem. We cannot hear Paula. We cannot get your audio. I see that you are talking, but I cannot hear what you're saying. Let's have an audio test. Would you like to try to say testing?

Good morning.

Okay. Now we can hear you. Okay. Thank you.

Good morning, everyone. My name is Paula. I am responsible for People and ESG at Aura. It is a pleasure to be here with you for the first time. Rodrigo presented the 3 pillars that guide Aura's strategy: Our assets, our balance sheet and the culture of building business through people. Now I am going to show you how Aura has evolved in the EESG agenda and the advances we've had in the last year, which were significant. Since 2017, under Aura's new management, this is a topic that has been a major focus of the company. When our mission/vision were created, it was based on company employees and community and governance. In 2020, we also established our material topics that were worked as part of our agenda. So what does that mean? Let me take a step back to talk about those material topics. Material topics are related to the impacts that we reflect on economic, environmental and social impacts. They are significant to our companies that significantly affect the assessments and the decisions made by our management team. So in this process of gathering material topics, we got the involvement of over 40 employees of the company. We prepared work groups sponsored by each one of our executive team members. We believe strongly that the E and ESG agenda does not belong to one area. This is an agenda that permeates the whole organization. It's everyone's responsibility, and we count on business leaders to have a very strong participation in this agenda. Myself and my team are the facilitators of this agenda. Let me give you a first update about 2021. We have hired 3 people to be dedicated to EESG at Aura. And in addition to the advances we've made this year, we'd also like to talk about the expectations we hold for the future. This slide shows how material topics are connected to the values of Aura 360 degrees that lead ultimately to our corporate culture. I'm going to elaborate on each one of them in the next slides. Now focusing on this first segment of the diagram. We have employees. Our main value here is and will always be safety. This translates very objectively into a material topic, which is health and safety of our workers, as Glauber has already mentioned. The other topic has to do with meritocracy. We are a performance-oriented company, and we have an annual performance review cycle that is well structured and robust, involving alignment of target, 360-degree assessment of leaders and also performance committees that discuss the performance levels of teams. We map our talents and also our pipeline for succession. We use a tool called 9 box. That's a matrix that assesses the performance, the deliveries and the potential for growth of our employees. This year, we assessed 175 leaders, which accounts for a 57% increase vis-à-vis the last year. Behavior. Or I correct myself, when you talk about performance, there are 2 work streams. So what are our deliverables, so what we need -- what results are expected from us and how we deliver those results? So the behaviors are expected from our employees and leaders, and they are aligned with the company values, our Aura 360 degrees, to deliver those results. The profile of employees we want in Aura are leaders that can delegate. This is based on planned delegation skills. They should work interdependently with -- in collaboration. They should be creative and focused on information. They should take risks. And they should know that if they make mistakes, it's okay. But being flexible, we can reach the results we want. In terms of diverse and inclusion, we have someone focused on that. And that is something that leverages this agenda. The diversity and inclusion agenda is everyone's responsibility. Our pillars are gender, generation, ethnicity, accessibility and LGBTQIA+. So we focus on gender and generation to attract new people. And in the other pillars, we'll focus on the education of our internal audience. This year, we became a signatory in Women in Mining initiatives in all 3 countries where we operate because we're already -- we're signatories in Brazil and Mexico. And this year, we became signatory of this initiative in Honduras. Because of that, we take the commitment of hiring more people, but also adapting the policy and the work environment to women. Today, we have 14% of female workforce, which is aligned with the average of the mining industry. But we know that we need to improve, and to do so, we need to have intentional initiatives. We need to make intentional changes to have a different scenario. In the past weeks, we have had significant discussions about what kind of commitment does Aura want to have with this topic? We need to take a very serious commitment to it. We will commit to have 40% of women being interviewed for administrative positions. And we know that to change that significantly, our main focus should be on the operations. And of course, we will need to train female workforce in the communities where we operate. Our strategy will also involve increasing our generational diversity. Today, only 6% of our employees are from the Z generation. And that's typical in this industry, but we want to increase this pool through internship programs, also trainee program. And why is it important to have more people from the Generation Z? We are part of a very traditional industry. 90% of our workforce is from Generations X and Y, '70s and '80s. Having different mindsets will leverage our agenda towards innovation. In addition to that, we want to have a pipeline for our leadership with people from our workforce over the years. We launched trainee program in Apoena this year. And in 2022, we'll expand this program to Mexico and Honduras. Now moving to the next slide. When we look into the second portion of the diagram, this relates to community and environment. Please notice that we don't have environment clearly as a pillar in this diagram, but it is a value within community. Let me talk about the material topics related to this. The first material topic related to communities is the community itself and human rights. Aura has done a lot for the communities that are around our sites. In 2021 alone, we implemented 29 initiatives focused on neighboring communities. Out of this 29, 50% of those focus on entrepreneurial education and technical training. In Honduras, for example, we delivered training to planting avocados for exports. In Apoena, we provided scholarships for entrepreneurship education with a partnership with the university. In Aranzazu, we made an agreement with a member of a community to manufacture masks for company employees and for the population. The total investment in communities in 2021 was $675,000. And this year, we've also improved a lot in terms of human rights. We launched our human rights policy in June this year. We communicated that in all our social media outlets, in our website, and we trained over 600. Over this coming year, we are going to work on our mitigation project to focus on a really material plan within human rights, which is diversity and inclusion. Back to the geotechnical structure. Glauber has already mentioned, but we have contracted on a third-party consulting firm. And Aura has produced an inventory of greenhouse effect gases up to 2020, and that includes diesel use, heating for the underground galleries and electrical power generation. We have seen that our CO2 generation is approximately 0.2 tons per ounce. And so that's a really good number, but that doesn't mean we can be complacent and content ourselves with that. We are currently designing, with help from this third-party consulting firm, a new plan that's improved and that works with all of our staff that we call The Carbon Challenge. This is a plan that will involve our staff from every location, and this is all based on the ideas that are raised by working with this consulting firm. They also include longer-term initiatives. This is another example of decentralization, in that we can get help from teams that wouldn't normally have this kind of influence. Another aspect that we've been working on improving is water usage. Our goal is to keep the quality of the water table and water resources stable at every location where we work. Our goal is to have very clear targets, for instance, from the past year to January of 2022. Moving now to the third and the last pillar, and that is specifically company inside governments. Another initiative where we invited every single one of our staff members is the innovation for sustainability. 122 people submitted 75 ideas in terms of operational excellence, environment and safety and company culture. These projects were selected by technicians and operators. Another initiative is the publication of our sustainability report. It was published this year with information from this year and 2020, and it represents Aura's commitment to continuous transparency and to working with EESGs. Aura has also become a member of the World Gold Council, and that means adhering to more than 280 guidelines. These guidelines will be monitored over the years to come. And lastly, our final and perhaps most important pillar, because it's the baseline for every others, is our code of conduct and code of ethics. This year, we have applied the requirement for studying and developing a code of conduct for every single one of our employees. You can see some information about our ethics channel here on the bottom right corner of this slide. I should mention that the ethics channel is monitored by an outside company. It is not something that we see, and all the information provided through that channel is absolutely privileged, just like a whistleblower channel. So with that, I will wrap up my presentation about ESG and people, and thank you very much.

Paula, it's really great to hear you explain more about Aura's EESG. It's really good to see that this department is something that you manage. And because of all of your experience with people, I want to ask you why is it that it's such a good thing to bring together these 2 departments?

Well, I'm going to start by explaining why. EESG is something that is intrinsic to our company culture. When we define our values, they are based on people, the environment and the governments. So EESG is really part of Aura's genes right from the beginning. And so that's why we really -- we need to think about the first E because we decided to disentangle really this pillar, the E pillar. Because in order to move forward sustainably, it really is up to our employees. That's the most important pillar. And from that point, the other pillars will follow along, more or less, reliably. In terms of strategy, our goal is to consolidate this culture more and more over the years to come. Since Rodrigo assumed his position as CEO in 2017, we have been moving forward to consolidate this culture.

Thank you very much, Paula Gerber, for your participation and for your explanations here and for your leadership of the EESG Department. And now folks, we have another quick video of our operations. We're now going to Honduras. The location is called San Andres, also known as Minosa. [Presentation]

Folks, and now to tell us a little bit more about Minosa, live from Honduras, I'd like to invite Sofia Aguilar. She's the General Manager of Minosa. Sofia, Good morning. Thank you for joining us here at Aura Day. As we've seen in this video, Aura has a strong focus on EESG, especially the social pillar. Could you tell us a little bit more about the projects? And how many people benefit from Aura's involvement in the region?

Good morning. Nice to meet you. Yes, the social projection of Aura Minosa has a positive impact in all the communities that are related to the gold mines. We focus on education, environment, health and especially, we are the main generator of local jobs. We provide over 800 direct jobs, over 5,000 indirect jobs. And in terms of education, we support more than 900 children in school age by providing them materials. We hire teachers and provide transportation. And we also have an occupational health clinic, not only to our employees, but also health clinic that is available to our communities there. You can find ambulance service, medical services, and so on. And for the environment, there are several environmental projects that are leveraged by the company to serve the community. We also have infrastructure projects to improve the quality of life of our neighboring communities. This is part of our social responsibility and also the sustainability of our communities. I would like to mention some of the projects that we are developing with our team. Our team has created a plan. We're establishing alliances with strategic partners that provide us technical support, different types of support. And there is also a project that is made in a partnership with the central government, also with the civil society and with private companies. This project wants to increase the potentials of our communities and to train them for local agriculture activities. We also have a mineralogy project with the global mine in Central America alliance to educate our children to implement responsible mining practices. There is also a project that was sponsored by a Honduran organization to provide to women who support themselves based on artisanal mining. We provide them material and legal support. So this is just a small part of the strategic plan that we have created with the Social Environmental Responsibility group, not only to improve the ability -- the capacity of our communities, so to improve the vulnerable sectors, including women and children.

That is very nice to hear you talking Sofia. You briefly mentioned about this international movement, Women in Mining. And Aura Minosa has become a signatory of that initiative, represented by you as a general manager in this initiative. You're the only woman that takes a similar position in Honduras, right? So I would like you to comment on that -- to comment on this challenge.

I'm very pleased because I am the first woman as a general manager in my country. This is usually a position that is taken by men. And I'm still very proud because I represent all working smart women who have a lot of ability in Honduras, and many of them developed themselves in several of the economic sector of the country. And I think that this would have not been possible without the support of the companies where we operate. And this is why I'd like to publicly thank Aura for the encouragement, for the support and to include us as leaders in their teams, and also not only to leverage the professional development of women, but also our personal development. And I think that I felt well accepted when I was hired for this position. I was nervous. I didn't expect to be so well accepted. But I was very happy. And this was applauded by every women who work in the mining business that have been waiting for that for years. So I feel honored and I feel that it's inspiring.

Congratulations on your work, Sofia. I'm very glad to hear about your background, about what you've been doing in Aura Minosa. Good luck. I hope that you keep representing women very well in the mining business, and I wish you a great day and a great day to everyone in Honduras and in Minosa.

Thank you.

Now let's go back to Miami. We will talk to Aura's CFO, Kleber Cardoso, who is connected with us. He's going to talk about the financial results and policies implemented by Aura. Good morning. You can start your presentation.

Good morning, Fabiana. My name is Kleber Cardoso, and I'd like to thank everyone for this -- for your presence here this morning to talk about Aura. In my presentation as a CFO, I'm going to talk about capital allocation, and Rodrigo touched upon that during his presentation earlier. Glauber also talked about capital allocation, talked about all the Aura projects. But during my presentation, I'm going to talk more about the process. So what do I mean by that? So where Aura tries to allocate its capital? What is taken into account for capital allocation? What are our objectives and goals? And in the second part of my presentation, I'm going to talk about corporate governance, also continuing what Paula has already started talking about. So first, let me talk about capital allocation. So where does Aura try to invest the cash generated by its operation? Today, we allocate capital in 3 main parts in our business. First, we use it for the maintenance of our businesses. What does that include? That includes maintenance CapEx. So where we need to invest to keep our production capacity in our operations. We also have some working capital needs to keep our operations or to grow them. We also pay taxes in Brazil, Honduras and Mexico. So our income taxes. We also use the cash generated by the company to expand our business. And what does that include? Investments to expand mineral resources and reserves. And you probably remember that Glauber also mentioned that in our projects and operations, we invest to increase the life of mines. Business expansion also increases investments to increase the production capacity in our current operations. The most recent example was the increase we had this year, an increase of 30% in the capacity of the Aranzazu mine. And also we have greenfield projects and mergers and acquisitions that could take place in the future. And the third use of the cash generated by our operations has to do with the return to our shareholders. We have an established policy to pay dividends. And of course, we always assess the possibility of launching a share buyback program. In summary, this is basically where the company allocates its cash. And what is this process like? So what do we take into account in our cash allocation? Maintenance of the financial health of the company. So the company has a target to have a net debt over adjusted EBITDA ratio of under 1, which is much lower than companies in the business, they work with a ratio of 3 or 3.5. Today and actually for quite some time, we have operated very comfortably reaching this target. This indicator is under 0 is a negative indicator. Because the net debt of the company is negative, today we have more cash equivalents than net debt. And it's also important to work with the proper liquidity. And what do I mean by that? Cash and cash equivalents should be enough for us to allocate the capital like that, to develop projects, to maintain our operations and to return capital to our shareholders. But we try to work with not too much cash because cash and surplus can cause problems. And this is why recently we had paid dividends. The second point we take into account in this capital allocation project involves investing in projects that have expected good returns. So we should -- would have more than 25% IRR in dollars. Those are profitable projects that aim at reducing the initial CapEx, anticipating cash flows of projects with the purpose of reducing payback. By doing that, we reduce financial risks. And to do that, we also work in reducing technical risks. So detailed feasibility studies with the support of international consulting companies is a benchmark in this business, and also by working with a highly skilled team. And finally in the capital allocation process, we want to meet the dividend policy to distribute at least 20% of EBITDA minus recurring CapEx. So there's also a minimum exploration CapEx to keep the life of mine. To summarize, this is the process we follow. These are the uses for the company's cash. And this, as you've seen, is the process we follow. Now here in this pie chart, this shows a little bit of how the theory is applied in practice. How has the company allocated its capital since the start of 2021? So we had a little bit of surplus cash. And so before I dive into these numbers, just a tiny warning. What we are looking at here, these are all to-date based on the -- up to September of this year, but we expect these numbers to remain stable over the year to come. And I think that these numbers will really ground our understanding of the company. So if we look at the first few months of the company, we see that 37% of our cash was allocated into maintenance of the business. So that's specifically income tax payments and maintenance CapEx, and that includes Gold Road. So the fourth quarter is going to be highly positive, and maintenance of productive capacities as well is another significant investment. And we, of course, expect this to not recur over the coming quarters. So we paid $60 million in dividends this year, that is over 8.3% in dividend yields. So that's actually in excess of our dividend policy. So why is that? Because, as I mentioned, we started the year with a little bit of surplus cash, and so we were able to increase dividends to shareholders without putting the company's financial health in danger. In the bottom here -- on the bottom right, we see business expansion. So that's $27 million, or 15%. And that includes the Aranzazu expansion, the Almas project, the Matupa project and as well expenses in exploration across all business units and projects. And finally, we have another -- an others section. So that includes this $25 million that's set aside for nonrecurring or seasonal working capital needs as well as other expenses. So now that we've understood a little bit about how this works in practice, I'm going to now show you how some of these financial indicators have been behaving over this exact same period. We see here a lot of information about the company's capital structure. And that's a lot to take in. So let's start on the left, and that's the evolution of cash and equivalents up to the final closing of Q3 2021. And so what we see over Q3 2020, Q4 2020 and Q3 2021 is pretty stable growth. Today, a considerable part of the company's results have allowed us to invest in the operations that we're working on, such as Matupa, for instance. Here in the middle, we have a simulation of Q3, considering the $3 million that is public information about the company. When we study the net debt graph, we see that this is a very healthy net debt for this period. In the third quarter of 2020 through to 2021, we see that we had approximately $50 million in net debt that could be distributed to our shareholders. And so after 9 months of 2021 to date, we see that even with all of these extraordinary events, we still have a negative net debt. So our net debt is very, very healthy, and we have a lot of room to invest. And here on the right, we can see the pro forma forecast for what would be our net debt. And that simulates the receivables of those $10 million, and that excludes the Gold Road. And that would put us at negative USD 40 million in net debt. So this is -- these numbers are very similar actually to the cash that we had at the start of the year. And on the right, you'll see the profile of our gross debt. When we study this, we again see a very similar message. 12 months ago, 75% of our gross debt was in the short term. This dropped considerably over these past 12 months and here, again, on the right, you will see a simulation, a pro forma simulation with the Gold Road numbers put aside. Looking at the final chart in the bottom right of the screen, the weighted average cost of debt, percent per year. One year ago, the cost of debt was almost 10% per year, and that's actually relatively high, specifically when you take Gold Road into account. That -- despite Gold Road, we did a lot of work over the year, and we were able to bring this number down to almost 7% per year. And the pro forma, again, this -- considering Gold Road's numbers, this would put us below 6% per year weighted average cost of debt. So that's a very interesting number. And lastly here on this slide, now that we understand the theory and the practice, we can see what to expect from the future. In the years to come, we expect to invest more heavily into Almas and Matupa. And so here, in this slide, I have a bit of a time line about our primary investments, all the way from 2016 through to the future, and that's up to 2024. I want to start here by studying in the bottom part of this time line, and that's Almas in red and then Matupa in blue. Almas, as Rodrigo and Glauber mentioned, we started this investment in 2021, and we hope to consolidate these investments by 2022. And so the payback should come in early 2023. That is when Almas is expected to start paying back into the investments we put into this project. Matupa is a little bit different, because we did a little bit of work in 2021, but we will concentrate these investments in 2022 and '23. And so as Almas starts being leveraged, that's when Matupa will be invested into, which means that the company's debt will remain quite low and give us a lot of room to grow in terms of future investments. If we look at Aura's history, from 2018 to 2020, we saw something like 18% growth. That was our forecast back then, and that is exactly how much we grew Aranzazu one project after another, always focusing on CapEx, improving the payback terms and making sure that after 1.5 to 2 years, we have always been able to leverage each project without having to leverage the company. And so our leveraging and liquidity indicators have always been very healthy. And so that's how I wrap up my capital allocation section and move into something that's also very important to us, which is corporate governance. This, again, is a very rich slide, and I'm going to break it down step by step for you. Paula has talked a little bit about this already. But as for me, let me tell you what do we have in mind? So we have 2 axes, one is external and one is internal. So what does internal mean? That means everything that the company is exposed to -- pardon, external is what the company is exposed to, and that includes the B3 Brazilian Stock Exchange and also the TSX. We, of course, have to follow all the legislation in every market where we operate, whether that's in Brazil or Canada, or anywhere else. We also have to follow the complementary regulations that Canadian legislators have that they really go hand in hand with Brazilian legislations. As we know, Canadian laws are among the most advanced in the world when we talk about precious minerals. So the Canadian government requires a number of highly detailed reports from us and studies, and we follow all of these, we follow and comply with every rule and requirement in order to publish all of our -- everything that we publish. And again, this is not required by the Brazilian government, but it is required by the Canadian government. And so we want to make our investors happy. We have PwC Brazil and PwC Canada doing the audits for this. And that encompasses environmental, labor, fiscal and also touches on all the other countries where we have operations. So looking at the external side of things, we have a very robust backbone. Internally, the company adopts a number of procedures to make our operations even more robust. So that includes internal audits to assess our most critical processes. Paula mentioned the compliance program a little bit, and where we also use very robust tools, so that's the whistleblower channel, the ethics code and committee and policies. We have very robust compliance programs. We have an administration Board that is very, very well put together, and I invite all of you to learn more about our counsel and Board. Within our management team, we have some committees that are composed entirely of counselors. In terms of audits, they are composed entirely of independent counselors. They're all from outside the company's management, and this really emphasizes our transparency throughout all of these processes. This is a very rich topic that I could really spend an hour talking about, but I want to really demonstrate how robust this process is. And so I pass the floor back to Fabiana.

Kleber, thank you. It's so interesting to hear you tell us more about Aura's internal and external compliance and governance. And so this year, we saw a high dividend payment, combined with a really ambitious plan. So could you tell me how you plan to maintain this very rich 2-pronged effort going on via the dividend payments and the ambitious plans?

Yes, absolutely. So looking ahead, basically, we plan to repeat what we've been doing so far. Aura has a history of growth, and we're right about in the middle of the curve. We -- from 2018 to 2020, we saw something like 67% growth. And it could be even higher if we analyze this growth a little bit differently. And most importantly, we have negative net debt, which is very important. As I mentioned, investing in projects where we expect a high rate of return and minimizing financial risks, we will have a very good outlook for maximizing payback with very low risk. And so whenever a risk does occur, we can very quickly mobilize and mitigate it, and so keep the dividends very high and our net debt very low. And Almas is essential for that.

Well, that really is so great to hear. I'm very, very happy to hear you say that. And I wish you the best of luck in dealing with investors. Now a lot of investors are still learning about the gold market. And so now we're going to talk to an expert in the topic. John Reade is Chief Marketing Strategist at the World Gold Council, which is really the global council when it comes to gold. So Mr. Reade, thank you very much.

Let's do this. Increasing understanding by providing top quality research, data, analytics and demonstrating market knowledge are all areas that fall under my responsibility as Chief Market Strategy. But we also work to improve market infrastructure and to try and make policies more favorable for gold investment around the world. Next slide, please. So I'm going to start off by giving you the short presentation that we use to speak to investors to explain why gold should be part of pretty much every portfolio all of the time, and it's called the strategic case for gold. Next slide, please. The first of these arguments is because gold delivers returns. A lot of people think you should own gold if you're worried about inflation or you're expecting a financial crisis. And while it's true, gold will do well during those circumstances, it's more than that. If you look at the performance of gold since 1971 or over the last 20 years, it's delivered average returns in line with or better than other major asset classes. Even over the last 10 years, gold has delivered 4% annual returns per annum, better than some assets and worse than U.S. equities, for example. So gold has been a source of returns for portfolio. Next slide, please. It's also a top quality diversifier. And what I mean by that is not only has it delivered returns, but the correlation of those returns is not related to other assets. So generally, gold moves independently of equities, which is good, et cetera. Finally, gold exchange-traded funds contribute a few percent of the overall turnover. So that $180 billion a day is more than many other major asset classes like the U.K. bond market, like the Dow Jones stocks, like the German bund market. So that source of liquidity is really important for portfolio. Next slide, please. Gold is not as volatile as most people think, either. I often read news stories talking about how gold is a very risky asset or how it's very volatile. But that simply isn't true. If you look over the last 20 years, the average volatility of gold has been in line with emerging market equities, U.S. equities and lower than any other individual commodity. So yes, it does move more than the bond market, but everything does. But other than that, gold's volatility is in line with or lower than other asset classes. Next slide, please. Gold also has fulfilled a role in portfolios during difficult times. So each of the events that I've shown on this chart represent market sell-offs of some form or another. We've got the 9/11 attack on the United States. We've got the sovereign debt crisis in Europe. And in all cases, pretty much, gold has performed well or being one of the best-performing assets, protecting a portfolio during these crisis periods. Next slide, please. So how does all this contribute? Well, if you add returns, diversification, correlation, liquidity, volatility and protection from downside events together, then you find that adding gold to a portfolio has a positive impact. Now this particular example here is taken from the United States markets, and it takes a typical U.S. pension fund over the last 10 years and shows the impact of adding a little bit of gold, 2.5% or 5% or 10% of gold to a typical pension fund portfolio and reducing everything else in proportion. And what you can see is adding gold, probably on this example, about 5% of gold to a portfolio, is the sweet spot. It increases the risk-adjusted return of that portfolio by contributing to a little bit to returns, but also from the diversification of the portfolio protection that it offers. Now we've conducted this exercise in many markets around the world, in Europe, North America, Australia, Singapore, Russia, India, China. And the answer we get is very similar, somewhere between 4% and 8% is the ideal allocation to gold based on its performance and the performance of other asset classes over the last 10 years. Next slide, please. So aside from the strategic case for owning gold, what's happening in the gold market at the moment? Next slide, please. Amongst the work that we do, and I should add, all of the research that we do is contained on our website, gold.org, and is available for free. But the research that we do includes an analysis of the drivers of gold price performance. Now this shows you the positive and negative factors that have been driving gold this year. And you can see, in the first 6 months of the year, risk and uncertainty and then opportunity cost, which we divide into 2 categories: foreign exchange and interest rates, have been the major drivers of the market. Lastly, it's mostly about opportunity costs, and again, interest rates being the major driver of markets. Next slide, please. Because what's happened over the last 12 months is that gold has underperformed many other asset classes. If you look back in 2020, having gold in your portfolio was a clear positive. The return was around 25% for the year, in U.S. dollars, in a year when most other asset classes fell. But once we started to get positive news about vaccines and investors started to anticipate a recovery in the global economy, other asset classes did better. And that's what we've seen since August last year. We've seen gold underperforming equity markets, and we've seen gold underperforming commodity markets as well, which is a clear sign that the reflation trade, the recovery from the pandemic crisis, has benefited other assets rather than gold. Next slide, please. And research that we published on this earlier this year shows this is entirely normal. In the first 6 months after the end of a U.S. recession, gold tends to underperform other commodity sectors and other equity sectors, too. So you see much better performance from energy, from industrial metals, et cetera, whereas gold tends to languish. But what you see is if you hold gold for longer than that, if you hold it over a 12-month, or a 2-year or a 3-year period, then the performance of gold is very much more in line with or better than the other commodity sectors. So the early stages of an economic recovery, gold underperforms. Typically, gold catches up over the longer term as well. Next slide, please. So I'm going to talk a little bit about the fundamentals of the gold market now because it's important just to understand what's driving the market at the moment. This slide here shows averages over the last 10 years. So it strips out the very specific events that happened in 2020. In general, about 40% of gold demand goes into consumer purchases, whether that's jewelry or technology. And 40% of that demand goes into investment. And finally, 17% of the demand is being bought by central banks. So you have a very balanced market here, one where some things are driven by economic growth, and some things are driven by uncertainty. Next slide, please. So where we stand now? Looking at gold over the first 3 quarters of this year, we've seen a return to normal. Now what I mean by that is, last year, saw the gold price up 25%, driven by extraordinary investment demand as people were looking to protect themselves from the coronavirus pandemic. At the same time, we saw a collapse in consumer demand. And consumer demand collapsed because markets were closed. People were losing their jobs. They weren't buying jewelry or able to buy technology. So this year, we've seen a recovery. The gold market is returning more to normal. Jewelry demand has recovered. Bar and coin investment, and by bars, I mean, the little bars, not the big James Bond bars that we see in the films. But bars and coin investment remained strong as retail investors are concerned about the outlook, particularly for inflation. But the big negative we've seen this year is investors who bought lots of gold via exchange-traded funds last year, helping drive the price to all-time highs, have been taking profits on those positions and reducing their holdings. And that fits very much with what we've seen in terms of playing the reflationary trade I've mentioned before. Central banks have stepped up and bought more gold this year. They were a little constrained last year because of the economic impacts of the coronavirus pandemic, but they're back and they're buying good quantities of gold this year. And the final point I'd say is mine supply was affected by the shutdowns because of the coronavirus pandemic last year. But mine production has bounced back strongly in 2021, and looks like it will hit an all-time high. But total supply to the gold market looks as if it will be about flat because the amount of recycling of old jewelry has fallen back quite a lot. Next slide, please. I mentioned central banks before. They are an important component of the market, contributing 17% of net demand over the last 10 years. But it wasn't always like that. We've seen 27 years of selling by central banks up until 2009. But after the global financial crisis, central banks stopped selling and emerging market central banks started to buy, and that's continued every year since then. Even last year, in 2020, where we didn't see quite as much buying. This year has seen some buying from the usual central banks to buy, but also from some unexpected purchases, including Brazil, Thailand and Hungary. So based on the conversations that we have with central banks, because we have relationships with approximately 94% of the central banks in the world, we expect these purchases to continue in coming years, and they're an important supportive factor for the gold market. Next slide, please. I mentioned mine production because mine production has grown strongly over the last 10 years. Lots of analysts, however, are beginning to expect to see gold mine supply slow down its growth and maybe even start to decline going forward. That may be the case. We've looked at an analysis of projects and new mines that will be coming into production and it's going to be difficult to sustain the levels of production of the mining industry with a few new mines and projects coming on stream. But this year probably sees mine production hit an all-time high. So we may have another year or 2 of growth coming through before we think there will be a slow, steady decline. Next slide, please. But as I mentioned earlier, recycling looks as if it will prevent total supply from increasing very much. Because recycling is very sensitive to the gold price, we saw a big jump last year because of gold prices getting to all-time highs, but it's rapidly slowing down now. And we think that's because it's too soon since the last spike in gold, which happened in 2011, for large stocks of unwanted jewelry to have amassed in people's homes. And it will require a much higher price, we think, to make recycling demand increase rapidly again. So my final slide is a brief conclusion. I've only had 15 minutes or so to talk here, and I've been in the gold market for 35 years and can talk about gold for hours and hours. I would encourage you to go to our website, which is free. All the data and research there can be read. And it gives you lots of insights into what's going on and what we expect to happen. But I conclude by saying the gold market is normalizing in 2021 after the shock that we saw last year that resulted in the all-time high in the gold price and the collapse in consumer demand. So that normalization should continue in 2021 and into next year as well. Central banks will keep buying. We expect ETF investors will probably return to the buy side in 2022 as well, particularly if the inflation that we've seen worsens or turns into stagflation, that could be a big upside trigger for gold. But if central banks are able to hike interest rates and to normalize monetary policy without crashing the economy, there is the potential, I suspect, for downside in gold. And on the production side, we think that mine production will hit an all-time high this year. And although the medium term does look for declines in the price -- sorry, declines in production levels, that's not going to happen this year or maybe not next. But recycling should stop the gold market from being inundated with supply. So I'm going to stop there, and thank you very much for your time, and thank you.

And folks, it's so interesting to learn more about the gold market because I kept asking myself, what about Aura? Where does Aura stand in this market? And what is Aura's competitive advantage within this market? So now to answer these questions, we're going to talk to Mr. Chad Williams, who's the Chairman and Founder of Red Cloud Securities, which is one of Canada's premier investing firms. Mr. Williams, welcome.

Thank you very much. It's an honor and pleasure to be here. Can you hear me okay? Perfect. My name is Chad Williams. A little bit about me. I'm a mining engineer with an MBA. I've worked in the capital markets for about 30 years. I was a senior gold analyst with some large banks here in Canada. I've been an investment banker and CEO of a gold company, and I'm the founder of Red Cloud. So a little bit about Red Cloud. I started the company 10 years a year ago. And our objective was to provide a variety of financial services to mining customers all over our world. We've been very successful and we've grown quite rapidly. But obviously, this presentation is about Aura and I was asked to discuss a topic about the industry. First, in terms of disclosure. I'm a very proud shareholder of Aura. And Aura does some work with Red Cloud. So in terms of Aura's peers, please trust me on this. Aura is truly an outstanding company. And note that I didn't say gold company because what I meant to say is Aura is a very, very good company on its own, and Aura is choosing to work in the gold industry, which is obviously a small niche. But I do believe that -- and I'll talk about management in a second here. I do believe that as a stand-alone company, and you can judge Aura as a stand-alone company in terms of all kinds of corporate metrics, growth profile and obviously, dividend and all kinds of other factors, Aura truly stands out. And I'm very optimistic about Aura's future. The company is built strongly and well with a good base. And one of the strongest aspects of Aura is the very strong growth profile, which is unusual amongst many gold companies, in particular, gold companies of Aura's size. The mines are robust. They're well operated. The operating teams are very solid, it's obvious to me. And as I alluded to, the most notable feature is the management. The company is exceedingly well run. The senior management is professional based on my experience, and they run the company efficiently. And the quality of this call to me is a small example of how efficient Aura is run. So let's talk about the markets now in gold. So John Reade just did a very good analysis of the gold commodity itself. I'll add a little bit from my perspective. The gold price has struggled, let's say, in the last year. And the reason is because of the fear of higher interest rates by many investors. Higher interest rates are historically not good for gold, at least initially. And again, without getting into too much detail, it's a race between interest rates and inflation. And in terms of inflation, I think gold is doing well recently because investors are realizing that inflation is here to stay for many reasons, supply chain problems, lack of labor, et cetera. And so gold and gold stocks have recently broken out on a technical basis. So for investors that follow technical analysis, that's very, very important. Now in terms of gold stocks themselves, as I mentioned, the gold sector has suffered from lack of investor interest. One could call it a funds flow problem. Investor funds have flowed to virtually every other sector, including, of late, oil and gas, but thrilled, let's say, the last 13 years into technology and other stocks that are not commodity stocks. And it's proven very difficult for the gold stocks to compete with the growth rate of certain technology stocks. One can argue that certain technology stocks, and I'll throw out Tesla as an example. Perhaps names like Tesla have ran too far too fast, and they're due for a correction. I don't know. But if we do get a general correction in the stock market, gold stocks should perform very well because of their historical negative correlation to the general market. But as mentioned, and it's important to reiterate, gold and gold stocks have recently broken out on a technical basis. So that's important. One of the challenges that we face as an industry in terms of investment in the sector is demographics. Obviously, we're seeing a phaseout of boomer investors and a phase-in of millennial investors. And millennials, generally, overwhelmingly, don't have a strong understanding of mining, gold and gold stocks and all of those in general. And so as an industry, we need to provide education, and we need to provide -- which includes the basics of mining and calls like today are fantastic for that, but also the basics of the commodity, and the World Gold Council does a great job of that. But I do believe, and I'll conclude by saying this, that I do think that younger investors will invest in gold stocks. And when they do, they will seek high-quality names like Aura, companies, again, that have a high growth profile, that are well managed, solid balance sheet and so on and so forth. So that concludes my presentation today. Thank you very much for the opportunity, and good luck to Aura and everyone on the team.

What do you think?

Well, I'm so incredibly proud of everything we've achieved and everything we've shown you today. This company is creating so much value not only for shareholders, but this value is also being created by and with our employees, everyone at all of our different locations, the surrounding communities. We've had the chance to listen to the folks in the surrounding communities and see the huge impact that we have in their lives and the lives of their children. So I am so proud and so happy that Aura is here to stay, and these benefits are here to stay. So I think everything we were able to show you, it has been very clear, including the finances or indicators. I invite you all to, please, take a look at our numbers at our presentation. You'll see that we are a very robust operation. Our leverage is low, and we are definitely on the radar. And we're very responsible and sustainable. So thank you to everyone who was with us today. You are part of the gold value chain, and you, investors, can have the chance to really see the actual numbers of how gold will benefit for you. $15 trillion to $20 trillion were issued -- were invested to treat the impacts of the pandemic. And this value is very similar to what we're going to see being invested now in investments that will leverage what you can put in. And it's important for everyone to understand that Aura is anti-cyclical, just like gold. So it's really critical to having a diversified portfolio, and it's going to protect you from swings.

Well, that's really good, Rodrigo. It's because I'm an investor. So it's really good to see companies that are growing, are distributing dividends, have a contribution to diversification in our portfolio. And I know that everyone involved is going to feel the impact in the year to come. And the work that you do at the locations, the EESG work is so pivotal. And exploration and mining in particular, make EESG so important. So I want to congratulate you. And as an investor, I really love this event. So thank you.

Thank you, Fabiana. Thank you, investors and everyone who was with us today, and please, visit our site and look at our report. And as always, remember that this material will be made available on Aura channels. It will be subtitled in Spanish and in English so that everyone can understand. I'd like to thank our team in Miami, Kleber Cardoso, Glauber Luvizotto, and Paula Gerber, who were with us and are sharing our screen now and to everyone else who was with us live. And of course, most importantly of all, to you who is watching us right now, thank you for being with us. And so shall we?

Yes. Thank you. It's always a pleasure, Rodrigo.

Thank you, Fabiana. And once again, thank you. Have a great day, and see you in the next Aura Day.