Semirara Mining and Power Corporation (SCC) Earnings Call Transcript & Summary

Good afternoon, everyone. Thank you for joining the First Quarter 2025 Analyst Briefing of Semirara Mining and Power Corporation. My name is Hannah Chan, Investor Relations Officer of DMCI Holdings. I'll be walking you through SCC's financial and operational performance for the period before we open the floor for Q&A. Joining us today are members of the SCC top management team, as shown on your screen, led by our Chairman and CEO, Mr. Isidro A. Consunji; and our President, Chief Operating Officer and Chief Sustainability Officer, Ms. Cristina C. Gotianun. Before we begin, please take note of the following. This meeting is being recorded. [Operator Instructions] This session is intended for analysts and investors to gain insights into SCC's financial performance and strategic direction. Management may discuss forward-looking statements about our plans, expectations and growth prospects. These statements are based on current assumptions and beliefs and are not guarantees of future performance. Actual results may differ due to various risks and uncertainties. With that, let's begin with -- let's begin the presentation. In the first quarter, SCC's financial results reflected the continued normalization of the energy market. Net income was PHP 4.4 billion, down 33% year-on-year mainly due to lower coal prices. The impact was partially offset by stronger performance from the power segment. We maintained a solid cash position of PHP 11.5 billion, enabling PHP 2 per share dividend payout in regular special dividends totaling PHP 8.5 billion, which was paid on April 23. This represented 43% of last year's reported net income and well above our 20% dividend policy. Let's begin with an overview of the coal market. In Q1, Asian coal prices adjusted amid elevated supply, lower demand from major importers such as China and India and global trade uncertainties ahead of the Trump administration's April 2 tariff announcements. The Newcastle Index declined more sharply between December 2024 and March 2025, dropping 24% to USD 97 while the ICI4 remained relatively stable, slipping just 2% to around $50, supported by Indonesia's HBA index policy and steady demand for low to mid- calorific coal. Notably, mid-grade coal prices showed relative stability compared to the broader equity and commodities markets, which saw significant volatility during the same period. Looking ahead with demand from markets like Vietnam providing support, coal prices are expected to hover near the current levels. Shifting to the power market. Average spot prices in the Luzon-Visayas Grid fell 21%, driven by the continued impact of approximately 2,700 megawatts in new capacity added last year, which eased supply tightness. This led to an 11% increase in average supply capacity year-on-year, over year. Demand, on the other hand, grew by only 3%. La Niña conditions this quarter led the lower demand growth in contrast to El Niño-related demand increase seen in early 2024. Further capacity additions expected later this year are likely to keep prices moderated. Going back to our consolidated results. While coal prices appear to have generally settled in the short to medium term, return on equity remained healthy at 8% for the quarter, with coal contributing 56% of earnings, down from 65% last year. The Power segment's contribution declined from PHP 2.3 billion to PHP 2 billion, mainly due to the high base effect of eliminating entries. Excluding the stand-alone net income of the Power segment rose by 6%. Eliminating entries reflect the gross margin from coal sold to the Power segment, which is booked under the Power Group. Lower eliminations this year resulted from more efficient fuel use and lower coal prices. Quarter-over-quarter, net income rose by 11% on stronger power segment performance. Turning to our group income statement. Revenues fell 11% due to lower coal selling prices and shipments, while cash costs dipped slightly as higher coal production costs were offset by a lower government share. Core EBITDA margin narrowed to 41% and net margin eased to 26%, still slightly above the pre-pandemic levels. On the balance sheet, we further strengthened our financial position. Total debt was reduced by 19% to PHP 2.1 billion, just 3% of total assets, and our cash balance improved to PHP 10.5 billion with PHP 8.5 billion paid out as dividends in April. In the past 5 years, we have shifted from a net debt of PHP 15.8 billion to a net cash position of PHP 8.4 billion, a testament to strong financial prudence and flexibility to manage market shifts and pursue growth. Moving on to the stand-alone results. Coal revenues fell by 18%, driven by stabilizing selling prices, more lower grade sales and a slight decline in shipments. Cash costs dropped 8% to PHP 7.6 billion, helped by a 45% reduction in government share, though this was partly offset by higher labor, fuel and insurance costs. Depreciation and amortization rose 26%, reflecting new mining equipment and the continued amortization of the Narra mine stripping asset, which totaled PHP 1.4 billion and was capitalized last year as part of pre-stripping activities to benefit the operations up to 2026. On the balance sheet, coal segment debt fell 20% to around PHP 447 million, just -- now just 22% of the total group debt. With a stabilizing top line and higher cash and noncash costs, stand-alone net income came in at PHP 2.8 billion, down 44% from last year. Now let's now look at the coal operational highlights. Production jumped 16% to 5.7 million metric tons, driven by better access to coal seams in the Narra mine blocks after continuous pre-stripping in 2024, which also improved the strip ratio by 7%. Shipments slipped by 2% due to lower domestic sales, but were cautioned by stronger sales to our power plants. Exports remained steady at 2.7 million metric tons with growth in China and Brunei plus a new shipment to Vietnam. Meanwhile, selling prices softened on stabilizing global coal indices and the higher share of noncommercial grade shipments, which made up of 36% of total sales this quarter. Finally, ending inventory dipped slightly by 5% to 1.8 million metric tons, while commercial grade inventory stayed stable at 0.6 million metric tons. Starting this year, we're reporting combined power segment results to give a clearer view of SCC's energy businesses. Stand-alone results for SCPC and SLPGC are still available in the annex of our briefing materials. Now looking at the power stand-alone results. Revenues rose 10% on stronger power generation with stable selling prices, pushing stand-alone net income up by 6% to PHP 1.6 billion. Cash costs grew in line with top line, driven by higher dispatch, replacement power purchases, maintenance and insurance, though partly offset by efficient fuel management. Spot purchases rose to PHP 106 million due to SCPC's 4-day simultaneous outage of both units. As a result, the core EBITDA margin narrowed slightly to 44%. On the balance sheet, debt dropped 24% to PHP 1.6 billion on ongoing SCPC amortization and cash declined following a PHP 2 billion dividend payout to SMPC. SLPGC remained debt-free. Turning to the operations. While overall plant availability dipped to 89% due to the continued plant maintenance of SCPC Unit 1 and SLPGC Unit 2 from last year, the segment's performance was driven by a 13% increase in average capacity following the full restoration of SCPC's Unit 2 dependable capacity to 300 megawatts in late May 2024. Power sales rose by 11%, reflecting improved operating performance and stronger spot market sales supported by higher capacity and a 6% increase in contracted capacity. A key highlight of this quarter was the success of the contracting strategy. Overall ASP or average selling price remained firm despite a sharp drop in spot prices, owing to stronger BCQ pricing under new contracts with more favorable terms. As of March 31, 40% or 334 megawatts of the total 840-megawatt dependable capacity was contracted with 7% under fuel pass-through arrangements. This is close to the management's target of about half of the net sellable capacity with 62% of contracted capacity expected to expire in 2026. We continue -- so moving on to our outlook. We continue to focus on strengthening our core operations and cost discipline to navigate the evolving market landscape. On the coal segment, we're advancing production efficiency in the Narra mine while continually progressing our exploration efforts at Acacia Mine, which is essential to sustain future production targets and improve coal quality. While we're optimistic about securing DENR approval over the Acacia ECC amendment, which will sustain operations over the medium term. We're also moving forward with our plan to use wind energy for part of our mining power needs with implementation targeted in the second quarter of 2025. For power, we're reinforcing our contracting strategies and working to enhance fuel efficiency and plant performance. We're also watching for infrastructure movements like upcoming transmission line upgrades that will support grid stability and growth. On the risk side, we remain mindful of global demand trends, policy shifts and potential economic slowdown. While these issues are external factors, we are addressing these risks through disciplined spending, operational improvements and carefully targeted investments to maintain strong business fundamentals. To end the presentation, let me summarize our key takeaways for the quarter. While earnings softened in line with normalizing coal prices, strong operating performance across both our power and coal segments as well as effective contracting and marketing strategies helped support overall results. We remain focused on cost discipline, operational improvements and customer growth to sustain performance and protect margins, especially as we navigate a more settled yet evolving market landscape. With a solid balance sheet and prudent investment approach, we are well positioned to navigate market shifts and capture new opportunities moving forward. This ends my presentation, and we open the floor for questions.

To open the floor to questions, let's start off with questions sent via e-mail. So we'll start off with questions sent to the full segment. So the first few questions are addressed to Mr. Mark Bentayo, Head of Coal Marketing and Product Delivery. The first question goes, what is the most prevalent thermal coal benchmark to use for coal pricing? And can you provide more updates on the Indonesian government's HBA-based pricing scheme? And what do you think is the reason for the sequential decline in ICI4 price? And have this mirrored the decline in HBA prices?

So for the index that we use, we primarily reference our pricing to ICI3 and 4 for pricing our low to mid grade coal because this closely aligns with the growth rate that we have for Semirara. So -- but we are also monitoring the Newcastle Index for broader market trends. And we are also using this Newcastle Index for benchmark pricing for our index-based pricing for some of our domestic customers. With regards to the HBA price, HBA index being implemented by the Indonesian government, it remained relatively stable over the past few months, largely due to Indonesia's efforts to balance domestic supply with the coal export pricing. And -- but however, major markets like China are still reject the idea of HBA and still use ICI for the pricing of their coal imports because there's a lack of clear and tangible implementing rules for HBA that discourage them from using it primarily because they are citing concerns about transparency and the frequency of the release of these indices. So right now, as long as the miners and traders trade below the HBA prices, the government of Indonesia allows it. So that's why Chinese market is still using it. With regards to the sequential decline in the ICI4, this is primarily due to the softer demand in the key importing countries like China, India, South Korea and Vietnam and Japan, amid high stockpiles, preference over the domestic use of coal and of course, on the cautious procurement strategies they are implementing and additional seasonal factors like the winter weather reduced -- the mild winter weather that we have experienced, this has reduced coal burning in some regions. So both of these factors are reflected on the ICI index and the HBA index. As you mentioned earlier, there's a 2% decline in the ICI4 index from January of this year -- from the fourth quarter of last year to the Q1 of this year. Likewise, in the HBA index, there's a 6% decline from January of this year up to the end of the first quarter of this year. And since Indonesia started using the HBA index, there's a 2% decline also from March 1 up to April 1 of this year.

Thank you, sir, for providing more colors on the coal indices. Next question, excluding coal sales to the own plants, what was the proportion of noncommercial grade shipments to overall sales in the first quarter of 2025 relative to last year's first quarter and relative to the fourth quarter of 2024.

So for Q1 of 2025, excluding coal sales to our own plants, noncommercial grade shipments accounted for about 10.68% of coal or around 506,000 metric tons out of the 4.7 million metric tons that we shipped for the first quarter of this year. This is up by about 9.89% from the same quarter last year, which is about 472,000 metric tons. So in comparison, there is no -- we have no noncommercial grade coal shipment for the fourth quarter of last year, except for our own plant. So this shows a slight increase in the proportion of our noncommercial grade coal shipment year-on-year basis and a sequential increase from last quarter.

Sir, on the market side, what's the effect of U.S. tariffs on China on SCC's coal shipments to China?

So far, there is no direct effect on the U.S. tariffs of China on our coal shipments as our coal exports to China are not subject to the U.S.-China tariff measures. Since our primary product is a thermal coal, this is not really directly affected by this trade actions by the U.S. However, we recognize that the broader U.S.-China tensions can create some macroeconomic headwinds ahead that directly influence our Chinese industrial demand and even the coal importations. So let's say, there's a slowdown in China's manufacturing sector. This could lead to a softer industrial electricity demand, which may affect the thermal importations also -- thermal coal importations also. So we're proactively managing this external risk by diversifying export markets, solely not focusing on China, but there's a growing sales in Vietnam, Brunei and hopefully in other Southeast Asian countries. and even in India. And also we increased allocation to our own power plants and other domestic plants to ensure the stability of the domestic demand. And also, we secure more term contracts, which we did this year for our domestic market. And also, we focus on the cost discipline and the cost reduction measures that we have for our production in our mine site.

Sir, last question, what developments could trigger a reversal in the current downtrend in coal prices?

Well, several factors could reverse the current downtrend in the coal prices. Number one, if there's a strong demand recovery from key importation countries like China and India, then there will probably be a slight increase in the prices as faster than expected. So also the weather-related disruptions, let's say, hotter summer and colder winter can boost electricity demand for cooling and heating also. And also if there are supply constraints, let's say, there are import/export restrictions or production cuts from major exporting countries. So this will also affect the pricing. And of course, the policy changes that some of the key markets and countries that involved in the coal marketing -- in the coal business might affect also. So we continue to monitor these market trends and maintain operational flexibility so that we can capture these price improvements hopefully.

Thank you so much, for the very insightful answers. And now we proceed to questions addressed to the mine site. So we have this afternoon is Mr. Danilo S. Tirona, Mining Division Head and Operations. Question goes, what strip ratio are you targeting for the full year of 2026, especially as Narra winds down and Acacia ramps up?

Okay. Yes, Hannah. Good afternoon, everyone. Even with us transitioning from Narra to Acacia, we still expect our aggregate strip ratio to be within our previous guidance of 12:1. So we are looking at that number for the next year.

Sir, next question, what is the current status of the Acacia mine? And are there any recent developments or milestones we should be aware of?

Yes. Currently, Acacia is undergoing exploration and predevelopment activities. This will enable us to continue to produce about 16 million metric tons per year, as mentioned earlier. And in addition, we are hoping to get DENR's approval to our amended environmental compliance certificate. Hopefully, we get it by -- before this quarter ends.

Sir, last -- okay. Sir, how soon can you extract coal from the Acacia mine once you receive DENR's’ approval?

Yes. Assuming we get the ECC approval and we complete our development and pre-stripping activities, we expect Acacia production by second half of next year. This is in line with our approved work program as approved by the DOE.

Thank you so much, sir DST. Now we move on to questions addressed to Ms. Carla T. Levina, CFO of SMPC. Madam, in connection to the question addressed to DST earlier on the Acacia mine. Are there any cost differences that you foresee from operating Acacia versus Narra?

Okay. Good afternoon, everyone. So we don't expect much difference as to [indiscernible] versus Acacia and Narra. So like usual standard open pit mining, we would need to do the usual series of stripping, construction of cutoff wall, slippage management. And normally, at first, it will have a higher strip ratio as we need to do the stripping. So production costs would be higher, but it would eventually even out as we'll be able to get access to the core strips already. So it's more or less the costing charging for the mining would vary on the timing of the mine plan on the stripping and the production, but we don't expect much difference.

Next question, what could explain the 38% quarter-over-quarter increase in cash costs, excluding royalties for the mining unit in the first quarter despite favorable crude oil prices and Philippine peso's appreciation against the U.S. dollars. Were there unusually heavy pre-stripping activities done in the first quarter that you reckon should subside in the second quarter?

For the quarter 1, the increase in cash cost is really mainly due to the higher production cost. So apart from the stripping that we normally do, while we have access to coal seams of Narra Block 3 and 4, as mentioned by Hannah during the briefing a while ago, we're also continuously stripping on other sites of the mine. But the production cost also is also attributed to also an increase in the number of fleets. So therefore, there's higher fuel consumption as well. So despite the normalization of fuel prices also, we have higher fuel consumption and higher parts also in maintenance parts. And then also, it was in Q1 of 2025 that we paid for the renewal of the insurance IAR of the coal mining. So that also triggered increase in our cash cost. Yes.

Thank you, ma'am. Next question for the coal segment. Please provide updates on your ITH extensions. Was ITH bonus year for Narra applied for? And will Acacia mine also have an ITH, if so, for how long?

Okay. The previous bonus year ended already this May -- will end this May of 2025. We are still eligible for our last bonus year under the foreign exchange savings criterion. We have just completed filing the standard requirements of BOI for the year ended 2024 last April 30. So after that this May, they are now open for us to start receiving our application for the bonus year. So we'll do that. we're expecting to have one last bonus year for Narra. So that eventually should cover from May of 2025 until May of 2026. Now as to Acacia, we are Acacia mine IPH, we are awaiting for the approval of SIPP 2025, the Strategic Investment Priority Plan for 2025 from the BOI, where we requested for the inclusion of coal exploration and development in light of Philippine Energy Security. So once we -- that is approved and hopefully, we really do get included, then we'll now have a basis to apply for ITH of Acacia. And hopefully, we'll be able to get the standard ITH of 4 years. And then hopefully, depending on the terms and conditions of the new SIPP, then hopefully, there will also be bonus years available to us. Thank you.

Thank you so much, ma'am, CTL. We'll be back. So we'll -- before going back, we proceed to questions addressed to the Power segment. So on the Power Marketing segment -- on the power marketing side, we have Mr. Andy Estrellado, Head of Power Marketing. Power market and commercial operations. The first question goes, what developments could trigger a reversal in the current downtrend in the power prices?

Yes, prices are always dependent on 3 factors: supply, demand and fuel cost. On the supply side, supply and demand relationship between the supply and demand. If there is really less supply, more demand and prices will definitely be higher. And then if there's higher supply, lower demand, then prices will be lower. One of the example is that like this March, we had these higher prices because of the outages. We have higher outages in March. And then compared to April, April is supposed to be a higher price, but then what happened is that there are less -- there were less outages in the end, it became lower. The prices became lower this April. So that's how the supply-demand situation is. And then for the rest of 2025, there are upcoming projects, upcoming power plants that is scheduled to be online. But if there will be delay, then probably the prices will go up. That would trigger those -- the reversal of the current trend of decreasing the prices. But we're anticipating that the coming months, like after election, prices will be higher. Yes. Another thing is fuel, unlike what happened in 2022, 2023 when there were prices in the -- world prices of fuel like coal and oil. So the behavior of those bidding in the supply on the power market, they changed the behavior, it became higher. So that would be -- that would trigger also the prices in the West. It may change. It may become higher if there will be some impact on the world behavior of coal prices or even on oil prices.

Thank you sir, AOE. Next, can you provide the duration of your power supply contracts? And how much of these are expiring this year and next year?

Yes. We have about -- currently, we have about 334 contracts, power supply contracts. 13% of that are in a 10-year period, 10-year power supply. Most of the remaining contracts are between 2 to 3 years. For those expiring this year, about 71 megawatts will be expiring this year and about and then about 170 next year, 170 megawatts.

Sir, what is the allowable downtime in your contracts at which you are not required to provide replacement power?

Our existing contracts are all guaranteed supply. So we have no outage allowance.

We have excess capacity.

Yes. And we have excess capacity actually. That's why we agreed on those kind of arrangement because we have excess capacity.

Sir, last question. How are power spot prices trending so far in April and May?

In April -- yes. April average price is about $439. This lower than March. Last March is about $533. This is what I explained earlier, it's about the supply and demand situation. And then this May -- as of May 5, average price is $383. It is also because of the supply and demand. The outage -- average outage for March as of March 5, this is only about 400 megawatts, while comparing it with April 1,100 megawatt outages.

Thank you so much, sir, AOE for your very, very valuable insights on the power market. Now we proceed to questions addressed to the Kalakhat Power Complex. We have Mr. Charlie V. Robles, Vice President and Head for CPC. First question goes, what's the reason for the unscheduled outages so far this year?

Okay. Good afternoon, Hannah. Good afternoon, everyone. On SCPC Unit 1, the 30-day planned outage, which started in December 11, 2024, was extended by 2 days until January 12 as other maintenance activities took some time to complete. The unscheduled maintenance outages were carried out during the holidays in April, while demand is slow as we observed hots-patch in the terminals of the plug-and-play switch system module or PASMO between the main transformer and the NGCP switchyard, both for SCP Units 1 and 2. To correct this high temperature, we need to synchronize the units. Further, SCP Unit 2 had a tube leak, which took around 6 days to complete. For SLPGC Unit 2, one of the major activities during the 50-day planned outage was the turbine overhauling. The outage had to be extended by 17 days as there were turbine [indiscernible] found during the inspection to be beyond tolerance and required to be replaced.

Thank you, sir, for the detailed breakdown of the outages so far this year. Sir, last question. Could you provide more color on the plant availability during the quarter? And was the recent outage scheduled or unexpected or upfront or advanced?

As shown earlier on the slides, SCP Units 1 and 2 had availability of 87% and 93%, respectively. Unit 1's 30-day planned outage was until January 10, but as mentioned, had to extend by 2 days, as explained earlier. SLPGC Unit 2 likewise had to extend the 50-day outage supposed to be completed from November 11, 2024 to January 4. The 17 days extension plus another 2 days forced outage due to boiler furnace issue brought the availability down to 75%. SLPGC Unit 1, on the other hand, had 100% availability for the first quarter. Hopefully, there will be no more unplanned outages as the team is continuously improving the maintenance and operational protocols.

Thank you so much, sir CVR for your very detailed answer. Now we address our question addressed to the finance side of the Power segment. So we have -- we go back to ma'am CTL. Ma'am, what drove the quarter-on-quarter improvement in power revenues -- actually quarter-over-quarter from last quarter. Did this already capture seasonal factors such as election-related demand?

Okay. The improvement in the power generation revenue, so that's from quarter 4 of 2024 to Q1 of this year, mainly 2 factors. So it's a higher -- a 25% higher plant availability. mainly due to lesser outages that we have this quarter as against quarter 4 of last year because there's planned outages in Q4, mainly for SCPC Unit 1 and SLPGC Unit 2. There might have been some extension in Q1, but that would just be for a few days. So it's generally lesser this quarter. And also in Q4 of 2024, there's also outage that we encountered forced outage arising from the Typhoon Kristine that happened in October. So that's a higher plant availability this quarter. Another thing is on more or less a 6% better ASP that we have this quarter as against Q4 of 2024 coming from the new contracts that we have that have better BCQ bilateral contract prices. So to answer the question, also the follow-through on whether this captures the seasonality, yes, because Q4 is -- it's a cooler season, cooler and portion rainy season. So there's really lesser demand as compared to this quarter, as I mentioned, of election related. So there's also seasonality in it, but also taking into consideration higher plant availability and a little higher ASP that we have for the quarter.

Next question, how much of your PHP 6.9 billion CapEx guidance will you spend in the first half of this year?

Yes. Based on forecast, we're expected to incur at least 50% to 60% of this total CapEx of PHP 6.9 billion. This also includes our need to pay at least around 22 -- 20 dump trucks for our coal segment for the first half. So 50% to 60%. We've incurred PHP 2.4 billion of our CapEx out of the PHP 6.9 billion. So we're expecting to incur a little bit more so that will total at least 50% to 60% of the PHP 6.9 billion for the first 20-20.

Okay. Thank you, Sorry, before we go back to some corporate questions, we have a question addressed to Ma'am CCG, Ms. Cristina C. Gotianun, our President. Ma'am CCG, the question goes, what is the latest update on your request for term adjustment on your coal operating contract? And what do you think is holding up the approval?

I'm sorry, I cannot [indiscernible] something wrong. Anyway. The question is about the term adjustment of the COC. I really do not know why it's taking time for DOE to act on the term adjustment of the COC of Narra, but we are still hopeful that it will be a positive favorable response. So we're expecting it sometime this year. And they know DOE knows that we need their action on the term adjustment because of the CapEx that we have to do towards the second half of this year. So we're still hopeful that DOE will act favorably on the COC term adjustment.

We also have a question addressed to -- we have a question addressed to -- sir AOE, our Head of Power Marketing. Sir, AOE, the question goes, why are you expecting power spot prices to go up after the elections?

Yes. After the elections, we're looking -- we're expecting it to be higher because the DOE, there was a mandate by the DOE to prevent any outages, this coming election and a few weeks, even after a few weeks of the election in order not to disrupt the counting of those ballots. And after that, we're expecting that some of the power plants who were not able to schedule their outage, they may have to do it later on. So in that case, there will be a supply issue, then probably the prices will go up.

Thank you sir. The next question is addressed to ma'am CTL again. Ma'am, what are other cost-saving measures that the group is doing today?

Okay. For the cost saving measures, so we are continuously exploring for cost efficiency in our -- for cost efficiency improvements in our operations. So like for coal segment, we are currently studying and analyzing the savings that we can generate from increasing the availability of our equipment that is running them to a certain number of hours versus spending for its major parts change out or maintenance. With there, we're expecting that we might be -- we're hoping that we can be able to generate savings from lesser operating expenses and at the same time, increasing the availability of our equipment, then hopefully, we can also reduce, if not normalize to having a more stable number of our fleet. And then on our coal segment, we are continuously implementing engineering solutions that would reduce our fuel consumption. So like for the micro oil burner and the low vacuum economizer, where we're looking at reducing the fuel consumption during start-up and also the actual fuel consumption. And then also, we're continuously doing the coal blending for our fuel efficiency that keeps our generation cost at least low and remain competitive. So these are what we call value-driven efficiency strategy that we're looking at where we want to spend on costs that would return or give more benefit or value to the company.

Thank you, ma'am. And now we will answer some questions addressed on St. Raphael Power Generation Corporation. So we have this afternoon is Mr. [indiscernible] from the business development team. The question goes, what is the latest update on the St. Raphael Power plant project and are time lines and budgets still on track?

St. Raphael, we have resumed the project development works. Currently, we are finalizing the technical descriptions and requirements of the project, we are expected to finish that one within the next few months. And also the acquisition of the right of way of our connection asset from Calakatao is ongoing. In terms of time line and budget, yes, we are on track.

Sir, next, how soon can you start building the plant? And apart from grid connection issues, what are the other requirements that you need to secure before you can start construction? And can you please provide an updated cost estimate for this expansion?

We plan to start our construction by middle of 2026. And prior to the start of the construction, we have to acquire -- completely acquire the right of way of our connection asset, as I mentioned earlier. In terms of cost, the initial budget is estimated at around $1.4 billion.

The next question is addressed to ma'am CTL, so more on the financial side of the project, sir. Ma'am CTL, so in light of this, what capital structure is SCC targeting over the medium term? And do you still expect to remain in a net cash position during the development?

Okay. On SLPGC, as [indiscernible] mentioned, we're still studying and looking at -- studying on the -- also on the financing, the model and the financing options that we'll have for the project. So for now, we're still on that stage, and we'll just be able to provide updates as we progress and move forward.

Thank you so much, ma'am CTL and [indiscernible] Now we move on to one of the most important questions of this afternoon, which is addressed to -- sir IAC. Sir, given the decline in commodity prices and higher CapEx guidance, could we still expect the company to declare special dividends in the second half of this year?

Good afternoon, everyone. Our projection shows that if the current prices of electricity and power stays, we should be able to give a special cash dividend for the year. If it declines, then we don't know by how much. But anyway, we intend to try our best to give a special cash dividend for this year. Thank you.

Actually, that's the last question we have for this afternoon. So before we close the session, maybe request our Chairman and CEO, sir IAC for your closing remarks.

Good afternoon again. Well, prices now are back to normal. I mean, coal prices back to normal. We have Trump tariffs negatively affecting world trade and might affect commodity prices. I hope it doesn't happen. But anyway, we're trying to do our very best to mitigate situation by stricter cost control and higher productivity. We think that there's a lot more supply of electricity coming in end of this year and next year. However, there's a big supply that will be terminated. I think [ Santa Rita ] will be terminated before the end of this year, it's about 1,000 megawatt. So exactly how that will affect local electricity prices remains to be seen. So we don't know exactly what is the net effect of that. But anyway, thank you very much for attending our analyst briefing, and we'll keep you posted if there's any new development as far as Semirara operation is concerned. [indiscernible] for your support, and good afternoon.

Thank you to our panelists and everyone who joined us today for the Semirara Mining and Power Corporation briefing. We appreciate your time and engagement. You can find the final briefing materials on our website, www.semiraramining.com later today. Have a great day, everyone.