Can you elaborate on the challenges faced during the initial four months of 2023 and how you managed to recover throughout the year?

In the first four months of 2023 we faced challenges meeting the projected budget for Condestable's production ramp-up, resulting in missed opportunities with high copper prices. Despite these setbacks, we achieved a recovery throughout 2023, meeting the annual production target. Additionally, we took several initiatives, including Condestable’s Environmental Impact Assessment (EIA), changes in Ariana, and overcoming bureaucratic challenges in Peru.

2024 is off to a promising start. We reviewed the mining plan in detail, which ensures a restart with no foreseen production disruptions. However, industry-wide cost escalation concerns persist. Addressing these concerns requires improving process efficiency and renegotiating terms with suppliers.

How do you plan to ensure a smooth approval process for the production increase at Condestable?

As part of the renewal process of our EIA, we are including, among a few changes in some components, a production increase to 10,000 t/d. We are finalizing the technical details and drafting of the EIA for Condestable, which is set for submission during the first quarter of 2024. Given the close coordination we have had with the authorities, we anticipate a streamlined approval process. In 2023 we secured the approval for a filtered tailings facility via an Informe Técnico Sustentatorio (ITS). We have extensively informed surrounding communities about the process through workshops, garnering a generally positive response.

How did the transition from a local resource estimation model to a global approach boost Condestable’s resources?

The Canadian consulting firm SLR recently concluded an audit of our exploration resources and reserves. We transitioned to a global approach, consolidating mineralized blocks into a single reserve block for enhanced mining efficiency. While this integration may lead to a loss of ore grade in some areas, the gained efficiency outweighs the drawbacks. This restructuration has boosted our in-situ resources to over 120 million tons of copper, narrowing them down to 70 million tons of resources and 40 million tons of reserves in mineable resources. This represents a substantial 25% increase from our previous reserves of 32 million tons.

In line with this, we have allocated a significant investment of US$25-30 million for constructing a tailings entry plant. This facility promises operational and environmental advantages, elevating recycled water from 65%-70% to 95%-98% and improving safety. Additionally, the tailings area footprint will be significantly smaller than that of conventional methods.

What impact did the new government have on the approval of projects in the pipeline?

Under the previous government technical matters became overly politicized, and, in my opinion, with or without intention, meticulously constructed technical teams within MINEM were dismantled. The absence of expert intermediaries caused, and it is still causing, significant delays in obtaining permits for projects.

With the new government, there has been a notable improvement in the attitude toward the mining sector, even though the complete reconstruction of MINEM's technical team is still pending. We now have a Deputy Minister of Mines, Henry Luna, who understands the sector, providing a platform for constructive discussions.

Can you provide details about the pilot plan to implement electric equipment at Condestable?

Our primary investment focus is electromobility, with successful initiatives in electrifying the surface fleet of pick-up trucks for personnel transport and acquiring an electric truck from BYD for ore transportation. We have furthered our commitment by partnering with Enel X for fast charger implementation, and plans are underway to acquire four additional electric trucks.

The operational experience has been exceptionally positive, evidenced by the successful transport of 20,000 tons of ore in 2023. The electric truck incurs an approximate monthly electricity cost of US$1,000, resulting in a considerable reduction in operating and maintenance costs.

What can we expect from SPM in 2024?

In 2024, we are optimistic about a positive legal resolution for Ariana’s case. At Condestable, expansion plans are underway, with a decision pending on whether it will occur in the underground mine or explore open-pit opportunities identified in the new resource definition.

Furthermore, we are actively assessing the integration of a copper project in southern Peru into our portfolio.