Marcelo Arazi

Marcelo Arazi asked if the wider production guidance range for 2026 indicates a more conservative approach or challenging conditions. He also questioned if the current level of sustaining CapEx is a new reality or inflated by the MSG turnaround, and its potential impact on dividend distribution. Finally, he inquired if the guidance already accounts for Era Dorada's full construction CapEx, or if a revision is expected upon project approval.

Answer

Rodrigo Barbosa, President and CEO, Aura Minerals, clarified that the higher sustaining cash costs and CapEx are not due to challenging conditions but represent opportunities, such as the MSG acquisition and Almas expansion. He noted that MSG's higher costs and CapEx are part of a turnaround strategy to achieve over 80,000 ounces at below $2,000 AISC in future years. The current CapEx guidance does not include the full construction of Era Dorada; a $380 million CapEx would be added upon board approval, expected between Q1 and Q2 2026. He affirmed that dividend distribution, typically 20% of EBITDA minus recurring CapEx, is not expected to be impacted, as the company has historically paid above policy and anticipates continued strong cash generation.

Marcelo Arazi asked if the wider production guidance range indicates a more conservative approach or challenging conditions. He also questioned if the current level of sustaining CapEx is a new reality or inflated by the MSG turnaround, and its potential impact on dividend distribution. Additionally, he inquired if the Guatemala CapEx guidance already accounts for early-stage investments and if full project approval would lead to a CapEx revision for the year.

Answer

Rodrigo Barbosa, President and CEO, clarified that the higher sustaining cash costs and CapEx are not due to challenges but rather opportunities, such as the MSG acquisition and Almas expansion. He confirmed that the sustaining CapEx is inflated by the MSG turnaround and Almas expansion. He stated that the dividend distribution is not expected to be impacted, as the company has historically paid above its policy. For Era Dorada, the current guidance only covers early works, and the full construction CapEx (~$380 million) will be added to the guidance after board approval, expected in Q1/Q2 this year, with most CapEx occurring later in the investment period.

Marcelo Arazi from BTG Pactual asked for specifics on the cost efficiency measures in the steel division and inquired about potential CapEx flexibility and other short-term asset sales to improve the company's cash flow.

Answer

An executive, likely Marco Hebello, detailed that shutting down Blast Furnace 2 enabled operational improvements and new raw material loads in Blast Furnace 3, leading to significant cost reductions. He noted CapEx is targeted at the low end of the BRL 5-6 billion range and is critical for growth projects like P15. He also revealed discussions are underway for a partnership in the energy segment. Chairman Benjamin Steinbruck added that all deleveraging options are being pursued for the short term.

Questioned the company's strategy for managing its high leverage while pursuing new investment projects, and asked about the ideal product mix, as the Q4 mix had negatively impacted margins.

Answer

The executive explained that leverage is expected to decrease as EBITDA recovers with the rebound in the Brazilian commercial vehicle market. He also mentioned improvements in working capital and lower interest costs. On product mix, a 50/50 split between commercial and light vehicles is considered healthy. The drop in the Brazilian commercial market skewed the mix in 2023, but they expect to return closer to the 50/50 target as the market recovers.