Orest Wowkodaw

Orest Wowkodaw sought clarification on whether the $135 million capital expenditure guidance for Copper World in 2026 would increase if the project reaches a Final Investment Decision (FID) in the second half of the year, or if additional spending would commence in 2027. He also asked for confirmation on the potential to maintain 185,000 ounces of gold production in Manitoba for the next 5-10 years.

Answer

CFO Eugene Lei clarified that the $135 million for Copper World is pre-FID, covering feasibility study and early works, and is not expected to exceed the $420 million received from Mitsubishi in 2026. He confirmed that maintaining 185,000 ounces of gold in Manitoba for 5-10 years is the goal, with the 3-year guidance (end of March) showing this extension and a longer-term outlook to follow.

Orest Wowkodaw questioned whether the $135 million CapEx guidance for Copper World in 2026 would increase if the project reaches a Final Investment Decision (FID) in the second half of the year, or if additional spending would commence in 2027. He also sought clarification on whether Hudbay expects to maintain 185,000 ounces of gold production in Manitoba for the next 5-10 years.

Answer

CFO Eugene Lei clarified that the $135 million for Copper World covers pre-FID and early works, and any additional spend post-FID in 2026 is not expected to exceed the $420 million received from Mitsubishi, positioning Copper World to be cash flow positive from Hudbay's perspective this year. Regarding Manitoba gold production, Eugene Lei confirmed the goal is to maintain 185,000 ounces for the next 5-10 years, with a three-year guidance update in March and a longer-term outlook expected later in the year.

Orest Wowkodaw of Scotiabank asked about any discussions with the U.S. administration to advance the Rosemont phase of Copper World sooner, the potential for capital cost inflation since the 2023 pre-feasibility study, and whether any major scope changes are anticipated for the upcoming feasibility study.

Answer

President and CEO Peter Kukielski stated that the company is entirely focused on the fully permitted Phase 1 and is not in discussions regarding Phase 2 (Rosemont), though he noted the current political environment is constructive. He acknowledged the likelihood of modest CapEx escalation due to inflation but emphasized this is offset by a more bullish long-term copper price outlook, and confirmed no major scope changes are planned.

Orest Wowkodaw of Scotiabank inquired about the sustainability of the impressive 90,000 tonnes per day throughput at the Constancia mine in Peru, asking if ore hardness might reduce this rate in the future. He also asked for the baseline against which the new 10% throughput increase regulation is measured.

Answer

President & CEO Peter Kukielski expressed confidence in the repeatability of recent performance. COO Andre Lauzon elaborated that their strategy of using pebble rejection on harder materials has been successful, sometimes pushing throughput over 100,000 tonnes per day. This strategy also improves grade and tests downstream capacity ahead of planned pebble crusher installations. Lauzon noted he would confirm the exact regulatory baseline offline.

Orest Wowkodaw of Scotiabank asked for clarification on the reduced 2025 production guidance for Hudbay's Peru operations, questioning the specific drivers at the Pampacancha deposit and any potential implications for 2026.

Answer

President and CEO Peter Kukielski explained the guidance reduction was due to mining dilution and ore losses at Pampacancha, for which the company has now applied conservative resource-to-reserve conversion factors. He also noted that some high-grade gold benches were pulled forward from 2025 into 2024. COO Andre Lauzon added that the updated models are prudent and may offer potential upside.

Orest Wowkodaw of Scotiabank asked for clarification on the expected copper grades in Peru for the second half of 2024 needed to meet annual guidance and inquired about the immediate next steps for drilling at Maria Reyna following the EIA permit approval.

Answer

President & CEO Peter Kukielski and COO Andre Lauzon responded, explaining that production is weighted to the second half due to planned stripping. Lauzon detailed that Peru's copper grades will increase in late Q3, with a significant rise in Q4 to the 0.55-0.57% range as they access higher-grade benches at Pampacancha. Regarding Maria Reyna, Kukielski clarified that the EIA approval is the first step, and it typically takes another 12 months to secure all necessary permits to begin drilling.

Orest Wowkodaw questioned the 2026 production outlook for McArthur River, noting it suggests output could be up to 4 million pounds below its 18 million pounds design capacity. He sought clarification on the reasons for this and whether the issue is expected to be resolved in 2026 or could extend into future years, potentially delaying the expansion to 25 million pounds.

Answer

Grant Isaac, President and Chief Operating Officer, explained that the reduced production reflects a disciplined strategy, not a technical inability. He stated that McArthur River's production pace is aligned with market demand, which is currently below replacement rate. Isaac indicated there's no incentive to accelerate production or take 'heroic action' given the current market conditions, suggesting that the timing of development and expansion is linked to stronger pricing signals from increased demand. He confirmed confidence in the team's ability to ensure development for future production when desired.

Orest Wowkodaw inquired about the 2026 production outlook for McArthur River, noting it's potentially 4 million pounds below its 18 million pounds design, and asked if this issue is expected to be resolved this year or continue into future years. He also asked if the expansion to 25 million pounds is likely to be delayed.

Answer

Grant Isaac, President and Chief Operating Officer, explained that McArthur River's production pace is a disciplined response to a market not yet at replacement rates, with no incentive to accelerate beyond the systematically rephased development plan. He stated that while the market is improving, the pace of development is tied to demand, and pounds are expected to be worth more in the future. Mr. Isaac delinked the current development pace from expansion plans, noting that the decision to expand to 25 million pounds depends on fuel buyers signaling demand, with Cameco doing preparatory work but having no set timeframe.

Orest Wowkodaw of Scotiabank asked why Cameco's five-year CAGR guidance for Westinghouse (6-10%) hasn't increased with the improved global nuclear outlook and questioned the potential cadence of future IP settlement payments.

Answer

Executive VP & CFO Grant Isaac explained the guidance is conservative and excludes new build projects that have not reached a Final Investment Decision (FID). He stated that once projects in Poland, the US, or elsewhere reach FID, the outlook could rise significantly. Regarding the IP payments, Isaac clarified they are tied to new builds led by Korean partners, citing the four-reactor project in the Czech Republic as a source for similar future payments.

Orest Wowkodaw inquired about Cameco's capital allocation priorities, including potential dividend increases or share buybacks, given its strong balance sheet. He also asked about the implications of the Westinghouse IP settlement with Korea on its five-year outlook.

Answer

Executive VP & CFO Grant Isaac stated that while cash flow is strong, the company remains financially conservative due to being in supply discipline, as the uranium market has not yet reached replacement rate contracting. He prioritized risk-adjusted growth opportunities across the fuel cycle before considering enhanced capital returns. On the Westinghouse settlement, Isaac explained it transforms the relationship with Korea from competition to collaboration, opening new markets like Czechia for participation and growing the Energy Systems business. The financial impact is tied to future final investment decisions.

Orest Wowkodaw of Scotiabank sought clarification on the tariff issue, asking if Cameco's contract book is a mix where responsibility for tariffs is split between Cameco and its customers. He followed up by asking if the threat of a 10% tariff is currently affecting contracting behavior among U.S. utility customers.

Answer

Executive VP and CFO Grant Isaac clarified that while older contracts presumed free trade, newer contracts explicitly define tariffs as a tax in the buyer's country, making it the buyer's responsibility. For older contracts, Cameco has mitigated risk by prepositioning material. He stated the tariff threat is largely irrelevant to current negotiations because U.S. demand is inelastic and requires imports, though it may influence Cameco's long-term market diversification strategy. President and CEO Timothy Gitzel added context on the U.S.'s high import dependency.

Orest Wowkodaw from Scotiabank sought more detail on the remaining bottlenecks at Tucumã impacting steady-state throughput and asked for an update on the Pilar shaft sinking project's schedule and budget.

Answer

President and CEO Makko Defilippo stated that the primary focus at Tucumã is now on preventative maintenance for consistency, not fundamental bottlenecks. Regarding the Pilar shaft, he confirmed the project is progressing well, reaching approximately 700 meters depth by the end of June, tracking on budget, and is on schedule for a 2027 operational start.

Orest Wowkodaw of Scotiabank sought further details on Tucuma, asking about the specific remaining bottlenecks hindering steady-state throughput and requesting a throughput number for July. He also asked for a progress update on the Pilar shaft sinking project, including its schedule and budget status.

Answer

President and CEO Makko Defilippo stated that Tucuma is no longer in a 'stop-start' phase and has moved beyond fundamental bottlenecks to focus on preventative maintenance for operational consistency. He declined to provide a specific July throughput figure. On the Pilar shaft, he confirmed the project is progressing well, is approximately halfway complete as of July, tracking on budget, and remains on schedule for a 2027 operational start.

Orest Wowkodaw requested an update on the remaining operational bottlenecks at Tucumã that are hindering steady-state throughput and asked for an update on the Pilar shaft sinking project's schedule and budget.

Answer

President & CEO Makko Defilippo stated the focus at Tucumã has shifted from fixing fundamental bottlenecks to implementing preventative maintenance for operational consistency, declining to provide specific July throughput. He confirmed the Pilar shaft project is progressing well, reaching approximately 700 meters depth by June, tracking on budget, and is on schedule for a 2027 operational start.

Orest Wowkodaw of Scotiabank questioned the status of the Tucuma ramp-up, asking if any further repairs are needed post-filter press replacement, if significant maintenance is scheduled, and for an update on the power supply situation, including the frequency of disruptions.

Answer

President and CEO Makko DeFilippo stated that the major identified bottlenecks at Tucuma have been substantively completed, with no major downtime anticipated outside of routine planned maintenance. He confirmed that while power oscillations on the grid persist, the implemented solutions have minimized disruptions to a level that is no longer considered a major bottleneck for the ramp-up, though a permanent solution is still being designed.

Orest Wowkodaw of Scotiabank inquired about the ongoing ramp-up at the Tucumã project, specifically asking if intermittent power outages are still impacting the mill, whether other notable issues could impede progress, and what financial levers the company would pull to protect liquidity amid copper price volatility.

Answer

President and CEO Makko DeFilippo confirmed that while some power quality oscillations persist, plant adjustments have significantly reduced mill trips from 15-20 per day to just a handful per month, with a permanent off-site solution expected by the end of Q2. He stated there are no other notable impediments and that guidance reflects ramp-up uncertainties. To protect liquidity, DeFilippo highlighted the company's expanded credit facility and noted flexibility in adjusting the Furnas drilling program and Xavantina's capital spending.

Orest Wowkodaw of Scotiabank inquired about the Tucuma project's ramp-up progress, its Q3 accounting treatment, the 2025 free cash flow strategy, and the drivers behind the revised CapEx guidance for Tucuma and Caraiba.

Answer

COO Makko DeFilippo stated that while it's early, Tucuma's concentrate grades are above design and throughput is at 40-50% of capacity. CFO Wayne Drier explained that Q3 will see partial expensing of costs against initial revenues. CEO David Strang confirmed the 2025 priority is deleveraging the balance sheet. Makko DeFilippo detailed that Tucuma's CapEx increase is due to non-recoverable taxes and accelerated ramp-up costs, while Caraiba's decrease stems from synergies in tailings management.

Orest Wowkodaw from Scotiabank sought clarification on the Aripuana fourth filter commissioning timeline, its potential impact on 2026 production guidance, and the expected timeframe to reverse the large negative working capital change from Q1.

Answer

CEO Ignacio Rosado reiterated that the Aripuana commissioning timeline for Q2 2026 is unchanged and that the 2026 production guidance remains firm. CFO José Carlos del Valle Castro explained that the Q1 negative working capital is a typical seasonal event due to large annual payments and that, consistent with prior years, he expects the entire amount to be reversed by year-end, resulting in a neutral working capital impact for the full year.

Orest Wowkodaw from Scotiabank inquired about the operational status of the Aripuana mine, specifically the throughput constraints caused by tailings filter issues and the expected impact on 2025 production.

Answer

CEO Ignacio Rosado confirmed Aripuana is operating at approximately 90% capacity due to filter limitations. A fourth filter, costing $12-14 million, is being acquired, but its 10-14 month implementation means throughput will remain constrained through 2025. He stated that updated 2025 guidance would be provided in January.

Orest Wowkodaw of Scotiabank inquired about the Quebrada Blanca (QB) tailings management facility (TMF) issues, asking if they would constrain operations into 2026, require further capital investment, and what provides confidence in achieving the 2026 guidance given current ramp-up challenges.

Answer

President & CEO Jonathan Price stated that the company expects to resolve the TMF development issues in 2025, so they will not be a constraint in 2026, and no additional capital is expected for it next year. He expressed confidence in the 2026 guidance, believing that once the TMF constraint is removed, the plant's demonstrated throughput, recovery, and grade potential will allow them to achieve the targeted production numbers.

Orest Wowkodaw of Scotiabank questioned the ongoing QB2 tailings management facility (TMF) issues, asking if they would constrain 2026 production, require more investment, and what provides confidence in achieving guidance given current ramp-up challenges.

Answer

President & CEO Jonathan Price stated the expectation is to resolve the TMF development issue in 2025, so it will not constrain 2026 operations, for which guidance is maintained. He added that no additional capital investment is expected for this issue next year. Confidence in 2026 guidance is based on observed operating parameters (throughput, recoveries, grade) when the plant is online, assuming the TMF constraint is removed.

Orest Wowkodaw of Scotiabank inquired about the QB2 tailings management facility (TMF) issues, questioning if they would constrain 2026 operations, if more investment would be required, and how realistic the 2026 guidance is given the current ramp-up challenges.

Answer

President & CEO Jonathan Price stated that the TMF development work is a one-time ramp-up issue expected to be resolved in 2025, and therefore should not constrain 2026 operations. He affirmed confidence in the 2026 guidance, noting that the operation has demonstrated the required parameters, and no additional capital for the TMF is expected next year.

Orest Wowkodaw from Scotiabank questioned the ongoing tailings issue at the QB2 project, asking if it would constrain 2026 production and require more investment, and expressed skepticism about achieving 2026 guidance.

Answer

President & CEO Jonathan Price responded that the company expects to resolve the TMF (Tailings Management Facility) development issue in 2025, so it should not constrain 2026 operations. He confirmed no additional capital is expected for this next year and maintained confidence in the 2026 guidance, stating that once the TMF constraint is removed, the plant's demonstrated potential supports the targets.

Orest Wowkodaw of Scotiabank inquired about the QB2 tailings management facility (TMF) issues, asking if they would constrain production into 2026 and whether additional investment would be needed. He also questioned the feasibility of reaching the 2026 guidance given the current ramp-up performance.

Answer

President & CEO Jonathan Price stated that the TMF development work is a one-time ramp-up issue expected to be resolved this year, and therefore, the 2026 guidance is maintained. He clarified that no additional capital investment for the TMF is expected next year. Price expressed confidence in the 2026 guidance, believing that once the TMF constraint is removed, the plant's demonstrated throughput, recovery, and grade potential will allow them to achieve the targeted production rates.

Orest Wowkodaw of Scotiabank questioned the revised timeline for QB2's full production, asking about the duration of extended maintenance in Q2/Q3 and the basis for confidence in meeting the low end of 2025 guidance. He also inquired if these issues would impact 2026 guidance.

Answer

CEO Jonathan Price clarified that achieving steady-state operations by year-end was always the plan for 2025. He confirmed the guidance of 230,000 to 270,000 tonnes remains, albeit at the lower end, due to additional work on the tailings facility. Price stated that the required downtime is factored into this guidance and that the issue is a one-time event that is not expected to impact 2026 guidance.

Orest Wowkodaw asked for more details on the QB2 ramp-up, including its performance since the January shutdown, its trajectory towards steady-state production, and the planned frequency of future maintenance shutdowns.

Answer

CEO Jonathan Price confirmed the QB2 ramp-up is progressing well and in line with benchmarks. He stated that the extended 18-day January shutdown was fully factored into the 2025 production guidance of 230,000 to 270,000 tonnes. Post-shutdown, the plant is operating as planned, and the company is confident in its guidance. For future maintenance, he indicated that quarterly shutdowns of approximately seven days are expected, with no other extended shutdowns planned for the year.

Orest Wowkodaw of Scotiabank questioned the confidence in QB2's 2025 production guidance following consecutive cuts and asked for a breakdown of the drivers for the expected improvement. He also sought clarification on the 86-92% design recovery range.

Answer

CEO Jonathan Price acknowledged the 2024 guidance reduction was driven by lower grades but noted strong progress in mill throughput. He stated the 2025 guidance is achievable, with the wide range reflecting ramp-up uncertainties. COO Sherhzad Bharmal added that recovery challenges with transition ores are being addressed with new reagent strategies, and clarified the 86-92% recovery target is for the life-of-mine, not a specific year.

Orest Wowkodaw of Scotiabank inquired about any discussions with the U.S. administration regarding financing or incentives for U.S. growth projects and the potential for tariff exemptions on copper from Spain or Indonesia.

Answer

President & CEO Kathleen Quirk confirmed educational discussions with government authorities, highlighting Freeport's advocacy to add copper to the critical minerals list for IRA benefits. She identified the Leach initiative as the primary near-term opportunity for U.S. refined production growth. Regarding exemptions, she stated they are awaiting implementation details and are unaware of any at this time.

Orest Wowkodaw of Scotiabank inquired about any discussions with the U.S. administration regarding financing or incentives for American growth projects and the possibility of tariff exemptions for copper from its international operations.

Answer

President & CEO Kathleen Quirk confirmed educational discussions with government officials about Freeport-McMoRan's domestic role and technology. She mentioned their advocacy for adding copper to the critical minerals list to receive IRA benefits, like a 10% production credit. However, she stated they are not currently aware of any tariff exemptions for refined copper from their Spanish or Indonesian assets.

Orest Wowkodaw questioned the higher-than-expected 2025 and 2026 CapEx guidance, asking if it includes new growth projects and what a reasonable run-rate for sustaining capital would be.

Answer

President and CEO Kathleen Quirk explained the 2026 guidance includes discretionary spending for the Bagdad tailings expansion and LNG projects, which could be deferred. She affirmed the company's commitment to capital discipline. For a future run-rate, she estimated sustaining capital would be in the order of 2% to 2.5% of revenue, excluding major new projects.

Orest Wowkodaw inquired if the new reality for costs is a $2.50-$3.00 per pound range for North America and $2.25-$2.50 for South America, and asked when the inflection point for rising North American costs might occur.

Answer

President and CEO Kathleen Quirk agreed that the proposed cost ranges were directionally accurate but emphasized the significant potential of the innovative leach initiative to lower the U.S. average cost by adding incremental production at under $1 per pound. She stated the company's target is for North American costs to decline, and that stakeholders should see lower site production costs in 2025 compared to 2024.