Aura Minerals - Earnings Call - Q1 2025

Transcript

Speaker 1

Good morning, ladies and gentlemen. Welcome to the first quarter 2025 earnings call. This conference is being recorded, and the replay will be available at the company's website at auraminerals.com/investidores. The presentation will also be available for download. This call is also available in Portuguese. To access, you can press the globe icon on the lower right side of your Zoom screen and then choose to enter the Portuguese room. After that, select mute original audio. Para acessar nossa conferência em português, clique no ícone do globo ao lado inferior direito da sua tela Zoom. Ao acessar a nova sala, certifique-se de mutar o áudio original. We would like to inform that all attendees will only be listening to the conference during the presentation, and then we will start the question and answer section when further instructions will be provided.

Before proceeding, we would like to clarify that any statements that may be made during this conference call regarding the company's business prospects, operational and financial projections and goals are the beliefs and assumptions of Aura Executive Board and the current information available to the company. These statements may involve risks and uncertainties as they relate to future events and therefore depend on circumstances that may or may not occur. Investors should be aware of events related to the macroeconomic scenario, the industry, and other factors that could cause results to differ materially from those expressed in their respective forward-looking statements. Present at this conference, we have Rodrigo Barbosa, President and CEO, and Kleber Cardoso, CFO. Now, I will turn the conference over to Rodrigo Barbosa. You may begin the conference.

Speaker 0

Thank you very much for all for participating in this quarter. I'm very happy and glad to be here with you and also announcing another record high results for Aura. As we're going to go through the presentation, we'll see and we'll share with investors that Aura continues to progress in our growth project. We continue to generate higher margin. We continue to pay strong dividends, and we continue to build the portfolio in order for the growth to achieve over 450,000 ounces that we announced a couple of years ago. With Bluestone, we can go beyond this, and we continue to monitor the market as well. I'll ask Natasha to share the presentation. As always, I'm going to give you the broad overview about the quarter results.

Kleber, our CFO, is going to go more into the details about the EBITDA bridge to free cash flows and also net income. If you want to go to the first slide, yes. Very well. As we can see, and we already shared with the market, the production during Q1, we achieved 60,000 ounces of gold equivalent production. That is slightly lower than last quarter, as the market knows and we have been sharing for the last four years. Mining, especially mining in gold, you have variation in grades, you have variation on the mine, so sometimes you have changes in production from one quarter to the other quarters. Last year, we finished the year very strongly, and now we are very much in line with our projections.

Internal projections, we produced 60,000 ounces, which is 9% below last quarter and 7% below Q1, understanding that Apoena, as we shared with the market later last year, we're going to go through this year and next year investment phase. Although we will be producing and generating positive cash flows, we consider this as an investment phase because we need to open the pits. We're going to have a lower production to achieve higher production after these two years. Nevertheless, we're also very happy to see the gold prices continue to increase, and that helped us to achieve another record high EBITDA for the quarter with $81 million. With the gold price at $2,786, today it's close to $3,400. Now, as we can see, we should progress production within the assets that are already producing: Almas, Aranzazu, Minosa in Apoena.

We will add on the top of that, during Q3, the production for commercial production for Borborema, Q3 and Q4. We should see along the next quarter a progress within our production while gold prices continue to evaluate and we maintain the cash cost very, very stable. I would also highlight that on the last 12 months, we reached an EBITDA with $295 million with the gold price only at $2,500. Again, gold price today is $3,400. On top of that, we have growth of production and Borborema coming in also with a lower cash cost. That EBITDA translated in recurring free cash flow at $27 million. Kleber is going to go more in details. Net income, we had a net loss of $72 million.

I remember last year I was once asked, "Now that you already market to market your hedges, can we be comfortable that we will not have any more any loss due to this market to market?" My answer was, "Hopefully not. Hopefully, we continue to have losses on our market to market hedging because that means that the gold price is significantly increasing and we are hedging a very small portion of our total production. We have benefited significantly from the higher gold prices, but the market to market affects the net income on the quarter that the gold price had a volatile." Kleber is going to go more in details of that, but we are happy to see this net loss coming in because that means it came from fully a significant increase in gold price.

Gladly, gold price continued to appreciate since the end of last quarter. I would also highlight Borborema. We finished the construction of Borborema in the first quarter on time and on budget as we were disclosing to the market. We are successfully ramping up the project, and we continue to project the commercial production for Q3. I would recall the investors that Borborema will bring a significant increase of production from 82,000-84,000 ounces in the first year with all-in sustaining cash costs below our average. That will significantly boost our results from the second semester and then next year. In terms of return to our shareholders, we also announced that we renewed our program, our buyback program. We continue to do the most we can respecting the regulation of the markets and also respecting the blackout period.

As we move forward, we see the company significantly underdevalued. So it's a good capital location to continue to buy shares back. On top of that, we also announced a dividend, $30 million for the quarter as a dividend. If you put that in perspective, it's at 11% of dividend yield in the last 12 months. Very, very few companies can provide those kinds of levels of dividends together with the level of growth that we are presenting to the market. We will continue to grow and we will continue to pay dividends. In this dividend, as we shared also, we are using our rule of 20% of EBITDA minus recurring capex. As we also received extra cash from the sale of Cerrado that was pending upon APM selling this to the buyer, we received an outstanding debt that they had with us of $13.5 million.

We included that to pay dividends, showing our consistency and our commitment to the shareholders that we want to remunerate shareholders through the shares appreciation, which grew over 200% in the last 12 months, and also dividend yield and share buyback. That sets Aura as one of the highest dividend, if not the highest dividend yield in the gold sector in the world. We also, during the quarter, updated our 43-101 report. All the technical reports are now released by the end of March. We also could replenish resources. We are moving forward and extending the life of mine as we are also increasing production. Lastly, as we also disclosed, and as we've been sharing with the market during last years, one of our points that we needed to address is daily trading volume.

Our daily trading volume in the last year was $1 million, $1.5 million per day. That is very low if you want to bring significant investors. Our objective is to significantly increase our daily trading volume. The U.S. market, we believe, can bring us the opportunity to increase our daily trading volume. We filed this with SEC, and now we will wait for them to react. As we are clear, then we will move forward to the next phase. In terms of safety, again, super proud that Aura is setting new benchmarks in the world on mining industry with one single lost time incident. That was a very light incident during over two years where we were finishing construction of Almas, where we built Borborema, and where we also are doing a lot of work within our operations.

One single less lost time incident during these two years with all that's happening in Aura is something that we that work with Aura are very proud of. You as a shareholder should also be super proud of our benchmark setting, benchmarking the world for safety standards. On the geotechnical structures, again, we continue to monitor. We have third party, we have consultants independent that make reports, and all our geotechnical structures are under satisfactory stability conditions. As we can see, there are changes in quarter to quarter in terms of production. That change from Q4 to Q1 was absolutely expected, as you could see in the last three years. Aura started with a weaker Q1 and Q2 and then could increase production Q3 and Q4. We expected this same kind of movement during this year.

On top of that, we will also increase production through Borborema. Next slide. In terms of all-in sustaining cash cost, I would invite the investors also to take a look at this difference from Q4 to Q1, 2025, Q4, 2024. You will see this increase. Again, as I mentioned to you, in Apoena, we will go through an investment phase. We have to account for this all-in sustaining cash cost, including the high cash cost because all the investment that we are doing in Apoena to expand the pit and to be able to increase production should also be accounted for within the all-in sustaining cash cost. We increased this at $1,461, but that does not mean that our all-in sustaining cash cost has increased just because Apoena is under investment phase.

If you take out the Apoena higher all-in sustaining cash cost, we will be very stable compared to last year. This was very much in line with our projections. We keep and we maintain the all-in sustaining cash cost guidance also for the year. As I mentioned, we built Borborema on time, on budget, and without any single lost time incidents. We are now in the process of ramping up. Of course, all the ramp-up has problems here and there. That is why it is called ramp-up. The team is very keen to adjust and fix everything that is showing. We are very glad and we should continue to successfully ramp up to declare commercial production on Q3 this year. With that, Kleber, I'll pass the floor to you. Thanks, Rodrigo. Good morning, everyone.

We start with a summary of the main financial KPIs for the reporting quarter, the last few quarters. In the outer line here, we have accumulated for the last 12 months. Starting with net revenues, we are reporting $162 million in revenues on this quarter, a 6% reduction compared to the previous quarter, which is explained, as Rodrigo was explaining, by a lower production due to the mining sequencing, but partially offset by higher gold prices. When we see the last 12 months, we reached a new record high with net revenues accumulated at $624 million. When we move to adjust EBITDA, another two record highs, as Rodrigo already mentioned, for the third quarter in our role, we have a record high EBITDA of $8 million. Again, despite the lower production for this quarter, the gold prices helped, and then we exceeded the previous quarter EBITDA.

Our accumulated last 12 months suggest EBITDA is reaching close now to $300 million. We closed the quarter with accumulated $295 million. When it comes to net income, we are reporting a net loss of $73 million, basically for the same reason we had losses in some quarters last year because of a sharp increase in gold prices throughout the quarter, and the increase in the market-to-market liability and no cash losses related to the gold hedges. I am going to go later in a few pages with more detail about that, but excluding that impact, we see that our just net income was positive, $27 million for the quarter. Moving to cash and net debt, we closed the cash position at $198 million at the end of the quarter. Our net debt increased to $272 million in the quarter, as expected.

As in this first quarter, we invested close to $40 million in the final phase of construction of Borborema. We acquired Bluestone, in which we paid close to $20 million in cash and received about $20 million in debt. Later, I'm going to show you more details. We had some higher income tax payments on the first quarter that's related mostly to the 2024 results. Despite those impacts, we'd like to highlight that we have been able to keep our net debt over EBITDA below one time throughout all this period that is shown here, despite the fact that we built Borborema in this period, acquired Bluestone, and kept paying dividends and doing buybacks throughout all the periods.

Now, understanding the main items between adjusting EBITDA and net income for the quarter, when we look in the adjusted EBITDA by business units, we see it was another strong quarter at MINOSA, Aranzazu, and Almas, both then reporting over $22 million in EBITDA in the quarter. Even Apoena that we, as Rodrigo said, we knew and planned because it was going to be a more difficult year with lower production and higher costs, reported decent EBITDA at $13.5 million. Amortization depletion expenses came in as we expect and in line with what we report usually. The main item, the financial expenses in $122 million in the quarter, of which, as I mentioned, the main item by far was the non-realized losses and no cash losses for the quarter with the gold derivatives. That was $100 million.

When we did have some hedges that expired and were settled during the first quarter, that impacted our P&L in only $6 million, as we indicated here as well. Income tax expenses of $21 million, that's pretty much related to the strong results of the operating business units, bringing them to a net loss of $73 million. As we always present, when we exclude the items that have no cash impact, we come to a positive adjusted net income of $27 million. Now, I'm going to go over quickly over two pages with more detailed analysis on the impacts of the gold derivatives. The first one is understanding the accounting impacts in the MTM losses. That's, again, it's more provision. Does it impact cash?

In the other page, I'm going to show an analysis, more economic perspective, what to expect in terms of cash impacts of these gold derivatives. If you can go to the previous page. Yeah. Here, what we show on the left side is a table with the closing gold prices for each of these reporting periods. As you can see, gold has been increasing almost every quarter since the third quarter of 2023. On the right side, we can see that there is a strong correlation between increasing gold prices and increasing the market-to-market liabilities. When gold prices increase faster, the liabilities increase faster. In one instance, when gold prices decrease toward the end of the year, the liability reduces.

Fortunately, in this quarter, the gold prices increased the most, over $500, which then explains why the increase in provision was the biggest for these periods. Looking from what you expect from a cash flow perspective, here we demonstrate all outstanding gold collars that we have for the next few years. We see all our gold collars expire between Q2 2025 and the fiscal year of 2028. They are spread throughout these periods. We bring here two references. The first reference is our production guidance for 2025, which does not include the Borborema producing for a full year and does not include any of the new projects. We have a second reference, which is our long-term guidance to achieve 450,000 ounces of gold equivalent in terms of production.

When we analyze the outstanding collars per year and these references, we can see clearly that both our current and future production that is hedged, it's just a small portion of our current or projected production, which means that we do expect most of our production to be exposed to spot prices, both this year and the next couple of years. Moving now to understand the changes in the cash position throughout the quarter. Here in the far left side of the page in red, we show the initial cash position of $207 million. In this left side of the page that we call adjusted free cash flow to firm, is the cash flow to firm that is generated by the four miners in production, not including what we invest in to grow the company.

We see that portion of the business generates $28 million, despite the fact that we had some non-recurring throughout the year or temporary impacts, such as the income tax payments that I mentioned that we usually most of them we pay in the first quarter related to the 2024 results, which should not be repeating the same proportion for the next few quarters, and changes in working capital that also should partially be offset in the next quarters. In the middle of the chart, we show the investment for growth where was where we allocated most of our capital. We put $62 million in mostly expansion CapEx, the final phase of Borborema construction, and the Bluestone acquisition.

Then when we move to the right side, the more financial-like items, which we highlight, the dividends and share buybacks we did until March, $20 million, bringing the cash to $198 million towards the end of the quarter. Now we end the presentation. I open to questions. Thank you. We are going to start the question and answer section for investors and analysts. If you wish to ask a question, please click on Raise Hand. If your question has already been answered, you can leave the queue by clicking on Put Hand Down. Our first question comes from Guillermini with XP. You can open your microphone. Good morning, everyone. Can you hear me? Yes. Good morning, Rodrigo, Kleber, Natasha. Thanks for the opportunity and congratulations on another great quarter. I have two questions here on our side.

The first one, we have always discussed about stock liquidity, and now you have taken the first steps toward US public offering. I would like to hear more about the next steps in this process. If you could share the expected timeline for completion, and if you could also provide additional details on the offering as well. My second question is about Almas. Costs have been very volatile, and actually, we are expecting a lower cash cost considering that you had the issues with the contractor during the first half of 2024. As in the Q4, you had very low cash costs. My question is, I would like to hear your thoughts on that. I remember that in Q4, the low cost was due to mine sequencing and the reduction of the SRIP ratio.

Just wanted to make sure that we understand correctly what happened here in Q1 compared to Q4. Those are my two questions. Thank you. Thank you, Guillermini. The first question you mentioned about the offering, as we find already with SAC, I am very limited in terms of what I can share with the market. There is nothing much I can add on top of what has already been published. On the second question on ALMAS, as I mentioned earlier, gold mines, the nature is not uniform everywhere. It varies in terms of grade, width, SRIP ratio, and recoveries. As we mentioned last quarter with ALMAS, last quarter of 2024, it was very, very strong in terms of all-in sustaining cash costs. We shared with the market we should not expect this to continue to happen.

What I would invite you is to look on average, right? Look at the average all-in sustaining cash costs that we had in 2024. Then you can understand that after changing the contractors and increasing a little bit productivity, what could be the all-in sustaining cash costs for 2025. We also set the guidance. I would just highlight that this all-in sustaining cash cost is very much in line with the guidance that we provided to the market. Going to the variables, there are a few variables that are important in terms to build the all-in sustaining cash costs, right? The number one is grades. Number two is recovery. Number three is the SRIP ratio, right? Because the investment that you take, how much of a non-mineral you take out to access the mineral. That will vary according to the quarters.

However, during a long year, the longer years, it should follow one rationale and has lower volatility. It will change from one year to another, but with significantly lower volatility. That was very clear. Thank you. Our next question comes from Edgar Sousa with Itaú BBA. Hi, Rodrigo. Hi, Kleber. Hi, Natasha. Congrats for the record results for us that are following Aura since the re-IPO. We are very pleased to see the company delivering, growing, and now improving liquidity and visibility with this new listing in the US. Congrats for this initiative. My questions are related to the balance of these record gold prices and your growth projects. We are seeing gold prices reaching record high levels, which might stimulate new projects. In that sense, my first question is related to Bluestone. How are the negotiations with the government for the licensing of the project?

Do you see any changes in the local government positioning regarding the licensing? Maybe these higher gold prices could help there. Still on the growth projects regarding Matupá, we understand that the final decision on the project will depend on how you unlock Bluestone. That said, given these record high levels for gold prices, are you evaluating maybe bringing Matupá before Borborema and before Bluestone and starting with the projects? My last question regarding potential M&As. Gold prices have reached record high levels, but copper prices now declined a little bit. I remember that we discussed a few times the lack of availability of copper projects for M&A, but now with gold prices reaching these record high levels, does anything change here? Maybe are there any opportunities in copper rather than in gold for potential M&As? That's it. Thank you. Thank you, Edgar.

Going to the first question on the Bluestone in Guatemala, I think what we've been seeing is not a change in the mood because of the higher gold prices from the government and the communities. They do not really understand and see that. On the other hand, the whole new administration, the U.S., and the exportation and the cease of immigration from those countries to the United States, for example, numbers that either Honduras, Guatemala, 60-70, sometimes 70% of the total export, the reserves come from people working in the U.S. sending money to the country. That is significantly reducing since the Trump administration and should be expected to continue to reduce along the next year.

Now we see a slight switch on the minds of governments trying to find solutions within the country to create more jobs and to generate export revenues to bring extra dollars and compensate also these non-immigration to the United States process. We also see some community members that were leaving the United States coming back to the area where we have the project trying to find new opportunities for jobs. We understand that all that change is giving us more tailwinds in order to expedite the licensing of this project. I would highlight that this project as an underground is fully licensed already in terms of environmental and also with the government. We understand that before making any kind of decisions, we need to socialize either with the central government and also with the communities, which we are doing as we speak.

In the meanwhile, we are also updating the feasibility study. We are updating the investment designs, the new mine sequences, and so on. As we have more information to share with the market, we will update. As you can suppose, since it was published, there was inflation that might affect the CapEx. On the other hand, gold price is coming from $1,800-$2,000 to $3,400. That can boost significantly also the returns of the project. That would also address the situation with Matupá. Again, we believe we will be more mature to make any decision between end of second quarter, early third quarter, or within the third quarter to really decide which way to go.

We are delaying a little bit the Matupá because the magnitude of the results, the magnitude of the production, and the EBITDA that we believe the Cerro Blanco Bluestone can generate is significantly higher. Although Matupá is a very strong project, the Cerro Blanco could be more meaningful. If we believe that we can start the construction of Bluestone late this year or early next year, we would probably make that decision and prioritize Bluestone and then push Matupá to build by mid-construction of Bluestone or by the end of construction. The construction of the Bluestone, it will be more technical. It is in a country that we do not have operations. It is a country that does not have all the expertise of mining such as Brazil.

We will be more careful in the construction of Bluestone, and we do not want to do a lot of things at the same time. We will analyze. If we believe that we can delay one year and we can mix by the end, we will try to do so so that we can push more production from Matupa and speed up our growth. You had the second question, was regarding the M&As cooperative with gold. Yes. It is interesting that we saw this run in gold prices, and I would invite the investors to take a look. The major companies have been appreciated according to the gold price. Medium-sized companies such as us have appreciated, but yet have not followed the right appreciation that we should have gone with this higher gold price. The market is not at all pricing in gold price or even $3,000.

The market's pricing lower than these in our shares and not pricing the growth. For the junior mining, it's even worse. Although gold price is reaching record high, we do not see, we saw some appreciation in junior mining, but not significant because those companies do not have the cash generation, do not have the fund capacity for those projects, and they will go through a lot of dilutions in order to fund the project. We continue to monitor, of course, that significant increase can affect because expectations sometimes change from sellers and buyers. It creates a little bit of challenge. The best case for M&A is when gold price is more stable. That does not mean that there is no opportunity. We continue to monitor gold mines. The gold industry is very, very segmented, very fragmented.

There are a lot of producers that are not on the radar of many other investors or many other companies that we can access, and we do, such as we did with Borborema. Nobody really knew about that project, and we could acquire and increase even also a Bluestone. On copper, yes. We continue to monitor. We like both, right? We are growing on gold, so we would like to have copper also growing to at least maintain the percentage of 30-35%. That is one of the reasons that we are investing in Serra da Estrela, but that is more a medium to long shot. We continue to monitor other opportunities in copper, but we will see. It has much fewer projects in copper available for any kind of M&A, and normally they are bigger than gold. We are growing, and we will continue to monitor. Thank you.

Thank you. Our next question comes from Ricardo Monegaglia with Safra. You can open your microphone. Good morning, everyone. Thank you for taking my questions and congrats on the results and the first steps on a US listing. There are obvious benefits of listing in the US, but not necessarily related to that. I wonder if you have specific liquidity and unlocked assets under management metrics or targets that you could share with us. Maybe a liquidity based on free float would be interesting to hear from you guys. And Rodrigo, a lot has been mentioned on gold prices. We have a lot of volatility in the past couple of years, if you may say. But I wonder if you could share your view on gold prices today and going forward.

Do you see structural drivers that are different from recent past, maybe on demand, investor behavior, central bank activity that could sustain gold prices above $3,000 or even more, maybe $4,000? Do you think it's a reality that we may see in the coming months or maybe years? Thank you. Thank you. The first one, in terms of the liquidity metrics, what is important for the investors is shares available to buy and the price of the shares. That's it. The investors are concerned about daily trading volume. How fast can I invest $50 million? How fast can I divest $50 million in the market? That is independent of the percentage of the free float. It's totally dependent on the shares available for trade, which is the free float, right? Not as a percentage, but as a nominal, and the share price.

The value in dollars that is available to be traded per day is the most important variable for the investors to make a decision either to invest and also to divest, right? That is the main variable that we would like to address. In terms of gold prices, as I gave an interview to STARDOT-Saint-Paulo this morning, I think we have a structural tectonic movement that is happening and moving the gold price up. I would invite the investors to take a look on those movements. If you believe that those movements are reversible, then maybe gold price can decrease. If those movements are not reversible, then we should continue to see the gold price appreciate. Number one is the United States weaponized the US dollars after the war, Russia and Ukraine. The world confiscated and blocked over $300 billion of reserves in US dollars from Russia.

That is the message for any other country that perhaps does not feel aligned with the United States. They do not want any more to be invested in US dollars. Take a look on China. That has historically, over decades, invested in treasuries with a surplus of exports minus exports and has a significant investment in US dollars. They are not investing in US dollars anymore. They are divesting, and they are looking for other alternatives to invest the surplus. Gold is one strong alternative for them. Number two, the second variable, I will be limited to only these two, but have many others, is structurally also the United States is running a significant deficit over already a high debt to GDP. The country is running $2 trillion last year.

Some analysts say that perhaps this year with the increased interest rates is going to be $2.5, if not $3 trillion. That's absolutely unsustainable for the medium to long term. There are some initiatives like the DOGE with Elon Musk and to try to reduce, but yet this is not yet meaningful for the United States to address this deficit. To fund the deficit, it needs to issue more debt or to print money. That has an impact on the value of the dollar, and that can also push the gold price up. Today, I also read with Octavio Costa that also participates in Aura Day, and he's also seen some signals that perhaps even the United States, it's increasing the gold reserves. Of course, undisclosure.

That's his thought that Russia is buying gold, China is buying gold, Turkey is buying gold, and perhaps even the United States is buying gold to restore confidence in the coin, in the US dollar. In my view, I don't see any reversal of that trend. Some investors think or question that, wow, all these gold prices because of the tariff fights, and once they settle, the gold price is going to go down. I don't think the gold price increase, in my view, is not related to the tariff fights. The tariff fight is just crystallizing what has been happening along the last year. The war will find a solution. This tariff fight, the tariff war is going to settle down. The world also is going to settle down with the war, hopefully with Ukraine and Russia.

The fiscal debt is not being addressed in a meaningful way, and the weaponization of the dollars cannot be reversed. We do not see China selling gold and buying US dollars. That is clear. Is there a sweet spot that we can expect on traded volume in dollars that we could envision in the future after all goes in the right direction? There is not much I can say right now. Oh, that is okay. Thank you, Rodrigo. Our next question comes from Rabi Nizami with National Bank of Canada Financial Markets. Rabi, I think you might be with the microphone not open. Thank you for taking my call. Congratulations. Great to see you just hitting larger and larger numbers every year and all-time high. You did that right now. Just a couple of questions for you, and maybe some things we have addressed already.

With Aranzazu, there has been some lower throughput and processing recoveries lately. What kind of measures are you taking to offset that, and what kind of timeline are you looking at for improvement? I know you mentioned a molybdenum circuit in the past. Do you have anything new to discuss on that? No, in Aranzazu, you finished the question or have others? I have other questions. Do you want me to ask them all right now? Okay. So Aranzazu, we are entering in an area of the mine that is more difficult and has this impact on slightly lower grades. The recovery this quarter was mostly affected because we are installing flotation cells to recover molybdenum.

We saw some molybdenum also coming in our concentrate, and the team was very keen and fast to, within less than a year, implement a project to install some additional flotation cells in order to recover molybdenum and also sell this molybdenum. These lower recoveries that we had this quarter are due to the adjustment of the flotation cells in order to have the molybdenum as well. We should stabilize this process and then improve our recoveries along the next quarter. Nevertheless, structurally, on Aranzazu, we will see lower grades compared to what we mined in the last four years. In terms of metal mix, how significant is the molybdenum as a fraction of revenue? I did not hear your question, Rabi. What is the significance of molybdenum in terms of proportion in your revenue for Aranzazu?

The molybdenum, it can potentially generate $6 million to $10 million of sales. Got it. Thank you. Moving on to Borborema, you can hear construction is going really well, on time, on budget, and you're tracking well to guidance. Could you give us a bit of resolution on the rate of ramp-up as we move from Q2 and into Q3 and Q4? When would you expect to hit 100% capacity at that asset? The ramp-up is running according to our as we projected. We should continue to share with the market that the commercial production, which is not 100% commercial production, is something around above 80-85% for constant days. We should reach that during the third quarter. Okay. In the past, as you finished up construction of Almas, for example, you were able to then move on to Borborema just immediately.

Presumably, you used some of the same teams on both assets. Do you have a view towards keeping that team busy past Borborema? Maybe tying another question into that, do you have a view on the right number of mines that you would like to have operating concurrently in your portfolio? I understand in the past that you've added mines, you've built mines, and you've also divested mines. How are you thinking about the correct size of your operating mine portfolio? Yes. I think keeping the team busy, I think it's going in both directions. I keep them busy, and they keep me busy because they build those mines so fast that they push me towards looking for new M&As faster than I thought. Yes, I think you're right. The know-how that we built in Almas now, implementing Borborema, is the same team.

The idea is the same team is already involved already on the design and feasibility study for Matupá and also Guatemala. The team already visited both projects. We will decide which will go first. It will be the same team that will build Bluestone and also Matupá. That is why we probably do not want yet to build both at the same time because we will need, if we, Matupá, it is easier to build. It is something that we have already done in Borborema, in Almas, and we have the know-how, the suppliers. The whole ecosystem is in Brazil. In Guatemala, it is different. We need to pay a lot of attention. We will make sure that we will play very safe building Borborema or Bluestone. Although it is a smaller plant, technically, it can have challenges that we need to address and also be 100% focused.

We will decide by the end of Q2 or maybe during Q3 which way to go, but it will be the same team. Thank you for answering my questions. That's good to hear. Building some expertise in-house will be a very good thing going forward. If I can just ask one more before I sign off. On Borborema, the road relocation has been quite topical. Of course, you will tell us when it is completed. For now, could you tell us once you have the permits to relocate the road, how quickly could you implement that into a plan for expanding Borborema? That is my last question. Thank you very much. Just wrapping up the last question that you also asked that I did not answer about the numbers of assets that we believe we can have in our portfolio.

Normally, major companies, the rule of thumb is six to eight assets. More than that can create complexity. Structurally, our government has designed a decentralized decision-making process empowering the mines so that corporate pays attention to capital allocation and human development and, of course, setting the whole future. With that culture, we believe we can go beyond eight assets, maybe eight or ten, but there will be a limit. I believe eight to ten, it will create the complexity for us to manage them properly. After that, stop recycling, right? Start going towards higher mines, bigger mines, and then also divesting from the small ones. That is why I believe it is very important for the investors to pay attention. We have a very fast growth.

As we grow and start to become over a million ounces per dozen, 1.5, that will be harder to accelerate. It'll be harder to maintain this kind of growth and this kind of returns that we are having in smaller projects because the world is fighting too much for super big projects. The road allocation, we are progressing a lot of back and forth with the National Agency for Transportation. Believe that we can have the project approved in Q2, perhaps a little bit delayed to Q3. The government is overwhelmed with a lot of projects and work and small budgets to address them. We are progressing. After we have the license, we can immediately update the feasibility study and declare the new reserves.

After we do that, we need to go through two things: the construction of the new road, buying the land or expropriating the land and building the new road, and also expanding the capacity of Borborema. We believe we can do that in 2-2.5 years after we have the license. We can actually find a capacity better than this, but the bottleneck will be the whole process of getting the land, buying, expropriating, and building the road. Okay. Our next question comes from Marcelo Arazzi with BTG. You can open your microphone. Good morning, guys. Two questions on my side as well. Can we expect dividends to remain elevated at this high level, even during more CapEx-intensive cycles? On a second question as well, we also noticed a slight increase in leverage this quarter.

What levels of leverage are you comfortable with maintaining going forward? Could we see Aura sustaining higher leverage in order to keep dividends high? Thank you. Dividends, we continue to share that our idea is to continue to pay the 20% of EBITDA minus recurring CapEx as we are growing and as gold price continues to appreciate, as we maintain the cost at the same level reduced. We should see EBITDA going up. Then proportionally, the dividends also can follow this movement. Exception was this quarter that we paid extra due to the receivables of Cerrado. For the next quarter, the 20% of EBITDA minus recurring CapEx. We have been actually paying a little slightly above that along the next year. That is what we should expect for the company.

In terms of leverage, we had this slight increase during this quarter, mostly because of two transactions. One, we finished the construction of Borborema. So we had all the expenses of Borborema, and not yet we do not have the EBITDA, right? During the second semester, we will see this deleveraging process because then we do not have to invest in Borborema anymore, and then we have the EBITDA. The second one is the acquisition of Bluestone, either the cash we paid, but also the debt that comes with the project that also impacts our leverage, but nothing that takes us from the comfortable zone. In terms of leverage, we are super comfortable at 1.5 times EBITDA. Two times EBITDA could be acceptable in the process after we finish the construction of something, and we see the deleverage very fast. Or you do some acquisition, and you see the deleverage fast.

That is where we would like to maintain a net better EBITDA. Thank you. If I can ask another one, on Guatemala, is there any timing that you could share, even regarding some financial details in order for us to model the project? Yeah, we should do. We expect to do one PEA that will not fully optimize mine sequencing and some process by June, but at least we can provide the market what we expect to be the CapEx and the cash flow and returns, not including some optimizations. We are doing additional work to go through the feasibility study by early next year, perhaps late this year. That full feasibility study will also include mine sequencing optimizations in the project that we believe can boost even more other results. Perfect. Thank you, Rodrigo. The Q&A section is over.

We would like to hand the floor back to Mr. Rodrigo Barbosa for the company's final remarks. Thank you again, all, for the earnings call. Again, we are super proud for the results. I will just give a brief overview. For those that do not follow our story and have entered recently, we are walking the talk since 2020. When we did our re-IPO and the issues of BDRs in Brazil, we told the market that we would generate value in three variables. We would develop our greenfield projects. We would increase our resources and reserves. We would also continue to grow through M&As. We would do all these three while we would be able to pay significant dividends. If you look back at where we are right now, what we have done, it is significant progress since then. We built Almas on time, on budget.

We acquired the Borborema. We updated the feasibility study. We built the Borborema. We acquired the Bluestone. We increased production. We increased resources and reserves. And also, we provided one of the highest dividend yields in the world in the gold sector to our shareholders. We are walking the talk. We're delivering significant results. As I mentioned, we are right in the beginning because right now we are at closer to 270. Our guidance is 260-300,000 ounces. After we reach 500,000-600,000 ounces, and we also address this daily trading volume, we believe that we can significantly provide higher returns for our shareholders. Walking the talk, we are happy to be here. All of that with very, very high standards of safety in our operations. I thank you all.

We will keep the market informed as we progress in our news and in the upcoming future. Thank you. Aura's conference is now closed. We thank you for your participation and wish you a nice day.