Amerigo Resources (TSX:ARG) Q1 2026 Earnings Call

0:00 Thank you for standing by. My name is Carly, and I will be your conference operator today. At this time, I would like to welcome everyone to the Amerigo Resources Q1 twenty twenty six Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. If you would like to withdraw your question, press star one again. Thank you. I would now like to turn the call over to Graham Farrell, North Star Investor Relations. Please go ahead. Thank you, operator. Good afternoon, and welcome everyone to Amerigo's quarterly conference call to discuss the company's financial results for the first quarter of twenty twenty six.

0:51 We appreciate you joining us today. This call will cover Amerigo's financial and operating results for the first quarter ended 03/31/2026. Following our prepared remarks, we will open the conference call to a question and answer session. Our call today will be led by Amerigo's President and Chief Executive Officer, Laura Davidson along with the company's Chief Financial Officer, Carmen Amesquita. Before we begin our formal remarks, I would like to remind everyone that some of the statements on this conference call may be forward looking statements. Forward looking statements may include, but are not necessarily limited to, financial projections or other statements of the company's plans, objectives, expectations or intentions. These matters involve certain risks and uncertainties.

1:38 The company's actual results may differ significantly from those projected or suggested by any forward looking statements due to a variety of factors, which are discussed in detail in our SEDAR filings. I will now hand the call over to Aurora Davidson. Please go ahead, Aurora. Thank you for taking the time to listen to Amerigo's q one two thousand and twenty six earnings call. The first quarter of two thousand and twenty six was operationally and financially strong and consistent with what shareholders should expect of Amerigo. Our operation at NDC continued to operate steadily, predictably, and safely through market noise and macro uncertainty. Today, I'm taking a different approach to my comments, and I wanted to first share with you where I believe value is ultimately created at Amerigo.

2:31 One item exceeds everything else, workplace safety. During the quarter, NDC reached four full years without a single long time accident. This is not an abstract milestone. It means that for four years, 291 NBC employees came to work, did demanding industrial jobs, and went home safely to their families. This safety record reflects thousands of routine decisions made correctly by operators, supervisors, and management every single day. And remember, this record refers to any injury that keeps someone from coming to work, not just one that might negatively impact operations.

3:19 This will be something essential about this business that you, the shareholders, own. NBC is a safe operation. A safe operation is a disciplined operation. A disciplined operation is a reliable operation, and reliable operations generate durable cash flow. Durable cash flow brings me to something we can connect directly to NDC safety record, our recent performance dividend. Based on our q one operating performance and consistent with Amerigo's capital return strategy, we announced a Canadian 16¢ performance dividend a few days ago. Those two things, four years without loss and accidents and a performance dividend in the same amount as four quarterly dividends are not coincidences and are not independent of each other.

4:15 The performance dividend is not simply a financial gesture layered on top of the business at a time of high copper prices. It is the outcome of how the business is run. When an asset operates safely, steadily, and without disruption, it does not demand surprising reasons of capital, does not consume management's attention to firefighting problems, and does not introduce additional volatility into cash flow. That excess ability gives us the confidence to maximize our return of capital to shareholders when performance supports it without compromising the balance sheet or the long term life of the business. This is the essence of our performance dividend. At Amerigo, the return of capital is the natural consequence of a simple business model, consistently well executed in a disciplined way, a single asset operation with no growth capital burden, and a company managed to generate cash across cycles.

5:16 Q one reaffirmed the value of that model. Now let me spend a few minutes on the quarterly operational results. Q one unfolded exactly according to plan. We delivered solid production and completed our annual maintenance shutdown without disruption or compromising safety or reliability. Plant availability was strong, costs came in well below expectations, and performance exceeded our internal quarterly production targets. Maintenance quarters are challenging months, and I was very pleased with how the team executed. Q one is expected to be the lowest production quarter of the year due to the planned shutdown, and we still generated very strong operational results, which underpin the financial results released yesterday.

6:06 I will not spend much time on the financial results as Carmen will walk us through them. Speaking to the headlines, q one was an exceptionally strong quarter for Amerigo, particularly given the lower production impact from the plant shutdown. Net income was 14,700,000, EBITDA was 32,800,000, and free cash flow was 14,500,000. These financial results were fueled by the operational results previously discussed. The strongest LME copper prices on record for any given quarter and an NDC cash cost of a dollar and 82¢ per pound, well below our guided annual cash cost.

6:53 Our production and cash cost guidance for the year remains unchanged. During q one, the three tools of the capital return strategy were used. Our performance dividend of 5¢ Canadian was paid in January, Our quarterly dividend of 4¢ Canadian was paid in March. And through the quarter, Amerigo retired 1,500,000 shares. In total, 16,500,000 was allocated to the CRS in q one. I have received an email from shareholders asking how current global events impact our operation and costs. The short answer is that to date, the impact on Amerigo has been marginal, and we do not expect that to change. The escalation of the conflict involving Iran has very real second order effects, particularly through energy markets and industrial inputs.

7:47 In Chile, this has been reflected in higher diesel prices and a sharp increase in sulfuric acid prices, which are widely used as well as the copper industry. Sulfuric acid is a critical input for FXEW operations and the disruption of supply routes combined with tighter export availability has driven significant price escalation. However, NBC does not use sulfuric acid in its process. The asset price escalation that's featured so prominently in industry discussions has no impact on entities operating performance or cost structure. This installation is not temporary.

8:32 It is permanent. I should note that around 20% of the global copper production comes from SX EW processes. So we can add asset scarcity to the list of fundamental reasons for a tightening copper market moving forward. Also, as a result of the conflict, diesel prices in Chile have increased substantially. However, diesel accounts for only 5% of NBC's total energy consumption, with the majority of our energy coming from electricity under a long term contract from a 100% renewable sources. That means that the economic impact of diesel price movement is not material to NDC's overall cost profile.

9:17 Carmen will discuss the cost impact of current diesel prices further. Hopefully, this helps you understand why NBC was able to post excellent cash cost at a time when many operators faced rising input cost and volatility driven by factors like driver control. Looking forward in 2026, we expect NBC's operating profile and cost inputs to remain consistent. While volatility in geopolitics and commodity markets may persist, NBC is in a strong position with limited exposure to the most volatile cost inputs due to the structure of our business. I will comment briefly on copper price performance so far in 2026.

10:04 Copper entered the year with strong momentum with a sharp upward price move set in January, supported by concerns about supply reliability, continuing mine disruption from 2025, and continued investor positioning around the long term electrification team. As we move into February and early March, copper remained well supported, but price action became more volatile. Markets began to weigh the strong long term narrative against near term uncertainty. This uncertainty included higher energy prices, rising interest rates, and geopolitical risks. The escalation of the Iran conflict that carried another layer of complexity and volatility. Copper prices reacted as did other industrial commodities as market participants sought safety and liquidity.

10:56 By the second half of March, copper prices had pulled back from their January highs, touched quarterly lows, but then they stabilized. I should point out that even after that correction, prices have remained well above historical averages and materially higher than levels seen through most of 2024 and early two thousand and twenty five. Now at the end of April, although volatility has not disappeared, copper prices appear to be supported by tight concentrate markets and a continued focus on medium term supply constraints. The key points on management's perspective is this. 2026 has not been a straight line price environment. A strong start, significant volatility, and periodic pullbacks have characterized the year.

11:46 This pullbacks have been driven more by macroeconomic and geopolitical factors than by any sudden change in corporate fundamentals, which, if anything, now look even more favorable. This environment reinforces the importance of operating discipline and resilience rather than simply relying on price direction for business success. Our success at Amerigo and NDC does not depend on calling the copper price cycle. We focus on consistent operational performance, measured cost exposure, and disciplined capital allocation. By doing this, we know that the business will perform well across the ranges of copper price outcomes. The copper price environment in early two thousand and twenty six illustrates why that approach matters.

12:36 I will end my comments by addressing the capital return strategy. Q one has been a great example of how central the CRS is to value creation at Amerigo. As I mentioned a few moments ago, in q one, Amerigo returned 16,500,000 to shareholders through a balance fixed of dividends and share buybacks. After the quarter end on April 13, the board declared a performance dividend of Canadian 16¢ per share payable on May 13. And then on April 27, the board declared our nineteenth consecutive quarterly dividend of 4¢ Canadian per share payable on June 18. Why do I highlight that tremendous return of capital since the beginning of the year?

13:23 Well, first, it demonstrates the CRS's consistency. Our regular quarterly dividend now maintained for 19 consecutive quarters establishes a clear base and return to shareholders. Based on our March 31 closing share price of $5.03 Canadian, those quarterly dividends alone represent an annualized yield of approximately 3.2%. Second, it shows the CRS's flexibility in quickly returning excess cash. When we add to the base annualized yield, the performance dividends paid on January 15 and May 13, our total dividend distribution translates into a projected effective annual yield of approximately 7.4%.

14:12 That level of yield gets important information about where Amerigo's share price sits today. The yield has a superior when shareholders received concentrated returns through quarterly dividends, performance dividends, buybacks. It also does not reflect anything beyond the continuation of our quarterly dividend. Given that, we don't think that the share price has fully adjusted to reflect the potential for the levels of return of capital that we had in q one. As capital is returned consistently and the market understands our CRS even better than it does now, the yield should normalize at a lower level through share price appreciation. Although performance dividends are discretionary by design and linked to excess cash generation, q one was a tremendous example of how quickly and powerfully we can deploy performance dividends.

15:09 Performance dividends clearly allow for a quicker return of significant capital than a reset of the base dividend, particularly during periods of copper price volatility. So over time, what are the odds that investors will increasingly equate performance dividends with a permanent reset of our base dividend? Certainly, the more performance dividends we pay, the stronger the argument. But after demonstrating the return of capital in q one, I think those odds are already quite high. That leads me to the final question of this call today. If a 7.4% yield level is not an appropriate normalized yield for this superbly executed safe business, what if?

15:59 I leave that to the market, which will ultimately decide. But in my mind, the answer is that the yield should be much lower. With that, I will let Conan discuss the quarter's financial results. Thanks, Aurora. I am pleased to present the financial report for the first quarter of twenty twenty six from Amerigo and its MVC operation in Chile. The company had strong production for the first quarter despite completing its annual maintenance shutdown. 14,300,000 pounds of copper were produced, which was 8% higher than the 13,200,000 pounds produced during the first quarter of twenty twenty five. Higher production was further supported by the strongest quarterly London Metal Exchange copper prices on record, resulting in an average copper price recognized by NBC during q one of twenty twenty six of $5.70 per pound compared to $4.42 per pound in q one twenty twenty five.

17:04 This increased production combined with a higher average copper price and lower cash cost resulted in a net income of 14,700,000, up from 3,300,000 in q one twenty twenty five. I will discuss the key variances in the financial results for q one twenty twenty six compared to q one twenty twenty five. During the quarter, there were increases of 16,300,000 in copper tolling revenue and 5,600,000 in molybdenum revenue. These were offset by increases in 15,300,000 in DEP notional cost royalties, 4,800,000 in tolling and production costs, and 7,400,000 in income tax expense.

17:52 Revenue in q one twenty twenty six was 50% higher at 66,200,000 compared to 44,200,000 in q one twenty twenty five. This included copper tolling revenue of 56,900,000 and molybdenum revenue of 9,200,000. In q one twenty twenty six, the gross value of copper tolled on behalf of DET was 83,700,000. From this gross revenue, we deduct notional items, including DET royalties of 31,300,000, smelting and refining of 2,600,000, and transportation of 400,000, and then add positive fair value adjustments to settlement receivables of 7,600,000.

18:42 Tolling and production costs increased 14% from 34,500,000 in q one twenty twenty five to 39,300,000 in q one twenty twenty six. The most significant cost variances between the two quarters included increases in power costs of 600,000 due to higher production and an increase of 500,000 in maintenance cost. We also had an increase in direct labor of 400,000, mainly as a result of the effect of production bonuses to workers and a decrease of 1,100,000 in inventory adjustments from a smaller difference between the copper produced and the copper delivered in the period. DET royalties for molybdenum in q one twenty twenty six also increased to 1,400,000 from 800,000 as a result of higher moly production and prices.

19:41 This resulted in a gross profit of 26,900,000 compared to 9,700,000 in q one twenty twenty five, representing a $17,200,000 increase. Looking at other expenses on the statement of profit and loss, in q one twenty twenty six, we had general and administrative expenses of 2,000,000, including salaries, management, and professional fees of 1,000,000, office and general expenses of 500,000, and share based payments of 400,000. This compares to general and administration expenses of 1,300,000 in q one twenty twenty five. Other gains were 1,100,000 compared to a gain of 100,000 in the first quarter of twenty twenty five, driven mainly by foreign exchange gains in both periods.

20:34 And finance income was 200,000 compared to a finance expense of 400,000 in q one twenty twenty five. This is a structural cost change arising from Amerigo being debt free. Income tax expense was 12,000,000 in q one twenty twenty six compared to 4,600,000 in q one twenty twenty five with the current tax expense of 12,700,000 and a deferred income tax recovery of 700,000. The increase in tax expense was driven by the company's higher pretax income as well as an increase in withholding tax payments in connection with the higher dollar value of repatriated funds during the period. Before moving on to the statement of financial position, I will mention some non IFRS measures used by the company, cash cost, total cost, and all in sustaining cost.

21:31 In q one twenty twenty six, Amerigo's cash cost was $1.82 per pound, decreasing from $22.22 per pound in q one twenty twenty five. The 40¢ per pound decrease in cash cost was primarily due to a 37¢ per pound increase in molybdenum by product credits, which in turn was driven by a 33% increase in molybdenum production and a 27% increase in the molybdenum price. Other changes in cash cost between the two comparative quarters were 6¢ per pound increase in maintenance costs and a 5¢ per pound decrease in smelting and refining charges. In q one twenty twenty six, total cost increased to $4.53 per pound compared to $3.90 per pound in q one twenty twenty five, following increases of one dollar two cents per pound in DEP notional royalties in response to stronger copper prices and 1¢ per pound in depreciation, offset by a decrease of 40¢ per pound in cash cost.

22:43 All in sustaining costs increased to $5.03 per pound from $4.28 per pound in q one twenty twenty five due to increases of 63¢ per pound in total costs, 8¢ per pound in sustaining CapEx, and 3¢ per pound in corporate g and a expenses. Moving on to the statement of financial position. Strong operating cash flow allowed us to end the quarter with 57,200,000 in cash and 12,600,000 in working capital while continuing to fund our capital return strategy. Most of the accounts in the statement of financial position had minimal changes from 12/31/2025 to 03/31/2026 with the exception of trade and settlement receivables and dividends payable.

23:36 Trade and settlement receivables decreased from 34,200,000 as of 12/31/2025 to 11,700,000 as of 03/31/2026. This decrease is due to the timing of receipt of invoices in the normal course of business and the effect of mark to market adjustments at quarter end. And at 12/31/2025, there was 5,800,000 in dividends payable related to the 5¢ Canadian per share performance dividend declared on 12/09/2025 that was paid out on 01/15/2026. To conclude, Amerigo had a robust balance sheet at the end of the quarter that was conducive to the 16¢ Canadian performance dividend declared on 04/13/2026.

24:27 We will look at these mechanics and the statement of cash flow. On the cash flow statement in q one twenty twenty six, the company generated cash from operating activities of 20,200,000 compared to 11,600,000 in q one twenty twenty five. Once we include the effective changes in noncash working capital accounts, the company generated net cash from operating activities of 40,100,000 compared to 1,900,000 in q one twenty twenty five. In terms of uses of cash during the quarter, 5,700,000 was used for investing activities, in other words, for CapEx payments. In q one twenty twenty five, CapEx payments were 6,800,000.

25:14 Continuing with uses of cash, we moved to financing activities of 17,300,000 compared to 3,300,000 in q one twenty twenty five. These included Amerigo returning 16,500,000 to shareholders with 5,900,000 through share buybacks, 5,800,000 in performance dividends, and 4,700,000 in quarterly dividends. The returns to shareholders in q one twenty twenty six were $11,900,000 higher in q one twenty twenty six compared to q one twenty twenty five. This resulted in the company having 57,200,000 in cash and cash equivalents at the end of the quarter. Given the cash balance held at the end of the quarter and consistent with Amerigo's capital return strategy, on 04/13/2026, Amerigo's board of directors declared a performance dividend in the amount of 16¢ Canadian per share payable on 05/13/2026 to shareholders on record as of 04/20/2026.

26:20 Those are the comments regarding the q one twenty twenty six financial performance. In terms of our outlook, as stated in our MD and A, Amerigo is on track to meet its annual production guidance of 63,800,000 pounds of copper and 1,500,000 pounds of molybdenum. Our annual cash cost guidance is $1.98 per pound and the q one twenty twenty six cash cost of $1.82 per pound payment below the annual guidance. At this stage, we are maintaining our annual cash cost guidance. Aurora mentioned that Chile has been affected by a substantial increase in diesel prices due to the conflict with Iran.

27:05 In MBC's case, this effect is limited because we don't use much diesel in operation. We estimate a 50% increase in diesel consumption cost for the year, representing an impact of approximately 1,000,000. For 2026, our CapEx guidance was 17,500,000. We currently estimate that this could increase to 19,300,000, primarily due to expected cost escalation of project subcontractors, but to a lesser degree to the cost of engineering studies at MVC for twenty twenty seven projects. As a final comment, we reported a provisional copper price of $5.70 per pound on our q one twenty twenty six sales.

27:52 The final prices for January, February, and March 2026 copper deliveries will be the average LME prices for April, May, and June 2026, respectively. A 10% increase or decrease from the $5.70 per pound provisional price used on 03/31/2026 would result in an $8,200,000 change in revenue in the second quarter of twenty twenty six regarding q one twenty twenty six copper deliveries. We will report Amerigo's q two twenty twenty six financial results in July 2026 and wanna thank you for your continued interest in the company. We will now take questions from call participants. At this time, if you would like to ask a question, press star followed by the number one on your telephone keypad.

28:44 Again, that's star followed by the number one. We'll pause for just a moment to compile the Q and A roster. Your first question comes from John Pocari with Mutual of America Capital Management. Hi. Good afternoon. Can you hear me clearly? We can hear you loud and clear, John. Thank you. By the way, your the the connections in your news release, the toll free number, etcetera, are just FYI not accurate. They're not working. I was able to contact investor relations and and get a different link. So just for your information, the phone numbers are either not working or or unrelated to your to Amerigo.

29:37 So thank you for letting us know that. We changed providers, and we have people on the line. But we will look into that to ensure this does not happen. And our call is, anyway, is being recorded and will be available on the website as well the transcript. But thank you for pointing that out. Yeah. Perfect. Thank you. Two questions. This is the first one is since the price of copper has been and may continue to be higher than the, tax used in the current agreement to assess royalties. There are two two parts to this question. One, have there been discussions about formalizing the royalty above the current cap, for instance, on historical tailings when the price is $5.50.

30:35 The royalty is $2.15. So over and above $5.50, does the royalty stay at that price, and are we subject to a potential increase? Is there a potential liability if the royalty above that price would have subsequently increased retroactively? John, the discussions are ongoing. We have we have started those discussions. They are ongoing, and we will report the conclusion of those discussions when when they are concluded, and we cannot comment in the meantime. Our financial statements are not exposed. We have we have accrued for potential differences.

31:26 We we we we we haven't we haven't missed calculated or used a lower royalty factor than necessary. So we are well protected with accruals on our financial statements, but the discussions are ongoing, and we expect them to conclude in the near future, certainly, by the time we report the next quarterly earnings. And when we have information, we will release that information to the market. Great. Just a quick follow-up then. So prices say for historic tailings above $5.50 a pound of copper. Are we currently using the royalty the cap the royalty cap of $2.15 as we speak. Is that would that be correct?

32:16 We we we have taken a a conservative approach in perhaps over accruing our royalties subject to final negotiations. That's all I can say. Thank you. That's that's that's fine. Thanks. But we we have done some some what we would call a conservative accrual accounting. You you know we are conservative that way. So we we've we've taken the measures for that. Thank you. No. That's that's great. The second question I had was on shares outstanding. I know that we're down 61,583 shares from year end twenty five through March '31. So for the first three months, there's a modest reduction in shares outstanding.

33:05 Repurchases totaled 1,000,005, approximately. Can you just address where the where the difference is? Is it handed distributed to management and board members, the combination? I mean, well deserved, I'll add, in light of results. But I'm The rest of the the only the only John, the only share issuances we've had since 2008 are when options that are in the money are exercised. I see. And that would account for the for the increase in in shares outstanding net of repurchases. Correct. Okay.

33:51 Correct. I saw this close in the notes to the financial statements under the share capital notes. We disclosed the number of shares that were issued. It's a number of options that were canceled in respect of those exercises as well. I should note that most of the people that exercise their options at Amerigo are doing that on a under a cashless provision. So the amount of shares that are issued are substantially less than the number of options that are being exercised. Okay. Thanks. Yeah. I do know that the details on on the options are are in the notes. And so it would would not lead to any significant increase in cash on the balance sheet because it's a cashless exercise. Is that the accurate?

34:48 Primarily a cashless exercise? They are primarily cashless exercise. Let's put it this way. We're not relying on the exercise funds to keep the the balance sheet healthy. Okay. And now that it's not a significant if if it's if it's all sorts of of cash to to the company when the options are exercised. Okay. That's that's fairly accurate. Right? Correct. Okay. Well, thank you. Thank you, Johnny. Thanks. Your next question comes from Ben Terry with Atrium Research. Hi, Aurora and Carmen. Congrats on another strong and record quarter.

35:36 Just a couple of questions here, and I guess I'll piggyback on John's last question. Just in terms of the share buybacks, at these prices, the share price that is, obviously, the cost to to buy back shares is not much higher than it was, you know, a year ago. Is the intention to buy back enough shares to offset dilution, or do you plan on going beyond that and actually reducing the share count? It could be or we plan on continuing to use the the three tools of the core of the CRS for the rest of the year. And as we said, the minimum commitment is not to have dilution. If we need into support if we need to go in aggressively to support the share price, we will do so.

36:25 So it's all opportunistic then, and there are no plans to to shelf the share buybacks as a mechanism for the rest of the year by any means. Yes. Okay. Understood. Thank you. And I know this is sort of mentioned briefly on the opening remarks, but do you foresee any increase in cash cost as a result of the ongoing work? And I know there was that mention of diesel price increases being pretty minimal at the the operation. Carmen, do you wanna comment on that? Yeah. Hi, Ben. Yeah. So, I mean, I think there's been small inflationary pressures on price tickets everywhere, but not not specifically war related. The one thing that would impact MVC would be diesel prices, which I mentioned in my finance overview.

37:15 MVC uses very little diesel. It's only 5% of the energy consumption as we mostly use electricity. So so the impact's very limited. At this time, we estimate there'd be around a 50% increase in diesel for the year. And if we use that assumption, that would amount to an impact of approximately 1,000,000. Okay. Okay. Great. So these are the largest, but still relatively small just as, obviously, it's a small piece of the energy you guys consume. Okay. Just in the in the MD and A for for q one, there seems to be an increase in disclosure around revenue. Could you just walk me through that a little bit?

38:03 Sure. So we did add some additional disclosure in the MD and A as well as a shortened version of that disclosure in the revenue note of the financial statements. And it's just to provide more clarity on our m plus three copper price convention. If you take a look at the MD and A, just to walk you through it, we did separate it out into two sections. There's the adjustment to the same quarter sales and then the adjustments to the prior quarter sales or the final price adjustments. So in that first table, you'll see it, the sales are initially recorded at the provisional forward price of copper at the end of each month for that month's deliveries, and that's the m LME m plus three average copper price for the month.

38:53 This is what's included in our gross value of copper toll line within revenue. And then these sales are mark to market to the provisional forward price at the end of each quarter, which is shown to the right and is an with an average of $5.70 per pound, which would take the price curve between the published LME monthly average m and m plus three prices. So as you see, the prices decreased, and this for the quarter resulted in 2,200,000 in negative price adjustments. Then that second table are the final price adjustments. So this takes the provisional price that was recorded at December 31 for October, November, December sales and then shows the final settlement price for each of those months deliveries during q one.

39:47 So in this case, the price increased, and there was a $9,800,000 settlement adjustment for those sales. So together, if we take that $2,200,000 in negative adjustments and then that $9,800,000 positive adjustments, you'll arrive at the 7,600,000 in positive settlement adjustments that you see within our revenue as a separate line item. But we're just hoping that this disclosure helps to to break that process down and make it make it clearer as to how the m plus three convention works. Yep. Understood. Okay. I appreciate that clarity, and and it does paint a good picture. Is, you know, works when the copper price is going up. Obviously, you guys benefit significantly and and sometimes the downside slightly, but but generally, we're investing in this story for for the copper price appreciation thesis.

40:43 So thank you for that, Carmen. And just my last question here quickly. Can either yourself or Aurora just talk about the slight increase in the annual CapEx guidance? I believe it increased from the previous guidance to to to yesterday's release by 1,800,000 and just where, you know, the reasoning for that adjustment. I can comment on that then. And and this question relates to what Carmen was explaining before. We present to you and and to the market quarterly results, but we do a full monthly quote of our financial statements on a monthly basis. So every month, we we we sit down with our engineering team at NBC and the finance team at NBC to gather how the orders on the CapEx are progressing and how the preliminary quotes that were, you know, considered to to prepare the annual CapEx are are moving along.

41:53 We are seeing some escalation in mobilization costs associated with our subcontractors for projects. This is related to people cost, for example. So we are factoring that into a projected potential increase in CapEx. Again, it's a conservative approach, so we don't wanna be waiting until October, November to adjust our our what we called our CapEx equation. We monitor that monthly, and the data that we have in front of us is it's not showing us a red sign, but it's showing us a yellow sign that says, let's let's reconsider some of these costs. And just in case, we are disclosing it now because we have that information as management. So it's perhaps a proactive approach in trying to assess in real time how the CapEx incurred costs will be progressing along the year.

42:55 And then there's also around $400,000 of engineering studies that the team has recommended. We undertake earlier than expected, so earlier in this year as opposed to in 2027 just associated with having more information on potential additional communication topics probably that may come along. So, again, perhaps a little bit ahead of time, but because management has that information, we are communicating that to the market as a potential increase in CapEx associated with with those drivers. Amazing. Okay. Great. Thank you. Yep. That is smart getting ahead of it, and appreciate that answer. And that's all the questions I had today. Thank you.

43:50 Janice, would you like to ask a question, press star one on your telephone keypad. Your next question is from John Pokary with Mutual of America Capital Management. Thank you. Just a quick follow-up on the increase in the CapEx on the engineering side. Would any of these expenditures possibly result in increased production or lower cost due to greater efficiency, or is it primarily just to keep the existing infrastructure up to par? In this case, they are associated with potential optimization projects, John. Okay. Which possibly would result in Higher recovery. Going forward.

44:41 Okay. Higher recoveries. Thank you. There are no further questions at this time. I'll now turn the call back over to Aurora for any closing remarks. Thank you so much. Well, thank you for attending today's call. The recording and the script will be available on the Amerigo website in the next few days. Please visit our website regularly for updates, and feel free to contact us with any questions. And thank you for your continued interest in Amerigo. This concludes today's conference call. Thank you for participating. You may now disconnect.