Good morning, and welcome to Southern Copper Corporation's Second Quarter 2022 Results Conference Call. With us this morning, we have Southern Copper Corporation, Mr. Raul Jacob, Vice President, Finance, Treasurer, and CFO, who will discuss the results of the company for the second quarter 2022, as well as answer any questions that you might have. The information discussed on today's call may include forward-looking statements regarding the company's results and prospects, which are subject to risk and uncertainties. Actual results may differ materially, and the company cautions not to place undue reliance on these forward-looking statements. Southern Copper Corporation undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. All results are expressed in full U.S. GAAP. Now I will pass the call on to Mr. Raul Jacob. Thank you very much, Carmen, and good morning to everyone, and welcome to Southern Copper Corporation's Second Quarter Results Conference Call. At today's conference, I'm accompanied by Mr. Oscar Gonzalez Rocha, CEO of Southern Copper, and board member. In today's call, we will begin with an update on our view of the copper market. We will then review Southern Copper's key results related to production, sales, operating costs, financial results, expansion projects, and ESG. After this, we will open the session for questions. Before we go into the details of the second quarter of this year, let me mention that our financial results have been impacted by some unusual circumstances. This scenario has been compounded by three major factors: increases in costs for fuel, power, and some other operating materials due to inflation, a drop in copper prices that affected results for the quarter, as well as open sales through a significant mark-to-market adjustment, which led sales to drop $173.5 million. Mark-to-market is a required accounting method to reflect the fair value of sales that have no final price due to quotational periods in the future time. In other words, when prices drop, we have to adjust sales that we have not collect. The value of these sales are the ones that are reflected in our financials, and as a consequence, we have this $173.5 million adjustment. Our third factor is the quarterly results were also affected by a 25,674-ton decrease in copper production at our Peruvian operations, attributable to a stoppage at Cuajone and lower ore grades. To avoid a force majeure event, production losses were temporarily offset with copper purchase from third party, albeit at a higher cost. Finally, net sales were affected by lower sales volumes due to an uptick in the finished goods inventory, translated into $105.2 million sales reduction. Now let us focus on the copper market. In the second quarter of this year, the London Metal Exchange copper price decreased 2% from an average of $4.40 per pound in 2021 to $4.32 in this quarter. However, during the month of June, we had a significant drop in copper prices down to its current level of between $3.30 and $3.40 per pound. A concern for a simultaneous recession in the U.S., Europe, and China is dominating the market and consequently affecting copper prices. These fears are based upon the following factors, the consistent increment in interest rates by the Fed, the ECB, and other relevant central banks, the slowdown of the Chinese economy due to COVID-19 lockdowns, and a - 31% reduction in construction activities year-over-year. Even though these are issues that concern us, we should note that the most relevant market intelligence houses for the copper market are expecting a balance or a small deficit for 2022 in the copper market. This assumes also that we're assuming that demand will grow between 1% and 2.5% this year, particularly in terms of category consumption in the U.S. There is uncertainty regarding future production growth in Chile and Peru, which together represent about 40% of the total copper supply. The major warehouses have not reported a relevant increase in copper inventories. Just to give you an idea, the sum of the London Metal Exchange, COMEX, Shanghai, and bonded warehouses in China all together represent, as of June 30, eight days of consumption at relatively low levels of refined material available. We believe the economic slowdowns in the U.S., China, and Europe have temporarily weakened the demand for copper and are driving reductions in current prices. It is important to emphasize that copper plays a leading role in the global shift to clean energy, which correlates positively with our assertion that the underlying demand for copper will be strong in the long term. In this scenario, we believe the current cycle of low prices should be short-lived. Now let's look at Southern Copper's production for the past quarter. Copper represented 78% of our sales in the second quarter of 2022. Copper production registered a decrease of 12.1% in the second quarter in quarter-on-quarter terms to stand at 208,428 tons. Our quarterly results reflect a 25.3% drop in production in Peru, which was triggered by a production loss of 9,339 tons at the Cuajone Mine. This loss was primarily attributable to a 54-day mine stoppage, and secondarily, to a decrease in ore grades at both Toquepala and La Caridad. On a year-on-year basis, copper production fell 11.1% in 2022 to stand at 422,908 tons. Regarding the Cuajone stoppage, on April 30th of this year, the Peruvian government issued a ministerial resolution to set up a 3-party roundtable for dialogue with members of the community, government, and company officials to better understand all parties concerned. As of today, nine roundtable meetings and three direct meetings with the community have been held. The company has proposed terms to invest in social programs that address the needs voiced by the communities, and SCC has indicated interest in purchasing land near the Cuajone operations to establish a buffer zone to protect installations and production down the line. The company strongly believes that the programs that it has proposed will make meaningful and sustainable contributions to the community's progress and well-being. These efforts will be complemented by positive impact through the social investment for taxes mechanism, known in Spanish as Obras por Impuestos, which will allow SPCC to fund public investments in necessary public infrastructure and credit these expenditures against its taxes. For 2022, we expect to produce 898,200 tons of copper, a decrease of 3% compared to our 2022 plan of 922,000 tons. We expect our copper production to bounce back in 2023, reaching 971,000 tons of production as we get the Peruvian production back on track and generate new production through our Pilares and Buenavista Zinc concentrator projects. Excuse me. me. For molybdenum, it represented 8.6% of the company's sales value in the second quarter of 2022, and is currently our first by-product. Molybdenum prices averaged $18.30 per pound in the quarter, compared to $13.89 in the second quarter of 2021. This represents an increase of 31.7% in price. Molybdenum production decreased by 9.4% in the second quarter of 2022 compared to the same period of 2021. This was mainly driven by a decrease in production at the Cuajone operation. La Caridad and Toquepala mines also decreased their production due to lower ore grades, mainly. In the case of Cuajone, it was the Cuajone stoppage. These results were partially offset by higher production at Buenavista. On a year-on-year basis, molybdenum production fell 5.4% in 2022 after production fell at Cuajone and La Caridad, and was partially offset by an increase in Buenavista and Toquepala mines production. For this year, 2022, we expect to produce 25,700 tons of molybdenum. We believe that, for the molybdenum market, prices will be supported by lower exports from China and Russia that are maintaining this market in a deficit. For silver, it represented 4.3% of our sales value in the second quarter of 2022, with an average price of $22.65 per ounce in the quarter, a decrease of 15.4% from the second quarter of 2021 price. Silver is currently our second by-product. Mine silver production decreased by 4.3% in the second quarter of this year compared versus the same period of 2021 after production fell at Toquepala, Cuajone, and La Caridad. This was partially offset by an increase in production at the IMMSA and Buenavista mines. Refined silver production increased 1.1% in the second quarter of this year, mainly due to an increase in production at our La Caridad and IMMSA refineries. In 2022, we expect to produce 18.9 million ounces of silver, in line with our 2021 production levels. Zinc represented 3.5% of our sales value in the second quarter of 2022, with an average price of $1.78 per pound in the quarter, a 34.8% increase from the same period of 2021. Zinc mine production decreased by 11.5%. Excuse me for a second. As I was saying, zinc mine production decreased 11.5% quarter-on-quarter and totaled 15,141 tons. This was primarily driven by lower production at Charcas and San Martín mines. Refined zinc production decreased by 14.8% in the second quarter compared to the second quarter of 2021. For this year, 2022, we expect to produce 66,900 tons of zinc in line with 2021 production. Looking at our financial results for the second quarter of 2022, sales were $2.3 billion. This is $590 million lower than sales for the second quarter of 2021 or 20.4% lower sales. Of this amount, $173.5 million is explained by the mark-to-market adjustment, 89.3% by the 9,339 tons of Cuajone production lost in the quarter, $117.8 million by lower sales due to lower ore grade at the Peruvian operations, and $105.2 million for 11,000 tons of finished products in inventory. Copper sales volume decreased by 16.3%, while value decreased by 23.4% in a scenario of lower price. Mainly, as a result of the adjustment that I already mentioned and the reduction in volumes indicated. Regarding our main by-products, we have lower sales of molybdenum due to lower volume, partially compensated by better prices. In the case of silver, sales decreased due to lower prices and volume. For zinc, sales remained stable with lower volume compensated by better prices. Our total operating costs and expenses increased by $276.5 million or 22.6% when compared to the second quarter of 2021. Main cost increments have been Mexican workers participation, purchased copper, diesel and fuel, and operating and repair materials. Energy has also increased somehow. These cost increases were partially compensated by lower Peruvian workers participation, translation difference, and other factors. The second quarter of this year adjusted EBITDA was $1,021.4 million, which represented a decrease of 45.2% regarding the $1,862.4 million registered in the second quarter of 2021. The adjusted EBITDA margin in the second quarter stood at 44.3% versus 64.3% in the same period of 2021. Adjusted EBITDA in the six months was $2.7 billion, 21% lower than the same mark for the first half of 2021. The adjusted EBITDA margin for the six months of 2022 stood at 53.2% versus 62.9% in the same period of 2021. Cash cost. Operating cash cost per pound of copper before by-product credits was $2.15 per pound in the second quarter of 2022. That is $0.32 higher than the value for the first quarter of 2022. This 17.4% increase in operating cash cost is a result of higher cost per pound from production costs, treatment and refining charges, and administrative expenses. This was partially compensated by higher premiums on refined copper. Southern Copper operating cash costs, including the benefit of by-product credits, was $1.10 per pound in the second quarter of this year. This cash cost was $0.54 higher than the cash cost of $0.555 that we had in the first quarter of this year. Regarding by-products, we had a total credit of $465.3 million or $1.05 per pound in the second quarter of 2022. These figures represent a 17.6% decrease when compared with the credit of $583.5 million or $1.275 per pound in the first quarter of this year. Net income in the second quarter of 2022 was $432.3 million, which represent a 53.7% decrease regarding the $932.7 million registered in the second quarter of 2021. The net income margin stood at 18.7% versus 32.2% in the same period of 2021. This is for the second quarter. As mentioned before, our financial results this quarter has been impacted by unusual circumstance. Nonetheless, we believe Southern Copper is well-positioned to leverage our strength in a challenging environment. Our strong financial position, low cash costs, operating cost efficiency programs, and our significant copper reserve will let us weather both current and eventual circumstances. We remain fully committed to creating add value and positive impact for our shareholders and for all the communities where we operate. Cash flow from operating activities in the six months of 2022 was $1,130.5 million, which represented a decrease of 38.7% over the $1,844.2 million posted in the six months of 2021. This effect was attributable to lower sales value and to the mark-to-market adjustments already indicated. Let me add to that in the first two quarters of the year, we have a structurally higher increase in working capital that reduced our cash flow available during the first half of the year. Capital investments. Southern Copper's investment philosophy is not based on the outlook for copper prices, but on the quality of the assets that we operate and develop. Through the years, our strong financial discipline has consistently allowed us to make an ongoing investment in our considerable asset portfolio. In 2022, we spent $224.6 million on capital investments, which reflected a 2.2% increase over the figure reported in 2021, and represented a 61.9% of net income this quarter. In the first half of the year, we spent $429.7 million in capital investment, which represented 35.3% of net income. Our current portfolio for approved projects in Peru totals $2.8 billion, $1.6 billion of which has already been invested. If we include the Michiquillay $2.5 billion project and Los Chancas $2.6 billion project, our total investment program in Peru reflects a commitment of $7.9 billion. For Tía María in Arequipa, Southern Copper has been consistently working to promote the welfare of the population of Islay Province. As part of these efforts, we have implemented successful pro-social programs in education, healthcare, and productive development to improve the quality of life in the region. We have also promoted agriculture and livestock activities in the Tambo Valley and supported growth in manufacturing, fishing, and tourism in Islay. In 2021, Southern Copper fortified its relationship with the regional government and successfully overcome its opposition to project initiation. This new consensus was reflected in an agreement for social investment for taxes for projects related to health facilities and roads. Our efforts to ensure the current and long-term welfare of the population in the area of influence of the Tía María project were recognized by several local associations, which sent letters to the national government to request project initiation. We reiterate our view that the initiation of construction activities at Tía María will generate significant economic opportunities for Islay Province and the Arequipa region. Given the current Peruvian economic situation, it is crucial to move ahead on projects that will stimulate a sustainable growth cycle. We will make it a priority to hire local labor to fill the 9,000 jobs that we expect to generate during the Tía María's construction. Additionally, from day one of our operations, we will generate significant contributions to revenue in the Arequipa region. The company has made an offer to the Peruvian government to build the Paltiture dam instead of a desalination plant originally proposed, to provide water for, to both the project and the community. The dam will have a total capacity of 73 million cubic meters, of which the company will use a maximum of 10 million cubic meters. The remaining 53 million will be for community use. The dam, if built, will require a much higher investment than the $100 million budget planned for the desalination plant. Nevertheless, the company believes that by increasing the water supply, it will generate more palpable benefits for local communities. We expect the Peruvian government to continue to acknowledge the significant progress the project has made on the social front and the important contributions that Tía María will generate for Peru's economy, and consequently, take the necessary steps to provide SCC with adequate support to initiate construction. Los Chancas is a greenfield project located in Apurimac, Peru. It's a copper and molybdenum porphyry deposit. Current estimates of indicated copper mineral resources are 98 million tons of oxide, with a copper content of 0.45%, and 52 million tons of sulfide, with a copper content of 0.59%. The Los Chancas project envisions an open pit mine with a combined operation of concentrator and SXEW processes to produce 130,000 tons of copper and 7,500 tons of molybdenum annually. The estimated capital investment is $2.6 billion, and the project is estimated to begin operating in 2025. In February of this year, a group of illegal miners occupied part of the lands of the project and started to produce copper with a small-scale artisanal process. On May 31st of this year, a group of people attacked the project mining camp, causing a fire and completely destroying installations. There were no fatalities to regret. As of today, these illegal miners are working in the zone. The company expects strong action from the authorities to restore the land to the company, so that it can continue to develop the project. For the Michiquillay project, in June of 2018, Southern Copper signed a contract for the acquisition of the Michiquillay project in Cajamarca, Peru. The company has created a multidisciplinary management team to plan the development of this project. As part of this plan, the company has established avenues of contact with the local and regional authorities and communities to promote programs for sustainable development in the area. In 2021, the company signed a social agreement with the Michiquillay and the Encañada communities, and on October 1st, 2021, the Peruvian Ministry of Energy and Mines approved the semi-detailed environmental impact study for the project. Social agreements with the Michiquillay and the Encañada communities represent an opportunity to improve the quality of life of the residents of those communities via our strong social program, and backed by a solid framework for technical work at the project level. At the end of June, the project has all the required permits for exploration activities. These events are important steps that will allow Southern Copper to initiate an in-depth exploration program in this quarter, the third quarter of 2022. Michiquillay is a world-class mining project with inferred mineral resources of 2,288 million tons, with an estimated copper grade of 0.43%. When developed, we expect Michiquillay to produce 225,000 tons of copper per year, along with by-products of molybdenum, gold, and silver for an initial mine life of more than 25 years and at a competitive cash cost. We estimate an investment of approximately $2.5 billion will be required and expect production to start by 2028. Michiquillay will become one of Peru's largest copper mines and will create significant business opportunities in the Cajamarca region, generate new jobs for the local communities, and contribute taxes and royalties to the local, regional, and national governments. For our Mexican projects, we have the Buenavista Zinc project, which is located within the Buenavista facility in Sonora and includes the development of a new concentrator to produce approximately 100,000 tons of zinc and 20,000 tons of copper per year. We have completed the engineering study, and in order to continue with the project, stronger preventive measures to combat COVID-19 have been put in place. Procurement has progressed 99% and all main equipment is on site. Construction site works are in progress. Project has all the necessary permits and the capital budget is $413 million. As of June of this year, we had invested $264.9 million in this project. We expect to initiate operations in the second half of 2023. When completed, this new facility will double the company's zinc production capacity and provide 490 direct jobs and 1,470 indirect jobs. For the Pilares project, also in Sonora, this is a project located 6 km from La Caridad and consists of an open pit mine operation with an annual production capacity of 35,000 tons of copper in concentrate. A 25-meter wide off-road facility for mining trucks has been built and will be used to transport the ore from the pit to the primary crushers at the La Caridad copper concentrator. This project will significantly improve the overall mineral ore grade, combining the 0.38% expected from Pilares with the 0.34% from La Caridad. The budget for Pilares is $159 million, of which we have invested $80.9 million as of June 30th, of 2022. The project has sustained all permits and licenses required, and we expect to begin production in the last quarter of 2022. El Pilar is a low capital intensity copper greenfield project, strategically located in Sonora, also in Mexico. It is approximately 45 kilometers from our Buenavista mine. Its copper oxide mineralization contains estimated proven and probable reserve of 317 million tons of ore with an average copper grade of 0.249%. We anticipate that El Pilar will operate as a conventional open pit mine with an annual production capacity of 36,000 tons of copper cathodes. This operation will use highly cost-efficient and environmentally friendly SXEW technology. The budget for El Pilar is $310 million. We expect production to begin in 2024, and the mine life is estimated at 13 years. The results from experimental tests in the leaching process have confirmed adequate levels of copper recovery. Basic engineering study is finished, and the company continues developing the project and site environmental activities. El Arco is a world-class copper deposit located in central part of the Baja California Peninsula, with ore reserves of over 1,230 million tons with an average ore grade of 0.4%. It has also 141 million tons of leach material with an ore grade of 0.27%. The project includes an open pit mine combining concentrator and SXEW operations. Annual production is expected to total 190,000 tons of copper and 105,000 ounces of gold. The company has started the baseline study, and it's reviewing the basic engineering analysis to request the environmental impact permit. Several years back, we began to acquire the rights to all relevant mining concessions in the area. This process was completed in 2020. As you all know, Southern Copper is committed to improving its ESG record by adopting best practices and informing the investment community and other stakeholders about our progress in this matter. In line with best practice, on July 21st, our board of directors approved the formation of a new sustainability committee chaired by an independent director. Actually, composed by independent directors. The purpose of this committee is to support the board of directors of Southern Copper Corporation in developing and monitoring the company's compliance with ongoing commitment to environment, health and safety, communities, human rights, and corporate governance. This is a significant step in our pledge to a robust and strong environmental, social, and governance performance. Quoting the chairman of our board of directors in the letter that contains the 2021 Sustainable Development Report of our holding, Grupo México, I'm quoting, "A business model focused on responsible and transparent management in the social, economic, and environmental spheres are essential to guarantee sustainable development." S&P Global has recognized SCC sustainability efforts by including it in a new index, the S&P/Bolsa de Valores de Lima Peru General ESG. As of April of this year, this index is the first of its kind in the Peruvian market and recognizes a total of 17 companies that meet high standards for environmental, social, and governance management. In light of its improvement in the realm of ESG, S&P has also upgraded the company's sustainability assessment, which rose from 50 out of 100 points in 2020 to 61 out of 100 points in 2021. This is a 22% increase. These results led to our inclusion in Dow Jones Sustainability Index for the MILA region in 2019, and we have also been included in the 2022 Sustainability Yearbook. We aim to improve our sustainability management and performance to ensure that we maintain and continuously improve our sustainability ratings. Certification of our environmental and occupational health and safety management systems allows the company to reinforce a preventive culture that is aligned with best international practices. We continue to make progress in our quest to achieve ISO 45001 and 14001 certifications. During the second quarter of 2022, the maritime terminal of Guaymas, Mexico, received ISO 45001 certification, and the Charcas unit in Mexico became the first of our underground mines to obtain ISO 14001 certification. Given the importance of water for our operations and the broader perspective of climate change, the company recently appointed a water resources director at the executive level, whose main function will be to coordinate the actions needed to promote water management at all our operations and ensure our place as a responsible partner in the regional management of this valuable resource. SCC seeks sustainability by managing different fronts. The metallurgical complex in Sonora, where we smelt and refine material mined from the region, was recognized in the ranking of the 10 best places to work for women. With this recognition, this plant has consolidated its position as the employer of choice for the best professionals in the country and has strengthened an organizational culture based on safety, predictability, and employee trust. This industrial complex was also given the 2021 National Export Award in the category of large industrial exporting companies for its contribution to foreign trade and international business in the country. This distinction recognizes SCC's responsible production of essential raw materials, environmental preservation efforts, and the economic benefits and support it provides to bolster the well-being of workers and their families. In Peru, a couple of weeks ago, the prime minister joined us for the inauguration of the Cularj ahuira Dam at a cost of $11.5 million, which was the fruit of a joint investment between the company government authorities and the highland community of Camilaca. This project will help to strengthen agricultural activities in the province of Candarave, near our Toquepala operations, and will be complemented by work on the new Callazas Dam at an estimated cost of $35 million, which SCC hopes to finance through the Social Investments For Taxes or Obras por Impuestos in Spanish. This is a mechanism that allow us to credit to our taxes investments in the social infrastructure. Well, this process and these efforts are evolving in the context of marked by record highs for the company's tax contributions to the regional governments of Moquegua and Tacna in 2021. Regarding dividends, as you know, it is the company policy to review our cash position, expected cash flows, generation from operations, capital investment plans, and all the financial needs at each board meeting to determine the appropriate quarterly dividend. Accordingly, as announced to the market on July 21st, the board of directors authorized a cash dividend of $0.75 per share of common stock, payable on August 25 to shareholders of record at the close of business on August 11, 2022. Ladies and gentlemen, with these comments, we would like to end our presentation today. Thank you very much for joining us, and we would like now to open up the forum for questions. Thank you. As a reminder, to ask a question, you will need to press star then one one on your telephone. Please stand by while we compile the Q&A roster. Our first question is from Timna Tanners with Wolfe Research. Please go ahead. Yeah. Hey, good morning, and thanks for the overview. I wanted to. Hello, Timna. How are you? Hello. I wanted to explore a little bit more the cost guidance, if you could. Obviously some of the cost pressures in the second quarter would be attributable to Cuajone being down. I was just wondering if you could help us think about the cadence into the third quarter and the fourth quarter from what you know today. Energy price is probably up on average, but certainly those one-time items coming out. Can you talk a little bit more about cost, please? Yes. Thank you for your question, Timna. Well, as you well mentioned, we were impacted by reduction in production in the second quarter, resulting in, among other reasons, but mainly for two. It was driven by two factors. The Cuajone stoppage that affected the first 23 days of April, and the second factor was the ore grades that are lower, particularly at the Peruvian operations and also at Zacatecas a little bit in Mexico. The ore grades, it's a factor that we indicated to the market a while ago. This year, we were expecting to produce less than last year due to ore grades decay for a temporary basis in the case of our operations. The unexpected factor was the Cuajone stoppage. Now, Cuajone is currently working at full capacity. We have reviewed our program for the year, our production program for the year, and we have made an adjustment, as I mentioned, in the production profile that we have. We're expecting now to produce 898,000 tons of copper for the full year. We have produced already 423,000 tons, round numbers. We're expecting to produce for the remaining of 2022, 475,000 tons of copper. This will come from different sources, but mainly we will be recuperating the production of the Cuajone operation. We have to review our operating plans, particularly at the Toquepala mine. We are improving a little bit our production for the year. With that, we are expecting to get to our expectation of 598,000 tons. Now, cost guidance for the third and fourth quarter. Well, I think we're all seeing that fuel prices are decreasing slowly, a little bit when compared to what we had in the first and particularly the second quarter. More production will allow us to dilute the fixed cost on a much lower weight per ton of copper. We are expecting to have a better cost per pound for the second part of the year. Overall, we're expecting to have a cash cost by year-end of $0.86 per pound for the full year. This is based on the improvement in production, plus better also by-products production because they have been also affected by, in the case of Cuajone, molybdenum and silver were affected by that. Since we had to stop some days in the second quarter, the Ilo Smelter, we had a reduction in sulfuric acid production as well as some other material that was passed to our refinery. We're expecting for quarters three and four of this year having a much better performance which we have seen for the second quarter. Okay. That's helpful. Thanks so much. If I could one more, and I'll pass it off. On the lower dividend, understandable given the changes in commodity prices and dynamics. If we look at the second quarter, your total cash Some other material that was passed to our refinery. We're expecting for quarters three and four of this year having a much better performance which we have seen for the second quarter. Okay. That's helpful. Thanks so much. If I could one more, and I'll pass it off. On the lower dividend, understandable given the changes in commodity prices and dynamics. If we look at the second quarter, your total cash position fell by $900 million. A lot of that was the payout. Just trying to think going forward, you know, can you help us with like the right amount of cash that you like to have on your balance sheet? Can you help us with how to think about the dividend policy relative to the copper price going forward? Yes. I think I mentioned that while doing the presentation that in the first and second quarter of the year, the company usually has an increase in working capital, consequently reducing our cash flow from operations. If I look at the second quarter of this year, and you can see that as well, cash from operations was $641.9 million. The expenses that we have in the second quarter are usually the payment of the profit sharing for the Mexican workforce, and some taxes that are paid in Peru. In total this year, for instance, that amount was $255 million. On top of that, we had lower revenues due to the inventory buildup of finished products that we already mentioned. If you think about, we have about $400 million that were added to working capital in the second quarter, and that obviously affected our cash position. We don't expect that to be as strong as this has been the case in the second quarter for quarters number 3 and 4, but at the same time we're currently in a different price environment. We believe that we will have a much higher cash generation, but aligned with the new price set that we're seeing now, so to speak. Okay, great. Thanks very much for the help. No worries. Thank you. One moment for our next question. Our next question comes from Carlos de Alba with Morgan Stanley. Please go ahead. Very much. Good morning, Raul. Just one clarification on the information you gave on cash costs, $0.86 per pound, that is after byproducts. Can you give us the number before byproducts? And then I have a few other. Yeah. Certainly, Carlos. Hold on one second. We expect to close the year with $1.92 per pound of cash cost before byproduct credits. Right. Thank you very much for that. Then, you know, some of the questions I have are on the projects. One question is on the projects and the other is on third-party concentrate. On the projects, I saw there was basically no progress in Buenav ista Zinc in the last quarter. Remains at 99 procurement progress for this operation. Can you give us a little bit more color? You know, we're about a year or more of before that operation ramps up. Can you give us more color, any delays or anything that may be slowing down the progress that we have seen in that project? On Tía María, a very interesting move to offer the community to build a dam, given obviously the history of the project. What would be the next steps? What do you expect either to hear from the community or from the government that will really break the impasse in which we have been for quite some time at that operation? Just finally on the third party concentrate, you had to because of the impact of Cuajone that we saw in Q1 and Q2. Do you expect the third party concentrate purchase to come down significantly in the second half of the year? If you can give us a little bit of guidance, that would be great. Thank you. Thank you very much for your questions, Carlos. I don't agree with your first statement of no progress on the Buenav ista Zinc in the last quarter because we're currently working, I mean, building the plant. Once a month we review at the management level the advancement in the project. Quite clearly we're on the civil works of the project. We already have all the equipment, pretty much all the equipment, as you mentioned, 99% of the total engineering and equipment. The procurement is also well advanced. What we're seeing is that the project is moving forward at a good pace. We had a delay in the middle of the COVID-19 pandemic, but now it's moving forward at a very good pace. We're expecting it to initiate production in the second half of next year. We will be giving a more specific period once we approach the end of the construction phase of the project. For Tía María, well, this is a proposal that the company is making to the authorities and the community to build a dam that would provide water for the communities as well as water for the project. We'll take a minor portion of the water and the remaining will be available for the community and particularly the Tambo Valley population. We believe that circumstances are evolving in a very positive fashion for Tía María in Arequipa and in the Islay area. That's where we're seeing a very significant progress. We think that the national government can do its part by joining this process, but we're not seeing that so far. Regarding your final point on purchase concentrates, well, we'll expect to buy it as we have done through the second quarter and the first quarter of the year. It was just as I mentioned during the presentation of results. It was more driven. We didn't want. We don't want to have to call for a force majeure. That's why we, in order to comply with our contracts, acquire copper concentrates from third party, particularly from Peru, and we use that material for feeding our Ilo Smelter and refinery so we can back our contracts. That allows us to continue our flow of revenues and so on at the cost of higher cost, because as you know, purchased concentrates are paid at market prices now, you know, certain discounts while our production is at cost. For the next quarters, we will be, let me mention also that we're long both in Mexico and Peru in copper concentrate, so we produce much more copper concentrate than our smelting and refining capacities, both in Mexico and Peru. Generally speaking, we are not buying significant amounts or purchases of copper from third parties at all. That's what we expect to do in the second half of the year, and that will be one of the factors that will help our cost control in the second half of 2022. All right. Just for modeling purposes then, Raul, in the first quarter of 2022, the company purchased less than 3,000 tons from third parties. Last year, second quarter was around 3.5-3.6 thousand tons. Is that a number that we should consider that you do on a regular course of business? Yes. Some of these. If you look at what we have acquired last year in the first half was 4,300 tons of copper from third parties. It's a very small amount. I mean, it's about 1% of our total production. It's a very small amount. We will most likely come back to that regarding copper concentrates and copper from third parties. Thank you very much. You're welcome. Thank you. Again, ladies and gentlemen, if you have a question, simply press star one one on your telephone. One moment for our next question. Our next question is from Fernando Assad with Ashmore. Please go ahead. Hi, Raul. Just three clarifications, if I may, again, continuing from Carlos. The cash costs that you highlighted, $0.86 and $1.98, is that by year-end or for the full year of 2022? Do you have a figure, again for 2023? Yes, I do, Fernando. Thank you for your question. Let me be very specific. For the full year, we expect to close the year with a cash cost of $0.86, composed by $1.92 cash cost before credits, and credits for $1.06. For next year, we're expecting to have $1.82. Keep in mind that we will have more production coming from Pilares and Buenavista Zinc next year. Our cash costs at the end of the year will be $0.89 per pound. It will be at about that level up to the beginning of 2026, when we will have a slightly higher cash cost, close to $1, and then come back until we will come back to about that, the $0.86-$0.90 per pound range, when we will get the benefit of the new projects that, particularly the greenfield projects such as El Arco, well, Buenavista. No Buenavista, no El Arco, Los Chancas, Tía María and Michiquillay. Great. Just following on from that, now that the first half is completed, do you continue to expect this lower grades, temporary issue on the copper side to be a 2022 issue and you're back to steady state in 2023? Yes. The straight answer to your question is yes. We expect to have lower grades because we're moving into areas of the mines, particularly the Peruvian operations, where ore grades are lower, and this will allow us to get to areas where the ore grades will be higher next year. It's part of our mining plan which we're following through this year. We advised on this, well, two years ago, actually, we indicated that we will have a slowdown in our copper production. Yeah. due to lower grades. That's the balance package is expected for next year. Let me mention what we're expecting is that for 2023, we should be producing 971,000 tons of copper. For 2024, 1,047,000 tons. For 2025, 1,100,000 tons. Okay. Final bit of clarification. In Cuajone we're back to full capacity. The only downtime that we had in the second quarter was actually during April, and since then there was a ramp up back to full capacity, no other stoppages, in May and June. Correct? That's quite correct. At the very beginning of the stoppage, because the stoppage was a result of the community taking the water facilities that supply water for Cuajone. The concentrator and the plant, generally speaking the mine, were not affected directly. Not having water, it was impossible to operate the concentrator and the other facilities. We did some advanced maintenance in our Cuajone facilities at the first days of the stoppage. We believe that will be helpful for producing a little bit more than what we expect in our original plans for quarters three and four of this year. In total, in the second quarter, the Cuajone mine was stopped by 20 days and we received the water facilities and the railroad line on April 21st, and 3 days after that we were operating at full capacity. Okay. Thank you so much. It has been stopped since. Thank you. You're welcome. One moment for our next question, please. Our next question is from Alfonso Salazar with Scotiabank. Yes. Hello, Raul and everyone. I have a couple of questions. The first one is a very simple one, the second one probably not that much. The one is regarding water. If I'm not mistaken, in the Tía María project, something that you mentioned before is that it was really not a problem with water. There is plenty of water in the region, and if you check the World Resources Institute, that's what they say, that it's not a region with any water stress problem. What is the benefit. If there is no real water problem, what is the real benefit of having this dam? How does it impact the sentiment of people? The second question is regarding water in Sonora. That's a problem where water stress is really a big problem. Just wondering if you have any comments on how are your operations. If you have any contingency plan in case that the situation gets even worse, in terms of water use in the state of Sonora. Just a follow-up on the production that you just mentioned for 2023 to 2025. There is an increase in production of 130,000 tons. Which projects are you including in this period from your pipeline? Yes. Hold on a sec please, Alfonso. Okay. Let me start by the last question. We're considering in Pilares, Buenav ista Zinc, and El Pilar. Okay. As well as a partial production of Tía María. That's for 2025. Correct. Okay? Now, regarding your first question. Let me clarify this. We in Peru are operating now at the northern part of the Atacama Desert. We are in an area where water, generally speaking, is relatively scarce. We have water scarcity, generally speaking. That's why we are focusing in our operations in trying to improve our water recycling and water savings. Now having said that, what I mentioned a while ago in some other conference calls is that there is enough water in the area for providing the Tía María project with water. However, given the pattern of agriculture crops that are produced in this area, in this Islay Province, it's a strong in very good quality of rice production. Well, as you know, rice is a water-intensive crop. Considering that, there are some months of the year where there is some water stress, given the pattern of agricultural production of the area. That's why we're proposing a dam as the one that we are proposing to the government could be of help. On top of that, there are desertic areas that may be irrigated with the extra water that the dam will provide. That is where the opportunity is there for the population of this area. Regarding Sonora, as I mentioned before, the company has appointed a high-level water management director in order to review the water supply for the company. But as important as it is to be sure that we have the water that we require for our operations, it is also extremely important to be a partner in developing new water sources and water conservation for the whole areas where we operate. That's the idea behind appointing a high-level, high-rank position in water management at the company that is certainly looking at the Sonora water situation where there is some water stress. We're currently securing water sources for our operations. We believe, as I said, that we can be a cooperative partner for other efforts on a regional level, both in Sonora, where we have our open pit operations, as well as some other parts in the Mexican Republic, as well as at the southern part of Peru, where we have the Toquepala and Cuajone operations, currently. I think this is a great decision to have appointed this person. Hopefully we can have a conversation with him or invite him for a conference call sometime because I think he can add a lot to the water problem, and how the company is facing it. Thank you. Thank you very much for your comment, Alfonso. That high-rank position, it's also, as I mentioned, joined by a high-level ESG committee forum and by our board and composed by three independent board members. One of them is the chair of the committee, as I indicated. Excellent. Thank you, Raul. One moment for our next question. We have a question from Isabella Vasconcelos with Bradesco. Please go ahead. Thank you. Good morning. Thanks for the opportunity. I just have a couple of questions on my end. Most have been answered. The first one on the pricing adjustment mechanisms that generated a negative impact in the second quarter. If you could comment, you know, how much of the volumes were exposed to the pricing adjustments and the expectations looking ahead into the third quarter, if we should expect another hit to results, given, you know, volatility has remained high in commodity prices. The second question, a quick one on the smelters, if they have already been board approved or not. Thank you. On the pricing adjustment, let me explain. This is what we do, and this is an accounting process that we have to follow. It's U.S. GAAP mandated. We look at the futures price curve and we see some of our sales, particularly from concentrates such as copper concentrates, molybdenum concentrates, are done with collection terms in three to four months ahead of time. If we sell now that we are in July, we will be having a final price for that specific shipment four months from now, let's say in October or November. Consequently, we have to do adjustments on the final price. By the way, we collect most of the money relatively in a short period of time, but the final price is something that we have to get once we have the final payment on the material. We look at the futures price curve, and we adjust the sales that are not with final prices that are for, as I said, for futures prices for whatever is the position at the end of the month. Generally speaking, this affects our copper concentrate sales that have terms of three or four months ahead in time for the later part of the year, and the molybdenum sales that have also that kind of sales conditions. Now, concentrate sales are about 25% of our total sales for copper. Molybdenum, it's all sold as a concentrate. This is affecting mainly molybdenum and a portion of our copper sales. However, when we have a significant variance in prices, as was the case in the second quarter, we initiated the quarter with prices over $4 per pound, and we closed it very close to $3.50 or so. That's where you have to make an adjustment that is as strong as I mentioned. I think we're already past the worst part of it, but that's my personal view, and it doesn't mean that it will be like that. It depends on how the market evolves in the next few months. On the new smelters for Peru and Mexico, no, they have not been board approved. The company has made a very detailed review on the technology, on the cost. We believe that there is good economic value for the company in moving forward with these two investments, but so far they have not been board approved. Great. That, that's very clear. In terms of timing for board approval, is there any, you know, view there or not? No. We are going to do during this part of this second part of the year. We'll do a thorough, truthful review on the CapEx projects that we have, and make some adjustments. We'll most likely report on that on the next conference call. So far nothing has been set on specific dates for these kind of investments. Okay, great. In terms of the review of the CapEx, is it just for the smelters or for all of the projects that are currently under consideration? All the projects. All the projects. All the projects. Great. All the projects, yes. Thank you so much. We will report on that on the next conference call. Thank you. One moment for our next question. Our next question is from Henrique Braga with Morgan Stanley. Please go ahead. Well, thank you for taking my question. I just have a quick one. If you could repeat your production guidance estimate, your new estimates for the year? Thank you. Sure. For production is 198,000 tons. For cash cost is $0.86 per pound by year-end. $1.92 will be before credits, and credits will be for $1.06. Henrique. Thank you. I think you also mentioned silver, zinc, and moly during the presentation. Is that correct? Yes, for molybdenum will be 25,700 tons. For zinc, 67,000 tons. For silver, 19 million ounces. Perfect. Thank you. You're welcome. Thank you. I'm not showing any further questions in the queue, sir. Carmen? Yes, sir. You can continue with any final remarks. Carmen? Thank you, sir. One moment, please. We don't have any other questions, sir. Hello, Carmen? Yes, sir. Thank you for joining, everybody. You may now disconnect.