Earnings Transcript for ANTO.L - Q3 Fiscal Year 2021

René Aguilar: Welcome to the Antofagasta live Q&A Webinar and Conference Call. I'd like to part you over to Andrew Lindsay of Antofagasta. Andrew, please go ahead.

Andrew Lindsay: Thank you, Rene. Good morning, good afternoon, everyone. Welcome to our first Q3 Q&A, live Q&A. This is the first of what now become routine. We'll have these Q&A sessions after every Q1 and Q3 if we haven’t done previously and that's obviously complement our half year and yearend Q&A and presentations. We have with us, today we have Iván Arriagada, our Chief Executive; Mauricio Ortiz, our CFO and René Aguilar, our Vice President of Corporate Affairs and Sustainability. I'll hand you over to Ivan.

Iván Arriagada: Thank you, Andrew and welcome everyone. Thanks for joining the call. I'll just say a few words and then we'll go into Q&A. We've just released our third quarter production report and we're pleased that we continue to make very good progress on sustainability. As you would have noticed, we've been awarded Copper Mark for Centinela and Zaldívar and we've also recently released a progress report on TCFD and how we're making progress on our sustainability agenda and we're disclosing impacts of the climate change. With respect to production and cost, copper production and unit costs were in line with what we expected. We produced 181,000 tons of copper in the quarter at $1.16 per pound the unit cost, which is quite a good cost performance and for the half year, we recorded 543,000 tons at cost of $1.15 per pound. So we continue to perform according to our plan. Our plants are especially performing well. We have a strong performance in all our plants across our operations and especially at that Centinela and if you look at throughput at the plant, it's up almost 30%. We're also passing more ore at Pelambres and achieving more treatment [indiscernible] and Zaldívar. So our plants are performed well. We also had quite a strong production for gold in the quarter. Now we've also released our guidance for 2022 and obviously this is very much impacted by water availability, which we had guided before to the impact of no rainfall basically assumed between now and essentially when the diesel plant comes into operation. This is a temporary effect and therefore our guidance is very much impacted by the water availability condition. And also according to our mine plans, we have lower grades at Centinela. So our guided production for next year is between 600,000 and 690,000 tons at a midpoint of 675,000. So those are the key highlights I would say, but the good news is, as I say, that our plants are performing very, very well, and that the impacts that we have next year to essentially run water had temporary impact, the diesel plant construction is actually going quite well. We're 60% advanced in construction and therefore expected to be running with the diesel plant in the second half of next year, which is a permanent solution to the water condition at the mines. So having said, I will open it now for Q&A, and we're very glad to be available Mauricio, René and myself to be able to address any questions that you may have.

Operator: Thank you very much. We'll now move to Q&A. We'll first take questions on the webinar and before moving to any questions that have come through on the conference call. [Operator instructions] We will take our first question from Yiannis [ph]. Yiannis, I will now promote you to the path as a panellist. You are now a panellist, please feel free to unmute yourself, and please do turn on your camera to be able to ask you a question.

Unidentified Analyst: Hello? Can you hear me?

Iván Arriagada: Yes.

Unidentified Analyst: Great. Good morning and good afternoon. And thanks for the live Q&A. Two questions from my side, the first on the production guidance for 2022. I guess it's fair to assume that the 660,000 tons, which is the low end of the range suggest that you assume the full impact of the 50,000 tons of Los Pelambres due to water scarcity. But what about Centinela grade? What are you assuming at that low end of the range because my assumption would be that the Esperanza sewer pit opening would give you better grades at least for the second half of next year? And then second question around CapEx for 2022, you give some indication which feels relatively high to me given the moving part that I had in mind. Could you please talk about the key items that we should be mindful of for next year, and especially, I'm trying to understand if we are looking at a catch up on spending or if there is an incremental CapEx inflation across the growth projects that comes through? Thank you.

Iván Arriagada: Yeah. Okay. So on, production indeed the range assumes the full impact of the 50,000 tons that we had highlighted in our previous report. Now with respect to grade, we are projecting according to our mine plans at Centinela, as I mentioned, a grade decline. We are mining this year close to 0.6%, or we're feeding the plant close to 0.6%, or 0.59% grade and that will drop next year. Now we have the first feed from Esperanza soon coming in, in fact next year, but this is an ore body Esperanza where initially the first layers of ore in fact have lower grade until we get to higher grade later on. So while we've always see Esperanza suit as an ore body, which will allow us basically to reduce the volatility of grade at Centinela and increase grade during this initial phase, what this is actually doing is that we're mining a zone of lower grade, and therefore we're blending that with Centinela at the main pit. So initially in 2022, it doesn't have the impact of increasing the average grade. So that's the situation with respect to production. That's why we're assuming next year a lower grade across Centinela and that's reflected in the range. Now we respect to capital expenditure, I'll hand over to Mauricio to respond to that, but essentially, let me just, maybe as an introductory comment, say that we've generally guided for mine development on sustaining CapEx to be in the range of between 600 million and 800 million a year. Now, we are expecting somewhat of a higher number in 2022 and this is not a permanent change in the range for sustaining CapEx, but we do have some extra projects which are expected to be done or performed in the course of 2022 and Mauricio will talk to those.

Mauricio Ortiz: Good to see you again. Well, as Ivan said, we are moving to the top end of our let's say traditional range of sustaining plus mine development, basically because we are increasing mine development at Pelambres. We are increasing movement. So that is mainly driven or truly driven by additional mine movement at Los Pelambres and on top of that we have, let's say two big components from one side the more as you say, the moving pieces, we are updating the breaking skill for Los Pelambres expansion project and also we are budgeting, or we are guiding the amount for the engineering of the DMC, the second concentrator at Centinela. So basically that increase our development CapEx to -- rather than increase, that gave us the development CapEx figure driven mainly by the Los Pelambres expansion project, plus the engineering of the second concentration in order to be ready for final investment decision as we said, on the second half of 2022. And back to sustaining projects, we have some one-off projects especially in Centinela. We have very attractive projects related to improve the value and the operation at Centinela. For example, we have in-pit sailing dams project, which is interesting because we'll reduce the CapEx intensity going forward in the mine life as we are going to optimize the investment associated to tailing dumps using the condemned pit and also recovery projects related to flotation cells, something like that, but answering your question, Iván it's not driven by let's say inflation costs rather than additional activity associated to in some cases the development projects, Inco [ph] and second concentrator. And the other part mainly related with one-off sustaining project, as I mentioned. These two example in Centinela.

Unidentified Analyst: Understood. Thank you very much.

Operator: Thank you. I will now make [indiscernible] now a participant again. We will take our next question from Jason Fairclough. Jason, you are now a panelist, please remove your mute and turn on your video. Thank you, please. Go ahead.

Jason Fairclough: Thanks for the call today. A couple quick ones for me, if that's okay. Just in terms of the desal plant, you had been hoping that you could maybe bring the construction forward a little bit and speed it up and so we wouldn't have to wait until the second half. Have you been unsuccessful or is it just the range that you've given as reflects a different timing for the commissioning of the desal plant? So that's, that's the first question. Second question is, can you confirm for us again, that the desal plant supplies a 100% of the needs of Los Pelambres at the expanded rate?

Iván Arriagada: Yeah. Okay. So on the first one, I think we continue to and will continue to look at opportunities to be able to advance the delivery of water. I mean, no question, but we are and we're still working on that. I think the challenge that we've seen in project construction, which I think is common across projects has been following, the very high levels of COVID infections is to bring workers back. And I think that's something that we've experienced and we've seen in the industry generally when it comes to projects that, absenteeism rates have been high. So we are factoring in those elements as well as we sort of return construction to normal. And therefore we have been conservative and prudent in assuming therefore that any opportunity to bring this forward has to be locked in yet in full. So we continue to look at opportunities, but nothing that we can firm up at this stage, because there are other challenges around increasing the number of people working on site, which we're now reaching levels, which give us much more confidence and comfort. I must say, I mean, in the last, I would say month, month and a half, we are back to levels -- to levels of manpower in our construction projects, which gives us much more confidence. We know that some of the government help will go away, now in a month or so. And that will essentially provide also more opportunity to increase the numbers of workers at site. So we continue to work on this Jason, but there's nothing that we firm up now with full confidence to say that will allow us to bring forward availability of water, but…

Jason Fairclough: Ivan, sorry, could I just push you a little bit there? So just so that I understand, so let's say that you could bring forward the desalination plant by two months or three months. Does that bring up the bottom end of the range, the new range, or does it bring up the whole range? Do you see what I mean?

Iván Arriagada: Yeah, well, I think that the way that we've constructed the range again, is that the, we assume because we're going into the summer season that there's no rain basically until June next year. And we won't -- I don't think it's realistic to assume that we would be able to bring forward the plant before June. So I think that's, at this stage. It's a given that we will be dealing with the current until June. Now we may be able to do things within the second half of the year when it comes into the sort of construction date and availability of water. And, if we do that, then that may move indeed the whole range. But I think the margin in which we're talking is more limited given that this is essentially moving within the second half. And we will obviously keep you guys updated on this. We're seeing much more, better conditions today in terms of manpower numbers and therefore looking at ways to accelerate this. Now, the other thing is that I think we're confident that we can progress the plant and complete it within the current schedule, because we've got all the supplies on site. We've got the contractors working. We've got all the permits. There's no logistical issues, which are constraining us to be able to continue to progress according to the schedule. The question is, can we bring this forward? Can we accelerate this? We're working, but we haven't got yet plans, which give us full certainty so that we could convey those to you. That's on the…

Jason Fairclough: So again, just to push you on the other thing that you've said, so you said no rain at all, again, is that you guys being your classic sort of Uber conservative, really likely that we have no rain at all now until next June?

Iván Arriagada: Well, I think it's, we may be being conservative, but I mean, normally between January and June, it is a dry season and therefore, while there may be some rain, we expect it to be minimal and it won't make a difference. So I don't think that you can count on a significant deviation from that condition. I don't think that that would be realistic either because it is the dry season. So I think it's a reasonable assumption probably on the side of being conservative, but I think a reasonable assumption to go with. Now on the plant itself, what we've said is that we've got this first -- when we finished the plant, we will have around 450 liters per second of water available and essentially that will allow us to we think de-risk the water supply condition. Now, we've also talked about expanding into 800 meters per second subsequently. And that would essentially replace all continental water going forward. But with the first phase, we basically have a water balance, which we think is the risk from the point of view of the sources that we are extracting, combining both continental and sea water. So we don't see that risk going forward after we've completed this part of the diesel plant.

Jason Fairclough: Okay. Thank you, guys. Appreciate it.

Operator: We will take our next question from a Abhi Agarwal. Abhi you are now a panelist. Please go ahead.

Abhi Agarwal: Thanks Ivan and team for the call. I have a couple of questions. The, first one is a follow up on CapEx. Can you talk a bit more about what is the driving force behind the higher mine development at Los Pelambres? Should we see better flexibility post 2022 as a result of the higher mine development this year? Also, the second part of my CapEx question is could you talk a bit more about how much CapEx have you attributed to the DMC project the engineering portion of the DMC project? The second question I have is, can you talk a bit, can you talk about the ongoing debate around the Chilean royalties? What are your expectations? And do you think it's realistic to assume that there could be an agreement reached ahead of the November elections? Thank you.

Iván Arriagada: Yeah. Thanks. Abhi, so on CapEx, the mine development component at Pelambres is Mauricio may be able to configure the exact quantum, but it's an increase, obviously over what we've spent in 2021. I would say that and as a matter of from a business point of view, what we're doing is we are during this period in 2022, when we will have some restrictions in terms of the plant at Pelambres, we really want to go forward and develop the mine, continue to develop the mine in a way that allows us basically when we've got the new line, the new mill line available by the end of the year and the water supply result to be able to be running at full steam. And I think this mine development expenditure is in line with our mine plan, but it essentially allows us to have flexibility, as you mentioned in the mine, to be able to manage blending of hardness of the ore and grade in an improved way, and be able to use, full force, the capacity that we will have when get the plant and the water. And we're also from that point of view during this time, doing some plant maintenance at Pelambres, which will allow us again to be able to be running with a plant that has increased levels of reliability. So we are taking advantage of this time to be able to position Pelambres, to be able to run, as I say, full steam when we've got the Inco project delivered towards the end of next year. Now so that's on mind development at Pelambres, it's flexibility and it's basically as I say, ensuring that we are in a very strong position when the plant is up and running, and we've got the full of water availability. In the case of the DMC capital expenditure, that's one element of mine -- of development CapEx for next year. I think it's probably around a $100 million, the engineering that we're expecting to spend. So it's not that significant. I just want to remind you that the -- while we get ready for the DMC, the DMC is a decision that we are scheduled to take to the board in the second half of next year. And therefore, going ahead certainly depends on that decision. We've not made a decision to move ahead with the project, but we're obviously doing the work that's necessary to be able to have the full engineering available as we approach that date. Now as Mauricio was saying on the sustaining side and mine development therefore next year, we will be slightly above the higher end of the range that we normally dive to and there are some interesting projects that he mentioned, which I'd like just to touch on a couple of them, but he set up in big tailings. For example, that's a very interesting development that from an environmental and sustainability point of view, we think it's worth developing. And therefore we are investing, in the feasibility of in indicating disposal, which would allow us to improve or reduce the footprint on tailings. Then increasing concentrate grade, adding flotation circuits at Centinela and then also overhauling the water system on piping at Centinela, which is also one of the sustaining capital expenditure that's scheduled for next year, and which is not recurring, but will happen next year. So there is a suite of projects on the sustaining capital side, which I think essentially make our facilities reliability increase and therefore, they're good for long term and that's why we're spending more in 2022. It was tough during 2020 to meet the targets that we had because of COVID and therefore that some of that is also catching up with respect to CapEx that had been deferred. Let me now talk about the royalties, which was the last part of your question. I think as we mentioned before, the royalty discussion started with a project in the lower house, which was quite a regard a back project in the sense of how it was built on the sort of royalty rates, the discussion then moderated quite significantly in the Senate and there was a broad range of opinions, being consulted as to how could mining contribute more and therefore keep the incentives for the mining industry to be able to continue to invest and develop at the same time as the looking at ways of increasing some of the tax base. Now that essentially is where the project still is sitting today and because of the very heated debates around the Presidential Election, I don't think one can realistically think that this will get resolved before of the Presidential Election takes place on November 21. I had mentioned before and have mentioned that I believe that this is something that probably will get resolved before March next year when Congress changes, but that's subsequent to the election that's due to take place in November and as I say, I don't think that it will be a table before, because it's an element which will carry a lot of political debate, and I think the candidates during this time are essentially focused on other topics. And therefore don't want to bring this as an extra one to be discussed in the context of the politic election. So I don't think this is something that will get solved before the election in November, but it may well be before March next year. That's what I would expect.

Abhi Agarwal: Got it very clear. So I just had another follow on CapEx. So the highest spending at Los Pelambres next year, we should not read it as sustain CapEx has moved up permanently. That should not as it, right.

Iván Arriagada: No, no. And that's what I said at the beginning. I think we still, our range would normally be between 600 million and 800 million. I think we're going to be above slightly above next year, but because it's an unusual year because of some sustaining capital projects, which will not recur, and therefore we're not changing that range should not change that on a permanent basis. We think we should be on that range.

Operator: Thank you. We will take our next question from Daniel Major. Daniel, please unmute yourself. Turn your video on and go ahead,

Daniel Major: Yeah, thanks for the questions. I mean, a number of them have already been asked, but one on the approval of the expansion at Centinela, you're saying it's second half target approval. If that goes, is there upside risk to the full year CapEx number that you've guided to or will you really realistically be able to start spending in 2023? And what's the latest on the monetization or potential monetization as the water assets? Is that something that you would look to finalize at the time of approval or will it come after the approval? That's the first question. Thanks.

Iván Arriagada: Okay. Thanks. Daniel yeah, if the project gets approved, we don't see that there will be a material change to capital expenditure next year. The bulk of it will come the following year. So we wouldn't expect to change the guidance that we will provide on CapEx in January. Yeah. So, if it gets approved, it's likely to be in the second half, probably in the late second half and therefore no material spent expected next year. On the monetization of water yes, we basically are in the process of receiving or have received at this stage of the bits for the monetization of the assets. And this is something we're quite keen on looking at. And we would expect to be able to make a decision on this at the time we go ahead with the project. So the project therefore will contain from its very beginning, a decision on the water system either way or it's going to third parties. And a third party will actually take the water system that we have today and spend on the expansion of the water system as part of DMC, or we will do it ourselves. So that choice, that position will be made at the time that we make the decision to go ahead with the product not later.

Daniel Major: Very clear. Thanks. And then second question, just on CapEx again, how much of the uplift in sort of sustaining in mine development is the product of, I guess, temporarily high input costs to certain things that may normalize and also any related catch up from COVID related delays to either maintenance or stripping. So how much of the uplift from what is it, 600 to 800, maybe 900 to a billion is associated with those two items rather than scheduling of various maintenance items.

Iván Arriagada: Yeah. Look, as Mauricio mentioned, I think from a point of view of the input cost, I think it's mostly activity driven. So, we're not seeing in capital expenditure a lot of pressure from the point of view of input cost being reflected in the figure that we've sort of are looking at and as I say, we will provide specific guide in January, but that's the way that we're looking at it today is mostly activity based. Now in terms of COVID, I would say that there is a component which is commit related and I think no question there probably the 35%, 40% of the extra spent is associated to spend, which would have been scheduled to take place during the COVID and which have to be deferred or changed and on which there was some flexibility to do that. But I think certainly in that sort of range, I would say that it's COVID related, so things that would have been spent over the last couple of years have moved to be spent later on.

Daniel Major: Okay. Thanks. Just, just a final one, just to follow up on that CapEx. So to debate, is it fair to assume when we look beyond 2022, that's had some one-offs a normalized level would be at the higher end of the 600 to 800 range, and assuming you go ahead with the DMC expansion, what would the sustaining and mine development number be following that expansion?

Iván Arriagada: Yeah, on the first part, I think we wouldn't be in that range. I think we're seeing obviously a higher level of activity and also and therefore reasonable to assume that we would be within that range some years mid-range but some years at the top of the top end. Now with respect to -- the question is with respect to sustaining and mine development after the DMC, how would that look like? We don't have a number that we can share on that now, but obviously it would have to reflect the fact that there is another plant operating and a full set of new infrastructure in place involving the project expansion. So we would provide visibility on that. Certainly on the timing, which we knew that DMC decision, which would be end of next year, if we go ahead with the project.

Daniel Major: Okay. Thanks. But I guess it would be, would it be fair to assume a proportional increase in the sustaining and mine development with the increase in grade production as a starting point?

Iván Arriagada: Yeah. When a plant is new normally, the profile of spend is lower in the front end and therefore it's not proportional, but you would need to assume that during the initial years, probably this was spending capital expenditure is a bit lower compared to the later years.

Operator: We will take our next question from Jatinder Goel. I believe Jatinder won't ask the question now. So I will now move to the next question from [indiscernible]. Ian, you're now a panellist, please unmute yourself. Turn on your video and go ahead.

Unidentified Analyst: So just a question to follow up on the Centinela sulphides, I recall in the full year results Ivan, you were talking about medium term grade expectations typically to be somewhere on average between what you had in 2020 and 2021. Just in the context of your comment about the lower grade initially from Esperanza Sur. When, can we expect that grade, I guess, presumably that number is around 0.55. When can we get back to that grade now on a medium term, will that already happen in 2023 or will that be later?

Iván Arriagada: Yeah, our plans show that in 2023 during the second half, we'll be moving to higher grades at Esperanza yeah in 2023 second half.

Unidentified Analyst: Okay. All right. That's clear. Thanks. And then just on El Tesoro, do you expect some great decline over the next few years, or is that fairly constant where it's been mining the last couple of years?

Iván Arriagada: Where sorry?

Unidentified Analyst: El Tesoro, their oxide mine at Centinela,

Iván Arriagada: There we do expect some great some grade decline. In fact, we are seeing some of that this year. So we do expect some great decline progressively, but we've got good plan performance there, and we're looking at ways to compensate that through higher production at oxide, but we are expecting some great decline there at Tesoro, yes.

Unidentified Analyst: Okay. Thank you. And then just finally, your partner in Raker [ph] seems to be keen to develop the assets. I think by some commentary from you previously is that doesn't seem like something you'll be interested to do. Could you maybe just give some brief what's your view on that? And I guess, how do you resolve that situation? Your thoughts on that would be appreciated.

Iván Arriagada: Yeah, we, yeah, we exited the as you know, well the project some time ago out of the change of conditions, with respect to the title and access to the mine property and therefore were not -- it's not within our plans to pursue a project in Pakistan. So, I can confirm that for certain, and therefore we will continue to pursue, recovery of the amounts of spur of the legal works associated to the award. So, that's basically the update, nothing has substantially changed I think from that point of view for us.

Unidentified Analyst: Okay. And sort of potential timelines on that resolution. Do you think it still takes a number of years?

Iván Arriagada: I don't have any updates on that.

Unidentified Analyst: Okay. All right. That's all for me. Thank you.

Iván Arriagada: Thank you, Ian.

Operator: Thank you, Ian. We will take our next question from Jack O'Brien. Jack, you're now a panellist. Please unmute yourself. Turn your video on and go ahead.

Jack O'Brien: Question, if we look forward to 2023 production and appreciate you're not giving guidance on that yet, but just if you will on some of the matters here. So desal plant comes in second half of next year, should remove that 50 KT overhang that's impacting next year. So mechanics into '23, we could add that back then. Then you have the concentrated plant finishing by in '22, which I think you've talked about being a sort of 60,000 ton on average through the first five years, but I think maybe first year would be near a 40,000. So you've potentially got sort of 90 KT additional coming from Pelambres and then I guess there's out of our chloride leech, maybe I'd say 10,000 and some of the grade improving at Centinela or off the back of the Esperanza pit moving into perhaps more of the core of the ore body. Is that sort of rough math is fair?

Iván Arriagada: I think those are the factors that are in play, as you say. We do expect that next year will be a low point from that point view, specialty of the water availability, but then come 2023, if we have the water and the ramp up of the new middle line at Pelambres, we wouldn't be able to see fresh and new production. We will also have by then being working on the project [ph] for the full year of 2022 and therefore have completed most of the ramp up and in the case of Esperanza Sur, as you rightly point out, we will be into a different song in terms of grade. So I think all of those factors are right trends. And therefore we look forward to 2023, which we will see an important change compared to 2022. Now there are other factors. Obviously, we've got great declining in some of our operations that changes year to year, and therefore we will provide, more specific guidance to that effect. But I think the elements that you've mentioned and referred to are correct.

Jack O'Brien: Great. Thank you and just one follow up on the Centinela second concentre, so I think historically you had mentioned that that could cost around $2.7 billion, and clearly there's a bit of inflation going on in the industry at the moment and just wondering if you had any sort of latest thoughts or estimates regarding the CapEx for that second concentrator?

Iván Arriagada: We, did an estimate recently on the basis of final feasibility and the number is within that same approximation that before. There are different components. It's some have gone up and some have come down. We're also and therefore we don't have a significant different number at this stage. We are, and we'll do the final update before we take this to the board in the second half of next year, and then factor in these elements that you mentioned. And we're also looking as was discussed previously as the water system, and that may actually provide an opportunity to reduce the fund and the capital expenditure which is reflected in the 2.7 million that you referred to because obviously that will be if we go that route that won't be invested and we will be able to recycle that capital back. Now in terms of cost inflation, I would say on projects, when it comes down to labor, which I think is a very important component locally and and we mentioned we've seen some increase in labor costs for projects in Chile. We, think that those are associated to very specific bottlenecks and very much linked also to the fact that the government is providing quite an extensive network of help. And that continues despite the fact that from a sanitary point of view, Chile is doing quite well. But if you look the more fundamental baseline of the labor market locally, we don't see a tight market. Investments in the country is coming down and the projects which are being constructed are due to be completed by when we start DMC and therefore we were not expecting or planning on a labor market, which would be tight for projects at the time that would make the decision for the DMC in the second half of next year.

Operator: We will take our next question from Jatinder.

Jatinder Goel: Hi, good morning and good afternoon. Thank you and apologies for the last time. I think my connection dropped off as my name was announced. A couple of questions on 2022 production guidance, what does it imply in terms of gross unit cost? Is a 7% production decline proportionately impacting unit cost, or will it be disproportionately higher? If you could give any indication, that will be amazing. Second question, how much fresh water withdrawal at Los Pelambres are you budgeting for the year 2022 guidance? And is there any scenario where your water availability could be lower versus what you're currently budgeting now, depending on if there is any re-prototization for community usage etcetera.

Iván Arriagada: Okay, let me address the second one first in terms of, and I'll ask Mauricio to talk about the cost guidance for next year. So in terms of fresh water, we're assuming basically that we continue to grow from one of the main sources of fresh water that we have and this is part of the makeup that that we have at Pelambres. Pelambres, 85% of the water that we use is in fact recycled, so you have to have that in mind, and only 15% is actually the makeup of fresh water, but we're assuming that we use one of the continental sources of water on a continuing basis throughout this period. And we don't see a risk there, and maybe I'll just mention that the way that water balance is filled in Pelambres is that we have this continental source of water and then also because of the seasonality rain accumulates, and then we use that water during the dry season, and that's the source, which provides the great variability in the supply water for us. That's the water that basically we're not counting on during the first six months of this year. So, that's the situation on the water. Now, could it be worse? I think that the risks to a downside are one which are quite, I think obviously a delay in the desel plant would pose a risk to the lower end of our guidance. We don't see that as this we're working basically on the project with all the supplies, manpower and program in place. On the contrary, as we were talking earlier, we're actually looking at ways to bring that date forward, but if that were to get delayed or be delayed in a significant way, that would be that would be a risk. So having said that I'll pass it on to Mauricio so that he can address our thinking on costs going forward.

Mauricio Ortiz: Good to see you again. Well, in term of OpEx for 2022, we are still working on the final figures of course and we are going to disclose, should we do on the next -- in our next release, but let's say in term of moving pieces, we have three main trends and we are looking at the ones that you mentioned, which is the production reduction, which is a direct impact until the two there is related with first the change of portfolio. We are reducing the, let's say the relevance of Pelambres production within our portfolio from slightly above 50% to slightly below 50% of our overall production. So that is also will have an impact in term of portfolio and costing. And finally, in Q3, we have seen a significant input prices, and that is something that we are closely monitoring going forward because for example, we have an increase on assets and that put our SXEW operations up in the cost curve. And also we have impact on desel and steel milling material. So these are the moving pieces in terms of cost pressure. We also have some, let's say positive trends as the foreign exchange rate with a weaker peso. But those are the moving pieces and there is not only related with production reduction, as you said, but because also we have this other cost pressure that I mentioned.

Jatinder Goel: Thanks Mauricio, if I could follow-up on the cost a little bit. Are you able to indicate what percentage of costs at Los Pelambres are fixed versus variable? Because I would imagine labor is by and large fixed, but you can, if you can give a cost component split that can help to then figure out which components will be static with lower production.

Mauricio Ortiz: Yeah. Well, roughly speaking, it's about 60% fixed 40% variable and in term of exposure to Chilean Peso, which is also important at the time of modelling cost going forward is roughly 50%-50% is 55% to 45% with 45% exposure to Chilean Peso. So I hope that give you a better flavor on what our costs will look like ahead of our announcement in a couple of months.

Jatinder Goel: Excellent. Thank you, Mauricio and Ivan and color in the background looks an amazing great copper ore, actually adjusted without being the geologists. Thank you.

Operator: We have no more questions on the webinar. So I'm now going to hand over to the conference call to our operator, Ryan, Ryan, please do put through any questions that have come through on the conference call.

Operator: [Operator instructions] It appears there are no questions at this time.

René Aguilar: I will now hand it back to Ivan for any final or closing remarks. End of Q&A

Iván Arriagada: Thank you. So we just want to thank everybody for joining the call and being able to answer the questions from the credits that you have. As I say, we look forward to finalizing this year with a good performance that we're exhibiting in our plans in line with the guidance that we've outlined for this year. And while next year is impacted by water availability we consider that situation to be temporary as we continue to finalize and build the desalination plant, which will be ready, and we will take any opportunity to obviously bring that construction forward to be able to increase our production. So with that thank you from the Antofagasta team and we hope to see you again soon.

Operator: Thank you. That concludes today's webinar.