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Hello, and welcome to the Hochschild Q3 production results. [Operator Instructions] Just to remind you, this conference call is being recorded. Today, I'm pleased to present Ignacio Bustamante, CEO. Please go ahead with your meeting.
Thank you, Alessandra. Hello, and welcome to our production conference call for the third quarter of 2019. As usual, with me in Lima is Ramón Barúa, our CFO; and in London is Charlie Gordon, our Head of Investor Relations. As you may have read this morning, we have once again had another good operational quarter producing 9.8 million silver equivalent ounces or around 121,000 gold equivalent ounces. And clearly, we are on track to meet our forecast for the year, 37 million silver equivalent ounces or 457,000 gold equivalent ounces. We have -- also today reaffirmed that we're in line to meet our all-in sustaining cost guidance for the year of between $960 to $1,000 per gold equivalent per ounce or between $11.8 and $12.3 per silver equivalent ounce. Let's move to a little bit of the detail. Third quarter attributable production was 67,800 ounces of gold and 4.3 million ounces of silver, and this has led to the first 9 months output for the company at a very strong 367,000 gold equivalent ounces or almost 30 million silver equivalent ounces. Inmaculada remains the key driver for the company and produced almost 65,000 gold equivalent ounces with grades moderating from the better-than-expected second quarter levels. Overall, in the first 9 months, the mine's output was almost exactly to 200,000 gold equivalent ounces, a record for the mine and a 4% improvement on last year's level. At Pallancata, production was again 2.5 million silver equivalent ounces with tonnage and grades in line with the previous quarter. For the first 9 months as a whole, the mine's output was almost 7.4 million ounces, an improvement over the same period of 2018, which reflects the completed shift to Pablo vein ore. In Argentina, San Jose delivered another robust quarter with better-than-expected recoveries and consistent tonnage, leading to production of approximately 4.2 million silver equivalent ounces and resulting in a 9-month figure of 11.3 million ounces, a 10% improvement on the same period of 2018. As you know, our 2019 brownfield exploration program continues with campaigns ongoing at all our existing mines. At Inmaculada, we have carried out work at the new veins to the west of the Angela vein such as Pilar, Noelia, Salvador and Susana Beatriz with the aim of adding further inferred resources. We have also identified the Angela extension in the Northeast and will continue work there in the fourth quarter. Infill drilling has also continued around the Millet vein, which has now resulted in a resource grade increase of 27% versus December 2018 as well as a rise in contained silver equivalent ounces to almost 37 million, so real progress there, I'm sure you would agree. Infill work also is ongoing at the Divina vein where we expect to be able to update you on by the end of the fourth quarter. Drilling also carried on at the Palca zone to the northwest of Inmaculada with positive results indicating mineralization. The team is continuing its efforts to interpret the geology of the structures over the next few months, including the best levels of mineralization and the orientation of the veins with a view to start the next campaign towards the end of the first quarter of 2020. At Pallancata, drilling around the Marco vein close to current operations is looking to add further inferred resources and we have also started some Titan geophysical work at the deposit, which will help to generate the targets for the 2020 program. Over in Argentina, the brownfield program has involved drilling around the current operations at the Kospi, Kospi South and Ramal Huevos Verdes structures as well as the new Milagro vein and which have also started an 1,800-meter long drill hole to the west of Huevos Verdes. In the fourth quarter, we have a target called Tonio, which has come from the Goldspot technology, and we are also [ setting the ] potential extension of a structure from Cerro Negro into our property. In addition to our brownfield program, as you know, we have also recently announced the purchase of the BioLantanidos rare earth deposit in Chile for just over $56 million. We have already started preparations to put our new management team in place, and we're very excited by its potential. Our balance sheet remains strong with a cash balance at the end of the period at $123 million with net debt of only $30 million. Rise in free cash flow resulted from the solid production and the very good average prices in Q3 put us in a strong position going into the $56 million payment, I just mentioned, which was made on October 2. These precious metals prices -- this precious metals price trend continues and should allow us to generate healthy cash flows in the fourth quarter as well. And with that, I would like to open up to any questions that you may have.
[Operator Instructions] Our first question is from Justin Chan from Numis Securities.
Just -- my main question is just on guidance. I mean by this point in the year, you're tracking well above the rate. Is there anything that you want to caution us on in Q4, any maintenance or production interruptions? Or is the fact that you haven't moved it, just purely conservatism at this point?
Look -- thank you, Justin, for the question. We have a program that is established, getting to certain areas with certain different qualities during the year in all our different mines. In the particular case in which you see the strength is in Inmaculada, I imagine, and in that particular case what we are targeting is that in the Q4, we're going to be getting to areas that have lower grade and are more demanding in terms of productivity, so that's why we are maintaining our guidance. So you should be expecting lower production from Inmaculada in fourth quarter, which is something that we planned from the very beginning. So that's the reason why we're maintaining our guidance for the full year.
Okay. And just a follow-up on that, and that's the last question from me, do those areas do you -- is that also what you have in your mind planned for Q1 early next year? Or is that purely Q4?
No, no, that's -- that was the focus of Q4. But getting into Q1 of next year, we should -- I mean, the best guidance that I can give you is that you should look at the average grade that we have been mining or that we're going to be mining for the full 2019.
And our next question is from Daniel Major from UBS.
First question's around your exploration programs, around permitting. I think earlier in the year, you seemed very confident in securing all the required permits to execute on your drilling plans, but I understand that you haven't received permits for 2 of the targets in Pallancata. Can you give us a sense of why that was, how it impacts your, sort of, drilling program and potential to increase group reserves and -- sorry, group resources this year? And are you still confident that you can deliver the 10 years of resource life in 2021?
Thank you, Dan. Yes, the permits in the case of Pallancata have been slower than we thought. We were targeting to get permits in 3 different areas, which were Cochaloma, Pablo Sur and Palca. Those permits required 3 different stages. The first one was a community permit, which we added into 2018, so that was on plan. The second permit was the environmental permit that we also obtained on time in the 3 different properties. And the third permit, which is the last one, which is the actual drilling permit from the Ministry of Energy and Mines, we got the Palca one, so 1 out of 3, but unfortunately, the other 2, Pablo Sur and Cochaloma, the government has decided that it needs to go through a prior consultation process. That prior consultation process creates a delay of about 3 months, no?It's not that we're concerned that we are going to get it or not. Is just a question of when are we going to be getting that permit. And in this particular case, we're hoping that we will be getting that in Q4. Unfortunately, this one has lead to Q1. So it's a 3 month delay, that is going to delay our plan, but I will say in the big scheme of things that shouldn't create any material delays in our plan of trying to secure as close as possible to the [ fields ] that you just mentioned.
Okay. And just maybe looking -- one more question on the permitting and exploration into 2020, how much of your planned exploration requires additional permits? As clearly this has proven to be a problem over the last few years.
Yes. I would say in the case of Pallancata, once we have the Pablo Sur and the Cochaloma permit, we should have enough probably for drilling campaigns getting into 2021 -- 2020 and 2021, okay? So once we finish the Q1 and go through the prior consultation process, we should be fine for the next couple of years. All the drilling targets that we have are concentrated in those 3 areas, plus the ones that we have in our current operations that we're also pursuing, so we should be fine in Pallancata with that. In the case of Inmaculada, we should also have enough permits to drill and continue securing material amount of ounces during 2020 without any additional permits required. But we have also a lot of other areas that are looking really encouraging from a geological standpoint that we're working on the permitting and that we expect to get part of that at the mid part of 2020 and the other part at the end of 2020. So I would say in Inmaculada, we should also be fine with the goals that we have for 2020, and if we get the drilling permits on time for the ones we're taking for mid-2020, we should even have more targets than what we anticipated in our plan, so we're in good shape as well in Inmaculada. And in the case of San Jose, we are fine with all the permits that we require and the permits in San Jose tend to take significantly less time than the ones in Peru.
Okay. And then just to follow up on that, on the -- so how confident are you that you're going to deliver a year-on-year growth in group resources this year based on the drilling you've done today. Obviously, you delivered an increase in Inmaculada last year. How confident are you you're going to do the same and boost group resources and/or reserves this year?
In this case, in our plan, it's more like a long-term plan because we have many different targets as we have talked also because of Pallancata they have been delayed. So I will say, we're not looking that every year, we should be beating or we should be having this differences, where we're looking is that we want to get to 2021 with the levels that we have guided to the market,No? So I would say in this particular case, in Inmaculada, we're confident that resources should grow. And in the case of Pallancata, that's probably not going to be a case that we have mentioned, but we do believe that all the probabilities are open for 2020. And same goes with the case -- in the case of San Jose, no? we're targeting different areas and we expect also to continue exploring those areas and trying to reach our objectives by 2021.
Okay. And then -- so just final question, when we look at production profile for 2020, you've probably surprised with the strength of the grades, some areas on the portfolio, maybe Inmaculada, et cetera. Should we be -- what sort of run rate and a -- maybe you can't provide the guidance explicitly, but would you expect to have a similar annual sort of grade and throughput profile at the 3 key assets into next year?
We are in the process of preparing our budget, so we are not giving any kind of guidance to -- for 2020 done yet. And what I can tell you is regarding Inmaculada, you mentioned we are obtaining a very, very good grades and [ interest rates ] that are really encouraging. But in the particular case of Inmaculada, you may recall that in 2018, we brought many ounces that the average grade was lower than our current production grade. So our goal is to try to keep the longer term, the next 10 years for Inmaculada at similar grades. And that plan had 2 parts. The first one was to look for new areas, new veins with high grade, which is what we are doing, and we're getting good results. And also with the infill drilling in Millet, Divina and all that area to have a what we expect, there are going to be positive reconciliation with what -- which is what we're seeing, Millet has already gone up by 27% in terms of grade, no? so that's been very positive. So our goal is to try to maintain current production for the next 10 years or even more in the case of Inmaculada. And so far, those resources are pointing towards that, no? So I would say the most conservative or fair way to see Inmaculada is to continue maintaining production, and that's our goal going forward. And in the case of the other 2 assets, the guidance is going to be coming probably sometime early next year.
And our next question is from James Bell from RBC.
Just a quick one. I noticed that Arcata was not mentioned in the brownfield exploration section. Wonder if you can just remind us what your thinking is around that asset and if we can expect any results or any direction in terms of potential developments at the asset or for the plant coming into 2020.
Sure. Absolutely, James. As we mentioned the last time we talked about Arcata, we continue with being highly encouraged with the potential geological upside that we have in Arcata. We have all that area that is called the Q4. We have just completed a Titan geophysical program around that area as well. That has also given us very encouraging drilling targets as well. So we're in the process of permitting that whole area. We expect those permits to be obtained by June 2020. So we're planning, and we're going to be budgeting a drilling campaign -- an intensive drilling company in the entire Q4 sector of -- or quadrant of Arcata, getting to the second half of 2020, no? But I would say, we continue being very encouraged with the potential there.
Okay. And then just one more in terms of, if you look at the production profile, it's probably flat in the near term or even potentially slightly lower. Do you feel a need to maybe press ahead with some of the projects that are more advanced in the portfolio? So for example, Crespo, is that something which is becoming -- maybe coming more into focus given the higher metal prices and the production outlook over the next couple of years?
Yes. Thank you, James. Also very, very good question and very good points. We also have many projects in addition to our current operations that could have material optionality for the company. We have Crespo, we have Azuca, we have Huacullo, we have all the area between Pallancata and selene with Pacapausa and those structures are around that area that have significant upside. We have also completed putting a plan to work to explore all those areas to see if we can come up with potential new operation or potential new material feeds for our current operations. So we're planning on allocating roughly around $6 million next year in terms of brownfield -- greenfield work in all those areas to try to materialize the potential that we see in those properties. In the particular case of Crespo that you mentioned, Crespo is already -- and at these prices here -- it's already a profitable project. The problem that -- with Crespo has always had is that Crespo has been a relatively small asset for us. When we initially evaluated it at the gold and silver ratio at that time, Crespo was going to give us 2.7 million and 3 million ounces per year at current ratio because Crespo is more gold intensive. Crespo is looking like it could give us around 4 million ounces per year, no? So it's already more than 10% of our production, which is not bad. And Crespo is supposed to have a still significant potential in Crespo itself, in Queshca which is like 1, 1.5 kilometers from Crespo, and we have also identified certain areas that are colluvial deposits that have accumulated material with erosion of the material surface in Crespo and has been accumulated there over time and shows source of important presence of mineral with similar conditions as Crespo. So we do believe that within Crespo, the colluvial and Queshca there could be a potential for a material resource upgrade. If that was the case, then Crespo will become much more attractive to us and it could be a project that we could look significantly more seriously. But that's also going to require additional drilling. The permits now are expected to be obtained in May 2020, so also it's going to be a very intensive drilling campaign getting into the second half of 2020 to see if we can come up with a new operation with Crespo.
Okay. That makes sense. And then just one very, very final one. In terms of the technology particularly ore sorting, testing, can we expect any updates at full year results next year? Or is this something which we're going to sort of get an update on later this year in terms of the bulk testing?
Yes. We're in the middle of doing the bulk testing, so that is looking also interesting as well. And I would say -- but this is probably going to take us a few weeks until we obtain the full conclusions of the study. So I would say, it's very likely that by the time that we do our Q4 announcement, so mid-January, we can give you a more detailed update on that. But so far, things are moving ahead very positively.
If I may add, James, there, we have engaged Ausenco to help us to prepare a pre-feasibility study. And the kickoff has already occurred a couple of weeks ago, so we're very much on track.
[Operator Instructions] Our next question is from Ian Rossouw from Barclays.
Just following up on your sort of indications on grade and also going into next year where you say we can expect basically the average for 2019. I was just looking at the San Jose grade, reserve grade, it's still quite above where you're mining at the moment. So does that stand as well for San Jose or is it more Inmaculada you were referring to?
No, I would say in general what we're aiming is to have the current production grades getting into 2020 as well. So the base guidance that you could use for your modeling, Ian, in the case of San Jose is to use the average for 2019.
Okay. And then just maybe to follow up on Justin's question on the sort of guidance for Q4, I mean, you were saying, obviously, you had planned grades -- lower grades and slightly lower productivity. But if you obviously look at where you are year-to-date on the grades, I mean, that implies quite a material drop off in grade. Is that correct? Or is there still some level of conservatism built into the guidance?
No, I mean, we maintain the guidance, obviously, we like to be fairly conservative on our guidances, so there's always an element to that. But I would say in general, the way that we have prepared our mine plan from the beginning of the year was that fourth quarter, we are going to be accessing area with lower grades. And also remember that every year, by the end of the year, we end up with an inventory of precipitates that do not get into the process and get processed during the Q1. So if that were to continue getting into 2019 as well, we might expect a slower quarter and that's why we maintain our guidance. But it's a conservative approach, yes, but it's the one that we currently maintain.
But if you -- maybe sort of asking it a different way. If you look at year-to-date grades at the 3 operations, which areas have you -- is the year-to-date -- so your actual sort of quite a bit above your budget levels?
Sorry?
So if you look at the actual year-to-date grades and performance at the various assets, I mean, I guess in the release, you did mention, obviously, production was slightly ahead of expectations. I'm just trying to get a sense of how currently versus your budgets, how well are you're tracking year-to-date?
Yes. What I can say is, for instance, in the case of Inmaculada, we have a grade in case of gold for the year-to-date of about 4.6 grams per tonne. So probably by the end of the year, the best guidance we can give on gold is around for 4.45 grams per tonne. In the case of silver, we have 157 grams per tonne, so probably the best guidance for the full year is around 150 grams per tonne. So those are roughly estimates and you could do the math to try to get an idea of how the fourth quarter is coming.
And then maybe just last one for Ramón. You mentioned that the interim results, you were expecting a reversal of some of the working capital build you saw in the first half. I just wanted to get a sense of how much of that has come through in the Q3 results? Just looking at the net debt, obviously, that fell by $31 million.
Yes. I would say partially improved, and you'll see a full reversal towards the end of the year.
Right. Okay. All right. I mean is it halfway or I mean...
Halfway.
And our next question is from Richard Hatch from Berenberg.
I think the other guys have picked through the [ brains ] of all of my questions, but can I pick your brains on Biolantanidos for a couple of minutes?
Sure.
So first, congratulation on the very good quarter and a decent set of numbers. Just on the rare earths project, can I just ask just a few questions. So first one is, what do you envisage your OpEx doing when you increased capacity from 1,700 tonnes per annum to 3,000? Perhaps you can give me a bit of a steer on like the fixed cost to variable cost ratio there and also the kind of the CapEx you'd need to do to ramp it up to 3,000?
Sure, certainly. First of all, we have not guided on 1,700. Now probably you are using the information previously released by Biolantanidos. However, having said that, our initial plan is to invest, I think what we mentioned to the market is around $10 million, in building up a feasibility study and then $50 million to develop the CapEx. When you think about this type of deposit, this deposit is relative -- it's very shallow and it's very extended like a blanket. We have, in our concessions, we have intercepts, positive intercepts that are in some cases around 180 kilometers apart from each other, not that -- not that all the deposit is continuous, but this gives you an idea of how a geologically, this looks like, okay? And then given the easiness of the mining process and the easiness of the metallurgical and processing process, the highest cost is associated to the transportation of the clay from the pit into the plant and then back into the pit. That transportation is very important. So when you develop a second module and expand CapEx, [ probably ] what makes sense is to build another plant that it's center amongst a group of pits that can feed that plant. So what you would expect is that this is a project that would develop in modules. Let's call that each module will cost the same, $50 million, and we have identified several sites where we could grow production to -- by doubling it or multiplying it by even more times depending, of course, on demand.
Okay, that's really helpful. Ramón, and then just, I wonder whether you might be able to give me any steer on this one as well, just in terms of the concentrate grade and the payability factor of your concentrates, do you expect to get paid for all of the different rare earth elements? Or are they just kind of -- or do you think that given sort of small percentage points of some of them you won't [indiscernible] realize price?
Sure. No, our expectations is -- see, is we have 4 or 5 elements that are -- have a very active market and that are -- that have very good prices. Our -- when I give you this CapEx of $50 million, it's to produce a rare earth oxide, okay, that contains all of the elements. This -- when you look at prices, probably, prices are quoted based on the individual oxides of these elements, so there is certainly 2 alternatives for us. We either increase CapEx and separate the oxides, which is not the plan at this time; or incur in a commercial discount, as you were pointing out, for somebody else to do that for us. You can choose to go to China for this. We understand that there's a spare capacity there and at a cost of around $4 per kilo, you can achieve this. Or you can go through different routes. Originally, BioLantanidos had an agreement with a company called Rare Earth Salts in the U.S. with whom they signed a very small offtake, but it could be a possibility for us to increase that as well. So at this time, there are several alternatives. They will involve either a CapEx or a cost. And we will, at the beginning, we will plan on incurring in that commercial discount.
Okay, that's really helpful, Ramón. I think kind of basket price of about like $35 -- and a $4 discount is about a 10% odd discount to the basket. Is that fair?
I think that will be fair.
Yes, cool. And while I've got you, last one. I just noticed you talked in the release about rolling the debt once again to short-term loans at very attractive interest rates. I mean is that something that you will continue to do? You don't see any reason to lock in the debt on max of 5-year term or anything like that because I suppose you've done that already, right, and refinanced the debt and got it to super low rates, so I take it the status quo remains?
We are a -- we're seeing that the interest rate curve here in Peru is relatively flat, not perfectly flat, but it's close to that. So yes, we're at this point evaluating opportunities to extending significantly our debt facilities without necessarily incurring in a much higher interest rate cost.
Okay. And my last one, it's just that congrats again on the increase in the resources in Inmaculada, and should we expect to see that trend continuing into Q4?
Yes, that's our goal, that's our goal. We, as we mentioned last time we talked, we have decided to accelerate the infill program that was scheduled for 2020 and move it into 2019. So we continued drilling, doing a lot of infill drilling in the Millet and Divina areas, and we're going to continue updating the markets on the results. And so far, the Millet vein, which is roughly 1/3 of the entire 120 million ounces that we brought last year, Millet is 1/3. And that 1/3 is already being upgraded by 27%, so that's very positive result. Mostly, what you are seeing is that the infill drilling is giving us a better delineation of the structures. So the structures were initially thought to be, I don't know, 6, 7, 8 meters wide. Our [ resulting ] one meter less than that, but the grade of the remaining structure, which is still pretty wide is becoming much higher. So that's very positive from an all-in sustaining cash cost standpoint, and we would like to continue to do the infill drilling to see if that trend continues. So by the end of Q4, we're going to give an additional update to the market on where we stand on that work as well as with all the other new structures that we continue drilling for inferred resources.
[Operator Instructions] Our next question is from Tim Huff from Peel Hunt.
Just a couple of questions on the exploration. I guess first at Pallancata, between Marco, Pablo Sur and Cochaloma, you guys have a lot on coming in 2020. I noticed that Marco obviously is done in the fourth quarter and you have the delay on the other 2. But how do you plan on managing drilling all of those as you get in to 2020? And similarly, on Palca, I don't actually know whether the second drilling campaign was planned for Q1. But after the results you got from Q3, have you brought that forward to Q1? Or are you planning on doing that on, off as well as you go through 2020?
Sure. Tim, very good questions as well. So let me -- in Pallancata, we have 2 situations, okay. We have the first situation, which is the next 3 years or the next 4 years. We have another 1, which is -- was going to happen in the 4 to 10 years ahead. So getting into the next 3 to 4 years, what is important is to do as much work as possible and find as many reserves -- resources and reserves as possible in the current operating area, so the areas that are within our permitted area and areas that we can access with the current mine developments that we have. Marco is part of that strategy. And as well as Marco, we have all other different targets, which we have a total of 7 targets that we're accelerating in the current operating area. That's going to happen between now and I would say Q2 of 2020 with the goal of coming up with resources that could tag along after Pablo and continue giving us the time that we need for the longer-term perspectives, which are Palca, which is Cochaloma, which is Pablo Sur and which is Corina, okay? Unfortunately, no, as we mentioned in the beginning of the call, Pablo Sur and Cochaloma's permitting has been delayed until the prior consultation, so we expect that Q2, Q3, Q4 2020, we're going to be going at full speed. In the case of Palca, we have obtained very good results, I would say, a lot of economic intercepts, and our initial plan was to continue drilling during Q4. However, what we're seeing is that the geology because when you start drilling you have an initial geological interpretation. When you drill, that geological interpretation changes. So what we're seeing is that the orientation, the best levels of mineralization and that sort of things is different from what we initially thought. We have now a lot of drilling data and we're in the process of evaluating and remodeling. Until that evaluation and remodeling is not completed, it doesn't make sense to continue with the drilling campaign because we're going to be drilling based on the previous hypotheses that you know already that, that doesn't hold. So we continue being very enthusiastic, we continue believing that there's significant mineralization there, but we just need to make sure that the next drilling campaign is a reflection or response to the most current geological model that we have. So for doing that, we need to take the full fourth quarter and then wait until the rain season is over, which is going to be at the end of Q1, to continue with the drilling campaign. And that's why we're going to be stopping now and beginning at the end of Q1. In the case of Corina, something similar happened. We have already drilled Corina. We have found 2 veins. We have found Corina and Micky. We have also released the results, and you can see that, there are many economical intercepts there, so we're also very encouraged with Corina and Micky. And again, we need to also process all the information that we have, come up with a different interpretation, a new drilling plan, and then wait until the end of Q1, beginning of Q2, and continue going at full speed drilling in Corina. So that's the plan. I don't know if that answers your question.
Yes, it definitely does. So the way you're viewing things at Pallancata is mainly Marco and the 7 other structures is the next 3 to 4 years when you say that that's the program where you're going to define your 2020 targets, that's those 7 targets and the staging of those. But then Pablo Sur, Cochaloma, Palca all sort of medium to longer term, and again, that could be full on like you're doing at Pablo Sur, Cochaloma or it could be staged like Palca if the interpretations come out slightly different?
Exactly. Exactly. And the targets also, if you want to keep track of that -- those the targets that we have for the, I would say, relatively short to medium term are Marco, Paola, [ Alizée, Anomaly Northeast ], Rina 4, Mercedes and Yanacochita. So those are the ones that we're going to be pursuing within the next few months to try to come up with the potential to tag along Pablo until we give time for the longer-term prospects. And we're going to start a drilling campaigns, a very extensive drilling campaign in the next 2 weeks. We're going to be bringing in 5 long drill hole machines to target all these 7 different targets.
And our last question is from Ian Rossouw from Barclays.
Just on this exploration, is your guidance that you've given around $27 million still -- I mean, is that still a good estimate for your exploration this year? Obviously, you've brought some infilling drilling at Inmaculada, but obviously, there's been some delays in another drilling. So I'm just trying to get a sense, is that still a realistic number for this year? And then also, for next year, if there's any -- I mean, it sounds like there's a lot of targets and interesting work, so is there a chance that, that goes up a bit more?
Yes. For this year, the $5 million of infill, if I'm correct, those qualify as CapEx because it's part of the all-in sustaining cash cost. So I would say we are maintaining our guidance on that front, so that shouldn't impact. And regarding the additional exploration work, we're doing additional exploration work. I would say it shouldn't be too materially higher than the $27 million. I would say, we could probably get into $30 million, $32 million. But it's also most likely that could also be compensated by reductions in other CapEx areas. So we don't expect any material changes on that front.
On the exploration front or exploration plus CapEx and development?
No I would say, on the exploration front, probably we're going to be getting closer to $30 million or around $30 million for the year.
Okay. And then on the CapEx side, is the $130 million to $140 million?
That remains as well.
Okay, cool. That's useful. And then just expectations into next year, how -- just, I mean, whether you are happy with it, is this year's CapEx and exploration still a good guide for next year? Or do you expect some increases given there's more targets coming through?
Yes. We are still in the process of doing our budgets for this. I wouldn't like to go to advance any comments on that front. What I can tell you is that brownfield is the most important part of our strategy and we're going to continue at full speed into -- get into 2020. So I mean, we're going to be trying to come up with a plan, but I would say these are good estimates [indiscernible] to be around at the same levels that we have this year.
And as there are no further questions, I will hand the word back to the speakers for any final comments.
Thank you very much, Alessandra. And thank you very much, everybody, for participating in today's call. And should you have any additional questions, please feel free to contact Charlie Gordon directly at our London Office. Have a great day. Thank you.
This now concludes our conference call. Thank you all for attending. You may now disconnect your lines.