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Good morning. My name is Ennis, and I will be your conference operator today. At this time, I would like to welcome everyone to the Copper Mountain Mining Corporation First Quarter 2022 Earnings Conference Call [Operator Instructions]
Please note that comments made today that are not of historical factual nature may contain forward-looking statements. This information, by its nature, is subject to risks and uncertainties that may cause the stated outcome to differ materially from actual outcomes. Please refer to Slide 2 of today's presentation and Copper Mountain's First Quarter 2020 Management Discussion and Analysis for more information.
I will now turn over the call to Gil Clausen, President and CEO of Copper Mountain.
Good morning, everyone, and thanks for joining us. We're starting on Slide 3. Presenting with me are Eric Dell, our Senior Vice President of Operations; and Brad Bolger, our Vice President of Finance.
I'll begin by discussing details on what impacted us so heavily in the first quarter. Eric will give a more detailed discussion on our operation, along with an update on our concentrator expansion projects at the mine. Brad will present our financial results, and then I'll wrap up with a summary of some of our upcoming milestones and then open the call to questions.
Turning to Slide 4. Getting through the quarter was a real challenge. Production was extremely low due to lower grades, combined with low tonnage rates. The lower grade, which was planned, was due to almost all production coming from Phase 2. The tonnage was low due to the secondary crusher shaft damage in Q4 of last year, which forced us to run at reduced rates and deliver much coarser feed to the grinding circuit. We also had lower operating time due to major conveyor belt repairs to the SAG mill feed belt and modifications to the grinding circuit to run properly with coarser feed. But these issues are behind us now. New secondary crusher shaft delivered earlier this month was installed and operating by April 7. We're now ramping up the mill to target capacity of a steady state of 45,000 tonnes per day, with ball mill 3 operating well as designed. In fact, we've been operating above the 45,000 tonnes per day of late, and we have also ordered a spare secondary crusher shop that will be arriving in August.
We expect large throughput and production increases in the second quarter compared to the first. And further, we're beginning to mine ore from the North pit in Q2, and we'll start mining higher grade from Phase 4 mid-year. We expect production to be much stronger in the second half of the year. This production increase will have a positive impact on our cost per pound. Costs this quarter were abnormally high because of the lower production rate and major nonrecurring costs that are not planned to impact us for the balance of 2022. All-in costs in Q1 were higher due to extensive maintenance backlog work we completed on our shovels and drills. Also building up spare parts inventory on shovel hydraulic hoses and systems to prepare the mine for increased production rates.
In Q1, the company had to rent portable crushing equipment to produce crush waste for winter road material and for engineered crush bill for our sustaining capital projects, a task, which is normally done with our secondary crushing circuit because we have usually spare capacity there. That rental crushing plant has been demote with the secondary crusher back to normal operation.
We also increased maintenance contractor expenses during this period of heavy workload to assist with managing COVID-19-related maintenance workforce absences and also, of course, to do that major conveyor belt rip repair experienced when we had that really severe cold weather that occurred late in Q4 of last year.
There were also other nonrecurring sustaining capital items as well. The costs associated with the assembly of the Trolley Assist haul trucks and payment for the installation of MineSense. MineSense actually has been a great addition to our fleet. It measures the actual copper ore grade in the shovel and loader bucket and has greatly improved our ore and waste selectivity and grade control.
So these capital expense items will not recur this year as well. The construction of a new haul road underpass for vehicles leading to the mill and concentrator, that began in Q1. This underpass will improve safety and greatly reduce haul truck cycle times and delays on our main waste haulage road by eliminating haulage interference from light and commercial vehicles that we're crossing the haul road to head to the mill. This rope construction is expected to be complete mid this quarter. Also, environmental water management projects were also included in our sustaining costs in Q1. Overall, these are now all substantially complete with a few smaller scope projects left. All water management projects will be fully complete in Q3 of this year.
To a lesser extent, we did experience some inflationary pressures as well. Similar to everybody else in the industry, we saw diesel prices increase by about 60%, steel prices are up 19% and other mill consumables up 10%. But with higher production levels throughout the remainder of the year and the nonrecurring costs behind us, we expect unit cost to greatly improve in Q2 and even more significantly in the second half of the year.
However, we're increasing our all-in unit cost guidance to a range of USD 2.25 to USD 2.75 per pound. We are maintaining our production guidance of 80 to 90 million pounds of copper, but we're guiding at the bottom end of that range. We'll revisit our guidance each quarter as is our normal practice. Slide 5. Despite an unpleasant quarter, we did have some big achievements. We exceeded our sustainability targets for last year, achieving at least an A rating on each of the TSM protocols. We also commissioned our Trolley Assist project. We had 7 haul trucks that are now pantograph-equipped, and both ore and waste is being hauled up a 1-kilometer trolley ramp. We're proud to be the first open pit mine to commission electric Trolley Assist in North America.
Our electric-powered haul trucks will now travel up our haulage ramp at more than twice the speed of diesel trucks and at 1/10 of the energy cost and near 0 GHG emissions. This is truly a huge success.
Also in the quarter, we completed the balance of the 2021 exploration drill program at the Copper Mountain mine. We drilled over 50,000 meters with about 28,000 meters at New Ingerbelle. We continue to see positive drilling results at New Ingerbelle, which extended mineralization at depth and to the west. That deposit remains open laterally and at depth as does the Copper Mountain main deposit, and we're now working on updating the mineral reserve and mineral resource estimates with a new life-of-mine plan, which will include an expansion study as we've discussed in the past, all of which are progressing on schedule for mid-2022 release.
Earlier in the quarter, we closed zero-cost collar option contracts for 3.3 million pounds of copper per month through the balance of the year with a floor price of USD 4 per pound and an average ceiling price of USD 4.91 per pound.
I will now turn the call over to Eric, who will provide more detail on our operating results and development projects.
Thanks, Gil. I want to first start with an update on safety. The mine's injury frequency rates saw an uptick in the first quarter, while injury severity remained similar to 2021, our lowest in almost 5 years. Management is putting additional focus on reducing the risks related to injury.
Now I'll move on to production. Turning to Slide 6. The first quarter was challenging with production of 13.2 million pounds of copper. Production was lower than the first quarter of 2021 as a result of lower grades and reduced throughput. As Gil mentioned earlier, the lower grade was in line with our plan as we were mining mainly from the lower grade Phase 2 area. This was planned for the latter part of 2021 for the commissioning of ball mill 3. The lower throughput was a result of the damaged secondary crushing.
Copper recovery was higher in Q1 '22, and it's expected that the higher recovery will continue and further improve with the plant improvement projects that I'll speak to in the subsequent slides. With the installation of the secondary crushers' new shaft, the completion of our plant improvement projects and as we begin to mine higher grade ore from Phase 4 in the second half of 2022, we expect production to be stronger in the second half of the year compared to the first half.
Just to touch on costs before we move on. Costs were higher across the board when compared to Q1 2021. This was principally due to lower production, higher staying capital and nonrecurring operating costs as alluded to previously and, to a lesser extent, inflation.
Turning to Slide 7. Most of our ore came from the lower grade Phase 2 area of the main pit that was for commissioning ball military. Phase 4 pushback continues in Q1. We moved over 6 million tonnes of waste from Phase 4, accounting for 67% of the total waste movement in the quarter. Phase 4 mining is continuing to progress and is expected to be a main source of higher-grade ore for the second half of 2022 and in 2023.
Grades are expected to improve as the year progresses. North pit pre-stripping activity started in Q1, and the mill is expected to begin processing the North pit ore in the first part of May. It should be noted that the North pit has a low stripping ratio and low mining cost.
Turning to Slide 8. We continue to invest in our plan to improve efficiencies, copper recovery and production. We achieved a significant milestone with the commissioning of ball mill 3 at the end of 2021. It is operating well. And now with the secondary crusher repaired, we have already started to operate at over 45,000 tonnes per day, and we're working to consistently maintain this milling rate. We're also installing another concentrate filter press and increasing cleaner circuit flotation capacity. The new filter press will be installed in an extension to the existing concentrate storage building, as shown on the bottom left of this image. A single, new, large flotation column cell is being installed inside the existing mill building, and an expansion of the rougher flotation circuit is taking place to the north of the mill building. Turning to Slide 9. The new filter press will allow the mill to maintain maximum tonnage rates while processing higher grade ore for extended periods. Concrete installation is complete, and the filter press was delivered in Q1. Mechanical installation is now underway. The cleaner column expansion will support maximum cleaner circuit recovery for all ore types, eliminating a production bottleneck at high grade and tonnage.
The concrete work has been completed and the column has been installed. Both the filter press and the cleaner column expansion are advancing well and are on track for completion by the end of Q2 of this year. The expansion of the rougher flotation circuit will further enhance rougher recoveries for all our types. This project is also moving forward with most of the concrete work finished. The rougher expansion is expected to be completed in Q3.
The combination of these 3 improvement -- plant improvement projects are expected to increase copper recovery by 2% to 4% above current values. These projects are part of our longer-term growth plan, and they generate significant value by increasing our overall return on invested capital in the mill.
I'll now turn the call over to Brad to go over our financial results.
Thanks, Eric. Starting on Slide 10. As noted by Gil, the company had a challenging first quarter, and this is reflected in the financial results. However, despite the challenges we faced in this quarter, the company recorded sales of $94 million from the sale of 13.5 million pounds of copper, approximately 5,000 ounces of gold and 60,000 ounces of silver. This compares to last year's record quarter of $162 million on the sales of 27.5 million pounds of copper, about 8,500 ounces of gold and nearly 162,000 ounces of silver. This is based on an average copper price of USD 4.54 per pound of copper as compared to USD 3.90 per pound of copper for Q1 2021.
Revenues were down significantly as compared to Q1 2021 due to production limitations caused by damage to the main shaft of the secondary crusher. Also, and as planned, we processed lower-grade material during the quarter, which averaged 0.25% copper as compared to 0.42% copper in Q1 2021.
Cost of sales in Q1 was $75.3 million as compared to $65.9 million in Q1 2021. Q1 cost of sales was net of $10.5 million of deferred stripping costs, while Q1 2021 deferred stripping was $8 million. The increase in cost of sales is primarily a result of increased fuel costs during the quarter, which increased from $1.13 per liter at the start of the quarter to around $1.60 per liter for diesel at the end of the quarter.
This is an additional to higher grinding media costs also experienced during the quarter. These higher costs, combined with a few onetime items such as the timing of mobile equipment repairs and maintenance and increased contractor support to assist with managing COVID-19 absences experienced early in the quarter, also led to higher cost of sales for this quarter.
This all resulted in a gross profit of $18.6 million as compared to a gross profit of $96.3 million for Q1 2021. So from here, you can really see the impact of reduced production and grade during the quarter. We're certainly happy to have the secondary crushers main shaft replaced and operating normally again.
Turning to Slide 11. Slide 11 shows a net loss for the quarter, was $4.2 million or $0.03 per share as compared to net income of $52 million or $0.18 per share for Q1 2021. For the non-GAAP performance measures, the company recorded EBITDA of $11.3 million for Q1 as compared to $96 million for Q1 2021. Despite the challenges we overcame this quarter, we were able to generate $33.3 million of cash flow from operations in Q1 2022.
And after we deduct our investment capital for our growth projects of $37.6 million in this quarter, we ended the quarter with a strong cash position of $143.5 million. This was not a representative quarter for the company. And as we see production increase and costs improve for the remainder of the year, we expect to see our financials improve as well.
I will now turn the call back over to Gil.
Thanks, Brad. Continuing on Slide 12. So with this quarter behind us, we'll now be focused on increasing production and reducing costs, of course. In Q2, we'll be mining predominantly from the North pit, as Eric said, which is a lower cost pit and then mostly from Phase 4 in the third and fourth quarter, which is higher grade.
We'll be mining heavily from Phase 4 through 2023, which drives the higher production guidance range of 90 million to 105 million pounds of copper that we gave out for 2023. In Q2 and Q3, we'll also be completing our 3 plant improvement projects, which will also contribute to higher production through improved recovery and capacity to handle higher grade tonnage. A big announcement is expected mid-year, and this will be the publication of our updated mineral reserve and mineral resource estimate for the Copper Mountain mine, including all the drilling from our 2021 program that we just completed. Along with this updated estimate, we'll also announce a new life-of-mine plan, which will test higher throughput rates. Later in the year, we expect to announce our next steps for Eva.
2022 is a year that we are really investing heavily in and advancing our growth. Our goal is to clearly demonstrate Copper Mountain scale potential. And with that, operator, we can open the call to questions.
[Operator Instructions] Your first question comes from Orest Wowkodaw with Scotiabank.
Obviously, a tough Q1, but I wanted to focus on some of the bigger picture at Copper Mountain. I realize you haven't completed the life-of-mine study and expansion plan at Copper Mountain. But I'm hoping sort of by this point, you have a pretty good idea of potential scale. And I'm wondering whether you have a sense of how big you're planning with respect to the throughput expansion and sort of potential timing of that. I'm assuming it comes after Eva is up and running, but any guidance there at this point would be really helpful.
Orest, thanks for the question. Yes, we have the drill results. We're kind of working our way through final pit designs, and then we'll be moving on to the phase schedules pretty quickly. We have been working on the plant and capital side of the equation at Copper Mountain looking at plant capacities and flow sheets, et cetera. We've locked -- basically locked down a flow sheet that will be our preferred flow sheet at the end of the day. There is, I think, some significant opportunities here to reduce our overall energy consumption per pound of copper produced and to be able to, I think, really come up with an interesting and innovative way to get the throughput levels up at this mine. There's a lot of -- we've always mentioned, there's a lot of invested capital already in the Copper Mountain plant. And with just some additional incremental capital in that plant, we can significantly expand production.
It's a little too early to give final estimates of capital, but we told everybody in the past that we'd be looking at 100,000 tonnes per day scenario relative to what we had previously assessed before, which was a 65,000 tonne per day case. And I would expect that we'll -- we feel pretty comfortable with our ability to eventually, potentially, through this study, get to 100,000 tonnes per day through the concentrator.
So without speaking out of school too early, I'd say, I would look to that kind of a throughput rate as being a significant alternative for us at this time. We've not finished all the work, obviously, yet. Still got some work to do to complete that assessment.
In terms of timing of capital, it's going to be interesting when you look at the concept and the scale and the size potential of the resource and reserve expansions that were expected at Copper Mountain. We have a large deposit. It's still all open. We already had in the past 50 years of resources if you included inferred, and we had 31 years of reserves. So it really makes sense for us with this drilling program, we expect to expand on those reserves and resources significantly. So it makes sense to scale up.
I would also say that the capital and the capital program no matter what is going to be somewhat incremental in nature. We'll be able to develop the mine in a sequence that makes sense from an investment and return potential. You don't have to do everything at once. Do you know what I'm saying? With a new mine, you have to spend all the capital to get the mine up and running. I think we can do meaningful chunks of expansion with incremental -- some incremental investment.
So that is an advantage that existing mines have over new construction. But let's -- we'll wait and see what the study shows, but I think you'll find that it will be an interesting development plan. And we expect to have that study out, as we mentioned before, mid-year some time. It'd be more in the third quarter than, obviously, at the end of the second. In our view, we have to completely write the technical report and publish it with our results just to comply with Aussie regulations. So you'll be able to see everything when we get that release out mid-year.
And just as a follow-up, I mean going up to potentially as big as 100,000 tonnes a day would be more than doubling capacity. Was that -- should we think of that as basically a twinning of the current concentrator? Like basically building another one? Or is this just sort of incremental bolt-on to the existing facility?
We believe we can get to that level without building another concentrator. Yes, we're doing a lot of innovative work on different technologies. We've seen some excellent results on hydro flow technology and other technologies that work and will work potentially very well in our operations. So I think you'll find it a very interesting analysis and study when it comes out.
Your next question comes from Bryce Adams with CIBC Capital Markets.
Firstly, on the secondary crusher, once the change out was made in early April, I think you mentioned that the plant has been running at or about 45,000 tonnes per day. I just wanted to ask how reliably has that -- has it been running at that run rate? Is it most days since April 7? Or would it be something less, say, 75% hitting that run rate with some days still working through ramp-up issues?
Well, it was kind of a steady ramp-up. We got pretty quickly up to 40,000 tonnes a day. You have to make some -- we made some adjustments for the course of material, and we basically you have to start reversing those as well. When we had the secondary crusher problem, we were already sort of geared up to move to 45,000 tonnes a day. And we made cycling adjustments. We made screen decks and adjustments, all kinds of adjustments to the circuit to get to 45,000. And then we had to change that all back out in the first quarter and then get all that stuff going again once the secondary crusher was repaired. But we've been running -- let's say we've built up to the 45,000 tonne a day rate. And for the last consecutive, the last 4, 5 days or so, we've been running over 45,000 tonnes a day, so steadily. So we'll see. I mean the whole goal here, as Eric pointed out, is to make sure that we can consistently deliver that on average on that rate.
But look, certainly, the circuit is there. It can handle it, and we've run consistently days in a row here up until now. The most current information we have at 45,000-plus. We had a 48,000-plus day just a couple of days ago. So it's running pretty well.
Yes, that sounds great. And maybe one for Eric. You mentioned the better recoveries in Q1. Are they a result of the reduced throughput? Or is there any early benefits from the filter press upgrade or the cleaner rougher projects? I think -- and maybe you highlighted 2% to 4% improvement over the current levels. Is that over the Q1 results of 82%? Or would that be over 2021 average, which was roughly 80%?
Yes. Thanks, Bryce. The increased recovery is related to a finer grind, and that's part of having ball mill 3 run. So as Gil mentioned, there are some changes with the -- within the mill due to the crusher damage, but we were able to get a much finer grind, and that was part of the ball mill 3 design to get a finer grind and therefore higher copper recovery. And the 2% to 4% is related to really the increased cleaner column capacity and the rougher expansion, rougher filtration expansion. So that 2% to 4% is above -- is a sentiment above what our Q1 numbers are, okay, for recovery.
Got it. And maybe my last one, just a quick question on the North pit. It looks like the pit edge is pretty tight on the fixed plant. It gets quite close to the crusher and conveyor. Does that create a challenge? Or is that something that you can plan for and schedule accordingly?
Yes. That's -- we don't see that as a major issue. We've had blasting close to infrastructure before, and we do have engineering plans. So we work with our, well, internal and external blasting consultants to ensure that we don't have any damage to our fixed infrastructure.
Your next question comes from Craig Hutchison with TD.
Maybe a follow-up to Orest's question with respect to the life-of-mine plan and the expansion study that could come up with the Copper Mountain mine mid-year. Is there a potential scenario where that becomes the capital priorities for the company relative to Eva gets pushed out? Or is Eva really the goal here for the next 2, 3 years in terms of capital allocation?
Well, Craig, a very good question. We've always intimated that the highest return on invested capital that we have is on our existing assets. And really, that is true. We have a great project in Eva. There's no question. We were also the beneficiary of some basically good timing with respect to those 2 projects. So it created a nice window for construction activities to happen on Eva, get that up into production and generating cash flow when we were looking at more significant expenditures at Copper Mountain. What we're seeing in Queensland is we're seeing some real -- still some real tightness in labor and material. There's a really overheated market in Australia right now for projects. And we're starting to see the materials flow, et cetera. And we're advancing our engineering work very well, the detailed engineering work.
We've been telling the market at the end of the third quarter, we're going to make sure that we have sufficient information for our Board to make a decision on Eva. And if -- that would have to be in line with us being assured that we'll be able to deliver that project on schedule and on budget, and that's going to be dependent on what the markets look like in Australia at that time. So I'm giving you a long prelude to an answer to your question, Craig. But in terms of timing, there is that uncertainty in there right now. But look, that's a great project. And it's as rare as hen's teeth in the world, and it's certainly in Australia. They're not really any good copper projects, development projects that could compare to Eva's potential. So it certainly is a priority for the company. But I'll be able to give you a much better and more fulsome answer to that question once we get closer to that time.
But we try to be prudent and our whole objective here is to make sure that we can deliver the best return to our shareholders and do everything in a responsible and prudent manner.
Would a partnership for Eva be on the table? Even a potential sale if the expansion study looks really solid for the Copper Mountain mine?
Well, look, I got to be frank. As you know, it's our duty as a management team to be able to prepare all alternatives for Board's consideration when you're looking at projects, and those kinds of options are certainly things that we would assess, and I don't think our Board would expect any less. So when we're making a major decision on a project like that, you have to look at all the alternatives.
And then just maybe a couple of quick questions. The amount spent at Eva in the quarter, the CapEx that was spent there, any color on how much was spent on Eva specifically?
Eva specifically? We were just doing engineering on that, but I'll let Brad answer more fulsomely if he has anything.
Craig, I guess, during the quarter, we spent close to $4 million on Eva. And that is to move forward engineering, and that would also be included with labor and other costs as we progress the project. And I know previously, we had mentioned that we are moving towards 80% engineering on that project, and that's where those costs would be included.
Okay. And maybe just a last question for me. Gil, you provided really good clarity in terms of grades for the year 2022. I think you mentioned that would be around the range of 0.27. Do you see that going higher now to get to the bottom end of the range? Or are you still comfortable with 0.27? And maybe any clarity just in terms of what the main pit will do -- the Phase 4 of the main pit will do in Q4 would be great.
Yes. The main pit Phase 4 grades when we get that phase fully developed and it's going to have grades that are not too dissimilar to what they were in Phase 3 of the main pit. So we're going to see some significantly improved grades. And the North pit is an interesting pit. It doesn't have as high grade as -- and it's more like Phase 2 grade, but it's got really coarse mineralogy. It has really high recovery rates and it has a higher gold content, and it's right beside the crusher. So it's on surface. So it's cost and the stripping ratio is very low. So from a cost perspective, North pit is one of our high priority pits. Although it doesn't have as good a grade as Phase 4, it has a lot of cost benefits.
So you'll see as we progress through the year that in the second quarter and certainly fully in the fourth quarter, Phase 4 is going to be the main impetus. There'll be some -- a little bit of Phase 5 pit ore in there as well, a pushback. But that North pit will also be an important pit for us in terms of cost and recovery and throughput because it actually is not as hard as -- Phase 2 ore in addition to its lower grade had a higher pyrite content, which depressed some of our copper recovery, and it also was hard.
And so it had a couple of disadvantages that North pit doesn't have. So I think you'll see some significant improvements in the second half of the year.
Your next question comes from Pierre Vaillancourt with Haywood.
My question was actually asked regarding Eva. But just to clarify, if you -- are you aiming to make a construction decision at -- by year-end? Or is it very fluid at this point and just not clear?
Well, I think we're going to get all the information to our Board of Directors as we said we would at the time we said we would do that, which would be roughly around the end of the third quarter. So -- and so the construction decision and that discussion will be had with our Board at that time. And like I said, we will be looking at all the other alternatives so that we can present a recommended path to our Board for their consideration.
Now with respect to the timing of that, it's going to be a little bit -- if we do make a construction decision at that time, we'd have to consider where the supply chain is and what the risks are associated with construction in Queensland at that time. So I cannot answer at this point in time exactly when a construction start would occur if that decision is made at that time, but we'll be ready for the Board to consider all those options at the end of the third quarter.
And could you maybe provide a little bit of insight how the project financing is moving along? Is that at all too much in the current context and some of the risks in front of us here for the rest of the year?
The project financing is moving along without any hiccups, so I think we're just waiting for the final construction estimate. So -- which will come at the end of the detailed engineering phase, along with the actual final construction plan.
So that, we anticipate happening and occurring at the same pace as -- and be ready for a Board decision at the same time. So we'll have an updated construction estimate that we'll take to the banks, who are considering the lending into this facility, and it's a project financing facility that we're considering. And we'll have that information to them so they can take it to their final credit committee approvals and ready for a Board decision on the project.
Okay. And lastly, you talked about mill ramping up to 45,000 tonnes per day. Is this going to be achieved like steady state this quarter? Or...
Well, I'm hopeful we're at steady state right now.
You're at steady state now? Okay.
Yes. Yes. So I mean, we've been running steadily every day out of 45,000 or above for the last 3 or 4 days. So I want to make sure that on average that we can deliver that average rate per calendar day. And so far, so good. We'll just keep working on it and making sure that we're in a solid steady-state mode. But I don't see anything at this point in time. And certainly, Eric, if you have a comment on that.
Yes, I agree with you, Gil. We're -- last week, we've been pretty steady at above 45,000, and so our goal is to maintain an average of 45,000 a day for sure. And there's nothing to indicate right now that we can't achieve that.
Your next question comes from Alex Terentiew with Stifel.
I just got one question really on costs. I know you raised your cost guidance, all-in sustaining cost guidance or all-in cost guidance rather by $0.25. But in Q1, your sustaining CapEx looks like it was around USD 8 million, deferred stripping probably just over that.
Are your budgets for the year -- I mean, previously, you gave guidance for the year of $10 million sustaining, which obviously would imply quite a bit less for the rest of the year and deferred stripping as well, $27 million. So again, lower than Q1. Are those budgets still intact? Or have you added additional cost to that spending for the year?
There's a little bit. I think the deferred stripping goes into the AIC number, and I would suggest that we are probably going to be a little -- maybe a little higher in the deferred stripping. But that all rolls into the AIC anyway, so that fits into our cost guidance.
From the sustaining capital perspective, most of the big spends are there. We had 7 new haul trucks delivered in the first quarter. We don't have any major equipment being delivered until probably next year, I think our sustaining capital will be a little higher than we had originally due to cost inflation pressures, but it shouldn't be -- it shouldn't -- we're not going to see these kinds of expenditures like we had in the first quarter, Alex.
So I would say if you looked at the percentage range that we are guiding above our cost guidance, if you just -- you could probably work out where we'll be for the balance of the year because we think we're pretty reasonable with that guidance.
There are no further questions at this time. Mr. Clausen, you may proceed.
Well, okay. Thank you very much, everybody, for joining us today. Please stay healthy and safe, and we hope to talk to you all soon.
Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines. Have a great day.