Aura Minerals Inc
TSX:ORA
Earnings Call Analysis
Q4-2023 Analysis
Aura Minerals Inc
The company maintains strong management over all geotechnical structures with monthly analyses conducted by external consultants, ensuring stability across its operations. A noteworthy community initiative involves testing grape planting in previously mined areas to potentially develop high-quality wines, aiming to provide new income sources for local communities nearing the end of the mining lifecycle.
The company achieved its highest quarterly production in the period, reversing a previous downward trend and expecting continued growth throughout 2024. With the new Almas operation contributing and the Borborema project expected to ramp up in 2025, the company is optimistic about further increasing its production in the upcoming years.
The company ended the year with a strong cash position of $237 million and reduced net debt to $85 million. Despite paying $80 million in dividends in December, this exhibited effective financial management and a promising outlook for the next year. The adjusted EBITDA was reported at $41 million with positive contributions from various business units, highlighting improvements in Minosa and Apoena, as well as a positive EBITDA from Almas.
The 2023 production guidance was reported at 236 gold equivalent ounces, with a projection to the market of 244 to 292. The company expects production to increase in Minosa and Apoena while anticipating a stable year for Aranzuzu and full production at Almas. Cash costs are anticipated to align closely with 2023 figures, and CapEx is projected to be similar to 2023 with the addition of Almas.
Borborema's completion is targeted for early 2025, with key milestones including finishing land work, civil works commencement, and plant assembly in the second semester, along with the expected delivery of the mill in the fourth quarter of 2024. Over 61% of the project's total CapEx is already under contract, reaffirming the company's commitment to staying on time and on budget.
The company confirmed its commitment to pay dividends in 2024, adhering to a policy of distributing 20% of EBITDA minus recurring CapEx. Matupa's construction is expected to begin by mid-2024, post-licensing. The company is resolute in reaching its production goal of 450,000 gold equivalent ounces without delay, and Almas' operations are on course to normalize in Q1 2024, supporting the overall production guidance for the year.
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Good morning, ladies and gentlemen. Welcome to Fourth Quarter 2023 Earnings Call. This conference is being recorded, and a replay will be available at the company's website at auraminerals.com/investors. The presentation will also be available for download. This call is also available in Portuguese. To access, you can press the globe icon on the lower right side of your Zoom screen and then choose to enter the Portuguese room. After that, select mute original audio. [Portuguese Operator Instructions]. We would like to inform that all attendees will only be listening the conference during the presentation, and then we will start the question-and-answer section when further instructions will be provided. Before proceeding, we would like to clarify that any statements that may be made during this conference call regarding the company's business prospects, operational and financial projections and goals are the beliefs and assumptions of our Executive Board and the current information available to the company. These statements may involve risks and uncertainties as they relate to future events, and therefore, depend on circumstances that may or may not occur. Investors should be aware of events related to the macroeconomic scenario, the industry and other factors that could cause results to differ materially from those expressed in the respective forward-looking statements. Present at this conference, we have Rodrigo Barbosa, President and CEO, and Kleber Cardoso, the CFO. Now I'll turn the conference over to Rodrigo Barbosa. You may begin your conference.
Thank you. Bonjour et toutes. Good morning. We are here to talk about the fourth quarter results and the year-end 2023, and also, share our guidance for the year 2024. First, the year 2023 was not only important for achieving important financial results, but we did that under the highest ESG standards. First and foremost, we achieved during the year 2023, ZERO lost time incidents in all Aura operations. We now have 4 operations. We finished building Almas. We started building Borborema. And we could achieve significant results by not having any lost time incidents and making sure that one of the most value that we have, which is safety first for our employees, we are taking care of everybody that works with us. Not only Aura employees, but the third parties that come to our operations, we have an extensive training for them to achieve these goals. And this is a long-term goal that we've been working across the operations for 3, 4, 5 years significantly on a daily basis that could result in this ZERO lost time incidents for the year. And we know to maintain this is challenging, but we aim to maintain ZERO lost time. Until today, we are at ZERO lost time. Also, incidentally, we aim to achieve this in 2024 as well. On the -- again, on the [SAG], we also innovated one initiative to help and to bring to Honduras a new source of income. That area in Honduras that we operate is very similar to our area in Sao Paulo that's producing high-quality wines. We brought some experts and that we could test the soil and the weather that in the mine where we operate in Honduras could also provide a chance for the people that work around that area to produce high-quality wines. We did that. These initiatives, we planted as we're going to show, those grapes in the area that we already mine. And then instead of planting trees, we are now planting -- we will plant grapes and see if that could become a new source of income for the communities around us. They already produce coffee, so transition into wines could be important for them. In terms of production in Q4, and also results, we achieved the highest production for the quarter at 69,200 gold equivalent ounces in the quarter. This is 7% higher than Q3 last year. We were projecting to be the last quarter the highest one, and we did that. And that generated $88 million for the full year in terms of free cash flow recurring. Going operations for the year, so we achieved the 235,000 of gold equivalent ounces. And as we're going to see for 2024, we are aiming to continue to grow and achieve higher production as we will share guidance as we now have Minosa is on a running rate in the last quarter. We already are implementing initiatives to increase production in Apoena, Aranzuzu continued to be stable, and now we have full year of Almas, so we should continue to grow in 2024. Aranzuzu in the quarter, very much in line with our expectations, very stable. We will see a minor reduction in production that comes from mine planning, but that's not meaningful in terms of changes. Continuing to achieve very, very strong results in Aranzazu. What we will see for the year '24, and also in terms of cost, we will see some increase in costs for Aranzuzu, basically for 3 different variables. One is the exchange rate. The Mexican peso is appreciated compared to the dollar, so that pushed our costs up. There's some inflation. We are fighting against inflation, but some inflation is going through our costs. And then third is mine sequencing also. But that will not be significant. In Minosa, we achieved 17,900,18,000 ounces of production in the quarter, a new 2% increase compared to Q3. Remembering that we started the year in Minosa very challenging. If you compare last quarter of '22 to the last quarter 2024, this is call it 47%, 50% increase. During the whole year of 2023, as we were disclosing to the market, we were gradually improving the operations, fixing the reduction in productivity. And this will -- every quarter, we will be -- we were able to increase production. Now I believe that we are reaching some running rate and we're already starting the year of 2024 very strong at the running rate that's supposed to be in Minosa.In Apoena, again, we were expecting to increase production due to going to Ernesto pit, so we increased to 15,000 ounces of gold produced. This is 36% higher than Q4 2023, but also a reduction compared to Q4 on 2022, mostly because we were, in the fourth quarter of 2022, we were full quarter on very high grade of Ernesto. Now we work passionately on this high grade of Ernesto. We delayed entering the Ernesto pit due to the heavy rains during the third quarter of the year, and so some of this high grade was pushed to the first quarter, which we are now mining during 2024. Almas, we reached close to 10,000 ounces of production of gold. That is our first full quarter in production, reminding that in Q3 we had a partial quarter once we declared commercial production during the quarter. Almas, as we shared during Aura Day, we were very high production during Q3. And once we reached fresh rock, more hard rock, we had a reduction in productivity that also affected the fourth quarter production. Which was although an increase compared to Q3, it was below our expectations and below the running rate. I would highlight that this reduction in productivity during Q4 is already addressed, and we are -- we finished December already at above 1 million tons on the mine. We are very strong in the running rate as we're supposed to be. We're starting the year of 2024 very strong according to our plan. In terms of our sustaining cash costs, we saw a cash cost at 1,311. It's a 9% decrease compared to Q3 as we were projecting very much in line with our guidance that we gave to the market. And this reduction comes from the high production in Apoena and high productivity also in Minosa. We expect the year for 2024 to be very much in line of the year 2023, perhaps a little bit below or a little bit higher, depending on the situations according to the operations during the year. In terms of adjusted EBITDA, we had $41 million of EBITDA, the strongest EBITDA for the year as we were projecting to have stronger EBITDA during the fourth quarter. This is a 37% increase compared to Q3, and that is a result of increased production in operations as I mentioned, in-house higher gold prices, and lower cash costs. In terms of growth, I would highlight the company continues to cement our path to the production of 450,000 ounces of gold equivalent. That will, a as I was sharing with the -- as we shared, it comes from the development of 3 projects, Almas, Borborema and Matupa. Almas, first greenfield project that we built on time, on budget. We finished the construction during 2023. We ramped up in 5 months, we built in 16 months, setting new benchmark in the market compared to the other mines that's being built on budget, on time and is already in full production. Borborema, we updated during the year a feasibility study. We published the feasibility study. We raised the capital to fund Borborema and we already started the construction, and we are already at 18% of the whole construction complete and very much in line with our expectations in terms of so far on deadlines and also budget. We continue to path our way to continue to grow during the year '24, '25 and '26. Again, in terms of safety, it's something that we are very proud and it's an achievement that belongs to the whole team that's working on the daily basis to achieve those numbers. In Almas, we achieved this in June 2023, Apoena in July, Aranzuzu September, and Minosa October. We are now 4 operations with ZERO lost time incidents over a year because we finished the year and we continue to be at the ZERO lost time incidents until now.On stability and the structures, as we share with our board, as we share with our employees, and as we share with our investors, we have a strong management of all geotechnical structures that is being analyzed on the monthly basis by external parties, by a consultant. And now we have the online monitoring system all across our operations, and we are -- Geoconsultoria, which is one of the most well-known consultant firms for checking stability of geotechnical structures, and we are at a participatory level all across all geotechnical structures. Which means on the tails dam, on the leach pads, on the pits and underground also developments. As I also mentioned, we had a significant coverage by the national press in Honduras with this new initiative to bring high-quality wines. Which in the end of the day, what we want is to bring a new source of income for the communities around us so that they do not depend so much on the mines so they can have other initiatives to have other sources of gains. We know that mining gold mines has one day we will finish mining there. We will replant 100% of the areas. And then instead of leaving them with all the trees, we would like to leave them also with a new source of income that they can benefit from these new initiatives. Of course, this is a 3, 4-year test that we need to understand if it's going to work, but we are very positive that this can help significantly not only then the area, but it can grow the whole country or do this in other countries around Honduras. On the picture that we saw in the corner right, this area has already been mined in the past, so we are now using this area for planting grapes and test if they can be a source of high-quality wines. In terms of production and going details here, but on the left chart, I would highlight on the bars is the production by quarter. In the line is the last 12 months of production. In the quarter, we had the highest quarter in the year, even higher than Q4 of 2022 and once we have now Almas in production. But very importantly is that from Q2 to Q3, we inverted the curve that we were having a reduction in production over the last 12 months to the challenge that we had in Honduras in the beginning of the year, then the rain that we had in Apoena. But now we could start to increase production again with the 65 gold equivalent ounces production in Q3 and 69 in Q4, reaching the bottom of 228 gold equivalent ounces produced in the last 12 months on the Q2 '23, increasing 234, 236. And it's very to achieve to expect this continue to grow along the year 2024 once we are now -- we should not -- we're entering the ['20] year with a strong production all across our operations, plus now we have Almas that has contributed to a production increase during the year. And I would invite you also to look, if you want to see 2 years ahead, then in 2025, we will see Borborema also production kicking in along the year. We should continue to grow during the year 2025 as well.Next one, I already explained. In terms of cash cost, Q2 we had an increase compared to Q1. Then in Q3, another increase, mostly because we passed, as we explained, a low grade and stockpile in Apoena. They had -- although we made cash doing that, the cash costs increased. And now we started having a higher grade in Apoena again, we don't expect to have that low grade that we had in Q3. We don't have this in the stockpile anymore. In Q4 this, mostly Apoena, that we could decrease our cost and somehow in Minosa to 1,311 which is as we expected to the market. In terms of guidance, so we saw the year 2023 production of 236 gold equivalent ounces, and now we project to the market to be 244 to 292. Entering the year with Minosa at the running rate. Apoena also we will do some improvements in the plant. We will reach hard rock ore that has impact over productivity in the plant. And to compensate that, we are expanding a little bit the plant in order to achieve higher production that we had in the year of 2023. Now we -- Aranzuzu continues to be very stable and Almas is kicking in in the year, so we should have full production in the year for Almas. That already started the year very much in line with our expectation that the running rate that is expected that we finished the year of 2023. In terms of cash costs, very much in line with the year 2023. There is difference between the mines as I mentioned. There will be a decrease in Minosa, there is a decrease in Almas. There's an increase in Aranzuzu due to the exchange rate and some inflation. All-in sustaining cash costs, also very much in line with the year of 2023. And then when we project the CapEx for the year 2024, we see sustaining very much in line with 2023, but now we need to add Almas. That also needs to do its sustaining CapEx in the operations. Exploration was slightly below the year of 2023. And then when you see the new projects and expansion that we are now including Borborema that is under construction. That's why you see this increase from $56 million to $144 million, $169 million. Most of the CapEx of Borborema go through the year of 2024 and some remaining for the year of 2025. In terms of development of the project, again, we not only finished Almas on time on budget, but we did that setting a new benchmark in the sector. We are now slightly over between 17%, 18% of completed in Borborema and we expect to start the ramp-up in Q1 2025. Most of the land work has already been done, and we are already initiating safety work. We have more than 350 people at the project. And most, as we have -- as we did also with Almas, we focused hiring people locally, so we have about 70% the employees working at the site coming from the city that's nearby, Currais Novos, which is the closest city to our operations. Also very importantly is that as we were progressing in the project, although it is built 18%, 17%, we already have negotiated or have a very strong already information about the total CapEx. Over 61% of the total CapEx we are already under contract, so we are very much in line with what we were projecting. Yet there's no deviation, we continue to be on time on budget in this project. And then hopefully, we'll be able to start the ramp-up by early 2025. In parallel, I would highlight very importantly to the investors is that this project starts with reserves around 815,000 ounces of reserves, but we have over 2 million ounces of resources. You cannot say that you have -- for reserves, the areas need to be fully licensed. As one road crosses close to the pit, we are limited on the feasibility study to have only 815,000 gold equivalent ounces of reserves. But as we move one road, that reserves can be more than doubled and reach close to 2 million ounces after we get the license for moving this road. And all the process of moving this road, which is already regulated by law is in place. It takes time, but we already initiated all the conversations with DNIT, the National Department for Roads, in order to change there. It's not significant change, but we will require some time to reach that. That's the overview. I will come back with the question and answers. And now I'll pass the floor to Kleber that we will share and highlight more of the financial results.
Thank you, Rodrigo. Good morning, everyone. We're going to start with sharing a page with the main financial KPIs the company is reporting with the market. In terms of -- starting with net revenues, we reported $124 million in revenues on Q4. As Rodrigo explained, it's following the same trend as we saw for production, so it's the third increase in a row, increasing faster than production because of more favorable gold prices during Q4. In the year, we are exceeding, our revenues are exceeding $415 million, increasing 6% compared to 2022. When we go to adjusted EBITDA, it's a similar trend, the strongest EBITDA in the year at $41 million at Q4. It's also -- we also see this trend of the adjusted EBITDA improving over the last 2 quarters. The combination, as Rodrigo presented, of both stronger production, more favorable gold prices, but also a reduction in the cash costs in the last quarter. And then in Q4, we are reporting more or less the same EBITDA we reported the same quarter last year, $41 million. And also for the year, we're closing stable compared to 2022 at $134 million for the year. When it commits to net income, we're reporting this quarter a loss of $6 million, which is derived mainly from a nonrecurring and noncash item related to the market-to-market adjustments of Borborema and Almas project gold collars of $28 million. I'm going to go at the end of my presentation in more details of this number. But again, the noncash, cannot expect to be in the future a cash loss. Excluding that impact, our net income for the quarter would have been $22 million positive. Also, would have been the strongest in the year. And then finally, in terms of cash and net debt, we closed the year strong. An important reduction in the net debt position coming from $112 million by the end of Q3 to $85 million at the end of the year despite the effect that we paid $80 million in dividends in December. And we finished the year also with a strong cash position of $237 million.Now to understand the main items impacting between adjusted EBITDA and net income for the quarter. As we saw on the previous page, adjusted EBITDA of $41 million, of which Aranzuzu once again is our strongest business unit reporting EBITDA of $80 million during Q4. I would highlight also the improvements in Minosa and Apoena. At Minosa we're seeing, for the fourth quarter in a row, increasing production, but also especially in the last quarter a reduction, a significant reduction in cash costs, and therefore, improvement in EBITDA exceeding $10 million in the quarter. Apoena also with important improvements of EBITDA compared to the last quarter, $9.4 million, and Almas, despite the challenges, reported $5 million EBITDA, positive EBITDA in the quarter. Amortization, depletion, once again, it's been consistent over the quarters at $11 million. Finance, we recorded finance expenses of $37 million, of which, as I said, $20 million is noncash related to the gold collars for Apoena and Almas, which I'm going to go over more in detail later. On this quarter, we are reporting income tax gain of $4 million. This is mainly due to the recognition on this quarter of deferred tax assets of $70 million at Almas. And this is because Almas, before it reached commercial production, it incurred losses for a couple of years as it had no revenues. Those losses in Brazil, they generated income tax assets which could not be recognized on our balance sheet before Almas declared commercial production and was profitable. We see that as also positive news, recognizing the $7 million which are going to become cash savings in the future. Then other items, $3 million expenses, bringing the net loss in the quarter at $6 million. But again, the pro forma, excluding those market-to-market items, would be positive at 2022. Then on stage we bring a detailed analysis showing the changes in the cash and equivalent positions of the company throughout the fourth quarter of the year. Here on the far left side of the page, we see we started the quarter with $179 million in cash. Then more to the left side of the page is what we call adjusted free cash flow to firm, which is the free cash flow to firm and generated by the 4 mines in production. Excluding the investments we do to expand our operations and in exploration, so we see it was a strong quarter. The mine is in production, generated $38 million. We already highlighted the stronger EBITDA, so a positive working capital generation in the quarter. Then here in the middle of the chart, what we call investment for growth, how much we invested for example in acquiring the shale fault on Altamira. Pending exploration and expansion CapEx, the total for the quarter was $9 million, which is going to be much higher for the next quarters as the construction of Borborema influences this year. And to the right side, the financial items which would realize the $21 million we received at Borborema related to the royalties in the payments of dividends we made in December of $18 million, bringing the cash to $37 million at the end of the quarter. In looking at this analysis that is showed for the quarter, this was for the entire year of -- this page shows for the entire year of 2023. We see that the adjusted free cash flow to firm, the mining operation generated $88 million which was more than enough to pay for the investment for growth of the company. We invested $74 million to grow the company, of which $25 million in exploration, which are going to increase our mineral reserves and mineral resources and increase the life of mine of the company. And the final phase of Almas construction and Almas ramp up. And then to the right side, again, the items, the free cash flow from financing activities, highlighting mainly in the proceeds from that that we raised to build Borborema mainly this year, and the $28 million cash outflow dividends, which we paid in June and December. And then to conclude, so this is the analysis I was referring to, a more detailed explanation about the $28 million noncash finance expenses, which we recorded in the quarter. To understand it, starting the explanation with the top side of the page, what happened in the business. In September, the company had about 175,000 ounces in gold collars in its books, mostly related to the Almas gold collar risk management program which we entered a few years ago in the first phase of the program, a hedging program. In December, that 175,000 ounces increased to 298,000 ounces, so it was increased up 70% because we completed the Borborema gold hedging program coming from about 80,000 ounces of gold collars to 215,000 ounces. At the same time, during the fourth quarter, we saw a sharp increase in gold prices, which is very good for our business. Gold prices appreciated more than $200 between the end of the 2 quarters. The combination of having more good collars in our books and higher gold prices at closing had a different impact in our balance sheet and P&Ls, in our P&L. In the balance sheet, we see the impacts of $14.5 million cash gain revenue, which was the premium paid by the banks to participate in the Borborema hedging program. We collect already, out of those $14.5 million, we collect already $4 million in '23 and are going to collect another $10.4 million by June 2024. And on the other hand, following IFRS standards at the end of each quarter, we needed to do market-to-market adjustments in our balance sheets of all outstanding positions. Because of the increase in gold prices, the market-to-market position of the resulting derivatives generated liabilities of $43 million at the end of the year. Which we consider and we expect to be a noncash liability because of 2 reasons. First, all the open positions we have in our books, the strike prices are of these gold collars. The gold strike prices are way above spot prices. Spot is around 2,000 2,030 now, and the ceiling prices for these derivatives are above 2,400. And second, we expect to hold all dispositions to maturity, which means if market conditions stay where they are, this liability will disappear over time without cash impact to Aura. And now with this, we end our presentation and open to questions. Thank you.
Very well. Just a full summary, as you could see, a very important year for Aura. First, we generated $88 million on recurring free cash flow to firm. That was more than enough to fund the growth, but we also can leverage to fund the growth and also update the dividends. And we did all of that under the highest ESG with the ZERO lost time incidents, doing the right thing on the ESG standards. And as important as the results is we set the standards on the fourth quarter. We increased production in Minosa, in Apoena, in Almas. And we set the standard to start the year of 2024 very strong, very much in line with our expectations and now having Almas into production. And then building Borborema to start to ramp up in early 2025. It was a very important year which we achieved, important results, and setting the path to 450 gold equivalent ounces annualized by the end of '25.
We are going to start the question-and-answer section for investors and analysts. [Operator Instructions] Our first question comes from Ricardo Monegaglia with Safra. You can activate your microphone.
I have a couple of questions on EPP. Do you expect more volumes coming from Ernesto in Q1 relative to the Q4? And maybe what is the timeline for the plant's capacity expansion that you mentioned in the press release? Maybe some budget for this expansion would be nice. Second question on Borborema, I understood the project is on time and on budget, but just to get a sense of what are the key milestones in the project execution that could define if the project remains on time and budget. And lastly, a quick question. Are there any legislations under discussion in Brazil that could affect some sort your exploration works? That's it. Thank you, guys.
Thank you, Ricardo. First, in Apoena, there is a remaining award in Ernesto that we are now mining in Q1. Not necessarily will be more than we mined in Q4 last year. And then we'll be switching more to another pit. Northern pit has a harder rock that decreased somehow productivity at the plant, but we are doing investments to upgrade the plant and increase our capacity so that we can achieve even higher production compared to 2023 during the year of 2024. Borborema, I'm not sure if I understood the question. Can you please repeat?
Yes, sure. What are the key milestones in the project execution or construction that could -- that you see in 2024? Like what will define if the project remains on time and on budget? What are the key deliveries for 2024?
Yes. It's daily deliveries, but I think the first one is finishing land work, and this has been accomplished. Now entering the civil works and then during the second semester, we will also start building and assembling the plant. One important milestone is the delivery of the mill, which is expected for the fourth quarter of 2024, which will allow us then to start commissioning and ramp up during 2025. All civil works and starting assembling civil works during this semester, starting assembling during the second semester, and then finishing assembled with the mill to be delivered on the fourth quarter of the year. Our team has already visited the supplier in China. I'm very impressed how diligent they are on schedule, on program already and the mill is being built also on time, on budget. We don't expect yet any kind of delays. And then you asked about the regulation in terms of factor exploration. I'm not aware of any regulation that would affect our exploration program for the near mine. Most of the areas that we are mining or doing exploration in this area, it's a farm not close indigene area and not close to highly protected areas in terms of forest. We do not expect the regulation to interfere in our exploration program in Brazil.
Next question from Roman Rossi with Canaccord Genuity.
Yes, I have a couple of questions. Regarding Borborema, Rodrigo, you mentioned that once you move the road, you will double the amount of resources. Do you have any sense on what this could represent in terms of NPV?
Yes. We are upgrading the feasibility study. We will publish this. We do that yet, we cannot do all the disclosures, but you'll have -- I would invite you to understand and just make a simulation in 2 ways. First is if we extend the reserve. We can do that before moving the roads. We can increase our reserves just by having the permit to do that. But of course, you can just put in production as we move. Either -- but we don't want these new reserves to be at the end of the life of mine. So that's why what we are doing -- we are doing, building a plant flexible enough for us to increase our capacity. Once we have these permits to move the road so that we can advance those kind of reserves into the production on the year 4, 5 or 6 of Borborema. Again, 3 years, 3, 4 years to move the road and then you can start thinking about increasing production in the project growing from 2 million tons production up to 3.4 million tons of production by the year after 4 years.
Okay. Perfect. The second one is regarding hedging. It's probably for Kleber. You have 10,000 ounces concentrated at EPP with 2,100 ceiling prices. And this is expiring between March 2023 and December 2025. I just wanted to get a sense on how these derivatives are expiring. Because for example for 2025, my well target price is above that ceiling. I just wanted to understand what could be the potential impact if oil prices go above 2,100?
Yes. It's between now and the maturity, they are about straight line, Ramon, expiration. They are not concentrated, but in '24 or '25, it's on a quarterly basis, there is like -- they are spreads.
Okay. Perfect. Perfect. And finally, regarding dividends, based on your current policy, it seems like you wouldn't be paying any dividends during 2024. What are you seeing for the year?
No. We don't have this policy that would limit us to pay dividends in 2024. Our policy is 20% of the EBITDA minus recurring CapEx. And we should keep with this policy, except if we find a new M&A opportunity that would require more than cash that we are projecting. We are -- we continue to project dividend payments, yes, for 2024, according to our policy, which is 20% of the EBITDA and recurring CapEx.
Next question from Diego Castillo. Good morning. Thanks for the presentation of fourth quarter 2023. When are you expecting to start Matupa? And how are you expecting to deliver the guidance of 450 production in 2025? Was this guidance postponed?
No, it's not postponed. Matupa is in the process, final process of licensing. We expect to have the license to start the construction by the end of the semester, by June, July this year, so that we can start construction right after. And then we were entering production by the end of '25. We continue to, after Matupa production and Borborema in full, annualized by the end of '25 reaching the 450,000 gold equivalent ounces of production. And again, as you could see, we did not put the construction CapEx for Matupa in our guidance because this still requires licensing, then needs to be approved by the Board to start construction. Then we will revise the guidance for CapEx, but we are now moving the process to reach those milestones.
[Operator Instructions] Our next question comes from [Itakalis Cicadum].
I think if he's making a question, he is on mute.
I'm afraid he gave up. Itakalis, you can activate your microphone. Please wait while we poll for questions. Next question from Guilherme Nippes with A40 Club Investimentos.
This is Guilherme Nippes from ITV. I have one question here. What do you guys expect for Almas' operations given the contractor issues that you faced during the last quarter? Just to make sure I understood, we could expect operations to be normalized in the first quarter 2024, so starting the year with normalized operation to be on track to deliver the production guidance ramp-up for 2024?
Thank you for the question, Guilherme. Yes. As we finished the year with the movement at the mine at the speed as it should be, so we already entered January and Q1 of '24 at the expected speed of production in Almas. We are very much comfortable to be reaching the full year of the production of the year 2024 financial guidance.
The question-and-answer section is over. We would like to hand the floor back to Mr. Rodrigo Barbosa for the company's final remarks.
Thank you all. As I mentioned, a very important year, important milestones, ZERO lost time incidents, $88 million of recurring cash flow, $28 million of dividend paid at 6% of dividend during the year, third year in a row that we have reached the highest dividend, one of the highest dividend yields in the sector in the world. We finished construction of Almas on time on budget. We ramped up on time on budget, setting new benchmarks in the world for building greenfield projects. We started construction of Borborema, fully funded already during the Q3, and we did all that doing it with a real ZERO lost time accident. Very proud of what the team is achieving. Yes, we had some challenges in production. I would invite you to see that we finished the fourth quarter without those challenges. We fixed the operations in Minosa, Almas is already at the full running rate. Apoena also with a very strong plan to increase production during the year of 2024. And Aranzuzu very stable for the year of 2024. And then we continue to build Borborema in '25. We will add production of Borborema along the year, so we will continue to show growth on every quarter from here until we complete Matupa project. I thank you all for the quarter, and I invite you also to follow up with our update on resource and reserves that will be on the AIF and then we will be updating the market also with the milestones as Borborema is being built. Thank you again, and feel free if you have any additional questions, you can send a message to our Investor Relations, and we'll be glad to answer your questions. Thank you.
Aura's conference is now closed. We thank you for your participation and wish you a nice day.