Aura Minerals Inc

TSX:ORA

Earnings Call Transcript

[Operator]

Good morning, ladies and gentlemen. Welcome to second quarter 2024 earnings call. This conference is being recorded, and a replay will be available at the company's website at auraminerals.com/investidores/. 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. [Foreign Language]

[Operator Instructions]

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 Aura's 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 will turn the conference over to Rodrigo Barbosa. You may begin your conference.

[Rodrigo Barbosa, executive]

Thank you all, and good morning. Thank you for also being here with us. I am glad to be here to present again the second quarter of 2024. I will, as usual, present an overview about the operations and how we are progressing with our growth projects. And then, Kleber will go more details on the results.

The second quarter, again, we did a very strong quarter in terms of results and cash generation, while we continued to advance in Borborema, although as we were projecting during the mine sequencing, this Q2 is the weakest compared to the other quarters of the year. And we had a change in contractor in Almas, which I will explain further, in order to reduce costs, that has already completed. So we are now well positioned to have a very strong Q3 and also very strong Q4. We project to have a stronger second semester compared to the first semester, together with the lower cost and higher gold price, which give us a chance to continue to improve our results along the year and have a very strong year in 2024.

So, in terms of production, as we were projecting a weaker quarter compared to Q1 and also Q2 and Q3, together with the change in contractor in Almas, we reached a production of 64.3 (sic) [64,300] gold equivalent ounces, coming from [ 68,000 ] last quarter, and now we are projecting to be above 70,000 per quarter during the next -- during the second semester. [ 64,300 ] is already 33% increase when you compare to last year. We will see the results of the inflection in terms of production in the last 12 months that happened last year, and it will continue to move upwards during this year and then also next year when Borborema starts the production.

In terms of EBITDA, although we had lower production compared to Q1, higher gold prices allowed us to reach a $56 million of EBITDA, and there's a strong EBITDA again. And I would highlight that if you add Q1 EBITDA and Q2 EBITDA, we are reaching close to $110 million on EBITDA during this first semester, which is weaker than projected in terms of production than second semester. It's $110 million with a gold price of $2,173. And now, we are going to stronger production to Q2, while gold continues to be traded at closer to $2,400 or above $2,300 for the second semester, which will position us to have, again, a very strong Q3, stronger than Q1, Q2, and also Q4 for the year.

In terms of all-in sustaining cash costs, we had a slight increase of $41 compared to the first quarter of 2024. That comes mostly from lower grades that we reached in Apoena with the highest strip ratio and also the change in contractor in Almas. For the second -- for the third quarter and fourth quarter, Almas has already -- we already changed the contractor. We are already producing close to 4,500 ounces to 5,000 ounces of gold per month, [ while at ] Apoena, we will reach a higher grade. So we should see also our all-in sustaining cash costs improving or decreasing in value for the next quarters.

Within that EBITDA, Kleber is going to also share with you, we had a nonrecurring accounting event that affected our net income. That comes from good news. While gold price continued to increase, we had to market-to-market our options. So, that also is a nonrecurring accounting losses that goes to net income, together with an exchange rate that changed reais coming from BRL 5 to BRL 5.5, BRL 5.6 during the quarter.

With the strong cash flow that comes from the first semester, we also paid dividends close to $25 million dividends, plus $4 million of share buybacks. So, that also continue -- we continue to give cash back to our shareholders, while investing in growing. If you add the dividends we paid along the last 12 months, that together with the share buyback is reaching 8.8% of yield to our shareholders, which has put us -- continue to put us amongst the highest dividend yield in the world for the gold sector.

During the quarter, we also acquired 2 important prospection projects, Pezao and Pe Quente, and we now have an option to do a drilling program that will compound together with the Matupa project so that we can add more resources and reserve into the Matupa and extend the life of mine, although Matupa, we already have enough to do the payback and see good returns. It's still 300,000 ounces of reserves. And we expect with Pe Quente and Pezao, and then together Bananal, to significantly increase our resources and reserves in the project. And we'll do the drilling program during the second semester, and then we will update the market accordingly as we have the results.

We also published our -- I would invite all the investors to take a look on our sustainability report that we had recently published. This is the second report that we published, and we should do -- continue to do so along the next years, giving up full transparency of the Aura 360 concept, where we also look into the impacts over the communities and the environment, and also within our employees and everything that we do.

In terms of safety, as we always share with you, we broke our internal record last quarter in Q1 that 1 year, in all the operations, without any lost time incidents. Unfortunately, in Apoena, we had an incident, but we continue to do a very strong incident report where we have 21 months in Aranzazu, 20 months in Minosa and 24 months in Almas without any lost time incident. And also, in the construction of Borborema, we don't have any lost time incidents. [indiscernible] we continue to monitor on a monthly basis with independent consultant to check our structures -- our technical structures, and all our structures are in compliance and comply with the current legislations.

So, on the left side on this chart, I would -- on the line on the left chart, this is the last 12 months' production. As you can see, since Q2 last year, where we reached [ to do ] the challenges and lower grade -- challenges in Honduras and lower grades in Apoena, we reached the lowest level, 228 (sic) [ 228,000 ] gold equivalent ounces produced. Every quarter after that, in the last 12 months, we've been increasing, and that increase comes from -- the challenges in Honduras has been already addressed and we are producing at running rate, as we can see on the right side, 19,000 ounces per quarter. Then we also have -- we have higher grades in the second semester in the fourth quarter of this year in Apoena. And Almas started commercial production during Q3 last year.

So, in every quarter now, we are having a stronger production compared to last year, and that put us, in the last 12 months, an increase, so from 228,000 in Q2 2023, now at 266,000 in the last 12 months. And again, as we will have second semester stronger than the first semester of this year, we should continue to see improvement on the last 12-month production, Q3 and Q4, when it should be stabilized. But then, I would also invite the shareholders to take a look on the Borborema project, which I will highlight on the next slide, that should start to ramp up by Q1 next year. And that will also continue to add ounces into our last 12 months. And Aura should continue to increase production, while -- as we will see, we can -- we are meeting the guidance in cost -- all-in sustaining cash costs, actually the second semester should be strong, better than the first semester. And then, next year, Borborema enters with a lower all-in sustaining cash cost compared to our average. So Aura will continue to grow, decrease costs, while gold prices continue to be strong. Again, we had -- first semester realized close to $2,170 per ounce. And now, gold price is being traded at close to $2,400 per ounce. So, that combination of more production, lower cost and stronger gold price will boost our -- continue to boost our EBITDA for Q3 and also Q4.

On the right side of this slide, on the bars, as you can see, Aranzazu very stable compared to Q1. Apoena, where we reached lower grades that was already projected during the mine sequencing, we're transitioning from Ernesto to Nosde. So, that transition reduced our grades, increased strip ratio, but we should be also now entering higher grades with more productivity in Apoena, so that we will be able to meet the guidance.

Minosa, again, very stable, continues to be strong. We fixed all the challenges from last year, and then, this being the third, fourth quarter that we had strong production between 18,000 to 20,000 ounces per quarter, and we should continue to see those kind of productions for Q3 and Q4.

Almas [ were differently ] that we were projecting -- we did not project the change in contractors. So that's where we had lower production compared to our internal. But due to the change in contractor, Almas should be running between 4,500 to 5,000 gold production -- ounces of production per month. We had -- in April, it was close to 2,200; May, 3,500; and now, June reaching 4,800, which is the running rate that we should expect for the upcoming month in Almas, so that that we are very confident that we'll be delivering into the guidance.

So, next slide. In terms of all-in sustaining cash cost, as you can see, it's been very stable since Q4 last year, hovering around the $1,300 on all-in sustaining cash costs. Last quarter, we had a last -- last Q2, we had an increase that came from mostly lower grades in Apoena, which we don't expect to have that lower grades in Q3 and Q4, and also higher costs due to the transition in contractor in Almas. Just to give an idea, we are now coming from a running rate during the first quarter and a little bit on the second of BRL 17 per ton on the contractor, now we have reduced to BRL 13.5 per ton with the tons moved with the contractor. So that's a significant, more than 20% decrease, putting us in a very strong position to have a higher production with a lower cost. So, that will also boost our results during the second semester.

As already mentioned, we are -- during the first semester, the production reached 133 (sic) [ 133,000 ] gold equivalent ounces. This is very much within the middle of the guidance for the year. However, as I mentioned, second semester will be stronger than first semester, which puts us on the direction to be on the stronger health in terms of production, and that -- the reflection of this will also happen in all-in sustaining cash costs, where we are already close to the low of the guidance. So we should continue to improve all-in sustaining cash costs. So we should be, during the second semester, at the low of the guidance in terms of all-in -- in terms -- as a reflection of no change of contractor in Almas and also higher grades in Apoena.

In the CapEx, on the right side of the slide, as you can see, we are very much in line on the CapEx for exploration and also maintenance and project expansion. We are on the first semester below the half of the guidance, but that's because most of the expenses and investments and the cash disbursement for Borborema happens on the second semester, so we continue to maintain our guidance for the year. And actually, Borborema, as we will see in the next slide, is being very much in line in terms of schedule and budget.

So, as I was mentioning, Borborema, we are already 40% complete, which is very much within our schedule and within our budget, again, highlighting the numbers of this project that is not being priced in our shares. This project, we did a feasibility study with 812,000 ounces of reserves and the gold price at close to $1,700, and that was giving us an NPV of $182 million. Only adjusting the gold prices to $2,300, this NPV is already at $440 million at a $2,300 gold price, and gold price is already being traded above the $2,300. But also -- and more importantly also, we are considering this feasibility study 812,000 ounces of reserves and that we already have close to 2 million ounces of resources that mostly of this can also be converted into reserves, as we have the permits to move close to 5 kilometers of one road that's already in progress. And then, we expect within less than 1 year to have the permits, and then from that another 1 or 2 years in terms of construction. So this project can have more than double the reserves with that permit. That will significantly boost our NPV and returns in this project.

And Borborema, as we did with Almas, we're applying all the fast track going to production. It's easy to build, easy to operate. We are mounting the plant, while we are -- we did all the basements, and we built a lot of the parts aside from the plant so that when mount -- we're mounting altogether in the fast track process during Q3 and Q4, and ramp up is scheduled to have -- to start in the first quarter next year.

So with that, I will pass to Kleber to go into the results, and then I'll come back with the questions and answers and then to wrap up all the -- our projects.

[João Cardoso, executive]

Thanks, Rodrigo. Good morning, everyone. Okay. So this quarter, despite the fact that Rodrigo was mentioning that we saw a slight decrease in our production compared to the last quarter and that being the lowest expected production quarter for the year, we saw an increase in both net revenues and EBITDA in this quarter compared to the last quarter. So in terms of net revenues, we reached $134 million now in Q2, bringing the last 12 months to exceed $0.5 billion at the end of Q2, which is a record high in the history of Aura. We have never reported last 12 months revenues above $500 million.

Adjusted EBITDA, we're going in the same direction. We see also an improvement compared to the last quarter, now achieving $56 million in this quarter, coming from $53 million. If we compare it to the same period of last year, we more than doubled the EBITDA in this quarter. And then now, accumulated for the last 6 months, we have $180 million [ EBITDA ] accumulated, which already is significantly higher than the EBITDA that we reported last year, which was $134 million. So, keeping our expectation to meet our production guidance, cash cost guidance, and considering current gold prices, we should continue seeing, in the next quarters, both the quarterly EBITDA and also the accumulated last 12 months EBITDA increasing going forward.

When we come to the net income, we were reporting a $26 million loss in this quarter. That is entirely explained by either non-cash or non-recurring losses. Most of that, as Rodrigo anticipated, is first, as a result of continual increase in gold prices. The gold prices increased by over $100 between the end of the first and second quarter. We generated non-cash losses related to our gold derivatives. And also effects -- impact because of the Brazilian real depreciated 11% this quarter. Both factors are very positive actually from a business side. Of course, gold prices -- higher gold prices is positive. Because we export metals from Brazil, it's good if the real devaluate. But then, we see on these occasions, these non-cash losses in the net income. And we are [indiscernible] specific slide in more detail about that.

Then finally, in terms of cash and net debt, our net debt achieved $142 million at the end of the quarter, increasing from the previous quarter, as expected, as we continue to invest to build the Borborema project. And also in the quarter, we paid $29 million between dividends and share buybacks. With this net debt at the end of the quarter, our net debt over EBITDA achieved 0.8x at the end of the quarter. So we're still very comfortable in our cash position. It's still comfortable above $190 million at the end of the quarter.

Okay. Here, now we bring the details for explaining the change in the cash position throughout the second quarter. So here on the far left side of the page, we see, we started the quarter with $214 million. Then as a reminder, on this left side here on the page is what we call adjusted free cash flow to firm, which is the cash flow generated by the 4 mines in production, not including how much we're investing to grow the business in either expansion or reserves and resources, we see was a very strong quarter. We generated $37 million in cash. If we exclude changes in working capital, which we had $8 million nonrecurring temporary construction, the cash flow would have been close to $45 million, so it was a strong quarter, again, as Rodrigo mentioned, in a quarter which gold prices were close to $2,300.

In the middle here of the chart is the investment for growth. So we invested another $5 million in the quarter in exploration, and $17 million is mainly the Borborema construction. And then to the right side is what we call the financial items. The biggest one was the return of capital to the shareholders, dividends and share buybacks.

And I would like to highlight here also other 2 items. One is, we see FX impacting cash and equivalents of $11 million. This is not a cash consumption. The reason we see this negative $11 million is because Borborema holds most of its cash in Brazilian reais in Brazil because most of the CapEx expected to complete the project will be incurred in Brazilian reais. Because the Brazilian real went from BRL 5 to BRL 5.55, so 11% depreciation in the quarter. When we convert that cash in real to dollars, we -- it seems we have less dollars. But again, we don't expect that to translate in free cash flow loss because the CapEx is going to be incurred in reais.

And the second item I'd like to show here is the derivatives and others. We have a $2 million loss -- cash loss here, which was how much in cash, the net payments we paid to the banks to remove the credit support agreements, which are the agreements that allow the banks to call margins [ against foreign ]. So, in the second quarter, we did a negotiation. In the end, we end up paying a net amount of $2 million in cash, which we're going to see when we see the net -- there was a $13.4 million impact in our P&L, but the net cash impact was just the $2 million we see here.

In the quarter -- so in the semester now, it's the same analysis for the semester. We see the free cash flow to firm of $53 million. Investing $54 million of significant amount to grow the operations: $34 million, mainly the Borborema; a significant amount also in expiration, $10 million in the first 6 months. In the financial items, the main items are the ones that I explained before.

And then here on this page, we bring a bridge explaining the items between the adjusted EBITDA that we saw before in the net income. This quarter, we bring a little bit more details because of the items that impact the net income this quarter. So we see, as we saw before, EBITDA, we start with the $56 million adjusted EBITDA. When we look at that by business units, Aranzazu, once again, the strongest results with $23 million. Minosa came close, a very good quarter. $19 million in EBITDA in Minosa. Apoena, despite being the most difficult part in terms of lower production and higher cash costs, also $7.5 million adjusted EBITDA. In Almas also, it's a positive highlight with $11 million EBITDA, despite being the quarter where we changed the contractor and had some impacts also in production and cash costs.

Amortization and depletion, at $15 million, came according to our expectations. And then, the ones -- when we detail a little bit more of the financial items, we were reporting $45 million in financial expenses this quarter. Again, it's -- most of that didn't translate -- or we don't expect to translate in cash losses. Out of those $45 million, the main items are $12 million the market-to-market accounting losses because of increasing gold prices for the Borborema-Almas gold derivatives, as we saw in the last 2 quarters. We see here the $11 million FX cash loss, which is related to the Borborema cash held in reais, and the $13.4 million, which was the fee that we agreed to pay to the banks to remove the ability for the banks to have margin calls against the company. We agreed to pay the banks about $13 million, but we had also -- as part of the negotiation we did last year with the banks, we expect to receive $11 million this quarter. So the net amount that we paid in the end was just the $2 million that I presented before.

The income tax expense, as a portion of that, is similar. There was -- when there was a big depreciation of currency, especially the Brazilian reais, we have deferred tax liabilities. We create those provisions that were not expected to become tax payments in the future. That was $7 million in this quarter. Then these items explain the $26 million net income loss.

And from this quarter, as I mentioned, we are starting communicating -- reporting a new KPI, adjusted net income, in which we're bringing back the gain or losses with derivatives and the gain and losses with effects. We believe going forward, it's going to be easier to communicate because of the volatility of gold and foreign exchange. Excluding those 2 items, our adjusted loss would have been only $3 million, of which, if we excluded a onetime and also non-cash loss related to the derivative thresholds of $13 million and the deferred tax liabilities, actually, our net income would be positive $17 million, which is more close to what we see in terms of operational results more consistent.

And with this, we end the presentation and open to questions now. Thank you.

[Operator]

[Operator Instructions] Our first question comes from Ricardo Monegaglia with Safra.

[Ricardo Monegaglia Neto, analyst]

Solid results in the quarter, especially in Minosa and Aranzazu. So, my first question is, could we expect the maintenance of such strong operating rates in those operations, Minosa and Aranzazu, maybe third quarter, not necessarily third and fourth quarter? It would be interesting to understand. And on the other hand, it seems some specific conditions created some sort of perfect storm in Apoena and Almas during the quarter. And you mentioned during your presentation that you expect better figures for Q3. So could you give us more details on the drivers of this better operating performance, maybe a range for grades and strip ratio in Apoena, and a new cash cost level in Almas as operating rates normalize with the new contractor?

[Rodrigo Barbosa, executive]

Yes. I think for Aranzazu and Minosa, we should continue to have strong production, understanding that some volatility quarter-to-quarter. But producing 17,000, 18,000, 19,000 ounces per quarter in Honduras is something that is reasonable. And I think, for Aranzazu, second semester seems much equal -- or much likely the same of the first semester, with some minor deviation, either for less or for more. Then Almas, as I mentioned, we lost some 3,000, 3,500 ounces during the change of contractor. And now -- so we should expect to have close to 4,500 ounces of production per month under a lower cost. So, we're very comfortable reaching the levels of the guidance during the second semester in Almas. Actually, we are already reaching this in June, right, in Almas. Then Apoena, as you mentioned, we had -- and that was projected to have lower grades during the Q2 and higher strip ratio. So we are comfortable that during Q3 and Q4, we should start having a higher grade and lower strip ratio, which will put us achieving at least in the middle of the guidance that we gave to the market in Apoena. So we are very comfortable with the projections. We are very confident with the guidance. And we're very comfortable to share with you that we will have the second semester stronger production overall compared to the first semester.

[Operator]

Our next question comes from Edgard de Souza with Itau BBA.

[Edgard Pinto de Souza, analyst]

Congrats for the consistency of the results, the stabilization of production in Minosa, the company on track to deliver the guidance. This is something that enhanced the company transparency, also the company moving with the projects. So my first question would be regarding gold prices. If Rodrigo can comment a little bit on your expectations for gold prices for the next few years and also for the long term, given these higher gold prices that we have been seeing, if you think that we should factor in above historical levels for gold prices in the long term, this would be very helpful.

And also, my second question would be regarding Matupa. We know that Matupa has a solid NPV, but you are also moving with M&As, some exploration developments in the region. So my question would be, when do you think we can expect the approval of Matupa by the Board? And if you think that there is a chance that we could see another project may be coming from an M&A or any changes into Matupa's projects before the start of the construction?

And lastly, a very quick one. You had those issues with the contractor at Almas. What have you been doing to prevent this in Borborema? Have you already started conversations for the contractor in Borborema? What we can expect in this front?

[Rodrigo Barbosa, executive]

Thank you, Edgard. I'll try to be very straight to the point. On gold prices, if we understand what drove gold prices up, I think then we can project if that should continue or not. So when we look to the last 6 months or to last year, we had a unique situation where gold price increased, while real interest rates also increased. That never happened in the past. And the reason for that comes from probably the consequences of the wars, particularly in Ukraine, where the world froze all the U.S. dollars that Russia had all over the world. So, that triggered many other central banks to start buying -- diversifying from U.S. dollars and buying other real assets such as gold. So that's why you also see central banks in China and other non-so-friendly countries to the United States diversifying.

Also, another thing that pushed the gold price up is the record high level in terms of fiscal deficit, either in the United States and Europe. While they have the highest debt to GDP, they have the highest fiscal deficit, and the world doesn't -- and continue to print money. And when you print money, that loses value. So not necessarily gold prices only appreciated, but perhaps U.S. dollars and other fiat currencies are devaluating because of that. So if you understand that this is the reasons, and then you start projecting.

Do we think that the world will start cutting expenses and being -- and have a fiscal discipline? Number one. I don't think -- I don't see that conversation coming in, for example, in the new elections in the United States. Number two, do we see the world becoming more stable in terms of geopolitics? We don't see that, right? So we see that things escalated in the Middle East, so it's been very unstable in the last -- and it's actually deteriorating in the last couple of weeks.

And then, there's another factor that gold price increased while interest rates increased. That never happened. Normally, gold price increases when interest rates decrease. So if you put them on the top that we are now projecting interest rates to decrease, you can also maybe project that the gold price might continue to increase. So I don't see today variables that would drop the prices in gold. Of course, there's obviously going to be volatility in the short term, but we believe, and many other reports and analysts believe that gold should continue to appreciate.

Then second question you asked about Matupa, we are in the final process of getting the license to start construction. We did those acquisitions. We are drilling also in Bananal. Yes, we will analyze how they will compound together with the project, but yet, we have no decision yet. Our decision is to start construction as soon as we get the final license. However, those conversations are going to happen in the upcoming weeks when we will decide the right timing for us to start the construction of Matupa. In parallel, we continue to monitor and have the variables, initiatives on M&As. We cannot control when it is going to happen. There's no negotiation in place right now, but there are many projects that we are taking a careful look, [indiscernible] are taking careful look so that we can have a new M&A in the next 1 or 2 years.

Then your final question was about the contractor in Almas. That happened because we hired one contractor that had a significantly lower price when we did the bid process during -- over a year ago to start in Almas. We knew that he didn't have a lot of experience, but we took the risk, and we believed that we could work together with him in order to transfer know-how and then for them to be able to perform at an efficient level. Unfortunately, that did not happen. He could not achieve the productivity that we expected. The trucks and the equipment were not capable of doing so. So we had to hire additional, which increased our pricing. Now, we transferred to a new one.

Then, [ last with ] Borborema, yes, there's a lot of lessons learned in Borborema. Even in the construction of Almas and also in the operations, that's been applied. And we actually now already did all the bid process in order to hire a contractor in Borborema. And we are putting in -- we could combine, at this time, a good price, best price with a very strong company that has a very good know-how in terms of operation for Borborema.

[Operator]

Our next question comes from Guilherme Nippes with XP.

[Guilherme Nippes, analyst]

Congratulations on the results. So, Guilherme Nippes from XP. I have 2 questions here on our side. So my first question is for Apoena. Production and costs were affected by the higher strip ratio and lower grades, mostly given the transition from Ernesto to Nosde. So my question is, when do you expect production and costs to normalize in this operation?

And my second question is, if you could give us any updates on the other projects, including Serra da Estrela, Altamira? And if you could also share your thoughts on potential new M&As? These are my questions.

[Rodrigo Barbosa, executive]

So, in Apoena, we should see a stronger Q3 compared to Q2, and then even stronger in Q4. If you see, [ for coincidence ], Apoena has been able to achieve a stronger Q3 and Q4 over the last 3 to 4 years. So we should see that improvement also during Q3 and Q4, understanding that we will not reach such a higher grade that we reached in Ernesto a couple of years ago. But we will see improvement in Q3 and Q4, which give us a very comfortable position to be within the guidance. Although if you multiply the first half production by 2, you'll see that we won't be at the -- we will not be reaching the low level of the guidance, but as Q3 and Q4 will be stronger, we will be within the guidance on Apoena. So we're very comfortable that we'll reach either on the production, but also on the cost side. Actually, now with the further devaluation of real, the cost side is improving in U.S. dollars.

Then you asked about Serra da Estrela. We have continued to do exploration program. We renewed the option that we had on this project, so -- because we had very interesting and strong results on the first year of exploration. We are consolidating the information. There was a -- and that area has a very strong rainy season that you normally cannot do drilling, which is finished in May, June. And now, we started again doing the drilling campaign, and we expect to be able to publish some reports by the end of this year or early next year.

In terms of M&A, we are continuing to monitor the market. We like both, either copper, gold, in the Americas. That's our focus, something that is close to production or in production, or with the reserves significantly already discovered. And so, we can work on the feasibility study, build the project and then operate. We -- that's our main focus, while we will play opportunistically, as we did in Altamira, which is at early stage. That's why we did a minor participation that they will have a few years of exploration programs, which we are monitoring. And then, once they consolidate better understanding of resources and reserve, then we can have another discussion that if we should increase or not our participation in that project.

[Operator]

Our next question comes from Paul Renken with VSA Capital. How long will the negative performance on currency and gold hedging continue to impact the balance sheet if, one, the gold price holds around current levels, or two, rises another $100 per ounce?

[Rodrigo Barbosa, executive]

Okay. I'll let Kleber answer this. Just [ 30 seconds is ] -- hopefully, we will continue to have those kinds of not cash losses because that means that gold price is increasing and most of our production are assessing those higher gold price. But Kleber, please?

[João Cardoso, executive]

Yes. Rodrigo stole my comments, but yes, so FX -- yes, both impacts in terms of business is positive. And a higher gold price is good for the business, FX devaluation as well because it reduces our cash costs. So if gold prices stay where they were at the beginning of -- at the end of Q2, we shouldn't see any additional market-to-market losses in the next quarters. So gold prices now is about $100 above where they were at the end of Q2. So if gold prices stay above and keep increasing, we should continue seeing these non-cash losses, which, as Rodrigo said, is positive. Just as a reminder, about 25% of our production -- 20% to 25%, depending on the quarter, is hedged with a cap of $2,400. So if gold prices go above $2,400, what means that is we are capped at $2,400 1/4 of our production, but benefits of the upside for the remaining most of our production, while we still incurring accounting losses. So in general, we hope it's positive. Gold prices go down, we're going to see -- again, we expect to continue seeing a loss. And to your question, if gold prices stay where they were at the end of the quarter, that should have a 0 impact in the next two quarters.

[Operator]

Next question from Rabi Nizami with National Bank Financial. Can you tell us more about the organizational changes, particularly the addition of corporate-level technical roles?

[Rodrigo Barbosa, executive]

Yes. Thank you, Rabi, for being here with us. As we are continuing to increase production and complexity, we -- in 2018, we had 2 operations. Then in '19, we restarted at Aranzazu -- actually '18, restarted Aranzazu, so 3 operations. Now we built Alma, so 4 operations, building Borborema, the fifth, and then, we have Matupa, Serra da Estrela, and hopefully, a few others. So that's becoming more and more important on corporate to have a very strong technical team in order to keep the stability of our operations. So that's why we are bringing Henrique, which is the General Manager -- the Director of Aranzazu, that has been stable for the last 4 years, into corporate, so he can, together with Glauber and the team, help us on the technical side to maintain or even improve our stability of operations and also think about the construction and new M&As that should be coming in, as I mentioned, in the upcoming years. So that's a part of the strategy of enhancing our technical abilities to have very stable operations, understanding that we'll continue to have slim structure, a very thin corporate in order to be very productive and focusing on what is important, while all the mines continue to have their [ liberdade ], they continue to have the freedom to make decisions under the culture of our 360 concept.

[Operator]

Thank you. 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.

[Rodrigo Barbosa, executive]

So, thank you all. Again, just wrapping up, strong quarter, although a weaker production compared to Q1, very now much in line to meet the guidance. Actually, we should be on the top range of the guidance, as I mentioned, on the first half of the guidance for the -- with the production in the second semester. Lower -- we should lower also all-in sustaining cash costs during the second semester, while gold price continues to be strong, so that will significantly continue to boost our EBITDA, cash flows and results for Q3 and Q4, and continue to build Borborema, which should start ramping up next year. So the production of Aura reached the bottom, as I mentioned, by Q2 last year. And now, every quarter, we are improving in terms of our last 12 months. We will see that in Q3. We will see that in Q4, and then we'll have next year, then we'll continue to see that improvement in terms of production, cash cost. And gold price, we don't control. But as I mentioned here, with Edgard's question, we believe we will continue to be strong, if not stronger, so that will boost our results for the year, and we'll be positioned -- very well positioned also to have a strong 2025.

So, I thank you all, and we'll continue to update the market on the exploration and production as we move along the next quarter.

[Operator]

Aura's conference is now closed. We thank you for your participation and wish you a nice day.