Lundin Mining Corp
TSX:LUN
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Lundin Mining Corp
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Good morning, ladies and gentlemen, and welcome to the Lundin Mining First Quarter 2023 Results Call and Webcast. [Operator Instructions]. This call is being recorded on Thursday, May 4, 2023. I would now like to turn the conference over to CEO, Peter Rockandel. Please go ahead, sir.
Thank you, operator, and thank you, everyone, for joining us today. I will draw your attention to the cautionary statements on Slide 2 as we will be making several forward-looking statements during the prepared remarks and likely during the Q&A. On the call to assist with the presentation and answer questions are Teitur Poulsen, our Senior Vice President and Chief Financial Officer and Juan Morel, our Senior Vice President and Chief Operating Officer. Before we discuss our results, I would like to complement our team on an exceptional start to the year with health and safety. Our efforts across the company with visible felt leadership and the implementation of FRM, fatal risk management has brought a discipline that is already impacting our team. Health and safety has always been a key value at Lundin Mining. And while we have made good progress, we will continue to strive for even greater results.
Moving to our quarter. We delivered solid operating results across the portfolio, producing nearly 103,000 tonnes of copper-equivalent metal. Copper production increased by approximately 10% over the fourth quarter of last year with particularly strong performance in Candelaria and Chapada operating as per plan during the rainy season. Zinc production also increased 10% quarter-over-quarter, with the zinc expansion project at Neves-Corvo continuing its ramp-up and achieving record quarterly production in addition to Zinkgruvan performing well. With the strong operating performance, we generated attributable net earnings for our shareholders of over $145 million and adjusted EBITDA of over $335 million. Operating cash flow, adjusting for the working capital draw was $235 million and free cash flow from our operations is over $70 million. Our balance sheet remains very strong with $1.7 billion of liquidity.
As Teitur will speak too, we are realizing the benefits from the foreign exchange hedging program entered into late last year. And in April, we initiated a diesel hedging program to protect the operating cost structure at Candelaria. Our focus continues to be on growth. However, we will also continue to be very disciplined in how we allocate our capital. With yesterday's financial results, our Board of Directors has maintained our peer-leading regular dividend of CAD 0.09 per quarter or $0.36 on an annualized basis.
On the growth front, we are very excited about our recent acquisition of Caserones. I was in Chile last month with a number of my colleagues, and much of the integration work has begun. Both our Candelaria and Caserones team are looking forward to working together to create even further value. Also, it was evident after spending time in numerous government and regulatory officials as this transaction has been very well received in country.
Caserones complements our existing operations, and we believe will enable us to unlock synergies in the future as we integrate our teams and resources. In particular, Caserones proximity to Candelaria will allow us to leverage our knowledge, experience, relationships, supply chains and potentially existing infrastructure in the region. The transaction is immediately accretive on key cash flow and other financial metrics, and we will continue to remain low financial leverage post the acquisition. We also continue to advance our large-scale Josemaria copper gold project. Detailed engineering currently stands at 40%. As I'm sure most on this call are aware, much has occurred in the Vicuna district since our acquisition of Josemaria, including our most recent purchase of Caserones.
We will continue to progress our Josemaria project in a prudent manner and take into consideration many of our learnings over the last year with respect to the region. We announced the first mineral resource estimate for the Sauva deposit in February. The maiden estimate is nearly 180 million tonnes of indicated resource containing 1.3 billion pounds of copper and 1.1 million ounces of gold. We expect the estimate to increase with ongoing exploration efforts.
At Candelaria, study work evaluating expansion of the underground mines to add roughly 20,000 tonnes of copper per year to the production profile has been completed. With potential changes to mining royalties and taxation in Chile moderating from earlier proposals, we are looking forward to updating the study within any new information and making an investment decision upon receipt of our 2040 EIA.
In summary, Lundin Mining delivered a strong first quarter and is well positioned to deliver on our strategy of operating, upgrading and growing a base metals portfolio that provides leading returns to our shareholders.
I will now turn the call over to Juan Andres to provide a summary of our production results.
Thank you, Peter. Well, as Peter mentioned before, we produced approximately 103,000 tonnes of copper-equivalent metal in the first quarter. Copper production of 61,500 tonnes increased 9% over the fourth quarter of the last year. Candelaria had a strong first quarter processing over 7.2 million tonnes of ore. Chapada copper production declined quarter-over-quarter as expected with lower head grades and recovery rates as the operation managed the first quarter rainy season well, as Peter mentioned before.
Copper production at Neves-Corvo, Eagle and Zinkgruvan all increased over the fourth quarter of the last year. Copper production is tracking well to annual guidance of 236,000 tonnes to 260,000 tonnes. Zinc copper production increased 10% quarter-over-quarter to over 48,500 tonnes. Ramp-up of the zinc expansion project at Neves-Corvo progressed in line with trends delivering its fifth quarter of sequential production improvement with production increasing 13% over the fourth quarter of last year. Zinc production throughput increased 10% over the last quarter processing 510,000 tonnes of ore and recovery improvements to 79%. Zinkgruvan has had a good start of the year, producing nearly 20,800 tonnes of zinc. Zinc production is tracking well to annual guidance of 180,000 to 195,000 tonnes as production is expected to increase over the course of the year with initiatives to enable ZEP to consistently achieve nameplate capacity and recovery improvement.
Nickel production of 3,700 tonnes was lower quarter-over-quarter as expected with planned grade profile at Eagle. Both copper and nickel production at Eagle were impacted in the first quarter by unplanned downtime of one of the ball mill, which has been rectified. And rehabilitation work on the main ground that limited ore production from Eagle East as well as winter weather conditions in the Upper Peninsula to a lesser extent. Even with the slower than planned start of the year at Eagle, nickel production is tracking to our annual guidance of 13,000 to 16,000 tonnes.
Gold production was 36,000 ounces for the first quarter with Candelaria having a strong start of the year and Chapada having operated through the rainy season as planned. Gold production continues to track well to our annual guidance of 140,000 to 150,000 ounces. All in all, an operationally strong start of the year.
I will now turn the call over to Teitur to provide a summary of our financial results.
Okay. Thank you, Juan Andres, and good morning, everybody. Moving to Slide 6. As Peter mentioned, we generated meaningful adjusted EBITDA, operating cash flow and free cash flow from operations in the first quarter. Starting with the top line, we generated over $750 million in revenue. Our sales remain leverage to copper with the metal generating 70% of the quarter's revenue. Zinc and gold contributed 13% and 8%, respectively, while nickel contributed 6%. Other revenues include sales of lead, cobalt, PGMs, iron and other byproduct metals. With the price of copper and several of the other metals we produced, increasing during the quarter, revenue was positively impacted by $40 million of prior period price adjustments.
A summary of the realized copper zinc and nickel prices for the quarter are presented in the charts on this slide. Ultimately, we realized prices of $4.49 per pound of copper, $1.39 per pound of zinc, $7.36 per pound of nickel and $2,074 per pound of gold for the first quarter, including the adjustments. At the end of the first quarter, approximately 89,000 tonnes of copper were provisionally priced at $4.08 per pound and remained open for final pricing adjustments. Asset over 41,000 tonnes of zinc at $1.33 per pound and over 2,000 tonnes of nickel at $10.75 per pound.
On Slide 7, production costs totaled nearly $420 million in the first quarter, an improvement of 7% compared to the fourth quarter of last year. The decrease is largely a result of improved and prices of consumables, primarily at Candelaria and Neves-Corvo and particularly diesel and electricity compared to those of 2022. The chart on this slide presents the relative impact of the key drivers on the total operating and capital costs by operation for the quarter. Candelaria's production cost improved 9% compared to the fourth quarter of last year benefiting from the lower rate electricity contract that commenced at the beginning of this year, which more than halved per kilowatt hour cost quarter-over-quarter. The new PPA with our existing provider also ensures a minimum of 80% renewables in the energy mix, prioritizing wind and solar.
The new 3-year labor agreements with the 2 remaining unions were reached in the first quarter, impacting Candelaria's production costs and cash flow. On a cash cost basis, the impact was $0.08 per pound of copper in the first quarter. Candelaria's cash cost guidance of $1.80 to $1.95 per pound of copper in 2023 remains unchanged. Chapada production costs decreased roughly 20% compared to the fourth quarter of last year. While electricity and realized diesel prices did improve modestly, much of the quarter-over-quarter change, also how the operation is managed during the rainy season with a greater proportion of the new feed being from previously stockpiled ores.
Chapada's cash cost guidance of $2.55 to $2.75 per pound of copper in 2023 remains unchanged. Neves-Corvo production cost increased 9% compared to the fourth quarter of last year primarily due to the higher zinc production volumes. Production costs benefited from the easing of inflationary pressure on consumable prices, in particular, electricity where the realized rate in the first quarter was less than half of that experienced for much of last year. Cash cost guidance is $2.10 to $2.30 per pound of copper in 2023. With improvement expected as zinc and lead production volumes increase with the continued ramp-up of ZEP towards nameplate.
Eagle's production costs improved 10% quarter-over-quarter. So cash costs were impacted by lower nickel sales volumes. Cash cost guidance is for $1.50 to $1.65 per pound of nickel in '23 and is currently trending higher with the expected year-on-year increase primarily a reflection of the planned lower production volumes. Zinkgruvan's production costs were consistent with those of the fourth quarter of last year. Cash cost guidance is for $0.60 to $0.65 per pound of zinc in '23, net of the lead and copper byproduct credits. Capital expenditures are tracking well to our guidance with sustaining CapEx of nearly $160 million in the quarter compared to our full year guidance of $700 million.
Expansionary capital expenditure on the Josemaria project during the quarter were approximately $90 million in support of advancing the project, including the continuation of detailed engineering, procurement of long-lead equipment and preconstruction activities such as road upgrades and geotechnical work.
Lastly, on this slide, we continue to realize the benefits of our foreign exchange hedging program intended to provide better visibility on our USD requirements of future operating costs and CapEx. In the first quarter, we realized a gain of $14 million. Additional unrealized gains bring the fair value of the unsettled contracts to $85 million at the quarter end. As Peter mentioned, in early April, we initiated a diesel hedging program to protect the operating cost structure at Candelaria where we operate our largest open pit mine. We have initiated diesel swaps representing approximately 75% and 50% of the attributable purchases we forecast for the remainder of 23 and all of '24, respectively.
Our key financial metrics are presented here on Slide 8. First quarter revenue, as I said, was over $750 million, which was a slight decline quarter-over-quarter with $35 million less of positive pricing adjustments in the current quarter. We generated adjusted EBITDA of over $335 million and adjusted earnings were over $125 million. Adjusted operating cash flow was $235 million and free cash flow from operation over $70 million. Details of the adjustments are broken down in our MD&A disclosure. We remain in a strong financial position. We finished the quarter in a very modest net debt position of $35 million and today have a net debt position of approximately $93 million.
We have significant liquidity of approximately $1.7 billion. And I think it's fair to say that the strength of our balance sheet and our funding capacity are 2 of the levers that enabled us to acquire Caserones. Upon closing of the acquisition, our leverage will remain conservative given our overall net debt ratio and the additional contribution of EBITDA from Caserones. We will remain well on side with our debt covenants after closing of the Caserones transaction, and our liquidity headroom will also remain at a robust level. Based on our latest disclosed net debt position of $93 million and coupled with the further drawing of $800 million upon closing of the Caserones transaction would leave a net debt position of approximately $890 million before accounting for the likely net cash position that will exist within the Caserones' locked-box transaction mechanism.
The transaction structure is centered on the lockbox principle with a locked-box date being 31st of December last year with a share of debt in [indiscernible] cash balance as that date. This means that by the time the transaction closes later this year, the company that we are acquiring a 51% stake in is likely to have accumulated a net cash position at the point of the transaction closing.
Slide 9 presents greater detail as to the sources and uses of cash in the first quarter before changes in working capital, the direction of and timing of which is heavily swayed by provisional pricing. Our operations generated $235 million in the first quarter, net of $40 million of cash taxes paid. Cash and cash equivalents at quarter end were approximately $185 million, a decrease of roughly $7 million, with cash flow from operations primarily used to fund sustaining and expansionary investments in our assets.
With that, I will now turn the call back to Peter.
Thank you, Teitur. Slide 10 highlights the meaningful scale and material growth of our copper portfolio. As mentioned, we are very excited about the Caserones acquisition. Caserones complements our existing portfolio with large-scale and long-life copper and molybdenum production in a jurisdiction in which we already operate in and know well. For the last 5 years, Caserones has produced approximately 130,000 tonnes of copper concentrate and copper cathode plus [indiscernible]. On a pro forma basis, Caserones would have increased our consolidated copper production by over 50% last year.
Closing of the acquisition remains on track for the third quarter of this year and our technical team is working hard to be in a position to publish an updated NI 43-101 technical port on or prior to closing. As Teitur mentioned, we also have the option to purchase another 19% of Caserones for $350 million and the effective date of the ownership is at the beginning of this year. We continue to make good progress advancing our world-class Josemaria copper gold project and continued discussions with potential partnership groups. We will continue to advance the project in a deliberate and disciplined manner. Candelaria's life of mine has been extended to 2046 with the mineral reserve estimate announced in February. The base case plan of the corresponding technical report does not yet include the Candelaria underground expansion project which has the potential to add roughly 20,000 tonnes of copper production per year, nor does it include the potential restart of the Alcaparrosa mine.
And lastly, on this slide, in February, we announced the maiden indicated resource estimate for the Sauva discovery, and view it as the first of many iterations of increasing mineral estimates to come. I also want to take this opportunity to highlight the significant exploration potential within the emerging Vicuna District on our existing land package. At the top of the figure on Slide 11, with Caserones, we will be acquiring a large package of over 58,000 hectares in Chile of highly prospective and under-explored land with several near-mine turrets ready for drilling. The Caserones claims about the land package of NGEx Minerals Los Helados copper gold deposit in addition to some of NGEx's more recent positive exploration results. The light green and pink shading on the map indicates our Josemaria land package in claims, also illustrated the planned Josemaria infrastructure, including the process plant, tailings facility and the Batidero camp.
We believe Josemaria is well positioned to be the center of future development and expansion for this emerging world-class district. Some of the top exploration targets on the Josemaria property are outlined on the map including Potro Cliffs, Portones, Las Pailas and Josemaria at depth. We will begin drilling on many of these targets this year. In conclusion on Slide 12, we have a very desirable portfolio of long-life quality mines and are advancing meaningful growth projects in a disciplined manner. We delivered solid performance in the first quarter, leading to strong operating cash flows and a strong financial position from which to grow. We remain well positioned both operationally and financially to continue to deliver consistent results for the balance of the year and beyond.
And with that, operator, I would like to open the lines for questions.
[Operator Instructions]. Your first question comes from the line of Ioannis Masvoulas from Morgan Stanley.
A few questions from my side. And starting with Josemaria. It seems to me that the messaging has changed a bit. You haven't reiterated explicitly the time line for a CapEx update in the second half of this year? You now refer to an updated EIA submission by Q2 2024. And you show the slide on the district optionality. What's your latest thinking here on the best way forward for Josemaria and what are the associated dead lines? And maybe if you can share our latest views around the optimal configuration and potential CapEx, that would be great.
Thanks for the question. We continue to progress the technical work, as mentioned in the presentation, but arguably, it's a good observation, probably at a bit of a slower rate. The reason it's a bit of a slower rate is really the findings that we've had over the course of the last year and then also taking into consideration the Caserones acquisition. So we were trying to do a series of trade-off studies, which take time and whether or not we can benefit some with some of the infrastructure that we now have in place. We just thought that would be a prudent approach given the materiality of some of that infrastructure. Also, there has been a lot of exploration success in the region.
And we just want to make sure that some of the decisions we've made with respect to positioning of the mill, et cetera, are still 100% the best decisions given the development in the region. So nothing -- nothing major that's just making sure we're making all the right decisions. And on that front, we're still pushing to make those decisions towards the end of this year. In parallel, we've been very, very busy on a lot of the partnership discussions. So that hasn't slowed down. I've been on the road for the better part of the last few weeks in a few different jurisdictions, and we are looking to maintain that kind of structure, if you will, of a partnership.
The other area maybe I would add is, there has been information kind of coming out of Argentina with a few potential changes on how they deal with blue-chip swaps, currency controls, et cetera. Many of these things would have a pretty material positive impact on the project. So we're trying to get that information and take it into consideration. But it's also difficult because it's an election year. We're starting off with the provincial election then moving to federal. So getting that information kind of finalized is arguably a bit slow at this time line.
Understood, that's very clear and I guess, to your last point, would you expect any major update on the fiscal front before the elections? Or is it more of a 2024 story as things stand?
Yes, I would be surprised if it comes out prior to the election. So it could be a late 2023 arguably and if not, early 2024.
Your next question comes from the line of Ralph Profiti from Eight Capital.
Peter, the MD&A at Josemaria talked about procurement of some long lead equipment. Just wondering what specifically those items are? Where have you needed to get into the queue even though this -- you're now going at a slower rate? Is it sags, is it shovels, trucks? A little bit more specific on that would be helpful.
Thanks, Ralph. Yes, it's more -- we don't need to get in the queue. We were in the queue quite a long period of time ago. So it's mainly on the milling and crushing side. Most of those items, quite frankly, have been complete. And arguably, I would say, at the end of the next quarter, there probably wouldn't really be any outstanding items in the long lead items, if you will, in the queue. So it's just the ones that were ordered quite a period of time ago that are being completed as we speak. And those are the 2 areas, in particular, of focus.
You also talked a little bit about the Josemaria regional exploration on those 3 targets. I'm just wondering when we can get a little bit more of a concise strategy on regional exploration at Caserones, right? Does that sort of fall behind Josemaria in terms of its priority? Or are you waiting just more until you get sort of integration of the asset to look at exploration?
Yes. I would say our exploration teams are already talking. I was just down in Chile for a pretty extended period of time and having meetings both with Caserones and Candelaria, the teams have really hit it off, which is great. So I think this is going to be a pretty quick integration, if you will. And then we focus kind of Phase 2 on the local synergies and then expanded synergies. We've got a fairly extensive process in place, and we have someone that actually is leading that process.
From an exploration perspective, we've already come with a proposal for a budget at Caserones. Keeping in mind that there's about 58,000 hectares at Caserones. So it's a huge footprint, arguably double the size of Candelaria. But we have maybe 8 or 9 specific targets. And one of the ones that's of particular interest, if you recall, some of the most recent drills also came out from Los Helados, we're about 50 meters from the Caserones border. So I think we have a pretty good understanding of the geology of that area and that was -- is going to be a focus. We are getting into the winter stretch right now. So we'll see what we can get done.
But I mean there's no question that both Caserones and Jose Maria are going to be a huge, huge focus for us this year and next year, and we benefited a fair bit of time actually yesterday in our Board meetings outlining the plan to our Board.
Your next question comes from the line of Daniel Major from UBS.
First, just a question on the operational side, it was a good performance in Q1. If I look at the run rate of certain metrics, you look very well positioned versus the guidance for this year, particularly if I look at the ramp-up of the ZEP, Neves-Corvo, I mean you previously indicated a sort of sequential improvement in zinc production through the year, but the current Q1 run rate would certainly be achieving or above guidance. So I guess, is there some upside risk or conservatism built in, particularly the Neves-Corvo guidance for this year? You could probably say something similar around the sort of run rates in terms of throughput at Candelaria. So yes, if you could just give us a bit more color there.
Dan, this is Juan Andres. Thanks for the question. I think we put together a very strong and robust budget for the year. And Q1 is tracking according to the budget. So at this time, we don't see a need to change any of the guidance in either Neves-Corvo or Candelaria.
The second question, at the time presentation when you announced the Caserones acquisition, you made some commentary around -- I think it was a 45-day time line before publishing technical report or updated guidance on the asset. Can we get an update there? And should we expect that before the deal closes?
Thanks, Dan. It's Peter, back to Peter here. Sorry. No, I think when we made the announcement, if you made forward-looking statements that then triggers the time line for which you have to get the technical report out. So our thought is, I think it's best to put the technical report out, if we can exactly at closing. So therefore, we're going to continue to maintain avoiding the forward-looking statements. And right now, from a closing perspective, we are tracking extremely well to probably the very early part of Q3, yes.
Okay and one more, if I could, just on the bigger picture around Josemaria and et cetera. I mean you mentioned in the past looking at multiple scenarios, one stream being sort of offtake type silent partner and the other selling a larger stake to one of the big mining companies. Can you give us any color in your recent discussions as to which pathway is looking like the more likely option?
I've been on the road a fair bit over the last few weeks and meeting with many of these different counterparties. I would say that the proposal that we said from the very beginning, which would be like many of the other South American big, big projects where perhaps you have a major in there and then maybe even a smaller trading house. That would be the most likely structure we would try to accomplish and the discussions we've had to date seem to be supporting that.
So just to be clear on that, that's more than one counterparty bit where the major is an operator is that what we should be thinking?
Well, I would start off with probably one larger partner, as you said. It doesn't definitively mean who the operator would be. And then it just does give you the opportunity to bring in someone smaller, but that would be a second stage approach.
Your next question comes from the line of Bryce Adams from CIBC.
On the back of the Caserones announcement, I was going to ask on around potential upcoming changes to taxes and royalties in Chile. Can we get your updated thoughts on changes to the royalty bill? And when you think that we're likely to see a final outcome?
Sure. Well, as I said, I was just down in Chile and I found the tone was quite positive in this area. We had a great meeting with the Minister Finance, Mario Marcel and myself and Juan Andres spent a fair bit of time with him as well as the Minister of Mines. And I would argue that their tone is being -- every time we meet with them, it's more and more moderated. And in fact, when we were there, there was a proposal put forward for a cap at 48 -- 47%, sorry and that was rejected.
So the trend continues to go in the positive -- sorry, it is a positive trend, so we're quite happy with that. Andres, I don't know if you want to -- because we are both in the same meeting. So I think from where they first started talking way back when on some pretty high numbers, every time we have a meeting, it keeps getting better and better.
When was the 47%, 48% cap rejected? I recall a 50% proposal, but that was going back to earlier in April.
Yes, three weeks ago, approximately, it was a modification presented by the government to the bill.
Your next question comes from the line of Greg Barnes from TD Securities.
Pete, I just want to go back to your answer to Ralph's question about the long lead items. Am I correct in understanding that all of the milling and crushing equipment all the major components have been ordered are in fabrication?
Yes.
Okay. I guess that's good news.
More than fabrication, they're basically complete.
They're complete. Okay. Yes. Secondarily, on Josemaria and the discussions with the government around the stability agreements, are you having sit down face-to-face concentrated discussions with them at this point? And if not, when do you think you actually get to that point where you're sitting down with them and you're hammering out an agreement?
We've had those discussions face-to-face both at the provincial and federal level. And in some cases, we've had actual agreement. I would say just last week that there was further discussion, but it was not face-to-face. And I have just my personal view with the elections coming up, I suspect some of those face-to-face discussions in the near term may get a bit more challenging just to be able to hold.
So is there a structured process around this? Is there a set schedule about meetings and discussions and a working document that you're putting together to pull together a final agreement. I just want to understand what the process is and how concentrated and how focused the discussions are.
Well, there's a working document. But as far as having it on a time line, it's not quite that formalized. And I think, again, it's just because -- I mean, the reality is you could have a new governor in short order, right? So that's why we're just taking a bit more of a cautionary approach on the timing and some of that is actually spilling into the broader Josemaria time line, if you will. You need to get those things out of the way.
Which things out of the way, sorry?
Just elections.
Your next question comes from the line of Stephan Ioannou from Cormark.
Just maybe just a follow-up on Ralph's question as well, just on the exploration. I'm outside of Caserones on that slide you show on Slide 11. Do you think we'll actually see some drilling then at the Potro Cliffs and Portones and Las Pailas this year, just given the success NGEx has had right there as well?
I think that is very much a priority for us. We've already started discussions on whether we can get a couple of rigs over there. You have to just keep in mind that it is shifting into winter season. So that gets a bit challenging. But I would say, from the Josemaria side, it is a very, very much a priority, and we have a view on which ones we should start with first, and we already have some locations in mind. And there's a budget that would be allocated for it.
And you guys have like permits or whatever required to go in and actually put a rig up on all those right now? Or is that still in the works as well?
There are some areas where we have permits, some of that are still awaiting.
Your next question comes from the line of Gordon Lawson from Paradigm Capital.
I just have one easy one for you here. So with respect to synergies at Cesarones, would that include a possible expansion of the [indiscernible] plant could hold in the ?
No, we haven't taken that into consideration at this stage. I mean perhaps it's something down the road, but it hasn't been factored in. Most of the synergies that we're talking about right now, we'll begin on the Chilean side and are focused with Candelaria and also heading all the way down towards Caldera with our pipeline, port desalination plant, things of that nature.
So the low-hanging fruit will be G&A procurement and just sharing of knowledge in certain skill sets that are best achieved at Caserones or at Candelaria.
Your next question comes from the line of Jackie Przybylowski from BMO Capital Markets.
Actually, the question that Gord just asked was basically what I was going to ask. But can you talk maybe about what we're going to see in the technical report that comes out. Are those synergies with Candelaria going to be included in that tech report? Or would that be sort of future upside?
No. It wouldn't be included in the tech report. The tech report would be stand-alone document. Our team is well advanced in that document. I wouldn't anticipate there would be any large surprises in it from previous years of operation. But then we already do separate to that, have a formal strategy that we can perhaps Jackie go through off the call on how we plan to approach the different phases of potential synergies.
And if I can maybe ask -- I know you've sort of answered this already, but if I can just ask again because I just want to be totally clear. On the elections that are coming up in Argentina, can you just talk a little bit about what news flow or what disclosures you might be releasing prior to the elections? Or should we be expecting to wait on essentially any kind of news flow from Josemaria until after those elections are finished. Can you just sort of spell that out for me?
Well, I guess I would say if we have material news and it's pre any election results, we would put that news out. We won't hold anything back. But there are certain aspects of bilateral agreements or negotiations of that nature that are going to be extremely hard to proceed as we get into the finale here on elections. So I just -- anything of that nature is probably are going to come out on the back side.
Does that include the feasibility study -- updated feasibility study?
It's not -- they're not linked. So no, I don't think it will have an impact.
[Operator Instructions]. We have a follow-up question coming from the line of Ioannis Masvoulas from Morgan Stanley.
Just a couple of follow-ups from our side. First, Peter, to your point on the mining royalty bill in Chile. This 47% was rejected, is that the all-in tax rate? Or is the actual tax rate higher than 45% as per that proposal? Just trying to figure out whether we're comparing apples-to-apples.
Yes, it is the all-encompassing rate.
And then the other question I had is around the Alcaparrosa, how is the remediation work progressing there? And what's the timing for a regulatory decision about a possible restart?
Yes. So I think myself and Juan Andres will both answer that one. When we were down in Chile about 10 days ago, I just wanted to mention that our meetings with the Minister of Finance , as I said earlier, a couple of times with the Minister of Mines, Sernageomin and other government officials was really, really strong. I think the transaction with Caserones has put us in good standing with the government, especially given some of the headlines of other companies that have been a bit pushing back on the government. So we're getting extremely good support.
That being said, it still does require permits to move the remediation process forward. We are out for bid right now with about 5 different companies that are going to be part of that remediation process. So once we get those permits, once we can determine the most appropriate bid, that will begin and should move in pretty quick over, but I'll pass it on to Juan Andres to add.
Yes. I don't think I have much to add to what you said, Peter. But yes, we're working on different phases of the remediation. And of course, the potential reopening of Alcaparrosa in the second half of the year. And as Peter said, right now, all the studies or most of the studies have been completed. We're just waiting for the final permit from the different government agencies to proceed with the actual works.
And I would just add, unfortunately, from a permitting perspective, those are extremely hard for us to determine how long that takes us.
Your next question comes from the line of Patrick Jones from JPMorgan.
Just regarding a follow-up on Josemaria. Obviously, given the time line is looking like it's taking a little while longer and formal approval is looking like it would be some time post Q1, Q2 next year. I just want to kind of inquire as to what kind of CapEx spend you could have on an ongoing basis prior to an FID decision. Obviously, the guidance this year is about $400 million. Is sort of $100 million per quarter a good rough estimate for what you'd spend pre-FID into next year? And also, is there sort of a limit that you would spend on a total aggregate basis prior to FID?
Yes. I think, first of all, that the spend this quarter has come in a little bit below anticipated the original number. I think that trend will probably be similar for the back half of this year. And I don't think until we actually have a definitive go-ahead decision that moving out into 2024, I think the number will be fairly moderated down until we make that actual decision.
Because a lot of the bigger items with these -- some of these long lead items, and those will be complete this quarter.
Your next question comes from the line of Dalton Baretto from Canaccord.
Just one question for me. With the center of gravity, kind of coalescing now around copper and gold on the Chile and Argentina border. How should we think about your European businesses now? Are they still core to you given that they're geographically removed and big same component there?
No, I think there's still assets that we're very happy, that are within our portfolio, in particular, for starters. If you look at Neves-Corvo, they've just had a great first quarter on health and safety, which we're very proud of them on. We've also seen the production ramp up. Obviously, it's been a challenging project, but we're now starting to get into that gradual ramp-up mode. So I think there's going to be huge demand for zinc in Europe and Zinkgruvan has been an amazing asset within the portfolio for a long period of time. So happy to have both assets in our portfolio. If something changes 1 day down the future, we'll look at it differently. But right now, they're a core part of our team.
There are no further questions at this time. I'd now like to turn the call back over to Mr. Rockandel for any closing remarks.
Thank you, operator, and thank you, everyone, for joining in today. I think Lundin Mining has had a very, very good first quarter, in particular, as mentioned at the start on health and safety, but also seeing the operational stability within the company and we're going to be pretty vigilant going forward to ensure those 2 areas continue and look forward to updating everyone on our Q2 conference call. So thank you for joining.
Thank you, sir. 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 lovely day.