Aura Minerals Inc. (AUGO) Q4 2025 Earnings Call Transcript

Good morning, ladies and gentlemen. Welcome to 4th Quarter 2025 Earnings Call. This conference is being recorded and the replay will be available at the company's website at oramineros.com slash 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. Para acessar nossa conferência em português, clique no ícone do globo ao lado inferior direito da sua tela Zoom e selecione a opção Portuguese Room. Ao acessar a nova sala, certifique-se de mutar o áudio original. We would like to inform that all attendees will only be listening to 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, or the beliefs and assumptions of Aura 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 their respective forward-looking statements. Present at this conference, we have Rodrigo Barbosa, President and CEO, and Kleber Cardoso, CFO. Now, I will turn the conference over to Rodrigo Barbosa.

You may begin the conference. thank you and good morning all i'm super proud to be here sharing a few informations not only the results but all the strategic advancements that our is pursuing if i remind all the investors here and analysts about our strategy we are very much executing right on track on our strategy the strategy is number one to increase production through development of green fuel projects Number two, to increase resource and reserves as we see significant potential in our current deposits to increase the reserves. And number three, continue to grow through M&As and address our daily trade development or multiple, that is, still discounted compared to our peers. And doing all these three, while we continue to pay significant dividends to our shareholders. And I'm glad today that I will be able to walk you through that we've been executed in all of those three areas while we pay dividends. So number one, first going to the results, and I ask to put on the first page. In terms of executing greenfield projects and also improving the results, we see, again, the company going on record high production on quarterly basis. and also on a yearly basis. On a quarterly basis, which we have already disposed to the market, we produce 82,000 ounces, gold equivalent ounces, 11% up compared to Q3 25 and 23% compared to Q4 last year. On annual production, 28 to 280,000 ounces of production, 9% up at constant price and at guidance prices, excluding MSG acquisition that was not on the budget and it was not on the guidance we were very much in line with the middle and actually slightly above the middle of the guidance uh with the market the combination of a higher production cost under control and higher gold prices drove us to hit 208 million dollars on the quarter with the gold price of 4090 dollars while msg only one month and borborema is still on the final phase, achieving nominal capacity. When we look to the year, we reach $548 million of EBITDA with the gold price, $3,400. If I remind the investors, since 23, we've been doubling the EBITDA, coming from $135 million, $270 million, now $540 million. dollars and if you take in account the last EBITDA of 200 and 70 million dollars with the gold and put the new gold price and then put a higher production we'll see that we will be able to during this year perhaps maintaining this gold price double again or EBITDA if the current gold prices continue to be as strong as it is today on the always sustaining cash cost we are glad also to disclose to the market that we have not only reached the guidance but we are slightly below the low end of the guidance and I will talk more through this during the presentation. Higher gold price costs under control, we have a very also strong recurring free cash flow of 100, close to 100 million dollars on last quarter. Understanding that we are also investing in inventories, investing in developing the mines, which put some low grade into the So some working capital is allocated as an inventory as low grades of the plant would leave the low grades of the of the mines that are entering production to the further years while we now focus on higher grades. And I will talk more about this also during the presentation. Combination of strong cash flows, and although we acquired MSG, we continue to be in a very – and paid dividends, we continue to be at the low leverage. The ratio club is going to walk you through that always being able to grow without even leveraging, or cash flows that coming from the operations being more than enough to fund our acquisitions and our greenfield projects, while we also count with a leverage to fund those projects, freeing more cash to be distributed to our shareholders. A good news, it's a net loss of $20 million. That means that gold price continues to appreciate. And if you take out these non-cash, non-recurrent losses, we'll see that during the year that just the net income was $206 million, dollars and clever is going to walk you through all the details how to to how to achieve this 200 million dollars for the year 2026 we have a strong continue to have a strong production coming from our operations and some increase on all in sustaining cash costs some increase in also in capex due to positive news. We are now expanding ALMAS. We are coming from ALMAS we built at 1.3 million tons plant. Last year we finished above 2 million tons. We are now upgrading to 3 million tons to the plant. That means that we have to develop the mine that needs to raise the tailings then. We are also advancing in ERA Dorada. We just announced ERA Dorada early works. We also acquired MSG for $76 million. MSG has structurally a higher sustaining capex and a higher capex during the year of the turnaround and structurally will be higher than our average. However, the price that we paid for MSG more than justified this is higher capex, sustaining capex and also higher sustaining cash costs, which we will walk you through also during the presentation. Very important additional events, again, we closed the MSG, we got the license for early works in Era Dorada, which we already started the early works. We are now finishing all the analysis, all the studies to be able to go and approve in the board of full construction. Yesterday, we also announced a major milestone for Borborema, which we obtained the license to move the road, reaching now 1.5 million ounces, just with the reallocation of the road, freeing additional 670,000 ounces of reserves into the project. While we continue to analyze during the next few weeks for the AIF or 20F to be released by the end of March, we are updating our resources and reserves based on higher gold price, which means lower cutoff that will free more reserves into all across our operations. Major milestones that we conquered also is after lifting the Nasdaq and after the new issuance in 200 million dollars, AURA came from in one year, one or two million dollars being traded per day, now reaching 100 million dollars per day, addressing the low trading volume that we have now being attractive for major investors to invest in the company. And finally, not least, announcing again a very strong dividend of 0.66 per share on the quarterly basis, which gave us a yield on the last 12 months of 6.2% for shareholders while we made acquisition, while we ramped up Borborema, and while we're doing all these gross products. So, in summary, we can see that we are very much delivering on the long-term strategy. Number one, we are increasing production and developing the greenfield projects. Borborema last year, again, on time, on budget, commercial production in September. Then we also acquired MSG. This is the third avenue, it's continued to grow through M&As, address daily trading volume. So on the third avenue, we are part MSG and we significantly increase daily trading volume, which is helping us to attract more bigger investors, although yet we are still discounted compared to our peers. And the second avenue to increase resource and reserves. Again, with the Borborema, we increased Borborema reserves by 82% of reserves, significant increase in cash flows of this project. And I can also walk you through a little bit the importance of this additional 670,000 ounces, which I will do during the presentation. So very much increasing production, increasing resource and reserves, and address the multiple through daily trading volume and also new acquisitions. In terms of safety, super proud. And again, now all those numbers are putting Aura as a benchmark in the world, in the sector. not only we had the full year without any single lost time incidents, but now we're achieving over 18 months with no lost time incidents, which put ours under a benchmark in the world in terms of safety. Any well-managed company will give you strong levels of safety and also strong results. In terms of stability of the structures, again, we make a review every quarter, every month through external consultants and all or geotechnical structures are in satisfactory levels. Next slide. So when we look on the quarterly basis on the production that we have already disclosed, now we see since Q1 2025 a constant growth on production through a combination of the ramp up of Borborema, And lastly, still not only December, the acquisition of MSG. For the further quarters, we should see now continue to grow in terms of production on a quarterly basis as MSG now comes a full quarter. And then gradually we should also improve production for more other operations. When we looked on the guidance, we see that Aranza Azul, the production, When you consider the same metal prices of the budget, we see that we are very much in line with the guidance in terms of production. I will get attention for those that are not used to looking carefully on numbers. At AnzaZoo, we sell copper and gold concentrate, and then we convert all the copper into gold equivalent ounces. To do that, you get just the revenues, the revenues from copper, and you divide by the gold price. The higher the gold price, the lower the conversion into the gold equivalent ounces. So when you look at the number of warrants azul and you see the gold equivalent ounces decreasing along the last year, it's not because we are decreasing production, but it is mostly because our gold price is appreciated, which is positive for our whole company, and that that conversion goes to a lower gold equivalent ounces, which also translates to higher all-in sustaining cash costs, because you divide by the total cost by the gold equivalent ounces, gives in the gold equivalent ounces is slower, so that gives us a higher all-in sustaining cash cost, but that is because of a good news of a gold appreciating. Tapoena, we've been able to develop faster than where we were projecting during the year, so we could also produce above the guidance. Minos are very much in line with the guidance. ALMA is also very much in line with the guidance. And Borborema is where we were a little bit below the guidance. That's because we had the project, we had some minor issues with the agitators of the CIL tax that did not jeopardize the ramp up. But as this drove to a low, was driving to a lower recoveries, we decided this to put for a couple of months, very low grades instead of high grades, not to lose the long term, not to lose recoveries on that project that drove the production down while we preserved those that high grade goals when we could finish the fix on the CIR tanks, which took us just a couple of months, not jeopardizing the ramp up again, not jeopardizing reaching nominal capacity and not jeopardizing the recoveries that we reached after we changed those parts on the CIL tanks. Next. So in terms of always sustaining cash costs, excluding MSG, I'm proud also to show the market that we also could not only be within the guidance, which is the next slide, but also slightly below the low end of the guidance fulfilling what we promise to the markets in terms of production and also in terms of cost. If we take out the MSG, our all-in sustaining cash cost for Q4 would have been 1363. And as we know, as we acquired MSG, we know MSG had over $3,000 of all-in sustaining cash cost, now which doesn't scare us. I think that was the positive point on acquiring MSG was to see those high all-in-sustaining cash costs in project and believe that during the turnaround of this year, we'll be able to drive that all-in-sustaining cash cost to below $2,000 for the years ahead, not this year, but for the years ahead. Next. So just quickly going to the guidance. I just mentioned to you on terms of production, very much in the middle, slightly above the middle of the guidance. On the cash costs for gold equivalent ounces, also we reached the finish the year at $1,070. The low end of the guidance was at $1,078. All-in sustaining, that translates also to a lower all-in sustaining cash cost finishing $1,368 and the low end of the guidance at 1374 and also very much in line with the guidance in terms of capex understanding that there was a year that we also built Borborema and decided to move forward with the expansion of ALMAS on the first phase and now we are going to the second phase of the expansion of ALMAS next. So for the 2026 give an overview here of the guidance and then Cleber can go in a little bit more detail in the next slide, but in terms of production, now we project full year of Borborema, full year of MSG, although MSG still during this year on 2026 in MSG we are not focusing to produce the most at the lowest cost, we are focused on preparing that mine to be able to produce over 80,000 ounces per year and below 2,000 for the next year. So this year is a turnaround, although during this year, imagine that we projected that producing 50 to 60,000 ounces of production. Even if the cost is above $3,000 per year all in, we have the price, gold price of today is $5,200. So it's $2,200 of free cash flow margin in a turnaround year. for MSG, that price converted to 50 or 60,000 ounces means that the free cash flow, and maybe that will be way above this is 100, 120, 130 million dollars in this project that we acquired for 76 in the year that we yet we are not focused on production. We are not focused on cost. We are focused on preparing that mine to higher production along the next years. All right, in terms of, and that higher all-in sustaining cash costs, which Klaber is going to explain, is translated to, or from MSG, it's translated to higher cash costs in our consolidated levels, higher all-in sustaining cash costs also in our consolidated levels, and Klaber is going to explain that 65 to 80 percent of this increase is explained by MSG, and then we have other factors that we will disclose in more details. during the presentation. In terms of CapEx, it's the same situation. It's a year that we are investing in MSG. We are expanding ALMAS. ALMAS, we are doing the pushback of the pit to fast access, also the underground development. We are expanding the capacity of the plant. We are already doing in this expansion project is not the full investment in but yet already the first groundwork, the first early works. So there's a lot of capital that's been committed for good news, which we are expanding production, expanding to go at 600 or even above 600, preparing the company goes above 600,000 ounces of gold equivalent on the upcoming years. In terms of production, again, Aranza Azul, that decrease, it comes from mostly metal prices, although Aranza Azul is where we are more stable and getting more lower grades during the next years, while we continue to explore opportunities to decrease the cost of mine and the cost of plant to offset these slightly lower grades in Aranza Azul. Borborema, the range of 65 to 77,000 ounces. This is also accounts that we are working and we should publish it or new resources and reserves, the old AIF, now the 20F, by the end of March. That means that we are updating our resources and reserves and all the mining plan of the company based on the new cutoff with a higher gold price. That means with the higher gold price, we reduce the cutoff, we can and free and release and convert more resources into the reserves. On the other hand, the grades, average grades goes down. But all in all, it builds value, it's a positive news because we are now assessing grades that was not economically viable in the past with this higher gold price, with being able to access more ounces on total although it's a lower than the former grades that we were projected in the past so that it's a positive news that has on the long term that has minor impact on the short term so next slide

clever yes sure Rodrigo so good morning everyone so let's start with

understanding the main drivers behind the impact of the increase in the all-in-sustaining cash costs. The expected all-in-sustaining cash costs in 2026 is expected to increase between $262 and $407 compared to 2025. And as we can see here on the right side on the top, the main driver for an increase by far is MSG that's bringing up our weighted average cash cost explains 70 to 80 percent of this increase. Metal price effect that Rodrigo was explaining, the gold equivalent conversion, because gold prices on average in 26 are, if you take market projections, are above the average of 25, so accelerated more than copper price, so it explains another 5% in our increase. And the second impact that we have is in ALMAs. ALMAs, due to mining sequencing, this year we're doing a pushback in the mine and having higher strip ratio. So the costs in lower grades also due to mining sequencing, so the cost is increased this year. This is not expected to be repeated, for example, in 2027. And we also have tailings then expansion of this year in ALMAS. So in ALMAS, it's mostly not occurring, these effects. And then other impacts are marginal. We have a slightly minor worse cash costs in Minosa, for example, but better cash costs in Apuena. So they compensate each other. So then, on the bottom, understanding the main increases behind the sustaining capex is a similar story so 75 to 70 percent of the increase we're expecting to see an increase in 26 compared to 25 between 15 and 70 million dollars of which about two-thirds are mscg first because it's an underground mine so it has a higher sustaining cash costs, so we should not expect going forward to see sustaining CAPEX for MSG comparable to the other open-peed Brazilian mines, so it's going to be higher. But also, it's a turnaround year as we have been communicating. We're going to be allocating some additional capital, especially maintenance in MSG. And ALMAZ is the same reason. ALMAZ explains another 15% to 20% of the increase in the sustaining CAPEX for the same reason. They push back a portion of the waste is capitalized as sustained capex and explain also a portion of this increase. And finally, of course, Barborema is going to be operating for a full year. In 25 we had just three years of commercial production for Barborema. Three months, sorry. And then in 26 we have 12 months. Of course, that brings a higher sustaining capex. And finally, when we look at the expansion of CAPEX, what is in our guidance for 26 mainly is ALMA's underground developments in the plant expansion that we are investing to increase the plant capacity to 3 million tons until the end of the year. We have the second year of the NOAS pushback that we are planning in 25 to 26 to invest in the north phase three peaks to have a higher higher grades from 27 so this is the second year in Borborema we have a filter press expansion so the filter press now is the current bottleneck that we have at the plant so by expanding the filter press we can go beyond the nominal installed capacity that we have today at the plant and it also is going to help us prepare for a potential expansion of the plant in the future. And also we're going to be investing in engineering studies for potential expansion now that we were able to get the permits to move the roads. The Ara Dorada as well we're investing in the early works and we have then some other impacts such as Matupa and some investment in the projects. Thank you.

So I think one major Another milestone that we also achieved, again, your next slide, is the license that we've been discussing with the national authorities that we finally signed an agreement of partnerships to move that road. That is releasing 670,000 ounces of gold on the mine sequencing. Just hypothetically, if you get the gold price as of today, $5,200, and then you imagine a while we're in sustaining cash costs of $1,500 according to our mine sequencing, which is below this, we see, and then you multiply by this 670,000 ounces, you see that the company with this will be able to generate along the years more than $2.5 billion dollars pre pre-tax in this project that's the size of the magnitude that these additional houses can can can generate and of course now we don't want to go from we already have 15 16 years old 16 years of life of mine that will expand to above 20 25 we don't want to do is that's why we made the plant flexible and now we are advancing on engineering studies and water as access in order to expand the capacity of the plant, perhaps up to 4 million tons, that will drive us to a significantly higher production after we finish and conclude the expansion. We are now working on engineering, we are now working on water access, and we believe during the second semester, more towards the fourth quarter, we'll be able to present a high detailed and a new feasibility study for this project. using now a higher capacity uh why are we also we're doing and we should expect for the 20th by march uh this project is very sensible to cut off grades so as gold price is going up we are uh uh changing the the price for cutoff which means that we can now access as i was mentioned lower grades that was not economically viable in this project now becomes viable so we should expect further increase in reserves by the end of March when we publish the new resource and reserves for the entire company in particular here in Borborema. Again, I mentioned that we are delivering on the Greenfield projects on time on budget. Remind Borborema, the first ALMAS, now Borborema. We are delivering on new acquisitions. We closed MSG in December, and we also told the market, we've been telling the market for the last many years that we had address the daily trade environment and here it is uh the very successful results of our listing in nasdaq moving from tsx and then listening nasdaq that coming from 1.52 million dollars per day now reaching on average in february 100 million dollars per day with a combination of a nasdaq plus b3 so that will also help us address the multiple according to the analysts we are still traded with the discount compared to our peers and we will not only change the peers coming from the production of 300 000 ounces on average last year or this year to above 600 000 ounces and then also with the higher data volume and higher reputation as we are delivering our projects we should address this discounted compared to our peers and maybe even be with a premium compared to our peers as we continue to grow So, with that, I conclude here the more high-level analysis. Cleber is going to drive and walk you through the details of the results, and then I come back for questions.

Okay, thank you. So, we start with several of the main financial KPIs that we are reporting for the quarter, for the year and also comparing with the previous quarters. As we mentioned, we see the results here, a combination of higher gold prices in the fourth quarter and increasing production in the fourth quarter as well. There was a substantial increase in our NAV revenues, closing the quarter with $322 million and bringing our annual revenues beyond the $920 million in 2025. The adjusted EBITDA, it's the sixth partner in a row that we deliver a record high adjusted EBITDA at $208 million, considering Q4 average gold prices close to $4,000 per ounce, and bringing our annual EBITDA to $547 million as well. in also the last 12 months, also the six in a row that we see increasing. When we move to net income, we're reporting a net loss of $20 million, basically for the same reason that we reported losses in some of the previous quarters due to the sharp increase in gold prices during the quarter, which is good news. but it brings no-cash losses related to our outstanding gold derivatives. Excluding those no-cash losses, which amounted about $82 million in the quarter, in certain other no-cash items, we see that we had also an improvement in their net income, reaching $73 million in the quarter. And then in terms of cash and net debt, we see we continue in a very comfortable position in terms of balance sheet. There was some increase in our net debt in the quarter, but that's basically because in Q4 we paid for the acquisition of MSG. And unlike many other cases, many other companies when we make acquisitions, there are maybe some reduction in dividends. we didn't reduce the dividends and therefore we kept paying dividends above our minimum dividend policy because our balance sheet allows for it. So and then we can see as a result we closed the year also we felt a low very low net debt over EBITDA in the last 12 months below 0.3 times. Now moving to understanding the main items between the adjusted EBITDA and net income for the quarter, if we see a breakdown of the Ecibida of $208 million, Almas and Borborema were the top performers, about $50 million in the quarter each. We highlight, of course, Borborema considering it was only the first quarter of commercial production and it is almost our highest Ecibida, so it shows also the potential that we have in this mine. Minoza and Arranza Zoo also coming very strong, 48 and 41 million dollars respectively, Pueyana delivering EBITDA of 22 million dollars, and MSG 10 million dollars. MSG also I'd like to highlight for a couple of reasons. First is, was just one month, and one month that we didn't see yet any impact of any turnaround in terms of production and in terms of costs. And we already, and we've loaded prices at the much lower levels that we have today. And we already generated $10 million in a month for an investment, for an acquisition that we paid $73 million. So it shows the type of returns that we should expect for this acquisition. When then moving to financial expenses, I mentioned already we had $82 million, no cash losses related to the outstanding gold hedges, and we also had $22 million realizing losses related to derivatives that expired during the quarter. Income tax expenses increased compared to the previous quarters, basically because our results from the operations also increased, so it's in the same proportion. On this quarter, we had no recurring other expenses. That's mostly related to provisions that we did on year-end, related to potential partial no recoverability of certain VET credits that we have mostly in Honduras and also in Brazil. Then with that, we see our net income of minus $20 million, but then bringing back the no-cash items, mostly the real-life losses with derivatives, we come to just the net income of $73 million. Now moving to understand in detail the change in the cash position during the last quarter. We see on the left side of the page, we started the quarter with about $350 million. In cash, here on this more left side page, we can see what's the cash flow, recurring free cash flow, which is the cash flow generated by now the six mines in production, not including any investment to expand our business. We see we generated $94 million, already deducting the realized losses with the gold derivatives. That cash was almost enough to pay for all the capital allocated to growth, the business in the last quarter. We invested $103 million, mainly the NSEG acquisition and also expansion of CAPEX, the first steps in ALMAS mainly here for the underground mine development and plant expansion. And to the right side more the financial items highlighting as I indicated before as well 40 million dollars dividend payments. Next page. And then when we move to the year the cash flow by the mines in production generated over 250 million dollars in cash which was more than enough to pay for all the investment in growth. And 2025 was one year that we invested significantly in growth. So we invested to Borborema Construction, the second year of Borborema Construction, the acquisition of MSG, acquisition of Era Dorada, acquisition of Altamira Shares, investment in exploration to increase our mineral reserves and resources. that was funded, entirely funded by the cash flow recurring to cash flow from the operations. And to the right side, the more financial-like items, we highlight the cash we return to our shareholders, mainly through dividends, $116 million. In the net proceeds we receive from the NASDAQ IPO to $100 million, and that brings our cash position close to $90 million at the end of the year. This is the last slide, and then we open to questions.

We are going to start the question and answer session. For investors and analysts, if you wish to ask a question, please press the raise hand button. If your question has already been answered, you can leave the queue by clicking on put hand down. Please hold while we poll for questions. Our first question comes from Henrique Marques with Goldman Sachs.

Hey, everyone. Thanks so much for taking my question. So, quickly on guidance. I mean, there's still a lot to be made during 2026, so I just wanted to make sure here what is already implied in this guidance because there are technical report updates coming up which should impact reserves and eventually grades which might weigh on production. but at the same time you have some processing capacity expansion expected for for this year so i just wanted to confirm exactly and try to better uh understand what is already implied in this in this 2026 guidance that you guys just released and also on a second uh topic a lot of things going on i think that's great but it would be also uh great if you guys can just help us map everything that is that is going on so just any update on on timing for at a dorado or Mato part to be taken to the board to eventually increase the processing capacity for Alma's is what is what is the timing for that and it just to confirm is Alma's expansion already board approved the processing capacity and lastly just any timing for aura to join the GDX index is there any prerequisite missing for that um that's it thank you so much thank you for the question henrique

and uh yes as you mentioned uh a lot of going on in aura and again another year that we continue

to prepare the company to reach over 600 000 ounces of production so we're going step by step what you should expect and then first question is uh for the budget of this year we are not considering old gold price we're already using new gold price based in new cutoffs that we will update the market so there's this lag a little bit on the what we forecast on the budget and what we will publish now on by by march so we already reducing the average grade of some of the mines based on a higher lower cutoff and higher gold price which is a good news because we're going to free houses in terms of reserves for the long term and for overall it generates NPV for the company although in some cases might slightly be drive to a lower production so that's a part of the questions that you made that I could answer then there are a few things that's going on in Aura so you also asked about ALMAS it's already included on the budget it's already included a capex for us to expand the capacity and also do to raise the tailings dam to prepare that is then for this new capacity up to three million tons of the plant already preparing this to receive higher grade material as an underground while underground is not totally developed we'll put average and medium grade that's already on the stockpile because the mine is working faster than the plant and we have some important stockpile that to use on the higher capacity of the plant while we don't want to finish that we go we should finish the year or early next year at 3 million tons per year at the plant but we have projects to go up to 4 million tons but that will depend on some more positive geological information that we are investing in the project so we should expect these 3 million tons already hired approved and should be implemented by early should be already uh in full production by early next year or or by the end of this year while we have projects and we have ideas and have discussions to go up to four million tons but that will depend on more exploration results that we are conducting as we speak right now on these are also uh on this for this year uh we are as clever mentioned we are increasing capacity of the filters that will give us a possibility to go beyond the nominal capacity that we should reach along the second semester while again we are also preparing this doing engineering that's already approved in the board and doing now studies for water assessments to double the capacity and we would like to be able to approve this in the board by the end of this year for the new capacity for Borborema on MSG is the year of turnaround we are although we are generating positive cash flows we are not focusing on production and not focusing on short-term gains we are focused on building the right plan in the right structure so that we can finish the year with a very good view that for the next years we'll be able to produce above 80 000 ounces with the below two thousand dollars of all in sustaining cash cost so that means that we are preparing the mine we are doing underground development and advancing again if i remind the investors uh one of the the reasons that msg lost productive and lost production and the plan become idle is that they are doing uh the the mine six is is they lost productive to doing underground development and they start doing top bottom that increase dilution that reduce the speed so that that creates a lot of complexity so now we need to do all the proper underground development in order to do from bottom to up that means one year of a lot of underground development and preparing this so that we can do the the right methodology underground and then fulfill the capacity of the plant that will drive us to produce extra extra ounces and significantly reduce dilution significant dilute reduce also other only sustaining cash cost so and the final question you made was a it was regarding the index the GDX yeah yeah just if there's a prerequisite missing you know I think we are reaching but we need to reach for two consecutive quarters and each quarter you need to prove that your daily trading volume was higher on the last two. So we believe we'll be eligible for GDX, although there's some, it's not 100% sure because there is some analysis that the team do, but we believe that we'll be eligible to GDX by the second semester between third to fourth quarter of this year.

Great, thank you so much.

Our next question comes from Edgar Dissouza with ItaubiBA.

Hi Rodrigo, hi Kleber, Natasha, thank you for the question. So, my first question regarding the steel on the guidance. Prediction expectations came in slightly softer than what we were expecting, in particular at Borborema. I wanted to understand, I don't know if Glauber is connected here, but maybe if not, for sure you can help me, Rodrigo. How much of this lower production profile in Borborema is a direct consequence of incorporating material that was previously above the cutoff? And at a broader portfolio level, how are you approaching cutoff optimization in the current gold price environment? To what extent are you trading near-term grade and free cash flow for longer life of mine and higher total value extraction, let's put it this way? Then my second question, moving to the main positive news from the release, is regarding the expansion at Borborema and the road relocation. So I wanted to understand the next steps from here. What is the expected timeline for the physical relocation of the roads? You mentioned that the capacity could reach around 4 million tons. How much of this incremental processing capacity could be gradually added in a brownfield scenario, similar to what you did in ALMAS? How much of the expansion would require a more significant capex, maybe a new ball mill?

And how should we think about water availability as a constraint? until which levels can you produce with the current water availability that you have and for which levels this would require a more significant investments for water availability there those those are my my questions thank you guys okay i will start and then i think Glauber is here because he can uh uh finish but on the on the on the production for borborema mostly of the reduction in production comes from a lower grade that comes from a lower cutoff right and then we always we don't and that's one thing that we do in all right that actually it's this mind that drove us to be here today with a successful story we don't take decisions to favor only short term we think the company as a whole what builds the best value although sometimes hurts the short term and there's example of Borborema is a very good example because we know that we have lower production but overall as we will should see uh during the the publications of the 20f we'll see an increase in resource and results so that means we are in significantly increase nav of the company although that on the yearly on this yearly basis means slightly lower grades which is translated to a lower production on them on the capex I'll let Glauber explain but I'll give a overview of the plant it takes probably two years in terms of construction to relocate the road which is the same time that we will do an next plant expansion and the plant expansion will require a capex the plant is not at 4 million tons the plant was built for 2 million tons flexible and prepared to receive new investments and then go to 4 million tons. But I'll let Glauber walk you through more and what we are thinking about on this expansion. Is Glauber here otherwise or the mic is off?

Okay, sorry. Yeah, good morning everyone. So, yeah, as Rodrigo comments, this drop on grade is a positive thing. In fact, it's much more or becoming economical right now with this new price. And what we are doing right now can bring some impact in the short term, but it's a big benefit in the long term. So, in fact, we are preparing the mine for higher capacity or higher production that we are doing the engineering the plant. In the CAPEX, answer your question, so it's basically built a new parallel plant. So, now what we are doing is the bottleneck, the filter area is the constraint that we have right now to increase capacity. but we already approve it, we already hire all the service and construction, and we will implement the new filters in this year. We expect to be done in the beginning of the next semester of this year. In parallel, all the engineers to expand the plant. We don't have the total CAPEX right now, but we need to expand the CIL circuit, the new circuits and the crusher secreted also it means that everything it's it's prepared to expand because we just need to connect it without the impact the the actual production but it's something that to retire the required complex to be done thanks and in the meanwhile we are doing all the water assessment that there's ideas, there's projects also to do to increase the capacity to treat grey water from the city

or receive grey water from other cities, so there are field discussions going on right now, and it takes time, but we don't believe this is going to be the issue.

Great, thank you.

Our next question comes from Guilherme Nippes with XP.

Hi guys, good morning. Can you hear me? Yes. okay so so I have two questions here on our side as well my first one is on on the reserves report so could you guys share any any key shifts any takeaways from the reserve report and also if you have any shifts on on geological interpretation and also on long-term assumption for gold prices as well and if you could guys share also news on on the underground mining for almas boborama plan expansion and the increased reserves at matupa so any news on on on the updated reserves report and my second question is on capital allocation um of course you guys have a lot of projects going on but we still see um balance sheet room for for as gold prices are holding higher as well we still see room for further acquisitions so we'd like to understand what are the the priorities now and if you guys are also looking for acquiring other assets here in brazil as well and in latin america as well thank you

okay no thank you for the question uh unfortunately we cannot disclose what will be on the aif yet that will be published on the on the by the end of march but as you mentioned we are working on the new cutoff for the current mines

that we have that can affect some of the mines and cannot affecting other mines depending on the distribution of the grades in that mine Borborema as I mentioned has some sensitivity to this or it can be affected by a lower cutoff than increase which is already translated on the budget i will see that already the the grades are going down as you mentioned we are working on matupa we're doing analysis on serrinhas doing analysis also in in those that that were pet zone package that we acquired and perhaps some of those already be able to incorporate into the x1 so we should expect uh also uh the new report including a part of the the resource and reserves of the x1 and also uh or pecante um then underground we continue to do underground uh development and also uh reaching the right level then we could continue to do intensify exploration uh that uh although we've been having a very important and interesting interception that confirms the the underground mine uh that takes more time so we should expect uh more towards at the end of the year that we can consolidate all the information but we don't want to waste time that's why we're already doing all the underground development because we believe that this will become a mine and we don't want to waste time doing all the studies while we develop at the underground so in terms of mna as you mentioned in the companies it's significantly increasing EBITDA and cash flows. Again, if you take it back in the last two years, we doubled, every year we doubled EBITDA, 2336, then 24, 270, 25, now 540, with the last quarter of a $210 million with the gold price 4,000 and MSG only one month, So you can already imply that we are significantly right on the running rate above the last year. And that, of course, although we can, although we've been able to, if you look what has happened to our in the last four years, we are the highest dividend yield in the world of our gold price. We acquired Borborema, we built Almas, we built Borborema, we acquired MSG, and yet we have a low leverage. And that was with the gold price of $2,500 and $30,000. and now we are with the gold price at $550,200 with higher production. So we should expect for the upcoming years more than we've done in the last years in terms of we'll be able to generate higher cash, pay more dividends. Now we have more cash also to do more acquisition. We want to continue to do acquisitions. We know very much how to get to beyond 600,000 ounces that we published last year, But that by itself is going to generate a lot of value to us. But we know that the right multiple starts when you get closer to a million ounces. So we want to continue to pursue growth through M&As. We are America players. We don't feel we have the knowledge and expertise for the other continents. But in the Americas, we like gold and we also like copper. So we should expect from our acquisitions either in gold and also in copper. We're also in countries that we feel that has democracy, some strong institutional entities, so that give us the minimum security to invest. We also like a project that has, well, it's well developed in terms of geology, maybe needs further exploration, but just to convert resources into reserves and then implement or projects that are ready as we saw brownfield that we believe that's not perhaps the core of other companies and that they might sell so if you see an angle to buy them and reduce and generate events that's what we see basically what you should see for our for the upcoming years is what we've done in the last years with now higher production and higher gold price higher cash flow so more intensified.

That's very clear, thank you.

Our next question comes from Marcelo Arazi with PTG.

Hi guys, good morning. A few questions on my side as well. We can see that we are seeing a slightly wide range of production guidance than what we were used to. Can we say that is this related to a more conservative approach and a large number of assets or it can be read as a sign of a more challenging or more hard to predict conditions and a second one on capex is this level of sustaining capex the new reality for the company or the the full year 2026 print is inflated by the turnaround project in MSG can this eventually impact the dividend distribution given your policy of of 20% of the EBITDA minus the sustaining in the sustaining capex and just a final one if I can on the Guatemala capex the guidance is already accounting for the early stage investments but with the the eventual project approval can we expect some some capex revision for this year? Thank you guys.

Thank you Marcelo for the questions and I think for this higher always sustaining cash cost in high capex this is neither more challenging near they're more conservative actually it's a good news it's a good news that the company is being able to buy MSG for 76 million dollars in only one month without the as clever mentions we have 10 million dollars every done MSG structurally has a lower only sustaining cash costs MSG structurally has a higher only sustaining cash cost and higher also sustaining capex but that's how we generate returns. We put this asset into our consolidated basis. It affects negatively but doesn't mean that is a challenge. Actually, we see this more as an opportunity because during this year we'll be able to do the proper work and we are very confident that for the upcoming years we will see that we will be able to reach above 80,000 ounces and below $2,000 of all in sustaining cash costs. Nevertheless, in a single month we generate $10 million dollars without any new uh any any turnaround so and the other increase that we have that comes from positive news also again almost we've seen a very strong opportunity to increase capacity so that increase also our our capex uh not that another factor that increases the capex is era dorada because we felt then we got the license that uh this uh the former company could not get for several years so we already started early works and then going to the final passage that you made we are it is not on the capex the full construction of Eradorada so as we go to the board and as we approve the full construction of Eradorada this is when we then we will add a new capex for the project as we we published already last year the updated feasibility study the capex of this project is close to $380 million. Of course, it doesn't happen in a full year. Actually, most of the capex goes towards the end of the investments. But if we approve the board, then we will incorporate on our guidance this year. So again, the higher capex that you see in this year is way more as an opportunity rather than a challenge.

Thank you, Rodrigo. And just a quick follow-up, could this impact the dividend distribution given your policy?

No, we've been able to do everything. So our policy is 20% of the EBITDA minus recurring capex. Actually we've been able to pay 50-60% above the policy and we see no reason that we affect this for the upcoming years. Except that there's some major acquisition that we believe that it's a super high return, super high value added, then perhaps we go to the policy. But we should expect the policy or above the policy for the upcoming quarters.

Thank you.

Our next question comes from Lawson Winder with Bank of America.

Okay. Thank you very much, operator. And hello, Rodrigo and team. Good morning, and thank you for the update. Could I actually start by asking maybe a bit of an expanded question on the index, So there are U.S. indices for which Aura would technically qualify, like some of the Russells, and are even much more widely followed than the gold indices. I mean, is there any discussion of potential inclusion or potential inclusion in the Russells on the horizon?

We are monitoring, and we have a plan this year to be included in all the indices that we can fulfill. So we already were included in about 30 different indexes, but as you mentioned, I think we have way more opportunity to reach those major index funds that can not only help with the pricing on the multiple, but we also increase significantly our daily trading volume. So definitely is in our agenda.

Okay, fantastic. On Borborema, could you just confirm that the recoveries in Q126 to date are now hitting design capacities? And if not, what's left and sort of in what quarter should we think about that hitting the design recovery rates?

Robert, you want to answer this?

But we are at the design around. but yeah we are at the design so it's not it's not an issue in fact to run the plant in the capacity that was designed it isn't been an issue for us so the difference in production is mainly related to the grades that we are feeding to each of these strategies to expand the bit with these new reserves and new cut-offs so just doing a continuing dance for lost one that was a good question the meal is running super well actually we see room the meal to run even above capacity CIL tanks the same that's why Kleber mentioned that where we have now although we are already at

a normal capacity the filters are the bottleneck once we do this investment in the futures, then we can go beyond nominal capacity because everything else is running super well.

Okay. If I could ask about Matupas from both the point of view of CapEx and annual production. So, one, you guys have been investing a fair bit in exploration into Matupas. Does that have any implications for what your anticipated annual production rates will be? like I mean at least for example at the investor day you highlighted 55,000 ounces a year from that asset and then conversely I mean if that's the case what are we looking at in terms of a magnitude a potential increase in upfront CapEx for Matupa?

Matupa I think we continue to to have this view of 55,000 ounces we are not changing the nominal capacity of the plant what we are doing now is invest in exploration to expand the resource and reserves. This product has a resource of 400,000 ounces, light below in terms of reserves. But we say here and with also we see a significant room to expand the resource and reserves, which then we'll feel that's the right time to start the construction. And as we did with ALMAS, we prefer to build this project, prepare the plant to be flexible and expand because we know that we will even continue to expand resources and reserves beyond what we have today, beyond what we will publish in the AIF so that we can then increase the plant. And understanding that if you change too much the design of the plant as of today, even though we might see an opportunity, it's a whole different new environmental license process. So we prefer to respect what is in the licensed environmental and then during the years talk to the agents and see opportunities to do amendments and then increase gradually the plant.

Okay fantastic and if I could ask one more question just on Apowena I mean that mine continues to impress you guys are you know planning to mine much higher grades than we had modeled at that asset in 2026. Are these higher grades now sustainable into uh 2027?

I think yes we should reach higher grades by the second semester and then we'll last towards a couple of years so we're it will be maintained I think we believe that we can put this mine into 50 60 000 ounces of production on the running rate after the second semester of this year if not go beyond depending on some of other exploration that we are doing at the mine. It's a difficult mine, but full of potential.

Yeah, and you guys have done a great job operating it. So, well done. Thank you very much for taking the questions.

Thank you.

Our next question comes from Mateus Moreira with Bradesco.

Hi Rodrigo, Cleber, Natasha. Thank you for taking my questions. My first question is on ALMAs. I would like to better understand the rationale behind the production guidance for the mine. I mean, considering the ongoing plant expansion and the fact that the mine is already operating at an analyzed one rate above the published guidance, the numbers appear somewhat conservative to us. Are there maybe any operational bottlenecks or specific factors that you have already identified that could justify this more cautious approach? So that's my first question. And my second question on M&As, I would like to hear, to explore a little bit more on this topic. within Aura's capital allocation framework and considering that the company is now operating at a different level of cash generation than in the past, what type of assets in terms of size make sense for the company today? And if possible, could you comment on geographic preferences? You've already touched on this a little bit earlier, but in the past you mentioned the potential expansion into North America. Does that still make sense strategically?

Thank you. So in ALMAs, we are operating at 2 million tons, but we will go through expansion and reach 3 million tons by the end of the year. So this is a process that is going to happen during the year. So today we are still yet below what we expect to be until the end of the year. So that is also reflected on the production. ALMAs also, first year, started with a higher grade. So there is lower grades coming in now during this year. we will add higher grades again when we have the underground coming in, so we should expect ALMAs for the next year after underground then continue to increase production together with the higher capacity, and if we have positive results on exploration, then we can even expand further to 4 million tons, and then we'll see another step up. So ALMAs, I think you should see that some conservative scenario during this year but gradually continue to grow while we continue to expand capacity and then access higher grades when the underground mine come online in terms of projects i think we want to build a way to reach to a million hours i think that's where companies start to become relevant and then also start to get a fair multiple we know very much how to get to 600,000 ounces so to go beyond this we will need a few acquisitions of course as you mentioned that we are growing and we have a larger balance sheet and we have a larger also higher production so that meaningful more meaningful acquisitions should be coming online but again there's the higher the production the higher the acquisition is the higher also the capex so we will balance the internal rate of returns where this the right size 80 000 100 150 we saw sometimes even above 150 but that will really depends on the return we see and uh with the angle for aura to generate the value right uh it's america's as i mentioned and you asked about north america i think i think it's intuitive to think that down the road or will expand into north america but yet we feel that our multiple is too discounted uh we believe that in north america there's always probably always be a higher multiple compared to the players in latin america in general however cannot be that high gap so we need to narrow this gap we have a homework to do first to narrow this gap first to then be able to do a creative acquisition and not a dilutive acquisition to our shareholders but if something shows up that we believe that it's a creative to our shareholders we will do we look and we are ready and that's part of the strategy um perfect that's

very helpful. Thank you.

Our next question comes from Tatiana Conjini with JPMorgan. Good morning, everyone.

Thanks for taking my questions. I think most of them were already replied. I would just like to explore maybe a little bit too more. The first one, and again, you already explored a little bit of this, but this is regarding the cost of MSG. So I know that the more long-term for 2027 is to reach lower costs, I would just like to understand a little bit of the pipeline for this. What are the plans for reach those guidance? And if there is any type of hurdle that you imagine that you can reach. And the second one is regarding the CAPEX of ERA Dorado, which again, you already explored a little bit, but I'd just like to understand How is the pipeline for getting this approved for what I understood it this year? But this is like a 22-month plan. Do you have any, like, deadlines if it's not approved by any type of months, this could, like, have a little bit of an impact on 2028 production? Just trying to have a little bit more clarity on the months going forward. Thanks for having my questions.

Okay. Okay. So for Erador Adam, we are now analyzing our internal analysis. We did, we conducted during the last year over a thousand hours of dialogue with community leaders and community representatives. We brought some of the leaders also to visit our operations. So there was a very intense work on socializing this project. We moved back to underground, which drove attention from also national authorities that they understood that was a positive move. That's why the result of this was the license to initiate the groundwork. I think we feel now even more and more confident to go to full production. it's our full construction and we should expect this decision between first and second quarter this year that's how we are thinking and then it's a moving part right it's a tiny as you mentioned 22 months of construction and depending on the date that we started it will affect the the the final production for sure and the first question you mentioned was um i forgot this regarding the msg cost uh just to try to understand like what is the plan to reach the guidance for a lower cost by 2027 well the plan is already under uh execution we know very much how to improve efficiency we know very much how to decrease the cost we are now detailing in executing this plan as we speak. As I mentioned, we need to do a significant underground development because the mine today is connected to the plant. So any problem at the mine means that the plant is gonna receive the ore. That's why we've been seeing the last few years a decrease on the plant production. So it's becoming idle, it has 20, 30, 35, even 40 percent of vital capacity depend because the mine cannot fulfill so in order to accelerate the production of the mine we need one year of underground development to proper prepare the stoves proper dual bottom-up approach we have prepared the mine also to receive the the veins are one 1.2 meters and there would be mining at 1.82 meters now we want to mine at the narrow at 1.5 prepare the mine for 1.5 which means lower dilution higher average grade so all of those all of those uh strategies already be implemented but we need time we need up to towards at the end of the year to really see that the mine will be prepared to produce at its full capacity and the hurdle rate is managed as we mentioned We believe that we can prepare this for the medium-long term to be able to produce above 80,000 ounces per year at or in-sustaining cash costs of 2,000 or below.

Super clear. Thanks.

Please hold while we pull for questions. The Q&A section is over. We would like to hand the floor back to Rodrigo Barbosa for the company's final remarks.

So, again, thank you for the opportunity. super proud again to be diligently executing on our strategy. Diligent executing on implementing greenfield projects with Bill Taumas on time on budget, Porvorema on time on budget, and a few others now that are now prepared to go and hopefully during the first quarter, second quarter, approved to implement. Also, direct execution on increasing resource and reserves. We just added 670,000 ounces of reserves, one project that's already di-risked, already invested in the CapEx, already generated cash flows, that will give not only an opportunity to increase the NAV, but we will also be able to increase production. While we continue to invest in exploration, as we mentioned on Matupa, Underground Almas, and also Barborema has also potential to significant increase. So, decently executing also increasing resource and reserves of the company. And third, also decently executing on acquisitions. We just acquired MSG, now closed in December. Then we also address the daily trading volume, now trading $100 million per day, while we've been able to pay dividends. And the higher capex and the sustaining capex we see today, as I mentioned, is not a challenge, is an opportunity. We increase this because the company is growing. We increase this because we see opportunity to further expand the plants. We increase this because we see an opportunity to buy one asset that has a significant potential to expand capacity in terms of MSG, in terms of production and then reduce the cost overall in terms of results again super proud if you take the ebitda from 23 you double to 24 then we doubled again to 25 and if you take the ebitda of last quarter with the gold price of 4 000 now you use a 5 200 plus uh higher production plus higher production in msg on the full quarter you'll see that we already on the running rate also lining going towards maybe perhaps even to a double or even more during this year so very much on tracking and what we promise to the market the living results the living resources reserves the living strategy strategic agenda and also strong dividends so thank you all and hopefully uh down down the road that we have a new calls with the new quarter and then again between first or second quarter this year, take a look on Era Dorada and see if you feel ready to go to the board and approve.

Thank you. Our conference is now closed. We thank you for your participation and wish you a nice day.