Q3 2019 Earnings Call
Thank you for standing by this is the conference operator, welcome to the I Am Gold 2019 third quarter operating and financial results conference call and webcast.
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At this time I would like to turn the conference over to end D. Copeland <unk> Investor Relations lead for I am called please go ahead Ms Scoping Nathan.
Thank you very much and welcome to the idle <unk> third quarter conference call.
Joining me today on the call our Steve Letwin, Chief Executive Officer, Biden Gold Gord, Stothart, President and Chief Operating Officer, Carol Banducci, Executive Vice President and Chief Financial Officer, Craig Macdougall, Senior Vice President exploration and Jeff No Senior Vice President corporate development and General Counsel.
Our remarks on this call will lift.
Please refer to the cautionary language regarding forward looking information in our disclosure documents and be advised at the same cautionary language applies to our remarks during the call as far as referenced on this call. It can be viewed on our website I will now turn the call over to our Chief Executive Officer keep up with.
Well, thank you Andy and good morning, everyone and thank you for joining us before I start I, just want to reach out and extend on behalf of the board of directors and management of I'm gold or our thoughts and prayers to sample.
Obviously, there was a terrific tragedy yesterday with the attack on their Conway have reached out to then why.
Offer assistance and how that fee requires it but in the mining business, We're all brothers and sisters and ER. This a this was a tragedy that.
Obviously.
We're very very concerned about and.
We're very very sorry to hear about the news from our good friends at CMS semi so.
Bachchan pairs and wind team from I'm a goal.
So we are reported a solid third quarter last night, which demonstrates a clear path way to improve fourth quarter I'll. Just tell you that I've been at the sites quite frequently I think you know I spend a lot of time at the site.
Just wanted so you personally that we can affirm our full year 2019 production and cost guidance. In addition, we announced the appointment of Gord Stothart as President and Chief operating Officer of Island Gold Congratulations Gord.
<unk> has been what the company since late 2007, and we're pleased to promote him to this expanded leadership role I'm Gonna stay here as Chief Executive Officer, I'm going to be focusing on what I would call more strategic.
Opportunities for the company.
These would be you know centered around what we're going to do moving forward with Coty as an example.
In trying to.
Piece around the company, that's going to unlock some of the value that we have currently within our asset base and we don't think is being recognized.
I'm now going to make the case for investment in nine goal, we expect improved performance over the coming quarters on a number of catalyst.
And I think some of you probably already seen some of the photos Saramacca is now online I was down there last week, we had our first delivery award on October 31st I was in one of the whole Max trucks.
Well it wasnt qualified to drive it by what I was in the cash.
We plan to ramp up production levels in 2020, contributing soft rock higher grade ounces to the Roosevelt mill.
We will have the Westwood preliminary like mine update completed by the end of the year. The 43, one or one report by mid 2020, we expect to showcase a safe long life profitable mining gord can speak to that little bit later, we continue to improve productivity through various initiatives, including de bottlenecking the mill.
I'd ask you can and gaining incremental ounces from the Rosabel C.
As you can isn't more continue to be a solid contributor time go to asset base with operational improvements providing additional upside.
Our free cash flow as you know, it's been an area of focus as well and we're improving our outlook as we speak.
We've also enjoyed wonderful exploration success, including the declaration of now we get its initial resource estimate outlining over 3 million inferred ounces in Canada, which together with our Monster Lake project is consolidating our presence in the should Google move area and the new Kareena discovery on trend between the boto and Diack.
Deposits, which we expect will contribute positively to our future resource base in West Africa.
We are excuse me, we are an undervalued story with many more chapters to calm.
On slide six we thought we talked a little bit about our environmental social and governance.
We call the S.G., we have internalize the zero harm culture, we remain ongoing go art, we remain as an ongoing goal in journey of ours as we strive to put health and safety above all else as well as building strong partnership within our communities in respecting the environment, we've always conducted.
Our business with the highest environmental social and governance standards, we've implemented the mining association of Canada's towards sustainable mining framework, not just as our Canadian operation, but at our global operations and we are implementing the world Gold Council is responsible gold mining principles.
Recently, Moody's released its first assessment of corporate governance, and the metals and mining sector, where and I am gold achieved the highest rating at GE a multi one based on an adjusted score of 2.7. This was the second best score received the 31 companies profile.
We're all nice for sustainability efforts. This year, we were ranks as one of Canada's top 50 sustainable companies in Canada. Additionally, we were included in that 2019, Bloomberg gender equality index.
There are in addition to our ongoing PSG efforts, including the Solar Farm Commission that asked again last year, our ongoing commitment to education health and safety access to medical care and are continuing work building relationships with our stakeholders and a little bit off script, you guys. This sort of fee feed.
In the Roosevelt I will tell you after nine years in this business that relationship with the communities that we have really can't be measured.
I know everybody in the mining space hits headwinds from time to time and I will tell you had rosabel or it assay can in particular, if we didnt have the relationships that we have the strong relationships with the communities in the government's these headwinds would become a lot more challenging we had some.
Issues, particularly at Roosevelt today, we are able to correct, we saw simply because our relationships with the community in the government are so strong and they shouldn't be underestimated so on slide seven.
Sorry on.
Slide seven you will see both northern pits and southern fits at Roosevelt, which we are now back actively mining I was down there again last week, we've been working government local stakeholders to ensure we can safe work safely on the side I spent the morning with the President of Center Nam.
I can tell you that things are very positive there. The government has been giving their full support I feel very comfortable telling you that I believe we have a pathway to ramp rosabella back to full production. We also have a pathway to seeing saramacca become the deposit that Weve talk.
To vote for so long as you know Saramacca is located at the South West of the site. The Roosevelt mill highlighted on slide.
Pain haul road is expected to be completed by the end of Q1, the interim Hall route as noted here as well and blue we're connecting to the.
Reasonable portions of the main haul road. So it was on this haul road.
Spent a fair amount of time on it you will see the pictures up there.
I really wasn't a sizable hole.
This has been done below budget.
Is it really as a work of art.
This will open a pathway for us to new areas to bring or not only from saramacca, but from Sarah Sina and broker long call over the longer term. So this road is really going to be.
A very important root for us as we move forward So last week.
Slide eight we.
Then celebration of our first order delivery from Saramacca to the Rosabel now we have a few pictures that were up there we had the minister of Justice who handles the security.
For the concessions.
We also had to present the minister resources. So you can see the all Max trucks there in the background. The here they carry about 80 tons.
Each truck really does around trip and about one hour and 45 minutes were going Abbvie trucks, working so we're going to be moving a lot of or.
In the interim we'll use smaller trucks on the logging road to stockpile the orphan Saramacca and then pick it up at a book to 15 kilometer mark by the hallmarks trucks and the mill.
And.
So you'll see that celebrations on the slides. These are all village captains as well as members of the Suriname government as I mentioned and on this special occasion. We also presented the inaugural Chuck for our community funding the amount of $2.5 million. Congrats from this fund our intended for local.
Projects, which demonstrate potential for positive economic and social impact the fund will be managed by our country done director directorship our mill.
Thing.
Sharma lets just an incredible individual that we have down there and has been absolutely outstanding and helping us manage what I've said and repeated is a very very special relationship with our communities.
On slide 10, we highlight the road in progress on Saramacca Roosevelt as I said earlier this is our future starting with or and down the road, we're going to be tying in other concessions, which look.
From what Craig has been seeing quite prolific and on our website.
Thank you to look at the short video clip, which shows Ceramax. This progress. So it's very rare that after announcing a resource just a couple of years ago that we would have a haul road in place and this deposit I think people really underestimate how much work how to go into this at home.
Planning and I really want to congratulate.
Our team at Roosevelt I want to congratulate Gord Stoddard for the excellent leadership.
Bruno Lemelin. This this was.
Big feet for us.
Very real you can see it up on the slide.
This is a very very exciting achievement for us and positive news that it's going to come from this so we ask your patience. We know this hasn't been an easy year for our shareholders but.
I can tell you that again I spend a lot of time at the sites I have a very high level of confidence that we're going to be able to move ahead, and a very safe and sustainable and profitable.
Hi takes is the size slide 11.
You've heard the terms self funding thats been coming from us.
For some time now and we want and emphasize our progress, which we knew would be weighted to the back half of this year. We've now completed the assay can CIO heap Leach feasibility study, which gord will speak to the few minutes. We issued the initial resource are now again.
And we have delivered the first ore from Saramacca. So what do we focus on we're focusing on the Westwood redesign the C. I'll optimization work at assay can the completion of the Saramacca development and obtaining the exploitation permit for boto I want to reinforce the fact that Coty is.
Not.
No off the shelf is sitting there were minimizing our expenditures for coated going forward, we understand the sentiment out there is not in favor of large capex.
Except that and I think if anything we have strong record of listening to our shareholders.
That doesn't mean that there isn't some optionality a co today that we could work to the advantage of our shareholders Theres a lot of interest in co today from a number of companies around the world.
With our deep deep pipeline and the success that Craig Macdougall and his team that Theres a lot of hidden value in the company and there's a lot of value that we can crystallize through other means and methods. So with doors promotion to president he is going to be focusing a lot more.
More on what I had been doing at the sites I'm going to be focusing a lot more with taro and Jeff snow on what I would call the more strategic side of volume goal going forward. So it's a good combination we have a good team here and on that note I'll now pass the call over to Carroll to review our financial results.
Thank you Steve and good morning, everyone. This next slide presents key performance highlights for the third quarter.
Revenues for Q1 $24.4 million in the quarter well cost of sales came in at $251.6 billion, resulting in a gross profit of $22.8 million.
Adjusted net income before income tax and Noncontrolling interest as $21.4 million.
Adjusted net loss now and this was largely due to recognition of the tax income impact from increased profit at our operating mines, while the offsetting recovery from regions with losses, such as our exploration site.
Net cash in our case for changes in working capital, but $65.4 million in the third quarter.
53% higher than in the second quarter.
We continue to hold a strong financial position with cash cash equivalents short term investments primarily in money market fund and restricted cash at $677.2 million as of September Thirtyth 2019.
We experienced strong improvement in operating cash flows.
28% from Q3 hundred 54% Q3 2018.
Our gold margin improved by 38% from Q2.
We continue to focus on improving working capital, which was impacted in Q3, primarily due to lower accounts payable following the temporary cessation of mining activities that relative out now that we resumed mining payments from mining related supplies will return to normal level as well payable.
So it's improved in the quarter to site africana, west, but generating positive cash flows.
There was about was also back on a positive trend following the temporary setback caused by the security incidents in the summer.
This is made possible by the media mitigation efforts taken by site personnel, enabling them to assumption to mining activities within a short healy.
With brand, but with ramp up to full operations ongoing.
For Q3.
One thing key operating metrics production and all in sustaining costs.
We are expecting to achieve year end guidance from gold production of 765 to 810000 ounces are all in sustaining cost demonstrate our commitment to managing operating cost and sustaining capital expenditures on this metric we are trending down from $1132 per ounce Inc. Q2.
$1118 per ounce in Q3.
Operating cash flow before changes in working capital continues to increase throughout the year and $33.1 million in Q1 to 65.4 million.
Great.
Our gross margin trend positively as we benefit from a stone gold price environment. Accordingly, our gross margin has increased and a slight negative in Q1 to 8.3% in Q3.
We continuously work to managed our cost structure our cost structure.
The strong balance sheet with cash and cash equivalence of almost $634 million short term investments of $16 million and an unused credit facility of almost $500 million for a total liquidity of approximately $1.2 billion.
This total before is before the received in December of this.
$170 million import self fund.
We continue to work on improving cash flows and making prudent capital allocation.
I'll now pass it over to go ahead.
Thanks, very much Carol.
So.
And our top priority to health and safety of our employees in Q3, we continue to perform better than target and improve further from our strong Q2 performance. We work every day to meet or exceed our safety goals implementing a refreshing a number of an initiatives to ensure a safer working environment.
New comprehensive behavior based safety program.
As mentioned total consolidated attributable production for the quarter was 187000 ounces.
All in sustaining costs were $1118, an ounce and note that all in sustaining costs at the consolidated level includes corporate gionee costs and I'll review each operation in chart.
And that's again attributable gold production for the third quarter.
To 19 was 96000 ounces, we experienced higher total cash cost at all in sustaining costs due to overall higher tonnages and increased fuel costs from trucking probably going to war.
The results for the carbon in Leach and heap Leach feasibility study at Essakane were released last night, our leadership in a moment.
Sustaining capital expenditures were $8.6 million, primarily for spare parts and equipment and non sustaining capital expenditures of $11.5 million were primarily for capitalized stripping tailings liners and tailings dams.
Ken continues to generate positive cash flows for 2019.
This slide outlines the key results from the carbon in Leach and heap Leach feasibility study with an after tax NPV of $874 million at a discount rate of 6%. The feasibility study supports an investment in the mill optimization project, which would increase CL plant throughput by 6% to 11.7 million.
As per annum.
Our hard rock compared to the 2018 run rate of 11 million tons Brad.
Existing CIO primary and secondary crushing circuits.
Continued to be used for the heap leach process at the end of CIO operations.
A key changes for the Prefeasibility study include optimize mining capacity to tonnage handled.
A 4% increase in gold production during the CIO, we're about even on the annual heap Leach production profile, notwithstanding a reduction of 15% in throughput.
You may begin to increase in heap leach recoveries of 12 percentage points.
7% improved average diluted grade by 5% to 1.24 grams per tonne on the CIO material.
And Optionality at a later date to process the heap leach material through the heap leach plant or supported by prevailing metal prices in costs at the time through the CIO plant.
Looking at Slide 23 reserves decreased 12%, primarily due to depletion.
Application of our self funding lands to this project and declassification of some of the highest strip ratio ounces out of reserves.
The feasibility study identified opportunities to Debottleneck the plant in order increase just steady state processing at 11.7 million tons of it.
Equivalent hard rock per annum.
These included the primary screening circuit, the grinding circuit and modifications the cycling under flow as well as pumps and line. These scaling.
DFS also identified that the gravity concentrate as were underfed, leading to underperformance of the gravity circuit to remedy. This we plan to increase water supply as an existing spare screen or replaced two gravity scalping screens test work has demonstrated that include improved gravity recovery performance will translate.
Approved total net overall recovery.
That Roosevelt attributable gold production for the third quarter 2019 was 55000 ounces strongly impacted by the security incident in the summer we are progressing well on our ramp up to normal production levels with mining activities ongoing at all of our pets.
Total cash costs at all in sustaining costs were also negatively impacted and in accordance with I FRS. Both metrics were normalized given the lower production for the quarter you can reference our mdna for further details on normalization.
Carbon in call implant, we built in January recovered 1300 ounces from tailing off in the quarter, bringing year to date chains recoveries is 5600 ounces.
Mm I'll remind you hear that as these are recoveries from reprocessing tailings water the ounces extracted.
Quarter, and we don't run the plant a 100, 100% of the Todd.
Danny capital expenditures were $12.4 million in the third quarter, primarily for spare parts and equipment.
Sustaining capital of eight point million was spent mostly on the Saramacca project.
As Steve mentioned, we achieved an important milestone by delivering our first ore from Saramacca to the Rosabel mill. Our main haul road development is progressing well and we anticipate completion by the end of Q1 2020 with ramp up of Saramacca to full production levels through 2020.
Q3 gold production at Westwood is twice.
Total cash cost at all in sustaining costs were slightly higher this quarter relative to Q2 due to the slightly lower production sales.
Sustaining capital expenditures of $2.9 million in the quarter, primarily reflected deferred development and underground equipment.
Non sustaining capital expenditures of $2.4 million, primarily reflect deferred development and development drilling.
Underground tonnages and grades are expected to increase in Q4, we plan to exploit excess mill capacity with open pit Titans from our Grand Duke satellite deposit and currently target target positive free cash flow at Westwood in Q4 2019 guidance.
We continue to study various design approaches to Westwood with a preliminary life of mine plan expected in the fourth quarter. This year, followed by a plan in accordance with an eye 43, one on one in the first half in 2020.
At Boto, we continue to maintain our relationships with stakeholders, while advancing our application for the mind concession. We're also continuing to optimize the design of the project in preparation for development decision subsequent to receiving approval from the government.
Okay, we continue to de risk the project within our capital expenditures guidance.
Positioning for future development decision, we are approximately 42% complete on the detailed project engineering and also continued Geo technical evaluation and modeling of their proposed tailings management facility as well as delineation drilling to improve the resource block model.
At Monster Lake now again, we continue our exploration efforts in the region and we'll work to improve resource inventories and I'll now turn the call over to Greg to discuss exploration.
Thank you Gord and good morning, everyone before I begin. Please note that the results I talked about today have been previously disclosed in accordance with security regulations.
Signed off by the qualified persons within the company reporting them.
Historically this quarter is a quieter quarter for global exploration programs due to seasonal weather conditions at some of our project sites.
Despite this quarter was noteworthy with a series of positive exploration results reported from several several projects.
Also completed approximately 49600 meters.
Drilling at or mine sites and exploration projects during quarter.
Exploration announcements for the quarter included remaining drill results from wind programs completed at rule that once the late in the nelligan projects in Quebec.
The Coty Gold project in Ontario, with further positive drilling results from the previously announced drugs one discovery.
Positive drill results were also reported from our deep drilling program evaluating the underground potential saramacca deposit.
We announced a new discovery it to read in Guinea, which will speak to shortly.
And finally subs.
Or declaration of an initial mineral resource Inelegant project.
Awarded the discovery of the year in Quebec as recognized by the Association.
Great and then in nearly.
Actually proud of our exploration team in Qubec for this achievement.
But for it is important to note that the new discovery is strategically located along the realistic Senegal knowledge here zone between the Boto Gold project in central to the North and the Diack. This year by project in Mali into the so.
Highlights of the results reported from our 29.
Drilling program, which was comprised of 60 in reverse circulation drilling holes totaling just over 1800 meters.
Included 29 meters grading 2.96 grams per tonne gold 16 meters grading 3.17 grams per tonne goal.
Anyone leaders 89.1 grams per tonne goal.
The Nelligan project is located kilometers south west of should move them back once the Monster Lake project located 15 kilometers to the north.
Remaining results at Nelligan reported from the 2019 delineation drilling program included 123.7 meters grading 1.26 grams per tonne goal 50.2 meters grading 1.8 grams per tonne gold and 17.3 meters grading 5.5 grams per tonne goal.
The delineation drilling programs supported the completion of an initial mineral resource estimate totaling 3.2 million inferred ounces comprised of nearly 97 million being 1.02 grams per tonne gold at a 0.5 gram per tonne cut off the remain significant exploration potential further.
It's then this initial resource and that will be the targeted future programs.
Overall, our overall our exploration program is balanced and continues to advance early stage projects for its new discoveries, while continuing to support or near mine brownfield exploration to leverage our existing infrastructure.
With that ill now pass the call. Thanks, Steve conclude.
Well, thank you Craig and.
Just to reinforce we have just started to deliver on a number of catalyst. Yes, you can see CIO and heap Leach feasibility study that we talked about Saramacca production and the initial now again resource.
Q3 had challenges with the incident at Rosabel, our team has always met that challenge and as well on their way to resolving the unauthorized mining issue, resulting in an even stronger stakeholder relations and again I can reinforce enough.
Finally, I'd feel about this being a very big asset for the company.
We limit everyday we are working hard on the Westwood life of mine update and await the decision on the mining permit for Boto and 2020, we're looking forward to achieving full production at Saramacca and assessing its underground potential doing the work to optimize effort can further delineating resources in key X.
Duration projects and positioning ourselves for development decision on boto.
We are building the case, where I am goal through improved margins cost containment initiatives and ultimately.
Gross while executing on the plan and safely we look forward to keeping you updated on our progress and thank you very much for joining us.
Thank you will now begin the call the question and answer session.
Joined the question Q Press Star then one on your telephone.
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Our first question is from Mike Parkin with National Bank. Please go ahead.
Hi, guys. Thanks for taking my question.
Just looking for a bit of color in terms of how Roosevelt's maybe operating in October if you can give it.
Books, historically like you do roughly around a million tonnes of ore mined.
Per month, where are we kind of.
Relative to that.
Total burden.
If you can give color in terms of where you expect to be for the full quarter that'd be great.
Yes.
I actually don't have the total nine tons for October Andy here, but I will I will get back to you I can say, we're mining at all Pat.
Plus two to normal production levels.
Across the operation notwithstanding that we did lose a bit of equipment as a result of of the of the answer that so we're in the process of recovery that back but generally are our production is going full blast.
Okay Super and then.
Congrats on the first store from Saramacca, how do you kind of see that or coming in through the quarter in terms of volume is going to be a fairly marginal amount or do you expect it's actually contribute fairly signet Mike.
If you want to give a percentage basis or something.
The quarter.
Yes, I get it will contribute some ounces.
If we havent included in our forecast numbers.
But we are looking at all potentially somewhere between two and 5000 ounces out.
Out of Saramacca for the fourth quarter so.
Materials that were mining are part of the.
The ongoing pre stripping effort, so we have or write the surface and as we're driving the road into the Pip, there, where we're picking up some more along the way.
As we actually as you travel along the printers.
Gold at the surface, Yes, I had my Pecos there might goes.
Yes.
With my Bad me.
Okay.
On that back in a backpack some good Oh you got event.
All right.
That's good sounds like the fourth quarter is coming along nicely.
But there are further steps question.
The next question is from Stephen Butler with GMP Securities. Please go ahead.
Good morning gang.
Gord to congratulations on your on your promotion well done thank you.
And then I wanted ask your question about the the study for the CIO and the keep the hard rock to.
Maximum capacity filler design capacity 11.7 million tons per year of course with with some soft rock still in the mine plan.
Your milling way above that rate. So maybe does how does it profile look.
The next couple of years on milling rate for press again, what percentage of the reserves.
Our hard rock.
I'll answer it wherever.
I think going forward, our reserves are about 92, denying 5% hard rock somewhere in that.
The range this year and for the past several years, we've had a pretty strong contribution from our Falagountou satellite pit to though to the west, but thats really winding down for us in the coming years in 20 to 20, we do have a second satellite or.
Second what.
Immediately south of the existing efficacy remains on which will contribute some soft rock, we do have some lower grade soft rock stockpiles as well that that the site will throw out it but generally we're going to be moving to pretty much full hard rock as we move forward.
Craig team has been out looking at other satellite opportunities, we have a great land package there.
And part of the work in three months is to evaluate.
But the business cases for those.
Obviously soft rock.
Goods through the mill very nicely in.
Certainly adds a lot of incremental.
Gold production to us at relatively low cost. So we're aggressively looking for more but the reality is most of its hard for.
Sure and Gord this quarter I mean, how much percentage would have been soft rock approximately.
This quarter I think we're running I want to say about 80%.
For said hard rock.
Probably 10% transition and.
5% to 10%.
Satellite.
Okay. Okay.
Do you have do you have certain expectations that you.
Is there some conservatism potentially built into this 11.7 or is that.
A good number you feel comfortable with upside.
Theres always conservatism.
In our throughput numbers I think historically every.
Every time, we've done an expansion.
We have met or exceeded our production levels, we do that on purpose to make sure that the business case.
Investment.
Okay.
Sounds good thanks Kirk.
The next question is from Chuck Tanya Jakusconek with Scotia Bank. Please go ahead.
Great Good morning, everybody and that Quad congratulations again on your promotion. Thanks.
You're welcome I, just wanted to circle back on Esa Kennen, Steve asked a bit about the mix next couple of years.
We're expecting a stronger in Q4 from asset can are we not.
Yeah, we get a slightly stronger Q4.
We saw some some.
Somewhat up again, great pickup in October and we actually saw that.
For us exceptional recoveries as we got into some very low graphite ours.
October was was okay.
The remainder of the next two months November December looking for.
Okay.
And is that based on grade and improved recovery that we get the pickup.
It's on grade and recovery portion is a bonus for us we're not we're not counting those chickens yet.
Okay, so mainly on great okay perfect.
That's all I had on the technical side I did want to talk to come back to Steve If I could just on you mentioned, Steven and you're opening remarks that youre going to be focusing more on strategic.
Options for the company and surfacing value and I think you highlighted co today can you talk a little bit about.
Some of the option surfacing value on Cotai.
Yes, I mean right.
John Here, you know this better than anybody because you've been around it along time I mean, we very I mean, one of the comments we get from our shareholders is that we spend the time to get their feedback and we actually listen to them.
You know in Cotai, representing a very large capex project for us even though it has tremendous transformational capability for the company.
It's just a nonstarter away. It's currently structured so we have a number of options to resell down.
The additional percentage from the 73 own.
Do we sell all of it.
Do we take those proceeds.
And reduce our debt.
It's not due to 2025.
Do we use it to try and invest in mines.
And I'm just using boto is an example that are smaller capex and less risk.
From an investor standpoint, so.
We have a lot of optionality with co today.
I would just tell you that.
There are always had been expression expressions of interest in that asset it's in Canada, it's surrounded by infrastructure.
It is low grade bulk tonnage, but it's got a lot of positive attributes that people find of.
Significant interest so my time is going to be.
More strategically focused on things like code today.
We have had.
Long list of.
Very robust discoveries, whether its monster Lake and now again, whether its.
Photo SURVIAC diack.
And then more recent discovery in Guinea.
We have what we have a lot of optionality that I think we need to work to surface for value purposes, and I'm, we're not going to fight City Hall here.
People are interested in cash flow cash flow cash flow.
Honestly dividends coming onto the operation just like you went on many businesses the stock market season.
On yield as opposed to value place. So im not we're not going to beat a dead horse here.
I need to spend less time.
At the sites.
I spent a phenomenal amount of time at the site. So as you know I mean as they can I met rosabella lot at Westwood.
Hi, Gord is as well, we're going to increase towards time at the sites and I'm going to be spending a lot more time parochial and Jeff.
On the strategic options, which we feel very positive about in terms of being able to deliver value for shareholders.
So is it safe for me to to interpret this as you know excluding could take all that you talked about some of your options. All of these other ones that you mentioned you know.
From Nelligan Monster Lake et cetera, et cetera, what some of your option would be.
Considering selling these assets to generate that cash flow, yes, absolutely.
Okay.
All right so that role can I also ask on both today.
We're waiting for the concession approval can you mentioned a development decision and 2020 .
Steve what do we need what do you need to see.
To pull the trigger on that asset.
Well, we have we added agreement in place with the former Governor before the election and I was over there with the president and minister of mines, and and we are pretty well there. So it's a beautiful.
Opportunity for us $250 million capital expenditure.
About a 10 year life mine varying.
And for Us.
Very expandable resource.
With the government with the election, we had new players coming in.
Administer finance and.
And then my six these now tenuous, so I call them younger people.
Young box that have come in with new ideas and.
These are manageable, but their time consuming and so to answer your question, we need to solidify.
The royalty the royalty that dividend the tax holiday the things that we thought we had pretty well.
Okay.
And believe they still are you guys. We still have strong support from the president administer mine we are getting.
No pushback from what I call, new players, so I need to get over their end.
Deal with this youth enthusiasm and get this locked down so that we can move ahead because no. Our board is very excited about it our shareholders.
To our top 10 shareholders really good project, that's bite size for us.
It.
It delivers value very quickly. So that's another thing that I spend time on and then you've been around this a long time. These things don't happen overnight. You may you have to make multiple trips you have to have multiple meeting. So that's why we've promoted gord and.
I'm going to be focusing on more time on a plane. Unfortunately for me I guess, but.
As part of the business and.
We're just seeing a lot of interest we have a very robust pipeline as you know.
But that doesn't matter today.
People really don't care well above that they care about what are you producing once your margin.
It's not 2016 2000.
Thank you.
Yes.
Align ourselves with the sentiment that currently out there that may change like it always does in this space right now we need to focus on cash flow, we need to generate margins that are attractive to investors and we need to make sure that we're funding all over.
Our.
Capex sustainable Capex in expense somewhat we generate so our goal is to eventually get ourselves into a position, where we can pay dividends, where we can be more what I would call or more.
Attractive operating model that currently exist in the environment. So that's my job, that's what I'm going to be working on.
So so is it safe for me to understand from what you said that you don't have right now fiscal agreement in place that has defined your royalty your dividend your tax holidays et cetera.
Yeah that would be a fair comment I mean, we do we do have it but.
Time is advanced in terms and then negotiations Tanya it's very event now.
At the event that you don't have an impact if you were to have it implies.
Would you have does everything else in the project meet your criteria to make a go for like decision.
Yes, it does.
It's quite attractive.
Okay. Okay look forward to getting that agreement. Thanks, a lot guys.
The next question is from Anita Soni with RBC. Please go ahead. Good morning, everyone. Congratulations court on your promotion and you are first.
My first question.
Just a little bit of focus back on to our Westwood. The catalyst I think you said Q4, when do you plan to put it that that planned in Q4.
Well probably put on something in December .
We're looking to provide some ranges around.
And cost structures.
And looking spread it out in December .
Actually looking internally at presentations in the coming weight.
On that and obviously it needs to go through through a lot of internal review and some tweaking to make sure that we're all aligned but.
We're still on track to get it out Q4.
Are you happy with.
The progress there in terms of you did reduce the workforce I'm just trying to get an idea.
Whether or not we're going to.
Returning to larger production numbers or sort of sticking with that some of its little bit more.
Tighter mine plan and perhaps more for cash flow.
Yes look I'm extremely happy.
With with the operation there or was there a jump in their twice in the last month.
And opportunity to go underground is really good morale.
Safety.
Statistics, which.
He is always a harbinger of west Ecomm, our safety statistics are moving aggressively in the right direction, our productivity numbers are good.
It's an underground mine will always have a couple of challenges, but yeah. We're really looking to turn turn it around it will be a bit of a wrap up required it's not going to be immediate but.
We are turning it around as I mentioned in my dialogue.
We started mining a small satellite pits called Brad do.
Which will provide ounces here in Q4 and through all of 2020 of the probably a little bit into 2021.
So that that's helping supplement aswell, while the operation gets its feet underneath that.
Had an opportunity to talk to July the technical people.
About the study that that's coming out and getting into a lot more granular.
Yes, I will be coming out with some stuff here.
And then just moving onto.
Saramacca. So I think last time, we were you guys revaluating.
Underground versus open pit options, you're delivering or right. Now can you just give us an idea of like how how the open pit versus an underground option would play out in terms of timing.
Go ahead.
Yes, so right now and are approved life of mine plan.
It's all but that often only the underground study is progressing while.
I've I've seen some of the preliminary results from that we're working on financial models and trying to understand all integrated basis, how that might.
How that might sort of full year.
We've got some budgetary close.
Contractors to really start.
Start to understand what the upfront costs, so that offshore look like.
The challenges some of the data some interesting challenges obviously as you convert some of your block model from open to underground.
Yes, it's changer support that you see there and your definition of what what is our or sorry, what what is measured inferred to indicated changes. So so we're sort of wrestling with that right now the work we're doing in the pit because it's a multi phase pit.
We're not establishing any firewalls right now really the the pit if we.
Okay, because we do still left to go to another option, we still be mining all the satellite and most of the transition and even a little bit of hard rock through the pit. So the the phase why the past the phase actually the phase one and two and three fits our all containing still within that that original design. If we do go underground.
What that gets so gets us away from some really high stripping that we'd have to start thinking about towards the end the twins way to open up the phase.
Yes.
If we if we deem to go to too.
Totally open pit option.
Okay.
Would you be doing I guess drifting drifting away from the parent drifting from the bottom of the pit into the underground.
Sorry, if.
If you're looking at the could you would you be drifting from the bottom of the pit into Oh, yes right.
We actually interesting part a location.
If you remember that Sarah back then that we're starting to pick basically on the top of the hill, we have patients.
Down on the closer to the valley floor at the base of the Hill, where we could put a portal in as the prior design to.
It's not quite horizontal but it's actually a fairly gradual decline.
Yes, right into the middle of of what you'd call the hard rock portion of the ore body.
Thank you very much.
This concludes the time allocated for questions on today's call I'll now hand, the call back over to India Goldman Nathan for closing remarks.
Thank you very much stealing and thanks to everyone for joining us this morning and for your continued interest in nine fold, we look forward to having to join US again for 2019 year end conference call to February good bye.
This concludes today's conference call. Please disconnect your lines. Thank you for participating and have a pleasant day.
Okay.