Q3 2019 Earnings Call
Thank you for your patience.
I like to turn the call over to Mr., Clive Johnson, President and CEO you may begin Mr. Johnson.
Great. Thanks, operator, welcome everyone to our call today to discuss the.
Q3 financial results for 2019 on the here today.
Oh, we have a very strong quarter in a very strong year to date and this was driven by excellent operating performance from.
Sorry.
Yes.
For cold on much study of logical.
We're going to talk going ahead overall I can remember to talk about some of the detailed.
The quarter results and we also have our whole team here and on the phone to answer any questions answered give me a full uptake.
We also in the quarter sort of hard for me I guess in the quarter was in addition to the great performance wasn't the prudent transaction with caliber and at what seem for approximately $120 million cashing shares.
<unk>, 30% of caliber going forward I think it's a very good transaction. That's good for it's a win win win that's good for our employees are former employees in the aggregate were no employed by caliber of but they were very strong team and they have a similar corporate culture to beach gold and by that I think they're going to be successful, we're happy to be a 30% shareholder.
Caliber forensic wasn't a within the main driving force behind a change of ownership.
Corporate assets was really about the size of mine. So we're building these days and a wasn't above politics in Washington, <unk> any of the reason we like the assets you actually turned them over a very good changes to caliber. So it was more about looking at our future at the company, we're looking to drive onward.
Well I was a huge success for each book as a person producing assets and a great success for for the girl that people are patents government. So a very good legacy that we believe there and that helps.
Well, it's really for the quarter in New York State.
But having said that the debt repayments of over $220 million is expected by.
By the end of your.
The 100 million of up to 20 being paid back and we expect in the fourth quarter.
It will bring us down to a total debt by year end of 260 million.
Yes, mostly be our revolving credit facility and then so somebody quicken loans as well so that's a very low debt level on this one of the laws that it was oh ratios in the gold space today.
Because of that are really good problem performance, we've actually announced yesterday that were paying our first dividend.
That's a very important milestone for the company I believe for children.
The goal long when we create into of each for 11 years ago [noise].
Well, we aspire to us to become a successful in low cost responsible.
<unk> producer the could generate cash flow.
Provisions waters to continue to grow the company by building additional great projects and finding more coal, but the other was ultimately to see if we can do that at the same type hit dividend back to our shareholders and that's where we are when you started this dividend, but obviously, it's something we'll look to grow overtime and so it's a good started a consistent with them a pack in terms of gold producer demand.
Yes.
But once again, we're a growth company. So we wanted to make sure we maintain enough cash flow with access to cheap debt to be able to continue to do a region.
Excuse me that's building a fully funded vulnerable in order to call bunch of running an extremely well.
So looking forward and all the way forward quite clear for US we're spending for Cola, that's going on extremely well, we've seen a great performance cool and 2019 before such on traction.
Actually 600000 ounce production next year that it's too too as we told them internationally. Since June 2020, it's really driven by the fact, we have a larger mining fleet and were able to buy some higher grade during 2020 Soc both from low grade and then the actual.
Increased throughput at the mill expansion will kick in in the third quarter of next year. So some people wanted as to why the expansions finished in the third quarter next year. While this next year such a robust year, that's because of this ability to utilize the larger fleet for the first.
And by most of the euro them the expansion kicks in as well so we're still love it could comfortable with our.
Next five years average around 550000 ounces a year from a cold.
Additionally, that we'll continue to explore super cooler area for core could finish building north we've got a successful campaign, the infill drilling and filled during the 90% of the resource at the core that was in the inferred category.
So we'll have results dropped by the other year or the resources. The core but also remains open to the north and keep hitting it as we step up even further north.
So there's more work to be done to see how big could come against ultimately and of course, the had a car the area 20 kilometers north difficult as you have to some very exciting results recently, we have a large separately.
Pretty good size separate resource room, or five kilometers per hour commerce there.
That's it.
Actually a million ounces, so far I'm heading to any larger as it gets bigger but more importantly, perhaps significantly we're starting to hit what we hope to see below.
Separately that have some really good.
Recall that type grades in the so funds below so we're quite excited automatons PMR quite excited about that it's early but it's a great success and we're going to do a lot of drilling there.
If we have another caller type deposits.
In addition to that we're going to look to grab a lot has become an important part of our world again.
Tom as everyone knows.
Most yet it's been the operator for several years, we reached an agreement with HIV during the quarter, whereby we would become the manager of joint venture and we're looking to drive that push it forward very quickly.
Some people will remember we were actually to moving out of our interest a couple of years ago, We didnt like it looks repairable latte and we have other priorities frankly, some recent new geological modeling.
Program office suddenly really change the potential economics of the approach and to make that potentially quite robust remains the main risk now there's a lot the as we see it is.
Well drilling versus sort of a portion of the resource that is in the inferred category drilling has now commenced or will commence any day to turn to hopefully turn all of that inferred to indicated it's quite a homogeneous ore body. So we're not expecting to any surprises with infill drilling, but obviously, it's one of things you need to do other than that we've got a tremendous amount of good work done by anvil over the years.
The metallurgy engineering work to be done there's not a lot left to be done once we infill drilling to move to a vital feasibility study by the end of next year. So we have a budget between the two companies of approximately 40 million to achieve that gremolata certainly become a potentially.
Project for Us when we look to build our next month, we've got some work to do an infill drilling, but we like the looks of it correctly as you heard oval.
The infill drilling pans out on the rest of the detailed as a feasibility as what we hope to be so lots of is coming out of ever wanted over the next year. So clearly the focus on our strategy going forward is what has been for long term.
It is to grow this company from existing assets.
I have a lot to being a primary we're obviously the expansion for colon and also exploration for coal and elsewhere. So continue to grow by developing our existing assets and by exploration worldwide looking to do joint ventures or our own finding the looking for looking for large low cost deposits some of them the joint venture with a long struggling suffering.
Junior exploration companies, so well look for opportunities, where we can send money in the ground to earn a majority interest.
So let's give an overview for me I guess.
So Mike I would just STL, our our analysts friends on the line. This is probably not perform to get us detailed questions about rock types or strip ratios for mining cost per tonne. If you will ask those detailed questions without definitely invite you to send an email to unit new afforded to whoever is the right one to two answer those detailed questions. So with another vessel.
Over to make to give your an overview of the financial results.
Okay. Thanks Clay.
Great quarter. So happy present results. This story do I, just remind everyone what the basis. The presentation. These financials is consistent with the second quarter.
Nicaraguan results in the financial statements are presented in.
In the income statements a one line item.
Income loss from discontinued operations and the balance sheet. This is one line item in the opposite sex and the payable section, but when I discuss results I'm going to discuss it as presented in animals were mentioned what it was if you included Nicaragua as well.
So firstly, starting with the revenue line at 311 million.
For the year are for the quarter and the revenue increase with was mainly driven by 23% increase in realized gold price, but offset by 10% decrease in ounces sold.
Overall, if you include Nicaraguan there were 382 million versus the prior year quarter 324 million.
And basically all operations were at or above I'd like to both budget in terms of production and.
Terms of sales.
Then turning to production.
I can from continuing ops was 213000 ounces so thats for color.
Starting with Ricardo and if you could.
Production from Nicaragua 45, both in the total production for the quarter was 258000 ounces, which.
Compares very well with budget of 242.
Mm.
It's a quarterly record for Q3, and we already had a quarterly record production for Q2, so that so the good news continues.
Breaking that down and talking little bit of both the individual components of it for coal was 112000 ounces for the quarter I guess the budget of 108 to 4000 ounces ahead, and it's really the same same story that we talked about the first two quarters of the year for coal continues to demonstrate we hired sustain processing with Overages recovery.
And it's benefiting from the trend of more oxide softer material.
Finally, the budget inside.
Coming from the primary crusher.
Because we're able to put more material through the mill, we've actually been drawing down some of the low grade stockpile. So so what are you seeing it the greatest dropped a little bit, but theres an increase in production because there's a lot more volume going through the mill.
My body with 52000 ounces against the budget to 49 to 3000 ounces ahead and again same story is the first two quarters.
We continue at higher than planned grade ore tonnage coming from me, including some some ore tons that we're taking from back gold areas that we hadn't originally budgeted or both in the model, which would show higher grade.
So just a commitment that we had.
We have noted in the press release that Montana, and bringing one tenant the good thing MPSV that our mining license and program continues to move along well, we're now predicting and likely happen late Q4 early 2020, but overall from his value because of the outperformance to date and our ability to keep in mind from Maine, We think that bad he's going to.
Come in at the high end of our guidance range of 200 210000.
Oh Dakota, so for the quarter with 49000 ounces against budget to 47. So just slightly ahead and once again same story.
Earlier in the Euro Dakota continuing to benefit.
Higher than expected on ore grade tonnage from phase through the will shape.
I'm going to talk about cash comes down I'm going to talk about those on the basis of ounces produced in the Mdna, we presented on the basis of ounces sold as well as ounces produced but.
In this case I want to talk about it based on ounces produced so on a consolidated basis, the cash costs for $507 an ounce against the budget by 43, so a favorable.
Cost saving variance at $36 now.
If you break that down the total from the continuing operations was was 443.
Dollars, an ounce against the budget for 90 and once you add in Nicaragua. They ended that were 43 bumps up to five or $7 an ounce see can see that.
Going forward, we're going to see an improvement in the overall cash cost per ounce because the remaining operations are better cash cost profile and those of Nicaragua, which we now disposed of.
It's going to touch on the individual components some of those cash cost of color.
$383 Americans abundant 394 to slightly below but as I mentioned earlier for call. It really is moving along we've got slightly lower grade because we're producing from some of the material from low grade stockpile.
But overall, we've managed to maintain that say cross product profile, but more ounces. So that's certainly and profitability.
And that $622, an ounce against the budget to 673.
Ladies and cost savings kind of across the board.
There are number areas were those savings have been.
Noted that include like drilling and blasting costs, including taking material from the backfill locations are lower and we talked that we need less drilling and blasting loading in hauling.
Costs are being lower end and there are fewer total tons of waste move than budgeted because we've been focused on maintaining so all of those that benefited by these cost profile overall.
The most significant.
Cost reduction in period, though you go to cope.
Actual costs, there were $394 an ounce against budget of 519, so so its saving about $125 now.
And again there were number of factors in fact that that contributes about those lower cost profile, but.
Lower than budgeted fuel and reagent costs.
Hi than budgeted gold production and also a weaker Namibian dollar and maybe in dollar with.
Okay contributed probably 2 million so the and the year to date in terms of FX to the profitability of both Dakota.
So overall nicorette more where the total for the Nicaraguan operations were $810 an ounce against.
Budget of Apthirty, two Nicaragua were.
Kind of was on budget we had.
Better than we had fairly good production I think from both the underground at the moment and Liberty had benefited from higher than budgeted.
Or production at all all of it mining areas, including heavily underground.
Finally, I will comment on the all in sustaining costs for the quarter. The total on a consolidated basis $807, an ounce against budget Aveo force almost right on budget.
If you break that down the told from continuing operations was $755 against the by the 765 and then Nicaraguan all in sustaining costs were just over a thousand dollars, which is pretty much on budget.
The one thing to comment there would there is a fairly significant.
It's all in cost segment on the cash cost $36, an ounce, but we don't see that repeated in the all in all ends are pretty much on budget and and the main reasons that is the higher gold price because royalties flowing through that all in sustaining cost calculation we had.
Hi, higher gold sales and revenues as mentioned earlier and.
With those high Roadms getting higher royalties and those flowed through the all in sustaining cost number but all in all.
Pretty much right on budget there is some capex in there that was deferred.
In earlier periods that flow through this quarter for the forecast year, we've probably got somewhere between $7 million to $10 million of total capex.
Maybe related deferred stripping at several of the operations, but we don't expect will flow through into the fourth quarter. So you may see goes is absolute savings for the year against budget.
Okay.
Just going to come in a couple other items and the income statement one once on the interest a licensee 7 million there for the current quarter very similar to prior quarter and.
We did repay 100 million year to date on the revolver and as Clay mentioned, we expect to pay another 100 million in Q4.
What what that will mean.
When you look at that but doesn't create some debt than you might expect to see greater drop than that but it was really just to do with a timing we paid 75 million of it in Q3 off later in the quarter. So you will start to see costs or interest savings as we move forward now.
I will comment on the tax sites on on the current income taxes due to some of you frequently have questions on that 34 million for the quarter majority of us from call. It.
28 million 22 of its income tax and 6 million of it the priority dividend, which we also accounted for as attack.
One thing for your models, we have disclosed that that we were going to pay we expected cash tax payments for the year to be $120 million for the year, we bump that by 10 million in this quarter and Thats due to.
Would you Cotto theres, the higher gold prices and the higher net income generated in the media because of those higher gold prices as an augmented or your career with no more taxable than we thought it would be so we've added on guided to that Theres. Another 10 million that we think you should put in your models for Q4 for total tax payments and mainly related to it.
Quota.
Couple of comments overall now on the overall results.
As we look forward, so and for the quarter, so firstly for the quarter the.
Attributable net income was 66 million.
I'm, sorry, 55 million attributable 66 million overall.
Basic EPS, including discontinued operations.
Five cents a shared.
Adjusted EPS off adjusted net income attributable 89 million with nine cents this year.
And then cash flow from operations was 168 million or 16 cents a share.
In terms of overall guidance.
For the year and looking forward, we hit we Didnt change the mix of our overall production guidance range, where we didnt change the consolidated range overall I think that's significant too because we.
With that with the disposal of Nicaragua in the Middle of October we don't have the benefit of 100% of that production going forward, but we still think will come in somewhere around the mid range for consolidated guidance.
What we did change was from coal we moved that we recently had a guidance range of 420 to 430000 ounces.
We bumped that up to 445 to 455, just just based on the performance of full year to date and and you'll see from that and the results are already reported that June of this strong first half that we had there.
That production from for coal is no longer weighted half one versus half two it's pretty consistent on the way through.
Is that you were still guiding 200, 210000 ounces, but like I mentioned, we expect that to come in at the high end of that guidance rates as it is what would you go no go guidance 160 575000 ounces.
That would you go to was weighted to first so second happened the budget and remains so.
Since half one.
Reported 70000 ounces and we think will be somewhere in the middle of the 160 575 button on trend for the for the whole year, what we guided down was only mone and Liberty event and not because we were guiding down on the basis that we're only going to pick up our share of their production going forward that.
That so we would report is only 30% so taken into account. The production. We did have up to October 15th where we own those operations and and the sort of 30% share that attributes of going forward. We now think loans guidance ranges between 50 to that type of mountain.
And over time between 70, 580000 ounces, but when you put all those together the total consolidated earnings are still being 35 to 975.
And like I said.
We think we're going to come in somewhere in that mid range.
On a cash cost guidance range.
For Colo for the year, we still expect to be in the range from is bad Dakota, we expect to be at or below the low end of the range same story for those operations on on the all in sustaining cost side. When you look at the consolidated range that we gave so cash costs are 520 to Fysixteen, we think we're going to come in at or below the low end because you'll have seen the pause.
The results year to date for those and then on the all in sustaining cost guidance range.
830 by the semi side, we think will will come in there somewhere in the range.
Couple of general comments on the operations of the game couple of comments for your models and so for both of the exact and started in 2019, well underway, we expected to be completed.
Certainly by the end of Q3 2020.
Detailed engineering, we expect to be done early to mid November .
And now we did guide before the did the plant expansion project. So we expect to be $50 million totaled 25 split between this year next year. We so in fact that split is accurate on the fleet upgrades of 86 million that large and fleet.
We originally thought that we probably up about 25 million of that in the current year 2019, we now think because of accelerator purchasing and what we're doing there if things move in that the 86 million split will now be split 36 million for the balance of 2019 and 50 million in 2020.
But also in the solar plant again, well underway there with plans to get that both the total cost as we disposed before 38 million.
Previously we felt we incurred 20 of that in this year and 18 next year now we think we'll incur 17 in 2019 in the balance of 21 and 2012. So again just for you to update the model.
Quite mentioned grab velocity, and where we're going there and for the purpose a gain of your models and what you both in their weve.
We have agreed with with AG eight up we'll we'll have remaining budget of approximately 6 million for the fourth quarter of 2019, and then of up to 40 million.
For 2020 to get us hopefully to that feasibility stage studies based by the end of 2020, because we've agreed to fund. The first 30.9 million that first aid to earn are we back to 50 50 joint venture interest.
And B.
Supercom manager.
Our split about six plus 40, so totaled 46 million will be 6 million for the balance of 2019 and approximately 24 million for 2020, just if you want to put that in your model.
Just finally, a couple of comments.
On.
The cash flow statement as I mentioned cash from operating activities 168 million for the quarter, including cash flows from the ground.
Year to date to just under 350 million operating cash flows assuming $1500 crown.
Gold price for the for Q4, and we've seen that pretty much all the way through so far we think we're tracking right on that $500 million of operating cash flow that we previously disclosed for the year.
The financing side, we have payback and totaled 100 million on on the revolver 75, it so far.
In this quarter and in Q4 because of the waiting until my predicts that we talked about otijikoto and strong cash flowing for all the operation. We think we'll be able repaying another 100 million in.
In Q4, and it's quite mentioned the total debt reduction, including paid down some of the capital leases and equipment loans.
Well is estimated to drop from 480 million to started the year to 260 at year end and the way things are going, especially with the for coal expansion coming online or certainly the larger fleet.
So the impact of that and and mining earlier in the year end than the expansion comment fully online at the mill later in the year strong Pes was there we think we think.
If we wanted we could certainly be that free on the revolver side by probably Q3, just after the second half of next year are just up the first up next year sorry.
On the investing side, we spent 205 million year to date 73.
Million in the quarter and like I mentioned that there is some there maybe some timing differences and the capex year to date, but in terms of both Capex and like we did was budgeted, but it's not likely to be incurred probably somewhere in the region of five to 10 million for the full year, we will give an update on that when we report Q4.
Also we will see cash inflows in the fourth quarter of.
40, or 53 million in total for the first part of our payment related to the sale of Nicaragua.
So there is a 40 million cash payment as part of consideration and then there's also the first part of a working capital cash adjustment of 13 million. So a total of 53 million that we'll see flow in in Q4 in cash related to the Nicaraguans Bogo.
We finished the quarter with 146 million in cash now that excluded 18 million of the Nicaraguan cash is because of the way we have to reported but in reality.
In the early in the fourth quarter, we pulled up the majority of that cash backup into be too. So because it was cash that we generated under our ownership.
And.
I guess fine point to note on the cash lets say, what we'll see I think the in you'll see it probably early to mid December in.
Q4 will be the payment of the dividend of approximately 10 million use.
Reflecting our first quarterly dividend of one cents per share.
Let me those are the main items I wanted to highlight in terms of the results and the cash flows year to date and how we see the year panning out.
Okay. Thanks, Mike I think glow.
Open up to the question so.
Certainly at this time, if you'd like to ask a question. Please press star one on your telephone keypad, we'll pause for a moment to compile the Q and a roster.
Scared.
Again that is star one on your telephone keypad to ask a question.
Thanks.
Your first question comes from the line of Jordi Mark with Haywood Securities. Your line is open.
Yes sure.
No I switch on the quarters could see dividend coming in.
Great.
Perhaps in line with do something close to move.
Ladies and the new ships later, maybe as a segue from your comments on.
Focusing on.
Since it's a scale.
Just looking at Gramalote I'll tell you, what's sort of make sense to for free sales new partners in terms of relative scale of.
Of production on a gold gold production basis and asset life for that and so if you think you are you able to make any comments on that to achieve an idea.
Your thinking.
What we're doing we're working on our updated.
Okay.
Which we would hope to have done by earning.
Next every next year, but I think the most recent.
Economic running sort of a Doug, but looking at something starting out at Travelocity Ridge that we're talking about somewhere starting other somewhere around 400000 ounces a year.
Infill drilling pads on the other economic see similar to what they've been in the past.
In terms of mining costs, all those things when there's been a lot of worked on them and has the potential to be Anthony.
Well cost producer.
Look pretty robust economics.
For 200 on the cold So the mine life, probably talking about specialty.
To fully in my life, and we were talking about on most of the most recent numbers.
I think joining a lot of the details going to the unemployment of assessment, we feel that something that we would.
I can share with our with our publicly to indicate why we like it.
So much more than we'd like to the couple of years ago think driving force has been the of the new geologic modeling this but.
That is.
Shown us significantly better project.
No strip ratio trade logistics.
Pre metallurgy those are some of the keys to a low grade ore body and we thought all those.
So whether that will be.
Beginning with the stock into a valid and those are so the key travel Unfortunately, the infill drilling but.
So far we let looks a lot was warrants we done but not that much actually it's mainly infill drilling.
Okay. Thanks, maybe closed just one on one point on moving Christopher coal.
Just.
Obviously, some language on the on the sold plant there thinking about.
Obviously fully payback, there's a particular.
Close benefit on on the scale of that production on the scale of that.
Capacity of 70 megawatts.
And.
On that basis, given the collective capacity, if I guess a fuel for us so.
If anaconda was to.
Okay. Ultimately would you drill from the same plant.
Would you do something separate I'll leave it there thanks.
Well, yes, Dennis I think that is already can talk to the board of solar but I think the clubs that would be that occurred to become something ready becomes viable, which we're seeing the the just separate at a low and continues to expand so we're kind of keen on that as Ken if that was a stand alone.
Definitely you'd be looking to perhaps assured hard to some extent you'd be looking at perhaps expanding the solar plant those types of things are our options on let Dennis answer the other question about solar energy on.
Yes Clive.
Yeah. The solar plant is going to provide about all the way you when the expansions up and we're running at that the higher rate.
Provides about 18% of the power drops the process operating costs by little over 7%.
And it does.
It does provide.
Additional it lets us do maintenance during the day on the units things like that so we can draw more power from the plant simply because of the maintenance schedule, we don't need that the plus two scenario that we have in the power plant. We can almost go to a plus one scenario because of the daytime maintenance that the the solar plant creates in the solar plants being built to wear.
It could actually be expanded without too much trouble also hope that helps.
Okay, great. Thank you.
Thanks.
Lawson Winder with Bank of America. Your line is open.
Hey.
Good morning, guys I think.
I'd like to else's Echo those comments and I commend you on introducing the dividend and particularly only added competitive yield and Clive I definitely agree is your comments that.
I think this is a milestone for b two goals.
So.
With that said.
Question on Gramalote today, the cloud I mean, you mentioned that obviously one of the big sort of challenges. Our next big steps here is getting the until drilling done that makes a lot of sense, but just looking beyond that assuming the geological model checks out infill drilling confirms everything you'd hope.
What do you see is the biggest challenge to getting Gramalote they built.
Well well permitting is always you know what are the challenges of our business will be we do have an environmental impact assessment already accepted with the government. So the stair steps to go along the way to continue to the permitting process, but no we're not going to and you'll get which is definitely one of the best place to be in Colombia in terms of pro mining.
Okay.
If you were flyover.
Colombia helicopter and you know nothing about mining until it actually to pick the best spot in the country to build the first large on the goal, but you pick up a lot. It's it's generally molehills SATA altitude softseed drain there's not a lot of local crops and vegetation that goes to an excellent payment model, so excellent job and working with local people add.
Net working with the are just a miners and local population. So we're very popular there I mean.
Hey.
And taking over as operator, we're going to inherit a lot of people BG people than working so hard that on permitting at all the other social issues, they're going to stay where they are.
[noise] managed by.
Before but it also EG will have a strong presence as part of that.
Management Committee. So I think we think we're really good shape, there and then frankly because at that age is a big company and they probably.
They.
Two things methodically.
That will have already that we would sometimes and do a little more work than we but sometimes but things like metallurgy and engineering et cetera. So a risk reward thing. So we benefit from that after many years and the fact that it was a lot of good work done by each area in terms of the metallurgy in terms of engineering. So there's not a lot of risk that we see in terms of those things.
In terms of the ore bodies cellphone, Tom can speak to it but it's a pretty homogeneous low grade ore body. So we're really.
Hopeful, but the infill drilling is kind of thing, though no negative surprises I will have the results about starting to come out I guess it may Tom.
As of next year, so, yes, we see us as a very advanced projects a much more bass than you would normally expect to be want a significant portion of it is actually in for Silicon is it's a best permitting its events and social issues as well as fast and all the other things that make about feasibility study a detailed engineering there'll be some more detailed engineering and some more work to be done on.
Looking at plant and stuff, but we were.
We're cautiously optimistic and this can as potential.
Significant so low cost.
Producer and that's one of the reasons why our focus is organic growth because as I've said many times in these calls I'll say it again im not going to see any sleep and M&A from us because why wouldnt you buy anything when you've got the kind of assets. We have got a lots a potential for additional ounces for coal et cetera et cetera. So we're going to see the portion of its analogic potentially becomes important.
Another note on that I guess, one of our I think one of our reasons for our successful regional strength of our.
Our executive team and our technical at all but people that work for us tremendous amount of experience will tail cravings.
Vice President.
The loan production to be too bold as is often to put out of an estimate out I mean, the country manager in Colombia, reachable I think thats a great move for della for of some of the jealous actually but.
Especially store, but it has a deal came to us when it when we originally acquired the nonqualified assets. So in this country manager in Nicaragua that he was promoted to come Vancouver, Eddie water to go to Colombia, and how this experience. So that's what I think is one of the Houston successes that theres the bench strength the ability to two of this incredible routine that people around the world.
Slot into different projects in different opportunities as they come up and of course, if we get reported building.
It will be our in house construction team has done such a fantastic job and is currently due to the expansion of for coal. It. So yes. We're.
We're cautiously optimistic that took our modest on a real good shot to be a low cost of the going on.
I look forward to further updates on Gramalote today. Thanks for those comments Clive and then Mike maybe just a question for you on.
Or perhaps someone else, but I think business once going towards Mike on Montana the extension pit.
You highlighted that the permits are the approvals rather it could be delayed into 2020.
Im just curious how many approvals are needed and what are they and then finally I mean, if there's if there's any more slippage. There is there any risk to the guidance you guys have provided preliminarily for 2020 there with.
200 210000 ounces.
Well I think did the answer the first part of your comments.
Your question the I think we're right at the we've got one more final approval to go and then we'll have role we think we're ready to go other than that we think we're ready to go on mechanics. So.
That's why we think it will either have a bit later now report for 2020.
In terms of guidance. This year like is that we're going ahead guidance.
Of the upper end.
As a sensitivity to next year.
From a 10 is not in there there might be a slight slippage, but it won't be very significant certainly not in the scheme would be to production overall and.
We're also going to look at as part of budgeting.
Just to.
The what we would do if we didnt come in right at the start 2020, but right now that's when we expected as Mike said it would have a minimal impact of it doesn't come in at all but I think it's important point other we're not looking for new permits the consolidation of of the Montana.
And what have proven that we already have theres a lot of precedent in the Philippines wins have been done before so we're not doing anything thats outside.
Outside the norm and though we thought.
Bureaucratic process as we see in many countries, where the final final stages.
We don't anticipate.
Just beginning that final approvals very shortly here.
Thank you and then Mike just actually one quick follow up on your comments around Namibia.
Certainly the caution the NIM Namibia this year have been remarkable.
Just say the least you highlighted several factors that have contributed to that and I'm just assuming.
No change in FX from here.
Are there any sort of pressures that could work the other way going into 2020 or.
Would you consider some of these cost savings sustainable.
Assuming no change to the FX. Thanks.
Well, we budgeted a memory put in context, we budgeted our when we when we sort of re forecast for result, what we thought the costs look like we ended the year, we've assumed that the mid new cost will be on budget. So we did have some cost savings.
Through the year some of that's related to where we're mining in the ore mining.
The FX rate.
We will probably budget some room for peer half for 15 for pretty maybe the foreign exchange rate for 2020, and so I guess you can factor that into.
Whatever you've gotten your model but.
I don't I don't think we're planning that we have sustained cost savings.
That we've seen there this year.
For next year, the budget will be pretty consistent with how we budgeted this year.
And then or are you seeing any.
I'm going with this is just on the on the labor side with the depreciation in the.
In the currency are you seeing any pressure on labor cost there.
Labour costs, we have a union agreement collective bargaining agreement there they go up little bit each year to reflect something a little over I guess inflation rate.
Yeah.
Standard growth, we don't see any particular pressure in the labor cost next year again.
It will be based on what your FX rigors of so what the budget, but we'll probably budget somewhere.
14, and a half 15, Fortunately lot of mines in the mid have shut down over the last number of years various types of mine. So these are pretty good jobs and as you won't pay boating jobs and we've got tremendous support from the government recently had a successful depreciation for the unions again so.
These are our jobs are very much I think in demand.
Okay. Thank you all that's it for me Okay. Thanks, I'll answer your questions.
Again, if you'd like to ask a question. Please press star one on your telephone keypad, Chris Thompson with Pi financial your line is open.
Hi, Good morning, guys I again, congratulations on a stellar quarter.
One of my questions already been onset, but just moving toward you kind of quickly nice to see the high grade from Wolfshag hitting the mill.
What are we going to get a bit a better idea of.
Life of mine plan for the for the mine here.
Well go stick that Bill Bill Lytle, just left you had us venture for the Philippines.
Let's take that off.
Well I think there'll be no for wolfshag, the what we've always been considering as when you know how big we think the open pit will be versus the underground. So we're still looking at that.
But we.
Waiting or are sort of.
I thought that maybe going underground earlier might be the most profitable option, but that will be reflected in the mine plan on the new resource reserves and resources that are done.
By the end of the year or for the area than in Q1 next year. So in terms of.
Understanding how that fits and so mine plan I think thats, when it's going to be available.
Great. Thank you and then they just quickly finally I'm just want to make sure. My Thanks go right. The a new results for for Kona before the end of abuse deterrent.
Yes, that's right.
Perfect guys. Congratulations thank you.
Thanks, a lot pension.
Michael favor with Canaccord Genuity your line is open.
Hi, guys. Thanks, a lot for taking my question and again congrats on the great quarter I've, just got a couple of questions on for call if I could.
Starting with.
Just the stockpile that you have there I know you guys continued to process some of the lower grade stockpile that you have available are you able to give that any us any kind of a sense.
Of how large that stockpile is and what kind of greater we're looking out there.
Revenue UAN.
Yes, yes, right now were.
We've got a low grade stockpile of about three and half million tons and that'll continue to grow great. If that is running just over a gram 1.1 Gram a tonne.
Okay. Thank you and.
If I remember correctly in your mind plan, you should start to get into start mining some of that high grade core of the deposit if that starts to come out in Q4.
Would that be stockpiled as while until 2020 or would that start to go through the mail.
Starting in Q4.
Yes so.
We will have some stockpiles.
Hi, great at the ended the year.
To make.
So some of it will will go through the mill in Q4, but a lot of it will be stockpiled as well.
And be processed in the first quarter.
Okay, Awesome and one more if I could just on the shareholder loans that you guys have with the government of Mally are you able to give us any type of updates on where those sit or when you expect that to be fully repaid.
Yes, we can give us sort of indicator again based on the both price and production levels on.
They haven't repaid them, yet, they're not repayable, new ordinary dividends or the.
Clearasil until our construction loans repaid yeah, and once those are repaid than the ordinary dividends that attribute to the 10% shareholding that the government not only had will be applied against repaying along to dividend.
As a guide it varies depending the gold price and at the mine plan changes, but I think broadly speaking, we're talking about 2020 to 2023.
Okay awesome. Thanks, a lot. So that's it for me and congrats again on the great quarter.
Thanks appreciate it.
There are no further questions at this time I would now like to turn the call back over the presenters for closing remarks.
Okay, well, thanks, everyone for taking the time too.
Two down on the color. Thanks for your very good questions any further details on any topic feel free to reach out.
End of the you'll put your touch with.
The person most able to answer your question so.
Thanks, again, and we look forward to studies.
Okay.
This concludes be two golds third quarter and year to date 2019 financial results Conference call. We thank you for your participation you may now disconnect.
Okay.
Yeah.