Q4 2019 Earnings Call
Please standby your meeting its about to begin.
Thank you all for joining us this morning before I turn the call over I need to advice that certain statements made during this call today may contain forward looking information and actual results may differ from the conclusions or projections in that forward looking information, which include but are not limited to statements with respect to the estimation of mineral reserves.
Resources, the timing and amount of estimated future production cost of production capital expenditures future metal prices and the cost of timing and the development of new projects.
For a complete discussion of the risks uncertainties and factors, which may lead to actual financial results and performance being different from the estimates contained in the forward looking statements. Please refer to you I'm honest press release issued yesterday announcing fourth quarter 2019 resolved as.
As long as the management's discussion and analysis for the same period and other regulatory filings in Canada, and the United States I would like to remind everyone that this conference call is being recorded and will be available for replay today at 12 o'clock PM Eastern time replay information and the presentation slides accompanying this conference call.
And then webcast are available on them on its website at your Mana Dotcom I'll now turn the call over to Mr., Daniel Racine, President and Chief Executive Officer.
Thank you operator, thank you all for joining us and welcome pork fourth quarter on your end conference call.
With me on the call today's Jayson the block our CFO.
Our members of our Great management team is also on the rule and will be available for the Q any portion of the call.
2019 was by any measure a very strong year for Yamana.
Docs and exceeded guidance gosh <unk> increased the decline reserves grew project advance and the amount of was one of the top performing stock and then its peer group.
Or just some of the odds of the year with <unk> greater detail, what first look at our health and safety performance.
Our total recordable injury frequency rate in 2019 felt to zero point 57, a 5% decrease from 2000, and like 18, and 24% decrease over the past three years.
Helping you on I'm pleased to inform you completed its seconds three to your without a lost time injury, marking 8.9 million war car without a lost time.
Incident.
Yeah mother didn't have any material environmental or community incident for the fourth consecutive year.
Turning to our production results Weixin exceeded.
2019 guidance for both gold and silver with silver significantly outperforming its guidance.
Geo production also exceeded guidance at 1.0 with 24 million versus 1.01 million.
Cash costs of 667 bridge, you and all in sustaining costs.
978 were in line with guidance after the inclusion of adjustment noted during the year Jayson will discuss costs in greater detail during his remarks.
Total debt degrees in 2019 by 711 million and were nearly all of our net debt to 889 million see nics. It seems the strengthening our balance sheet and financial flexibility.
And with greater financial flexibility, good things up and.
One of those things was the 25% increase to our annual dividend announced in Q4.
You know a community of the increase our annual dividend by 150% to five cents per share from two cents per share in less than eight months.
In September we announced the discovery of each school D and new mineralized zone at Canadian Malartic, We said that drilling results indicate that Goldie and east about us xone carbon sheet converging at depth.
Increasing our confidence in the economy of the underground mineral resources at Canadian Malartic.
The join the amount of Agnico Eagle partnership that owns and operates the mine is evaluating scenarios to optimize the project, which includes discussion with world T. older years, then and other stakeholders that and then to the economy goes up for would check.
Given the amount a robust pipeline of development project, we do not currently anticipate the.
I anticipate approving the project for the Blackman, unless this discussion or successful and the project economic or improve.
In addition to Canadian Malartic, we issued positive exploration update for helping you on several mobile I mean, it off and I'll be the inject will be though in the second half of 2019.
We also advanced phase one of their check will be the optimization and we expect a prefeasibility study to be completed in Q1 that evaluates economy scheduling an expansion scenario for phase two.
We increased mineral resources on the consolidated basis with inferred mineral resources, showing a substantial 27% increase.
Jack will be no. It was a standout in this regard increasing their old reserve by 19% from Iran. Yearend 2018, I'll talk more about the reserves in a moment.
Another positive this past year was the progress on a go Rico last March we signed an agreed and integration agreement with Glencore and Newmont under which I go recall wouldn't be develop and operated using the infrastructure and facilities of the Alumbrera mine.
The agreement significantly de risked development with reducing the project complexity and environmental footprint.
In July we announced positive result be Prefeasibility study result for the project that underscore the already got has one of the longest life lowest capital intensity copper project in the world.
Physically do study is expected to be completed by year and or early 2021, we continue with advanced studies to further enhance project economic.
Finally, we completed the sale of shocked by the mine in July receiving upfront cash consideration of 800 million. In addition, daughter consideration.
These next like cover our fourth quarter highlights I want.
Walk you through all the numbers, but I do want to buy like cash and liquidity or cash balances declined by climb, but by 59% to 158.8 million from 99.9 at the end of Q3.
This is yet another barometer of our improved.
Financial flexibility and strong free cash flow, which climb to 73.4 million in our later this quarter before dividend and debt repayment up from 29 million into third quarter.
With that six ability, we are not only able to do things like increase our dividend. We can't also continued to reduce our net debt.
We did by nearly 60 million in Q4.
This slide shows our Q4 production and cost.
Isn't that will discuss costs in greater detail during his remarks.
Looking at production Jack will be that boosted an all time quarterly and full year production the 41.
Doesn't audiences.
74.
774 ounces and <unk> and 59 499 ounces, respectively full year production was also well above our onboard the revised guidance Fone hundred 52000 ounces.
The success of this operation as a testament to what can be done with planning patients and great people and there is more to come.
Phase one of the expansion is on track for completion in mid 2020.
This will bring totaled with but to a stable and sustainable 6500 tonnes per day.
The rest with puts into fourth quarter was approximately 6200 tonnes per day.
Increase in mineral reserve that I discussed earlier, we will support the phase one throughput, but also support the potential for fees the second phase of the expansion.
This phase call for production to increase the 200000 ounces per year at 7500 tonnes per day, and 225000 ounces at 8500 tonnes per day.
Prefeasibility study is expected to be completed in the current quarter.
Opinion on the reported its highest quarterly and yearly production since we completed the Rightsizing three years ago gold production in the quarter was 48131 ounces with full year production 159, and 515 ounces.
Jack will be no additional mine development has greatly improved production flexibility and the expectation for 2000 twenties to process or.
The process or will primarily be from run off of mine with reliance on low grade stockpile that supplemental supplemental or to them is.
Canadian Malartic produce 85000 ounces.
On a 50% basis during the quarter and 334 or 596 ounces for the full year.
In line with budget.
The Canadian Malartic extension project continues to advance.
As expected with a modest contribution from Barnett of 3137 ounces during the fourth quarter.
Yeah, that's probably the I just had its strongest quarterly performance of the year in Q4.
<unk> by an outstanding month of December doing which it produced 80 to 100 ounces of gold.
Quarter on quarter towards with increase as did great than men and <unk> mechanical availability. We are very pleased with the mine performance and we are confident that this is a sign of things to come.
Sell them all up was used 26658 ounces of gold and took water and 1.6 million ounces of silver the full year production was 120008 harder than into ounces of gold and silver production coming.
Above plan at 6.32 million ounces why the strong silver production at a positive and back on Geo reduction. This was partially offset by higher jewelry show goes by outperformance of gold versus silver.
We expect silver to continue to be a more meaningful contributor to deal in 2020.
Taking a lot that taking a look I look at our gold mineral reserve. We were pleased the depletion in 2019 existing the year with 7.86 million offices of mineral reserve compared to seven point 84 million at the end of 2018.
Measured and indicated mineral gold resources were also increase year over year to seven points 69 million from 12 point.
49 million ounces.
Inferred gold mineral resources increased by 27% to 12.07 million ounces from nine point 53 million ounces. As you can see also Canadian Malartic was a big contributor.
Silver mineral reserve ended the year at 63 point 82 million ounces measured and indicated came at 40 344 points 63 million ounces up 22 million, 22% from 2019 or ends for silver came at 45.2 million ounces.
The gold and silver resources and reserves. So our success in exploration the increase in gold and silver sure success in exploration at Canadian Malartic would the discovery on the school D and these mother to below 1000 meter we increased the mine inferred mineral resources by <unk> hundred 11.
Percent in 2019.
On the 50% basis is go the other 12.8 million tonne at three point 34 grams per tonne for <unk> for one point 37 million ounces does own continues to be open in all direction.
With the resorts to find today the potential on the ground is impressive but like I mentioned before the difference and argues need to be optimize and the partnership do not do not anticipate approving the project for development under the current economic result.
Last year, the L. opinion mine to replace gold and silver mineral reserves above and beyond depletion by 15% and 20, 521% respectively. It was the thirds threeth year, that's helping you on increase mineral reserves for both men, though well beyond that patients.
The operation Golden measure and then the gate and mineral resources increased by 66% from year end 2000.
An 18 with silver rose 70%.
We recently indicated the newest withdraw and interpretation of faulting and a deep or resolving that they'll opinion is helping to define new I agree.
I mean, there was I mean, there realization with potential to increase mine life Oh, the message is clear l. opinion to continue.
To show a remarkable ability to grow mineral resource reserve beyond depletion and we are confident that it has plenty of mine life ahead.
Measured and indicated mineral resources increased modestly at Selmo in 2019, while gold and silver inferred mineral resources rose, 25% and 10% respectively.
Flourish and will continue to be focus on drilling I potential targets, including 90.
For Jack will be now in the mid year exploration update for the mine, we I know that mineral reserve increased by 8.6% from year end 2018.
We continue on improvement project will be less cost structure and development productivity. The operation was able to incorporate or previously categorized as mineral resources into mineral reserves. The inclusion of this supplemental or which is encounter as all the halo for the core mineral reserves.
Slightly decreased old mineral reserve grade, but significantly increased the economy called mineral reserves on says.
We have effectively and profitably mine some of discipline supplant fundamental a little over the past few quarters.
We are prioritizing the mining of core mineral reserve with agreed of 2.4 grams per tonne and deferring the majority of the mining and processing of the supplemental <unk> until late in check will be knows mine life.
At Minera, Florida, others result, last year on the consolidated property, including new veins at better than life of mine grades underscoring the potential that we see a this operation.
The increase in mineral reserve reflect positive result, but Tagless, then they'll pull do santas HMA NPV S or.
Among solder along with block models revisions I will also like to I like gold and copper mineral reserve growth, that's like where recall last year.
Gold mineral reserve increased 13% from 2019 to 7.1 million ounces and copper mineral reserve rose, 21% to 11.8 billion pounds.
This slide shows or or two years production guidance, along with our cost guidance for 2020.
We see growth in gold production over the next three years with 2020 production at 557000 ounces 2021 at 873000 ounces and 2020 322 at 885000 ounces.
Silver production will be 11.5 million ounces. This year 11 in 2021 and then in 2022.
Geo production of 990000 ounces this year and 1 million ounces in 2021 and 22.
Our guidance for both metal and Jio is plus or minus 2% for 2020, and 21 and plus or minus 3% for 2022, we are confident to achieve and exceed these numbers.
That's a previous year production will be stronger in the second half of the year with approximately 54% of the production in the second half.
Cost of sales for 2020 will be between 11, 11, 30, 211 70 per Geo offices.
Cash costs. This year will be between 642 680 for Geo and all in sustaining cost between 980 and that thousand 20 Bridge you.
Why do we are forecasting a marginal increase in sustaining capital expenditure, we do not anticipate any impact to margins.
With the higher production waiting in the second half of the year. The company anticipate unitary cost also trended or in the second half in relation to the first off of the year.
I will now I'll turn it over to Jayson to discuss the financial.
Thank you Daniel and good morning, everyone.
I'll start off with a quick recap some of the financial highlights of the year revenue in the fourth quarter was $383.8 million compared with 483.4 million in the same period of 2018 decrease reflecting that the company's current portfolio comprises five minds compared with seven last year.
Despite the lower volumes, though gross margin was flat as metal prices were up significantly year over here.
Net earnings earnings attributable to your money equity holders in the fourth quarter were $14.6 million or two cents per share compared with a lot for $61.4 million or six cents per share last year.
The current quarter included certain items that may not be reflective of current an ongoing operations totaling $12.1 million.
On an adjusted basis and earnings were $26.7 million or three cents per share or flat with last year.
During the quarter. We also had our lowest cast cost performance and the year at $656 per Geo, even compared with earlier in here when we own should pata.
Jacobean an M.L. coming on in particular had a great Q4.
Our Q4 results for best characterized by the strong cash flow in free cash flow performance is that we had been expecting to end the year.
Cash flows from operating activities increased 75% in the latest corridor to 201.1 $1.7 million from $114.8 million year ago, what cash flows before net change in working capital were $176.6 million.
Paired to 115.8 million.
Free cash flow before dividends and debt repayments during the quarter increased to $73.4 million up sharply from $9.5 million year ago.
This drove a commensurate reduction in our net debt of $60 million during the quarter to $889 million, which is our lowest aggregate net debt level since all the way back in 2013.
At this time last year, we set to expect our inflection point on free cash flow during Q2 after an investment cycle of several years.
That would lead to sequentially, increasing free cash flow in Q3, and Q4, which was all the case.
We'll be generating free cash flow and further reducing both gross and net debt during 2020.
We have a scheduled debt maturity of about $56 million in Q1. This year that will repay from cash balances at year end of $159 million plus free cash flow generation.
Along with our financial results last night, we also released guidance information.
Leading goes on capital for 2020.
Expansionary capital spending of $89 million in 2020 is down about $6 million last year.
Sustaining capital of $164 million is up about $18 million last year, mainly attributable to Cerro Moro as we concentrate more on underground development there.
Total exploration spending of $84 million is up from $68 million last year.
$20 million of the total exploration spending will be expense with the with the balance capitalized in 2020.
With respect to the exploration spend we are allocating $14 million ever total this year to our generative exploration program to advance many highly prospective opportunities in our portfolio.
The program will target the company's most advanced exploration projects, while retaining flexibility to prioritize as merited by our drill results.
For the increased budget that we are targeting over the next three years, we expect to use the proceeds from the monetization of non producing assets to fund this budget.
This will create a better balanced between investing in new projects and maximizing sustainable free cash flow from our operations.
Well, we have a number of perspective land package is the program is mainly focused on projects in Canada and Brazil.
As you can see here production, we waited towards the second half of the year, representing 54% of the total.
Cost of all also follow this profile with lower cost as a year progresses from the unit cost benefits of the higher backend loaded production.
I also wanted to reference back to the strong free cash flow generation. We saw in Q4, 2019, which is our strongest production quarter of year.
With a production and cost profile just mentioned for 2020 free cash flow will follow a similar trend this year with second half free cash flow above the first half.
On average, though for 2020, we expect to generate quarterly free cash flow during year.
That would conservatively approximate our experience in Q3 and Q4 up 2019 on average at spot prices.
So that's to say a very healthy free cash flow profile, which were quite excited about it.
With that profile, we can reinvest in our business continued to improve our balance sheet and target higher sustainable dividends and dividends per ounce for our shareholders.
Your model has positioned itself as a dominant gold company with a portfolio of high quality assets, writing stable and increasing cash flows optionality growth and prospects for additional monetizations within American focus we operate in the best mining jurisdictions in the world and with that I'll turn the call back over to Daniel.
Thank you Jason.
Last year, our slogan was the beginning of what's next given our progress it makes sense to revise that to the beginning of what snow.
And what's happening in dollars that our free cash flow us growing to a point where are we are able to reduce debt significantly using cash from treasury was supporting higher dividend and continuing to grow the business. We are confident that this sustainable this is sustainable as a <unk> as our free cash flow profile continue to.
In pool, we will be in an even better position to advance our growth project. An exploration program was further reducing debt and increasing shareholder returns and with that I'll be happy to answer your question operator.
Thank you Mr. machine will now take questions from the telephone line. If you have a question and using your speaker phone. Please mr. headset before making your selection if you'd have a question. Please press star one on your telephone keypad to catch up the question. Please press the pound sign.
John one at this time, if you have a question and I'll be brief pause.
Register Thank you for your patience.
And your first question is from had 10 weeks from credit Suisse. Please go ahead.
Good morning, Thanks for taking my question I check of being a can you maybe walk through the reason for including the lower supplemental or in the reserves and was this the only kinda reason for the reserves, increasing 19% year over year.
I will Luke Buchanan, our senior VP of technical service will answer the question five.
Hi, there. So first of all we did increase the a the highest grade reserves as well I just so in the middle of the here and then we replaced depletion again by the end of the.
In terms of the lower grade.
We previously took a conservative approach to downgrade those reserves to measured and indicated resources.
But by demonstrating the possible quotas everything that we can sustain the lower operating cost pretty confident that we can include these in reserves. The later part of them on less.
One of the improvements was internalization of development.
Yeah, which is a resulted in improved productivity and lower cost. So we just didn't know it was a good time to Ed whose lower grade reserves back back into reserves.
And I included in the mine plan.
And just it thanks and just as a follow up can you remind me what the Capex would be for the phase two expansion in 2021 in 2022.
Well in 2021 and 2022, if we go ahead. The right now we have said many time as be is gonna be below 50 million dollar.
So will accompany this study this quarter are we going to commit in April with the the exact numbers, but oh no. It's going to be below 50, and then you can assume a a splits so 25 and 21 and in 22.
Great. Thank you.
Thank you Hey next question is from Ralph Profiti from H. capital. Please go ahead.
Hi, good morning, Thanks for taking my questions.
Firstly, Daniel when we talk about primary development versus secondary development Jacoby not can you help us a with how far ahead you are on on development and maybe put that in context by comparing to say, where you were seeing a year ago and also like to get a sense of you know how many zones.
You have opened now and how many are going to be required. If you hit the upper end of that expansion phase I'd say 8500 tonnes a day.
Thank you Ralf all that to you on answer.
Next question.
Good morning, Ralph just went through a question here I mean last year, we were doing about 1500 to 1800 meters of development per month. This year, we see other bluff and and arrays of 12 to 13 hundreds so we're already decreased.
No I would say expense recap picks up next year, a we indeed put some more development because we believed that the phase one expansion may yield a little bit small.
To put it has been privileged he thought so I mean to <unk> to make sure. That's we're going to be able to support the phase one expansion in case.
That's where I would say, okay that were being a bit more higher another 6500, it sounds pretty a targeted a we decided to put some more capex and or bunch up this year in that aspect.
Maybe to answer your first part Oh.
Five six years old go we weren't just in time and development. We are now about 18 month ahead in the development and that the production of the next six to nine month is already all develop and ready to be mine. So that's adding a lot of flexibility to the Jack will be no mine and like you on just mentioned I think one.
We have complete or 6500 tonnes per day that might already things that with the new equipment and we will install week, we might be able to process Morton more than 6500 tonnes per day.
Okay got it thank you.
Second question is on Argentine export tax just can you help me maybe reconcile this new regime that talks about sort of fixed percentages as opposed to the four to one ratio and you know going forward until this expires is that going to have kind of around the same impact sort of you know 60, 70, maybe up to $80 and.
Ounce impact.
Yeah, Hey, Ralph.
Yeah. So we we mentioned that 12% a tax which has been announced its not a proved and finalized yet, but we've we've assumed that 12% tax prospectively and are planning for that.
Your next years and really it's you know the easiest way to do it on a per ounce basis, 12% times the times the gold price and that will give you the the per unit impact that.
ER at Cerro Moro or take that number divide through by our you know 990000 ounces guided you got to consolidate packed.
Right and have you had you know discussions with the government sort of face time with them to discuss sort of the impact and how they're thinking about it.
Yes, a ralph we did that a discussion with the government to Peter our executive Chairman was there two weeks ago three weeks ago to discuss a directly with the president of the country and they understand that we just build Cerro Moro, we spend $330 million to build it and then we got its with.
With these taxes I think this the understand their listening and then there's this there's gonna be follow up on this regarding what should be their right to level off to actually you know as we have.
Stability agreement tax a 5% at several moral so we're still contesting each time, we pay the tax both work on testing this step, saying, we should be a maximum of 5%. So we're going to see what <unk>, what's what happened in the future, but right now we see we should be a maximum of 5%.
Understood. Okay. So encouraging thank you.
Thank you Ralph.
Thank you. The next question it sounds like gentlemen from Bank of America Merrill Lynch. Please go ahead.
Oh, Hi, Dan and Jason a set of questions and he school de outside impressive start there was the resource I guess.
2.8 million ounces of gold with your partner share I guess, Dan just on the mine ability would you access it looks pretty deep would or would that be accessed by a decline ramp from that can anymore take pet or on a new Shah often looks pretty good thickness is would it be mine like gold ex foreign economies of scale and I can be my first question I'm a second one on his call.
<unk>.
Okay. Good morning, Mike Yeah, it's quite impressive to that have already or resources of 2.8 million on says on the 100%. Thus there on a one year of exploration.
You're right, it's quite deep right know it between 800 meters to 1.51 0.6 kilometers of although surface.
ER, but it's an open going toward surface going east west and at that point I think this is our main goal. This year is to find I'll close the surface. This going and then east and west and deep.
Also.
It's quite interesting or what do size resources within gets its going to be a lot higher than that and in the future, but we have just to continue into two drilled it it's going to it'd be.
Similar type of a mining than the than gold ex now with Twitter to with the face Philip above any fitting into still there quite the white stope and and big we're studying right now to know as you know to start around we were studying to start doing them to go to east matter FSIC and Odyssey right now.
School these a bit too deep to be accessed by rent, but again, if we find that does own comes closer to surface.
And then we might access just by the around this is why we have also delayed their up last year and that was clear to time. This morning that we have no intention to start to ramp this year.
As we want to understand better are worthy east Goldie zone go up to surface, but also we have oh, we have some issues being higher royalties for underground mines.
Okay. I guess, that's my second question it says here paced.
They try and crazy I can equal release, just encode discussions with the royalty holders have discussions started yet yes. They they have started they have started before Christmas they're still ongoing with the main royalty older.
And then that's progressing so we're going to see what will happen in the next.
Weeks and months.
But for now for US nothing is really change we're going to continue to drill we have a quite a big exploration program, it's about $20 million, so 10 million or half of it for E School de this year. So we believe and the potential but as you know and it's clear in our press release, we used to <unk> dollar.
Upper on school, when we do our study and our resources and reserves.
Metastatic and that using that number the economic is not really good all the cash flows going back to the world the older. So.
Yeah, I guess, well, obviously I guess, Oh, Cisco has another 5% NSR does abitibi, how a 5% N P is that correct no oh.
Oh, I forget that debit to be as a a lot smaller percentage.
All right. So the main watch this whole gold royalties on their 5% NSR.
Yep.
Right, Okay, well. Thank you good luck. Thank you.
Thank you.
Next question is from carried mccurry from Canaccord Genuity. Please go ahead.
Hi, Good morning, guys, maybe just another question I'm real Arctic now that you've got east Malartic on to see school will be just wondering what sort of development options, you're thinking about in terms of.
Tons per day or or size.
Hi, Good morning carry right now there's no. We're doing this study as we mentioned last year. So 2018 that we started this study on the east might uptick and all this year's own the discovery and then the discovery obvious School D. D. N off 2018, it completely change or plan to two to look at.
The underground the projects. So we have restarted the we're just we're starting this study right now to would be the 2.8 million ounces, we just announced and resources. We can start to look at a P.A. study internal PK study to so to see all we can integrate.
The three zones into mining, but we're just starting so.
At this time, we don't have any indication on tonnage and stuff like that will come later this year I think both partners. We agree that we would come later this year and then Uh huh.
So our plan for my mother, FSIC, what we think it would be but it's too early to say you know.
Okay, Great and then maybe on Cerro Moro I know you guys had they.
Target of a million ounces of.
Gold equivalent over or some time period and deserves came down this year I'm just wondering how your.
You know, what's the outlook now and exploration on term or you're still comfortable you can get there or is your view changed it there.
And we want to answer this one.
Yeah, Good morning Kerry calm.
We we talked last year really about just increasing our sort of inventory of targets some at Cerro Moro.
We haven't done that over the year, we've had a very strong and aggressive exploration program. We've seen some new discoveries and we're starting to see small but significant contributions to the in for the resource at Cerro Moro.
So I you know by the end of EUR 2020, we should start to see some of those converting into measured and indicated and we'll see dust gradual growth much like we do at Penn you on that that's her more than say.
Great. Thank you.
Thank you.
Your next question, it's from that Tanya Jakusconek from Scotia Bank. Please go ahead.
Hi, Good morning, everybody I have bad just a couple of question one technical and then just one figure Jason I'm now on the capital Fine and maybe just Daniel starting on the technical side, just looking out a.
Full year guidance when you provided be 885000 ounces in that Twentytwenty too.
What have you assumed in that guidance for Minera, Florida, Jacobean now and Jacobean huh.
Well, we don't has you know and good morning to hang out as you know we don't provide my mind the guidance. After after this year, but to assume that Dick will be now we have already said what will be the production with the increase a throughput.
So you doubled the we I've always said is gonna be stable for the next three years. So you know the 80 to 90000 ounces.
Okay, and then when you say Jacobean, namely the increase to the are you implying be 6500 times today, yes, yes, okay. Yes.
Yeah, No no would there's no in our capital that Jayson discussed earlier, there's zero money for an expansion that the Jack will be now like we said before we want to wait to see this study coming this quarter and then we're going to decide if we go Ed we going to tell the capital needed to do it but so far.
The three years, assuming 6500 tonnes per day, and the production profile and again.
Yes.
Okay. So okay. That's good. Thank you on that front and then maybe just on the capital Frank and maybe just minutes Helvetica, Jason We I think Daniel mentioned under 15 million. If we were kick out kidney you know that 70 500000 tonnes a day of Jakone Bina.
When you look out the next here Peter here is that really be only to 2022 is that really the only development capital do you see in your portfolio right now.
Yeah, I know canyon, we'd reference back to you know we call it that.
Bucket of $50 million to $75 million, which was which would say a steady state. So.
We're a little above that this year you know the primary difference is.
Pending on on a Agra Rico with feasibility and some of the stuff, but really to your point after we get out past this year that that capital drops off pretty significantly there's no. There's some odds insides across the portfolio, but it said, it's a fraction of what we're going to spend this year or in 2021 and 22 at least what we see on paper.
Right now so when we do come to that decision.
On on jacket Bina, sorry, you know assuming that will be spent over multiple years.
We'd be well within that $50 million to $75 million bucket.
Okay, and then sustaining thought going in that 165 million range.
That's a pretty good number.
Okay, and then maybe just on the you mentioned that they can't capital expenditure doesn't include a good development not the acceleration ramp at Odyssey in my life Tech on is that because you're not going ahead with it or is that just another number that.
Sorry, what is that capital number maybe on where that being allocated.
No. So there's no no capital allocated 10 units I think what Daniel mentioned is you know, we're still wrapping our arms around the project to find out the best Ah sequencing and everything so we're not at the point of approving and developing that underground ramp yet.
Okay. So just the 10 million an exploration where he only expenditure that you're going to happen then that's going to be coming through the acceleration that yeah. That's right yeah.
Okay. Okay. No. That's my question. Thank you. Thank you.
Thank you next question is from a need for Sony from C.L. <unk>. Please go ahead.
Hi, Good morning, guys I just wanted to ask a question on El Paso, and I think you touched upon most of it but I'm just can you delineate where and when he or she has some good exploration success. There and can you just really went pico afford plan with L.P. on it.
Yeah. Good morning, a good morning, I need to entry will answer the question on that on exploration, but you know our opinion.
You saw last year was an amazing year. The last three years there was an increase in in gold production and then they maintain silver production I think what we saw last year. It's a good a good number or what we guided towards this year. It's a good number for the coming years for helping you on that but as we drilled and discover more gold.
And then more silver ounces or you know l. opinion does potential to grow production in the coming years as you. All know we have a 4000 ton per the email that tell opinions were processing or on 20 827 2800 tons produced so we have extra mill capacity I tell opinion, a once in awhile.
I'll now where precise things some of the stockpile is that incremental or is bringing home says to the to the mail and then that that cheap cost. So this is huge potential that they'll opinions I, let them to be answered a question on the potential on the exploration.
Sure. Thanks Daniel.
Yeah, Anita we had a very strong year last year and I think as we mentioned we combine some some sort of new techniques, including the machine learning that opinion.
That developed some.
Strong targets and we were able to chase some of the principal veins like a retail to deps and that will be continuing to do that 10 2020 combined with looking at some of the secondary veins that have been very productive for us in the past.
And we've also stepped out of the car mine and we're going to put a significant budget. This year into some follow up drilling on targets looking for for new veins that could extend to mine life beyond what we're seeing currently.
So were really on a very similar program, we does plan to keep on showing a growth than not resources there.
And to continue to replacing depletion on an annual basis ongoing.
Okay, and then maybe you could talk a little bit about that the jet degenerative program that you have gone from its he said 14 million budgeted for this year and then going forward you guys are planning to them.
And that plan is that in a in a similar levels that you said you're going to find it based on asset sales I guess noncore assets are things that are more tied up in the balance sheet not generating cash flow.
It could you talk about that plan and how you see that going forward.
Yeah, I need to do that the toll is around 53 million for the next three years. So 14. This year as you can see it will increase in 2021 and.
2022, and we will give the detail out of it and then you're absolutely right. All the funding for this will come from the non producing assets so either they're all t. portfolio.
Sale, some selling of our CEO gold shares or money coming from I go recall, we don't intend to use a cash flow from operation to two to provide that.
Exploration that already a generative program in the past few years. So for this year was easy to 14 million was already mostly in the the budget. We had already is just we moved the the money that was going somewhere else to generative exploration program in Canada, and Brazil, but then we can give more detail.
Well.
Yes, certainly you know what we believe we've built a very strong portfolio of properties, some particularly in Brazil, and we have been slowly moving those ahead small we'd like to see with the use of the monetization funds is a very stable exploration program. This is independent of gold price independent of some of the.
Cash flow restraints, we've seen in the past.
So we'll be basically moving ahead there are internal projects aggressively this year and then with increasing budgets over the next two years with as Daniel mentioned about $53 million total budget over three years.
Okay. Thank you very much.
Thank you. Thank you.
Thank you there no further questions registered at this time I'd like to turn the meeting back over to Mr. machine.
Thank you operator, thank you everyone for joining our call and stay tuned for Q1. The release in April and order continue you know cash flow free cash flow generation and the coming month and border. Thank you and have a wonderful Valentine day.
Bye.
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