Q4 2019 Earnings Call
Thank you for standing by this is a conference.
Operator, welcome to the I ever School, 2019 fourth quarter and full year operating and financial results conference call and webcast.
As a reminder, all participants are in listen only mode and the conference is being recorded.
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This time I would like to turn the conference over to India will be Nathan Vice President Investor Relations and corporate communications for I have gold. Please go ahead.
Thank you very much and welcome to the I'm going to fourth quarter and for your conference call for 2019.
Joining me on the call today, or Gord, Stothart, President and Chief operating officer.
In many cases, many good vice president operations quite as any information technology was covering the Barnett section for our E D P and CFO Carol Banducci.
Craig Macdougall Senior Vice President exploration and John No Senior Vice President business development in General Counsel. We also had more to the any out of her regional Vice President in West Africa, starting up here in <unk>.
Our remarks on this call will include forward looking at secret. Please refer to the cautionary language regarding forward looking information in our disclosure documents and be advised the same cautionary language applies to her remarks during the call.
I just referenced on this call can be viewed on our website I'll now turn the call over to our President and Chief operating Officer Garden style.
Thank you Wendy good morning, everyone and thanks for joining us So last night, we issued our fourth quarter and 2019 full year results, which were lucky years successfully overcoming the strong headwinds faced by the company.
I'd like to name a few highlights were 29 dream.
In response to a challenging gold price environment at this time last year, we implemented a self funding strategy, where each site is mandated with covering their own operating cost sustaining insight expansionary capital as well as corporate <unk> exploration financing costs.
We have achieved achieved let's call it a consolidated basis.
Thanks, Adam Westwood already self funding of sites and all sites looking to self fund for 20 watching.
In addition, we reduced the exploration budget by 22%.
At Westwood, we aligned our cost structure with production levels early in the year, reducing our workforce by a third.
With ongoing work on the Westwood mine plan, we were able to provide updated guidance at year end.
Planning, our vision for a safe profitable and long life mine.
At the Roosevelt site. The team acted quickly in response to the unauthorized pit intrusion answer then over the summer working with all stakeholders to return the operation Drager mining activities. Once the situation are you judge sufficiently safe to do so.
We delivered our first the works in the Saramacca deposit so the rosabel now at the end of October.
We both still pipeline was six wasn't significant maiden resource analogous which also won the prestigious a haven't you discovery a year award.
We continue to de risk our development projects, hoping and bought all within budget. Finally, we maintained our strong balance sheet.
I am slowly it's always is one of the zero harm and we aim to achieve high standards and environmental social and governance practices and then zero harm vision has been fully integrated our oldest organization for over a dozen years.
In 2019 were ranked as one of the top 50 sustainable companies in Canada by corporate night.
Additionally, we were included in that 2019, Bloomberg gender equality index.
Our goal is also achieved the highest possible Raven category.
Second Baskin absolute scoring of a 31 companies profile in Moody's corporate governance in metals and mining report.
I am gold has implemented the mining association of Canada's towards sustainable mining G.S.M. framework.
Instead, our Canadian operation, but our App, our global operations as well and we are implementing the world Gold Council is responsible gold mining principle.
Our ongoing U.S.G. efforts include commitment to education health and safety access to medical care streets water and are continuing work building relationships, where there are many stakeholders.
As noted in 29 gene we achieved a number of our targets I'm looking forward to 2020. Our next catalysts include completion of the construction of the Sarah Mccabe and haul road.
Which is well positioned to occur by the end of Q1.
Setting saramacca up for a ramp up in the last three quarters of 2020.
And they'll de Bottlenecking project assay can is underway with minimal capital and anticipated improvements in the range of 10% increase throughput while also improving recoveries expected completion is Q3.
<unk> guidance was provided in December and we're working on the and I 43, one to one report permit Twentytwenty, which will provide added details demonstrating a safe profitable and long life mine.
All the work I've described is intended to improve our operating cash flows in margins with the ultimate goal is significantly achieving and maintaining our self funding strategy.
On the exploration front, we're working on further resource delineation program now again, and the rule and project and get back.
Box <unk> coal, Jay and I knew Korea discovery beginning.
And we're conducting a great projects strategy review.
No I will now pass the call over to asking to review our financial results.
Thank you for revenues in person Q4 from Q3 by 7% on stronger bold person well cost remain flat quarter over quarter. As a result, gross profit improved approximately 80% quarter over quarter, you're just not last for the quarter was zero point $6 million or zero cents per share.
Net cash from operating activities before changes in working capital totaled $226.2 million, reflecting the receipt of the gold prepayment in December.
In addition, we reported a nice $275.3 million impairment charge.
Jeremy consisting of a 395 million dollar charge on the west what nine it's one of the reversal of impairment charges on the African nine of $122 million.
Year over year revenues were down 4% higher gold prices were offset by lower production level well cost of sales increased by 2% primarily as a result of lower got waste stripping in now accounting.
We ended the year with gross profit of 69.6 million down from the previous here and get a lower sales themselves and slightly higher cost due to lower capitalized stripping.
Adjusted net loss for the near were $18.3 million worth four cents per share.
Net cash from operating activities before changes in working capital totaled $367.5 million, including the boat prepayments.
I am girls remains in a strong financial position with $864.8 million each Josh Josh Brolin short term investments unrestricted cash as of December 31st 2009 to me.
This figure reflects further strengthening the balance sheet with the additional funds from the gold prepaid.
Overall, we were cash flow positive in Q4, which I forgotten Westland generating positive cash flows on the site basis, demonstrating progress on or self funding strategy.
2020, we expect capital in terms of year, but significantly strengthen the quite a couple of secure and that though.
All right a $1500 per ounce or better we would expect to see meaningful cash flow expansion.
As you can see on this slide excluding restricted cash, including a 500 million credit facility, which remains virtually on drawn our you're right liquidity stood at $1.3 billion.
400 million dollar senior notes are not due until 2025.
Continue to work on improving cash flow and making prudent capital allocation decision.
I'll now pass the call back over an important to discuss operation.
Well thank safi.
So our top priority is the health and safety of our employees in Q4, we continue to achieve we're better at targets on a full year basis, we achieved a dart rate, which adds for days away restricted or transfer duty 0.51.
For 200000 man hours, which is our best in a decade. We work every day, you can meet or exceed our safety goals implementing and refreshing a number of initiatives to ensure a fake for working environment, including a comprehensive behavior based safety program.
Our reserve and resource base remains strong.
Total proven and probable reserves, a 16.7 million ounces based on a.
1200 dollar per ounce gold price assumption.
Total decreased by 6% in 2019 compared to 2018, primarily due to mine depletion.
Measured and indicated resources inclusive of reserves decreased by 2% year over year to 27.2 million ounces, while inferred resources increased by 38% to 12 million ounces with the addition of an elegant gold project and updated resources at the coated gold project.
Gold price assumption for resources for most of our operations and projects remains a few hundred dollars grouse with Westwood assess that 1200 dollar sprouts resources.
As mentioned total consolidated attributable production for the quarter was 192000 ounces all in sustaining costs were 1160 to $1 an ounce for Q4.
And note that all in sustaining cost at the consolidated level includes corporate <unk> costs.
You each operation in turn starting with after cat.
Attributable gold production for the fourth quarter 2019 was 94000 ounces and for the full year 368000 ounces.
Production was lower than the prior year.
Which was there which was a record year for Africa.
I was primarily due to mine sequencing through lower grade zones, partially offset by higher throughput.
The fourth quarter was impacted by a number of factors, including lower grades in the following two satellite pits mine sequencing and the presence of prophetic or despite that that's again as cash flow positive throughout the year.
All in sustaining costs were $1006 for the quarter lower than the prior year, primarily due to the dollar pads for fleet additions are they had occurred in 2018.
Oh, yes, he was $1028 marginally higher than the prior year, primarily due to the higher cost of sales grouse, partially offset by lower sustaining capital.
In 2020 full year guidance is 365000 to 385000 ounces.
This is automobile optimization, which targets improvement in throughput and recovery with about a 10% throughput improvement target.
Completion of this work is expected in the third quarter.
Sustaining capital for 2020 is $40 million. It is a high waste stripping year forensics honest, we're beginning some new push back.
What about 80 million up 100 million notwithstanding capital.
Plans for those push backs.
In 2021, that's kinda is expected to have another high stripping year was slightly lower production, but better grades guidance for efficacy and 2021 is between 355000 385000 ounces of gold production on the exploration front drilling and evaluation of the nearby to Siri.
And so could be targets continues.
At Rosenthal.
Attributable gold production for the fourth quarter was 56000 ounces and 251000 ounces for the year production was low lower primarily due to this temporary suspension of mining activities. Following the security incidents in the third quarter, which resulted in the mail primarily processing lower grade stockpile.
The carbon in call them see I see plans continue to operate as expected recovery in 2000 ounces from tailings in the fourth quarter brand towable tailings recoveries and 29 change at 7600 ounces.
All in sustaining costs were $1307 for the quarter and $1165 for the year.
As you know the biggest impact Rosabel media was the incident involving unauthorized miners that our pets.
We were able to address this issue by working with our community in government stakeholders toward developing a long term solution.
In 2020 full year guidance for Roosevelt is 245000, it's one of the 65000 ounces following the milestone to deliver I'm first start from Saramacca. The Roosevelt mill in Q4 last year, we anticipate the main haul road development to be completed by the end of Q1 20 play with wrap up the.
So the lack of production in subsequent quarters.
2020, Capex is expected to be $55 million in sustaining 60 million for notwithstanding.
Sorry to ask again, what was the dollars also heights waste stripping you're ahead with 15 million of the sustaining capital and 35 million if at all in sustaining capital related to be pushed back.
These strategic expansion I push backs are expected to be positioned rosabel, very strong 2021 and beyond as the my as expected DAP higher ore availability and higher grades in 2021, we have guided to 305000 to 335000 ounces of gold production representing a significant.
A future increasing in gold.
Development work at Saramacca continues on plan and is expected to be completed in the first half 2020.
I would add that we are continuing diamond drilling at saramacca to assess its underground potential.
Production at Westwood was 29000 ounces for the fourth quarter and 91000 ounces for the full year fourth quarter production was slightly higher than the prior year period due to increase throughput.
Partially offset by lower head grades while the full year was lower primarily due to lower throughput and grades.
All in sustaining costs were $1117 for the quarter and $1079 for the year, Yes. She was lower for the fourth quarter, primarily due to lower cost of sales browse and lower sustaining capital to do the less development work.
Yeah, I won't see was relatively flat year over year, usually reduction in the operating costs.
Following the Q1 Labor force reduction.
Earlier in the year, we normalize fixed overhead costs to accommodate the unusually low production in Q1 and by the end of year, we were able to share forward production guidance, reflecting the safe and profitable long life mine.
Updated production profile has in turn impact carrying value for Westwood as discussed earlier.
In spite of a challenging year Westwood with cash flow positive in the fourth quarter.
And in 2020 full year guidance is 9000 210000 ounces, we have allocated 25 million for each of sustaining a non sustaining capital and our next milestone for Westwood is the completion of the life of mine plan and I company and I 43, one or one technical report and the first half a 20, we will all.
Also provided an update of resource and reserve statement at that time.
In 2021 Westwood continues to advance on its ramp up plan with guidance provided a 100000 220000 ounces.
At Boto and looking at our projects. So a boto and 2019, we continue to maintain our relationship with stakeholders and as announced in January we have received exploitation permit for boat open the government Senegal.
Earlier this year, we provided metrics of the optimized as I have the project as well and I've now filed the associated and I 40, if we want to one report.
Okay and 29 can we continue to de risk the project within our capital expenditures guidance.
We have completed more than 50% of the detailed project engineering to date signed an impact can benefit agreement with our first nations partners were viewed it updated the resource estimates confirming the robustness of that resource.
When viewed in adjusted our toss models in advance the permitting probe process.
We have also partnered with our first nations from for tree clearing work.
Following these advancements we are reviewing the five to 10 year strategy right goal.
Looking at our reserve profile, we're including this chart to show US The reserve base looks like compared to our peers as you can see industry reserves in a bit on a steady decline since 2012, well I'm gold has been working hard to reverse.
From this industry trends generating a 48% increasing reserves over that phone timeframe.
Since 2016, we have out at 8.99 million ounces over double the houses.
To our reserve base. We believe this is a significant competitive advantage triangle.
So I'd walk through the site by site expectations for the year and I'll comment here, but the full year attributable guidance for 2020, 700 to 760000 ounces with AMC guidance, a 1100 to 1150 per ounce.
The key contributing factors to this guidance or the high stripping work plan for bad both africana those about that's been the westwood's good development work.
And the end of production at Sadiola as we anticipate completion of the sale process in April.
As noted in 2021 rosabel is anticipated to have higher ore availability at higher grades well Westwood continues to it that.
Westwood excuse me I forgot is expected to have another high stripping year and 2021.
Were slightly lower production, but slightly better grades.
Overall for 2021, we anticipate increase attributable gold production expected to be approximately 10% higher than the 2020 guidance levels at at 760000 to 840000 ounces of gold and with lower all in sustaining costs.
For capital expenditures, the 2020 spend on a consolidated basis of $370 million into $65 million far development projects Boto and kotek at Cotai $35 million is budgeted for insight tree clearing access road development and detailed engineering, while it bought over $30 million is.
Budgeted road and camp construction and advancing project engineering.
In 2021, we expect lower capital expenditures of approximately 250 million with the completion of development at Cerro Mac, and 2020 and lower capitalized stripping.
I'll now turn the call over to Craig to discuss exploration.
Thanks, Stuart and good morning, everyone.
Again, there's no <unk> results. They talk about today have been previously disclosed in accordance with security regulation signed off by the qualified persons within the company reporting.
In 2020, our planned exploration spend is 47 million comprising both near mine brownfield and Greenfield exploration programs.
The brownfield program will continue its focus on discovering and delineating resources, along Saramacca broke belong to trendier Roosevelt as well as that identified targets interested can operation.
We will also focus our drilling efforts on continuing to convert resources at Westwood and delineating resources at the nearby Randgold <unk>.
The Greenfield program continues to target resorts expansions and evaluating priority targets on our advanced resource and discovery stage projects, including the currency Gold project in Ontario.
Now I'll, even in Monster Lake projects in Quebec.
Total project in South to go back this year, a buyer project in Mali defending GE project in Brazil, and agreed a gold project beginning.
The next few slides I will highlight some of our accomplishments from last year.
2019, we continue to make progress advancing in resource stage projects in our pipeline with prioritizing projects near existing I am gold deposits and infrastructure.
And now again the exploration team delivered an initial resource estimate comprising approximately 97 million tons, averaging one gram per ton of gold for 3.2 million ounces on 100% basis.
The New reserve Rennard zone contributed positively to the resource which was intersected broker one kilometer along strike went through second is locally exceeding 100 meters.
Following the delivery of the denied 43, one on one technical report, we exercised their option to increase or undivided interest by 25% to now overall, 75% interest in the prudent.
No again is located 15 kilometers south of Monster Lake.
Which host an inferred resource the 1.1 million tons grading 12.1 grams.
433000 contained ounces 100 present basis.
During the year, we met or expenditure commitments under the terms of the earn an agreement to best with 75% interest in this project.
From this work we announced further positive role results from our winter drilling program, which was targeting additional zones of mineralization.
As always included 0.8 meters grading 357 grams per tonne goal and 6.8 meters grading 3.9 grams per tonne gold, which included 1.67 meters grading 6.4 grams per tonne mold. We also had a 0.5 meter intersection greeting 133.
Transportation Bill.
Gross 2020, we expect to drill approximately 8000 meters and now again, focusing on infill drilling to improve resource classification and step out drilling to evaluate resorts extension and that's been along strike.
Nearby Monster Lake, we will continue to evaluate the plus four kilometer long corridor, we supposed to three to five Megan zone.
When we look to extend mineralization intersected during the 2019 program at the manager zone.
During the year, we also announced a new discovery at the coating project referred to is the dogs one's own located approximately 1.5 kilometers north east of the Coty deposit.
Because one zone has the potential to host the significant size resource with an exploration target potential of between three to 5 million ounces trading between 0.7, and 1.2 grams per tonne gold.
Please note the cautionary language on the slide relating to exploration targets.
Drill results highlights from the drilling program. They did that got as one announced during the year included 342.5 meters grading 1.0 grams per tonne gold and 412 meters grading 1.3 grams per tonne goal.
20, we expect to complete approximately 14000 meters the drilling to continue to evaluate the resorts potential.
This new zone and evaluate other targets on the property.
One of our shovel ready development projects Boto falls in a highly prospective Boto Korea Diack, a gold district design trend from B two goals for colon line in Mali <unk>.
2019, we announced results various properties, which continue to highlight or exploration success and demonstrate the exploration upside of our properties in this region.
Early in 2019, we announced an updated that consumer by resource estimate.
Rising 18 million ounces of indicated resources, averaging 1.3 grams per tonne goal for 744000 contained ounces.
And a further 23.2 million tons of inferred resources, averaging 1.6 grams sunvil for 1.2 million ounces.
This represents a 57% increase in the resource total of frozen.
That's a reader a wholly owned project north Eastern Ginny and immediately continuous with the Boto project.
We reported results from 16, RC holes totaling 800 meters completed experiment 2019 program, which confirmed the new discovery.
Highlights include 29 meters grading three grams per tonne goal 16 meters grading 3.2 grams per tonne gold.
And 21 meters grading 9.0 grams per tonne goal.
Overall, we have developed a robust and balanced pipeline of early to advance Greenfield exploration projects.
The diverse locations, while continuing to support our near mine brownfield exploration to leverage or existing infrastructure.
With that I'll now pass the call back to north to conclude.
Thank you Craig.
You guys get me once again.
Anyways I want to reiterate that we're focused on improving our cash flow outlook, while executing on plan and doing that safely. Our goal over the next few months is to provide clarity regarding our company strategy and we look forward to speaking with you again at that time, thanks for joining us.
I'll now turn it back to the moderate.
Thank you.
We will now begin the question and answer session to join the question Q. Please press star and one on your Touchtone telephone you will hear tolman acknowledging youre a class.
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Our first question comes from for Hot to read of Credit Suisse.
Hi, Good morning, Thanks for taking my question just maybe some clarity on the thought process behind co 10, Boto I know that.
There's another 65 million that will be spent on.
Basically getting these projects shovel ready I mean any color on how you're thinking about.
You know kind of the priority between the two how much more capex said, maybe required even before an investment decision and when you expect to make an investment decision on the either a project things.
Thanks five.
So I mean, obviously with the with Yemen, I'd sort of leadership change.
Hi, with the changing gold price and and and I think something like the change in sentiment plus all of the work that we've been doing on de risking as projects, we are as Pat coming to a decision point with our board.
And and really started going through that strategic exercise right. Now you know as we look at our company going forward are our existing assets you know I I love them the das, but they are getting older.
And and Oh, well start to heading into the plane at some point in time, So Oh, we have a benefit or an incredible benefit compared to our peers of others. Some some great growth projects.
Each of them do different things for our company strategically.
Yeah, I bought AUO is a nice tuck in project a relatively straightforward to execute.
And and and.
And.
You know has a very nice quick payback to it.
But on a consolidated basis has less of an total impact on the company.
Okay. So there's a somewhat larger project itself, it's not a massive project by any means in factor.
When you look infotainment, it's it's a smaller operation that asset cat and that's just similar sized operation to Roosevelt. So it's you know it's sort of in our snack bracket in terms of operating but the capital build is higher.
We have the strong balance sheet, and and and we can manage it quite nicely actually.
And we do recognize you know there there was some negative sentiment around.
Some aspects of hotel in the marketplace. So oh.
On the positive side it is a oh.
On a consolidated basis it it really does transform our company.
We love both of those assets. It's just it's a matter right now oh, reaching a decision as to which one it makes the most has.
I've been on the road within the pretty extensively last month, and and have even more ER visits coming up.
With the investment community.
Over the next couple of weeks to really help.
Do some do some topic talking obviously, but also do a lot of listening to the shareholders and understand how they see the decision or how they see the priorities. So that we don't end up surprising anybody a with what whichever decision we take going forward.
Timeframe.
Yeah personally I'm I'm Restless I'd like to see something decided here in the next June 234 months.
And at that point in time, then well, we can <unk> well will come forth I wouldn't expect others in the numbers, we talked about here for capital I wouldn't expect it either of those requiring additional capital added. Please note that the capital that we're spending now is serving to reduce.
The the post decision capital. So this is money being spent towards that objective of.
So the achieving those projects, it's not a just moving sideways with the project still being pushed out.
That's all I'm sort of leave it with that.
Okay, Great and that's really helpful and just.
On the reserves and resources I can appreciate the resources growing, especially specifically now again caused one but as you look at the portfolio, where do you see reserve growth over the next call. It several years similar to you know the trajectory that you had prior to prior to this year.
With the reserve growth I'm, just trying to get a sense of I can see where the resource growth is coming from but yeah, yeah lie and that's that's it. That's a good question, then I actually I'm going to sort of left.
Craig how about how the lack of it and I'll I'll step it afterwards, but.
Well.
I'll start with maybe the exploration things I mean, obviously you know these are sequential programs that we have to run you get your first inferred resources you increase the classification to something that the engineers can then study through a more detailed feasibility studies Prefeasibility studies those things. So you know certainly we have a number of resources Burns.
Some of them are still growing many of them have inferred resources that can be converted and once converted and then.
I used to buy backstop studies that can lead to reserves on an exploration front I think we do have quite a lot of opportunities to continue to increase their reserves, albeit a projects. It still has to be developed.
And I'll double a little bit on onboard side here on on the operations you know as you know we're working very hard to continue to expand resources proximally infrastructure Saramacca was obviously, a big success Flores prior to that selling doing two was a big since that's where it's at as they can and we do continue.
To put a time and effort you to understanding the satellite targets and when strategically there viable for the operations, which ones can extend you know the reserve base and which ones can help top it up and that's no. That's an ongoing process and consider the than we continue to invest seriously to extend or operations.
As long as we can I don't know gorgeous yeah.
Yes, and at a high level I can see incremental reserve growth at the mature assets.
I have any huge targets that are going to jump out there Westwood will continue to convert overtime.
Programs, we have for 2020, specifically designed to increase reserves would be extensions to saramacca along strike.
You know work, we're doing on NFL on an ongoing basis at Westwood.
Leased to cover depletion arm and a little bit better. We are also looking at a few small surface showings, we have in around going on that or are.
That can can make it into reserves this year.
I think had a week I talked earlier about some of the satellite targets I would expect to Syria and potentially so can you just have to reserve table. This year well, we'll be looking at some extensions, yes, if that means all itself.
And all we had we had to stop the time going up the appeal of the brownfield sites, but it is more marginal lumpy growth you're gonna see in the future is really going to come again from the exploration targets, whether it's now again coming to the reserve.
Got flat that was I was going to be at really stay forward one to March towards reserves given everything we understand there you know there are some some for writing steps that are required there, but other than that.
It's a pretty straight forward a line of sight to getting some some nice increases in reserves.
I guess at a higher level.
No it's still a large gap.
That Roosevelt between the reserves in the resources that Roosevelt proper.
That requires ongoing work on our costs are those ounces are available to us if we can get our cost.
In the right spot.
We do have a a couple of things we're working on there that.
That could potentially change and actually produced a material change and and rosabel, but I certainly do hang on not one because we need to do a little more work in house first and just some point of clarification of guzzling itself is not other resorts stage does does it still discovery stage we are.
Implementing a winter drilling program. This winter that if the ice cooperates and I used as I used that does mill.
We are hoping to bring that to a first resource as part of our program. This year, but that's not included in the upgrade that happened that go to this year.
Got it thank you.
Our next question comes from Anita Soni, I see I B C.
Good morning, guys I just wanted to ask on Coty.
Would you be updating the reserve I Friday 43, one and one that was put out on 11.
2018, or do you think that's sufficient.
Secondly.
No I to then can you talk about what kind of de risking you've done at the project.
Uh huh.
Yeah, well, we're not looking to issue a new 43, one on one on on co pay at this point in time.
But on that and I am happy to talk about the de risking we've done a as I said in my Todd.
We're over 50% detailed engineered now a which is added.
It's really I guess I describe it as its really tightened up the goalposts around our capital estimates on and and allowed us to understand not better we've got a little bit of re scoping.
As we look at the project you always want to know what's your potential downstream opportunities are for expansion. So we've done a little better re scoping on the project to choose to facilitate a potential future expansion have it once it gets developed.
On the reserve and resource side, and we did upgrades the resource the reserve we kept flat or we are in the process of reworking not reserve none of the changes aren't material enough really too. It's a prompt us to want to put out and then 43, one or one but there will be a reserve updates coming at us you're probably in the next quarter.
For for toll Jay or for cocaine, what we've done.
Yes, we brought in I guess I'm Modeler, specifically a model there that we know approaches things more conservatively.
Then then the earlier model I didn't provide a lot of validation haunt us because it's just demonstrated the robot robustness of the co day resource. So you also like for like.
Resorts risk point of view I'm really comfortable with where co pay that we mentioned in the idea we signed with a with the first nation partners and not again removes one other oh opportunity for issues. We've been asked a lot of the permitting work.
And we've really gone back you know, we listen to some other commentary.
Based on the original feasibility study.
We've gone back and validated a lot of our cost models are both for the class male operating costs, my operating cost Gionee and and completely Revalidated diamond shot from a and and explains.
Internally weve explain what we see as as a as differences from from maybe some other pure project and we're very very comfortable with the numbers that we have an air pocket right. Now so I think we've been a we've been paddling pretty hard below the surface over the past year or with the engineering team.
In there and.
I know the best description for me is we just really now with the goal posts.
Which reduces the opportunity for her through extremely variability as we go forward with the project.
So you're still planning to use HPG ours and then also.
Collectively.
Stockpiling lower grade material.
Not later in the mine life.
Yeah, and and you know to task that we've done some really tight space drilling in a few areas and done a lot of conditional simulation.
As to how that will work in and what our opportunities for success, our to do that and you know engineered a cut off grade sort of plan going forward.
Yeah. If you have about five days I can go through it with you, but then the upshot of it is we're very comfortable that I will be able to achieve the the higher grades at the higher cut offs knee earlier years, given that you know given the geometry and on that they distribution and not deposit.
Alright, and then the other question I had was I'm just looking for an answer part right now and I'm noticing that are used the phrase upstream slots on the Dan and so that's not an upstream Dan Dan.
Still all downstream.
It's all downstream downstream and are you comfortable with the.
Things I was looking at Wisco tail.
For the second corporate came out with that.
Total capital for the tailings dam it seemed a little on the light side is that something that also taking a look out and what's your initial opinions on it.
Yeah, I mean, we've completely reviewed all of those cost and we're not we're not uncomfortable with the cost on the talents that we have modified you know in our current internal models, we like what we modified the mining caught upward. So that does have some sort of us some some knock on effects on the cost the tenants because a lot of the sources the bulk.
Well, that's coming out of the pet So you do get a bit of an off on that but.
No not significant numbers and and Oh, we like where we're at we've also done a lot of work and I I, probably should have mentioned it earlier, we did some pretty comprehensive Geo technical studies in and around.
The the Chinese storage facility.
To make sure that we understand the foundation conditions, there and likewise a lot of Geo technical work at the plant site again, I'm, just trying to confirm wherever I ER and as and also you know ground water inflow, a and wall stability studies in the past so quite a bit of Geo technical work as as it.
That's a our understanding there.
And then I guess, one last question I'm not.
So if he is in your mind, if you get you know the boards approval on the construction time from that you would like where when would you see.
Potentially being.
Action.
I think we're currently working with about a 34 month construction and commissioning schedule.
Okay, Alright, thank you very much.
Our next question comes from Mike So none of Bank of America.
Oh, Hi Guard morning.
Good morning, I guess last [laughter] [laughter] kind of question on a your strategy you mentioned deal have clarity on the company's tried you in the next few months, but as you know there's been a lot of CEO transition in the sector recently, and it's always interesting to see what new Ceos or what their strives you're going forward is.
For example, Paul brink and Franco Nevada, So there'll be no strike no change in the Franco Nevada strategy given that it was worked and.
As evidenced by the share price keeps a new highs everyday and I am gold share price the past year, despite anybody milestones as being flat so.
I'm going to be more next week, you probably have 41 on one meetings with investors are going to want to know what steps you're gonna take two or get a higher share price nine goal job, which is like the peers. So just wondering if you can give any guidance there.
Well I.
Since the first one is to pick a stack strategy the very transparent.
As to why our rationale is behind that strategy and what we're looking to achieve.
On an operational level, we're going to continue.
To make sure that the operations execute a we've been very conservative.
Our guidance numbers on purpose, a and that's the strategy that I want to pursue going forward.
At the operations themselves or there are opportunities, but as I said earlier there they are getting older but we need we need those operations to performed very well we continue to do.
A lot of work.
Ah with our communities and and making sure that the operating environment. We're working in a at all of our operations is conducive to those operations.
Having the space to produce what they need to produce.
Sorry.
You know, making sure those operations are doing well.
And then as as I said I always speaking was an enterprise is less find out which works we're going to sit here and and whichever one we pick we're going to be very very focused on making sure. We actually choose that Ah you know as we've been able to do with our other development projects, we did it where that's again.
We didn't with Africana expansion, we've had for expansions that Roosevelt or you know these open pit projects are really in our wheel house.
And we want to.
To continue to demonstrate.
We know how to build projects we've done in the past and we'll do it while in the future, but that will be the focus.
You know I you know when you talk at a high level, what I'm not sure that shareholders. We're building long term value we've done such a good job Craig and his team, bringing additional reserves and resources into the portfolio your debt because I look at our south compared to maybe some other peers, we aren't huge opportunity to be who truly long.
The company at an added benefit.
No I don't want to take an enormous production levels, but you know certainly a higher production level. Then we're at now and can sustain out into the future and you know we don't have enough time here for we're trying to go into all the other stuff that's coming in behind the ones, we have already been talking about.
Okay. I guess, one thing you haven't mentioned the tone of M&A, that's less number of your peers or one of the say production sizes yourself and now the over a million ounces and I wonder a smaller makers or just kind of gotten left behind so I'm, just wondering where you saw that.
Yeah, you you always keep an eye on it in and you know what I'm talking with Steve.
There there is there is an issue irrelevant.
Obviously M&A has to be done at the right price with the right partner you don't stop looking at it.
I think.
Yeah, [laughter], if we execute on our growth projects here in the next two or three years and we're in a in a strong strong puts much stronger position than we are now.
Hi, it positions us.
On the other side as a table in M&A discussions are moving out from there or not it.
When we build Coty MBOED, although and you know when are we see some expansion that that Saramacca Oh, we ramp up Westwood, we've got a lot of really nice long life cash flowing projects into the future that really sets us up or I think.
Oh somewhat of a distinct position versus a number of our peers. That's gonna be a great place to be talking about M&A you know the other thing we we keep having the discussions that as.
Gold prices up we need to started looking at other ways to to generate some returns for the shareholders.
Okay. Thank you and good luck.
Thanks very much like.
Our next question comes from Mike Parkin of National Bank financial.
Hi, guys on Bakken Coty, and I'm wondering where we could expect in fancy <unk> on the engineered great over the course of this year where would you.
Kind of expected to kind of be at the end of Q1 Q2 and.
If you were to make a decision on it what would you kind of wants to see that rate at a <unk> percent completion that is so before moving ahead. Yeah. Yeah. No. Good question like we're you know we actually had a meeting last week.
The project came the actual number currently I think is 51.2%.
We're adding a about 2.2% per per month right now yeah. Most projects that you execute on.
When you watch your construction decision you're at about 10% detailed engineering, so we're well while beyond that and we'd be comfortable going forward at any time or based on where we're at one of our challenge is is without actually.
Kicking off the project and entering into final contracts are on some of the equipment. It will it will get to a point, where where we can't actually advance it without actually getting the field information that lasted a detailed information actually really depends on information coming back in the field drilling that during the concern.
Auction process. So it's tough to get more then about I don't know 60, 65%.
[laughter] without actually starting construction.
All right that's it for New York, Thanks, very much thanks, Mike.
Our next question comes from Tanya Jakusconek Scotiabank.
I think a good morning, everybody.
Got it maybe just coming back on non yeah. She teaching out like is it safe to assume that you know both of these projects cocaine phone L.R. shovel ready to go they need here at your internal rate Henry Chan from an economic standpoint.
When you do make that decision three to four months out or is it safe to assume that at one or the other oriented or are you thinking maybe kept pulled the trigger on both.
I I mean, everybody knows me I'm, a huge optimism I would love to do both but I know I wouldn't be the shortest live tenure as a C. O I think if I tried to do that so it.
It will be one or the either a staged format well with the second one nominally scheduled to start as the first one is getting where I lost the completion curve.
Hi, it's it.
I would love to be done them, both together, but we're not going to do that they will be one or the other.
Okay.
And then maybe what we haven't touched on and the Saramacca underground can you talk a little bit about I'm aware that study N. and conceptually you know as we as you look at this underground you know any and information or or insight you can get on you know sort of what you reported a net reserve base I think about a million ounces.
Like how much it that is the underground well you know glad you conceptually heater strip ratio going any information you can give on on timing and more details on [laughter]. So.
That's that's a good question I I want I avoid getting.
Just to outside on the slows or so I wouldn't describe the study right now as as being completed through conceptual design.
And in some ways getting close to that sort of a.
Pre feasibility level of others of design, a we've done a lot of work on.
Portal and and wrap access and and how much that would cost we've got budgetary quotes from contractors, because we really understand that first part is important.
As we look at it within our our production and as we looked at it within our self funding on below and using a conservative gold price for Roosevelt and are planning exercise. We plans. This year 13 50 for the five year plan under those conditions and.
You know staying true to our mantra of Oh self funding.
Although the project is good from a from an overall return point of view it Didnt pair our near term self funding because we would we would be spending some additional capital in the near term did to execute on that underground concept Ah.
Yeah.
You know tem eye on high it's something that should happen.
Are you know when we will be revisiting that now obviously looking at current gold prices and what our cash flow looks like for them and what we're able to achieve.
Got it gives us an opportune age re look at it you know you're talking probably it too and I have three year development period before you could deliver the current reserves does not assume any underground or are we would need to relook at our reserves.
Got it would allow you on the current pit design probably to take your stripping right I think the stripping right in the 43, one on one it was around 11 to one yeah. When you when you do the trade off you probably come back somewhere on an overall basis around seven six or seven to one for that pet.
So you you remove.
Dependable reserves are you take out some of the lower grade Oh below that that smaller pet now doesn't make reserve grade it using underground economy.
But quite nicely you can extend obviously underground too much greater depth. So you can access parts of the ore body that would never access.
There are some trade offs there, while we had really nice coherent zones I want to say 20.
In some areas, even 39 meters with Oh, plus three gram material over strike lengths of of 200 meters in a few areas to other 300 meters. So it's a very attractive block.
We are you know we haven't hit a few small graphitic zones as we've gone down so were.
We want to circle back with the with the Metallurgists. We're in the process I'm going back through through the metallurgical work just to make sure we don't get under there and find something doesn't actually work, but I that's out.
So.
In my mind right now that's moved into the lower risk category. So I'm I'm less worried about that but next steps.
For us.
At some point this is probably it's an investment decision you'd make before.
At least it drives the access portal Ah that's something you do it as part of the study work. It's so much easier to drill this deposit off.
From underground engine and hitting those kind of targets from surface is a penny asking costs a lot of money on its low.
So I think once we get to to let threshold point on rate of return.
We can show a 20% plus rate of return something out of that nature. If we're comfortable with our cash flows with our cash position in our balance sheet strength and our self funding model or we could move we could we could start to move towards executing on that project sooner rather than later.
So when it is a steady going to come out for asking kind of that public information.
I need to revisit that you know.
I'll come back and and a I think at the next meeting we will make a bit of a declaration. We originally were hoping to get something out this year as we pulled back from a project to choose to satisfy our self funding requirements are we had pushed that out but obviously, it's it's worthwhile revisit.
Sitting here as part of our overall strategic review.
Okay. So is it safe to assume that sort of pulled back comparison, okay, and boto I'm being you know more advanced and more ready to make that dependent on that.
Yeah, Yeah, I mean, it really has a different class approach accurate you're talking about around a much more modest.
Level of investment required and.
Yeah, I, it really would be a completely different group that would be involved with it.
There is there not mutually exclusive.
That being said you know obviously, if we moved just one of these big projects or if and when we moved one of these big projects the corporate focus will be on that.
Okay.
Thank you.
Our next question comes from carry Macquarie of Canaccord Genuity.
Hi, Good morning, just had a question on in the release it talks about guidance incorporating factors related to negative grade reconciliation that Roseville Saramacca. Just wondering if you could provide a little bit of color on that thanks.
So Rosie validated we haven't seen negative right Grad reconciliation issues at a at Saramacca at all Saramacca geologically is quite a bit of other different the eastern and we're not expecting to see those issues at Rosenthal itself.
Certainly in the past year and as the mine gets more mature and we get into deeper and deeper pushbacks, a and accessing more distill parts of the ore bodies.
It's a little more challenging to drill often model in understands rosabel historically has been a a real bought her to model a and reconciliation is parental perennially a challenge historically, a we see and somewhat.
Modest negative grade reconciliation, but a huge positive tonnage reconciliation at Roosevelt the past couple of quarters, a we've seen some some a.
A little higher negative grade reconciliation that than we've seen historically.
We put a swat team on it or going back and looking at our mining practices.
And and trying to understand exactly.
What's the best way to approach it.
So in my mind. It is a combination of one just the challenge to model. This deposit at any time has no spacing.
Where we are approved for the budget this year.
Enhanced RC drilling program that will really help us with modeling in them and then in that sort of in the mid term and and and health, but sort of maybe smoothed over some of those those challenges along the way you know none of this is.
Nothing we haven't seen before but where were jumping on it now anecdotally.
I thought positive grade reconciliation for January so.
Yeah. It Roses, though is one where you can never let off Nevertheless, a hammer off.
Oh, what sort of magnitude would you'd be saying on the grade just today curiosity.
Yeah, we don't know I really I think that negative reconciliation for Q4 was in the neighborhood of.
Minus 15% on grade and and plus 25% something like that on on on time.
Total gold is there, but obviously it creates a different cost model for you. If it's if it said those kind of lower grade.
Right got it thank you.
Yeah.
This concludes time allocated for questions on today's call I'll now hand, the call back over to Andy coping Nathan for any closing remarks.
Thank you very much and thanks very much to everyone for joining us This morning and for your continued interest in I'm goal. We look forward to having joined US again for a first quarter 2020 conference call inbound Goodbye.
This concludes today's conference call you may disconnect. Your lines. Thank you for participating and have a pleasant day.
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