Q4 2019 Earnings Call
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Good morning afternoon, ladies and gentlemen, welcome to be two goals fourth quarter and you're in 2019 financial results Conference call.
I would now like to turn the call over to Mr., Clive Johnson, President and CEO you May proceed Mr. Johnson.
You are very welcome everyone.
We're here to talk about the sharper said the results for the fourth quarter last year and before you're obviously, there's a great here for me to both Mike's going to come up Oh, My God shortly here talk about.
Oh, sorry, what quarter and you had been a solid fourth quarter and you have tremendous here as.
Given our initially.
But actual results, which I guess I'm just talking to people, who will review, where we won't be she ourselves going here and 2020, we didnt quite a lot of detail is initially 70 them on the Mdna talking about what we are no worries yourself going well the strategy going forward for that this year, obviously focus arm dogs would it make sense for doing such a cyclical expansion which is going.
Very well that's still the ship you work on that I've talked much about schedule and of course, that's a pretty dramatic expansion as it increases person to last years for.
2000 ounces to a worsening somewhere else or something else in house for calling for this year, bringing to say that about a million ounces.
To the company, including our corporate said ownership.
Oh, the caliber, reflecting a portion of their production and bankruptcies or some of the details.
Well, we're projecting in terms of cost the central but they look at a low cost you're.
Operating cost walls and caused a good as well and were also generating about a lot of caution or we are projecting the.
As you heard on cold they sort of card assumption so.
She said another billion dollars from.
Cash from operations really hurdles cold is higher than about something about 50 cars that was about $90 million per year or cash from operations. So significant today here.
This year for for cash flow free cash will continue to.
You should see next year.
We see these expenditures and things like what off expenditures over the course measure.
I will be behind us.
Next year, so very positive.
We're in that regard in terms of grows we're going to focus on on the pipeline.
As we've said for many years now sort of an excellent pipeline projects and what the to the Q1's always lots going on to the that he wants.
I would be a gravel lodging, we gave you some detail individual DNA and those are the news release and we'll be talking book I wasn't quite a bit more as we go through the year.
Major drill program underway with 11 rigs turning to turn the inferred resources a gram unless you mentioned you indicated.
We put all that we've called is pretty positive numbers on improving economic assessment, which is a dramatic change for the previous economic analysis, which is based on a on a model that needed some improving or some drilling help but also the interpretation.
Too much more accounts were keen to see you've got a lot to ask potentially be our next month with the operator now the joint venture and have an actual relationship with Anglogold Ashanti working on a profitable feasibility study by the end of year.
Potential decision whether to go no go early next year.
Have a permanent have lots of positives that we go longer.
In the industry, So where we are in Colombia, and why we're supposed to remote and she'll be a as a place to go.
No the gold mine in Colombia, <unk> comments, which is almost another key factor is.
If you focus this year will be further exploration you know you've got a bunch of over $50 million worldwide.
On that as brownfield, so I'm looking ahead.
But the coal and the other mines, we feel very good success of course real sort of major program with fiber is trending up and the other condo or the snakes through as we call. It 20 kilometers north of a cold that we've had some very good results are either good or large really large letters zone of separately.
Meters, how that continues to extend to the north, but perhaps more perhaps of grade are exciting to me is the potential for whats beneath the sampling and we've had some very good Joe are such that we lose long ago from I'm from Nava underneath the.
On exactly into the study was helped by the bedrock. So it's early days, but this is similar type structures hotels, which will receive Colin so she is a good grades good wins, so what kind of excited of potential in the past area.
And we'll be lots of other expirations coming out where we're definitely looking at still continuing to grow through the drilled up.
I'm, especially in this climate, where I think acquisitions are going to even more expensive and we're looking out a number of pursuing a number of a grassroots exploration programs worldwide, which we talked more about as they come and then also.
For joint venture the junior exploration companies. So obviously have entered a strange dates you.
To come up with results in the sense of the overall market in the gold price all of our but we're in a wonderful position we couldn't be happier, where we are and we're looking at the pace of premium boto gold.
Consumptions debt free in the third quarter of this year, which was funny.
Well, it's an estimate of somebody for me in a strategy and a sort of like not to give you that these other financial results.
Year 2019 in the fourth quarter.
I just just wanted to start just to remind everyone. We restructured our interest in and the Nicaraguan operations in October so in Q4, so a up for financial state for reporting purposes.
Results for Nicaragua, Pet data reported as a one liner in the financials and discontinued operations.
And thereafter, we pick up our 34%.
Favorable interest to an equity accounted for Nicaraguan from October to December 31st So when I went through this also going to talk about results from continuing in that I want to talk about what the also where when you when you take and to account Nicaragua.
So revenues for the quarter for from continuing operations 314 million a significant increase over the prior year, mainly driven by the increase in gold price and I am more ounces sold.
Take in adjusted revenue, so including 10 million.
As Canada revenues from just kind of discontinued operations. It was 324 million for the Q.
The significant increase over the prior year quarter.
Our production at very solid in the queue. So total from continuing operations was 228000 ounces.
Driven mainly Oh performance Bifocal unknowns Makoto for call. It was 11000 ounces the had.
Well, that's original plan and that that's driven by the same stories, we had through the year and there's more throughput going through the mill and because of that we were able to process more times than we thought some of which is lower grade stockpile tonnage now that that did lower the greater but but the throughput.
Oh I repeat the beat the the impact of the reduction in grade. So overall, we outperformed and call and 119000 ounces in the queue or.
Did you cauldron 58000 ounces again ahead of budget by about 4000 ounces and that continues to be driven by and is more or a better grade come out of wall checked that was originally planned.
Slightly offsetting that was meant that even got a 51000 ounces just 3000 ounces below plan that was as expected and I just discussed in Q3.
We did fine have a production from tenant in Q4 of 2019, but that as we indicated previously that was pushed out.
And to the first quarter of 2020 factor Workup attack commenced pets or mid mid February of this year.
The result, the impact to that was that we had style or what's that slightly lower recoveries in Q4 than we'd anticipated and therefore, we were about 3000 ounces under budget, but overall production from continuing operations was 12 months ahead of where we had planned when you take our share of Nicaragua discontinued operations in our attribute.
Suitable share from October 15 onwards, total production was 245000 ounces.
Just to comment little bit on the cost for the Q. So.
Cash costs. The non this is on an ounce produced basis.
From continuing operations $442 and from all operations $467 per ounce for the quarter.
We'd be plan and overall and that's again a function of this strong performance at both Mccullough North Dakota.
And with the higher production coming from those operations as body was a little higher than originally planned this value $694 cash cost per ounce and again it as a direct impact of that not having not that work come from Montana in Q4.
But overall, we beat budget by close to $30 an ounce on on a cash cost side.
On the all in cost side from continuing operations all in consult correct all in cost per ounce sustaining cost rents were $869, an ounce and the total from all operations, including Nicaragua was $882 an ounce and what we saw in the Q was.
Was mainly catch up of Capex, although we had to be overall on the cash cost per ounce. We were ahead of plan. We didnt have capex that have been postpone from the first three quarters of the year and was incurred in the fourth quarter and that's so we had some higher capital at for call. It onto Cotto as we had capex caught up.
In that period.
Also impacted all in sustaining costs that we need to remember that we actually budgeted.
On the base to $1200 per ounce last year and the royalties were based on pricing back through the year. We realized go a really gold price for the whole year of close to $4800 note. So there's a bump in the end. The total royalties that were included in the all in sustaining costs. So total on a consolidated basis from all operations again.
Was $882 per ounce.
Just to comment on some of the results now for for the year at revenues from all operations, including our shared discontinued operations was a record 1.3 billion.
And reflects the fact that all the mines have run very well through the period.
Our production basis from continuing operations, we had 851000 ounces well ahead of budget.
800, and including our share of Nicaragua overall, we had 980000 ounces again.
Which which beat the upper end of our guidance range of 975000 ounces, so pretty much at we'd already pre released those numbers.
If you break it down.
Im looking at job for caller had 456000 ounces 33 ahead of budget and it's for the same reasons as discussed on the cash cut.
Side, just more throughput slightly lower grade, but more throughput through the mill overall gave us more ounces than we planned.
And that beat the upper brand the 456 dozens beat the upper end of its already increased guidance range of between 445 and Port 55.
As batting had 217000 ounces 9000 ounces ahead of where we overall budgeted.
It's an annual record performance batting and it beat the upper end of its guidance range of 200 to two time.
No one code 178000 housing.
And that again beat the upper end of its range of 165 to 175 and the production stories at each of those sites is basically the same as I just described for the quarter just outperformance at all sites.
I just also to comment that 2020 guidance. So we may not on a on a fully kind of basis, including a drag a 980000 ounces for the year next year, what the impact of the for coal expansion coming online.
Throughout the year I guess, partly from the expanded fleet and then when the mill. The full mill expansion comes the line Q3, we're now we're guiding.
Million 2.055 million ounces, including our 34%.
Attributable share of Nicaraguans.
And the other on the other I am maybe just comment at this stage as well as recall a journey in that Q4 19 Mccullough produced its million ounce. Since it started production, which is quite an achievement. When you consider it's only been going just over two years.
Just to comment on the overall costs that and all in sustaining cost for the full year. So on the cash crop site grounds produced from continuing operations $449, an ounce and including our shared Nicaragua $512 an ounce. So.
And overall by that consulting the number of $512 Kras produced.
That beat the low end of our guidance range of 520 to fight 60.
Next year as we go through the year with eight the impact again up for Cola expansion coming online through the year.
And a smaller percentage share of the higher costs Nicaraguan operations were guiding cash cost of between Fourfifteen in for 45 per ounce.
On the all in sustaining cost sites consolidated including all operations, Nicaragua, $862, an ounce and from continuing operations $794 an ounce.
And that's that's right in the range that we gave we originally gave the guidance range of 830 Fivee 75, So $862 announced came just just at the midpoint of that range and as I said it was partly impacted by higher royalties in the period and also the fact is for the year.
We produced 980000 ounces and we sold 944.
So the sales were slightly lower and therefore increased the cost perhaps slightly because all in sustaining costs are presented on an ounce sold basis.
Next year for 2020 sort of mirroring the lower costs, we see on the cash cost Brown side, we're getting between 780 in a 20.
Overall.
It's going to comment on me.
Income statement for first quarter, and then and then the year. So couple of items to highlight I think in the three month period to December sort of unusual items. So impacting earnings Firstly, we're a couple of.
One thing I mean noncash item.
Which was a reversal of an impairments for 100 million. So a few years ago, we booked an impairment.
Of our oil and trust are catching volume as Batty mine.
We originally in purchase that why when gold was 1500 plus high in 15 and impairment tests as cold that were subsequently run at 12, 50, and we booked an impairment.
We would be increasing the gold price that we see.
Todays.
Plummet excluding of course.
We changed our long term.
Gold price assumption to 1300, $50 and with that.
We realized a reversal of 100 million on not impairment that we previously recorded adjustments batty.
And also impacting the income statement for the period was that gain on sale of the Nicaragua assets of 40 million. So.
As you may recall from our disclosure previously we.
That restructuring of our interest in Nicaragua was for proceeds of 100 million plus working capital adjustments.
Hi included in that and so that resulted because we had that in that was finalized in October we booked that gain of 40 million in Q4.
She also comment that as part of the consideration made up in that 100 million, we took 40 million us worth of equity and caliber.
There was also a 10 million dollar convertible debentures that with subsequent increase in calendar share price was converted and today.
We hold an effective interest in caliber of 34%.
Bottom line net income for the quarter 182 million as noted that includes the impact of those two items I just discussed and that side EPS in 17 cents per share.
On an adjusted net income basis, adjusted net income as reconcile their mdna $69 million or adjusted EPS seven cents per share.
Comment now on on the 12 month.
Financial results.
As mentioned before.
1.3 billion in revenues. If you include Nicaragua 1.2 billion.
Rounded.
Discontinued operations are included.
We had operating income.
For the 12 months of.
Over half a billion.
Couple of areas had mentioned in the PML interest in financing expenses 26 million or 26.5 million for the year versus a closer to 31 last year and thats due to the lower debt levels that we've we've had through the period.
The in.
In 2019, we repaid approximately 220 million.
Of our debt, including 200 million on the revolver and add as we currently look forward, we're expecting that by the end of Q3 2020, we will have repaid the remaining.
200 million on the outstanding revolver balance, so, leaving us with 600 million Undrawn an available but you should also expect to see a significant decrease in interest expense through next year as we pay that down.
Also one other item to highlight current income tax expense for the year was 114 million and you will see higher tax expenses. We go forward.
Compared to some prior years for be too as for call. It.
Is very profitable and there is no accelerator deductions in Mali. So you pay your share of income taxes straight to the gate and you get your deductions you regional investment over time.
And also adding any previously on Unutilized losses I.
Loss carry forwards appointments batting otjikoto had been utilized by the time, we've got to 2019. So we're starting to see a higher income tax expense there.
On a cash basis total income.
Cash income taxes paid during the year were 119 million in just a reminder, that that also includes payment of the for Cola priority dividend.
On a comparable basis for 2020, I think you can expect.
We're currently estimating total income taxes.
Our cash income tax payments, including for coal is dividend.
Of approximately 115 million.
Bottom line earnings for the year.
Attributable to shareholders 316 million.
Our sorry attributable to shareholders.
Was.
Sorry 293 million.
And that that added up to 29 cents per share EPS. If you just that the noncash items for the period adjusted earnings for $237 million are 23 cents a share.
Thats going to comment on a couple of line items in the cash flow firstly for the quarter at cash provided by operating activities 145 million approximately 14 cents per share just highlighted in Q4, we did make at along 312.5 million installment cash tax installment payment for for Cola.
We pay installments for the year, but the final balances due to be settle up in full and Q2 2020, but.
We actually prepaid 12, and a half million in Q4.
Also in Q4, we repaid as we indicated at the end of Q2 repaid another 100 million in the revolver, leaving us with 200 million.
At the period end and Q4, we paid we declared and paid our first dividend for B two goals. So one cent per share us.
Spends of $10 million overall for the Q and looking forward. We have also in highlighted in our news release that we declared our dividend for Q1 and the same amount one cent per share use.
In the quarter cash from investing activities was.
Nap was 58 million, but.
That was felt was inclusive or not of 51 million proceeds of cash.
From the caliber transaction, so gross was $108 million and like I mentioned Jose as I talked about the all in cost pressure that included approximately $11 million.
Catch up for some deferred stripping costs.
At both foot coal on Chicago.
It also included in the queue 54 million for that for coal expansion.
Overall in 2019, now we incurred 76 million cost related skol expansion and remember that includes both.
Fleet expenses mine expansion cost and work, but we've done in the solar plant. So 76 million overall in 2019, and we budgeted the remaining 97 million for 2020.
I'd also just a reminder, that we do expected for the fleet cost for total approximately 85 million overall, we expect the finance approximately $40 million flat with caterpillar loans and the latter part of next year and 2020 Sir.
And finally, just to comment on cash flow for the for the full full year cash from operating activities overall was up 492 million or 49 cents per share.
Like I say, we did pay off in Q4, 12 and half million prepayment on our filed for core tax expenses and also.
Right at the end of 2019, we did have about 25000 ounces that because the late shipments and delays in shipments from the from the sites, we had sitting at refineries, but wasn't to build from sale until just into the started 2020. So we sold those 25000 ounces for proceeds of approximately.
39 million.
At a significantly higher gold price actually then we would realize that we sold them at the end December.
Overall for the year in the financing side, we repaid 200 million and that has discussed we had proceeds from option exercises 73 million and 10 million for that first dividend payment.
Investing activities for the full year 263 million, our gross or the Nicaragua proceeds 316 million.
And that was a bit higher in the original budget.
Because remember foot included in their $76 million for Cola expansion expenses, which weren't in the original budget, we approved and announce those midway.
Through 2019.
And then we had.
Others, it's sort of main differences with men's value would probably 12 million over but under budget, sorry, overall, mainly due to Montana timing the timing final land acquisition and development cost from antenna, which we're now.
Incurring in first quarter 2020.
And Nick Rock, we were about 6 million honors because the timing of the sale there were six point had meetings.
Incurred before we sold it.
Overall, I ended the year with cash and cash equivalents of $140 million.
400 million on drawn on the revolver in good shape to go forward as we evolve as we work to complete firstly the for coal expansion through the year and then and then also to fund.
Our increased share now of the granularity.
Budget, where we're planning to drill Graham Lotto now in 22022 feasibility stage and have a feasibility study completed by year end.
To earn room our plan there is to earn back to 50 50 interest and also to two therefore thereafter fund their share of the 50 50 JV expenses going forward. So in total 2020, weve at 25 million in that and the budget for that but overall, we're well placed to fund all apparent activities that we've got.
And I think that probably summarizes what I was going to talk about.
Okay, great. Thanks.
Vessel over the Bill Lytle.
GDP operations too.
Give us.
Lunch grew on me progress to date of the expansion of the typical mill and the fleet.
Thanks Bye.
Maybe just by way of introduction to the projects I think everyone remembers last year, we were challenge to look at.
Should we expand the mill at for coal in so we did a study, which clearly show the optimized optimizing the mill and increasing throughput was positive, but it's part of that we looked at optimizing entire facility and one of the interesting things that came out of it was that that that the optimization actually indicating that we should also.
Expand the mining fleet and bring some higher read outs forward. So.
We that was approved in June of last year, and we immediately started ordering our mining fleet.
It's important to realize that because for twentytwenty the keys for getting the 600000 ounces really relates to the mining fleet and pulling us hydrate ounces forward I'm happy to say that on the mining side.
The mining fleet actually is arriving ahead of schedule on budget ahead of schedule. We already have received our first big ex meter to 60 40 excavator that has been commission and in will sharpen moving into.
Mining mining in phase six we also have received the first five of our 210 trucks flows have been put together in will almost momentarily I'd be put into operation is since we put some tires on them. So that remains ahead of schedule.
On the milling side remember, we're expanding from 6 million tons ran into a throughput of seven happily tons per annum, and a bunch of $50 million that.
What happens, which was finished pent lapped last year and half this year.
That again remains on schedule for a Q3.
Commissioning.
There are there obviously, we're currently watching all the issues related to the to the Corona virus that we are still forecasting at this time that we will be on budget for Q3 delivery of the mill.
In addition that we've looked at expanding because of the throughput at the mill and some of the past outperformance is in the mail, we want to make sure that the tailings facility had sufficient capacity and so we actually called for a double net last year, which would take us up into 2023 before it had to be lifted again.
That remains on schedule and we will be completed prior to the rainy season this year.
We also looked at the success at what Chicago, the solar plant and the economics of implementing a solar plant at the Cola and we approved last year, a $38 million budget to expand the power plant by 30 megawatts.
AC solar.
That remains on schedule and on budget. We're currently looking at some of the equipped which is coming out of China related to the batteries, which may be delayed slightly but overall the solar plant will be started up.
At the end of Q3.
And.
That that so the plan is not needed to support the expansion that just better economics over the long term.
Thanks.
Thanks, Bill I.
I think with that we'll turn it over the questions you have the entire executive team here in Vancouver. So.
We'll take questions we can enter.
Go ahead.
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To withdraw your question press, the pound or cash team.
Again, if he would like to ask the question Press Star one on your telephone.
Please standby, while we compiled acuity roster.
Your first question comes from the line Lawson Winder with Bank of America. Your line is open.
Hello, gentlemen, how are you doing today, thanks for taking the questions just.
On Gramalote say maybe.
Just looking at project, becoming more and more attractive to you and then I compare it to the other three sort of core assets in your portfolio, where you are not only 100% in drilling operations, but.
Majority owner.
In the event that your partner were to be interested in.
In tendering, there or half of that project, that's something that you guys would be interested in considering.
Well I think we're both both.
EG and ourselves or refocused on.
Moving to the thought of visibility by the end the year.
There is a provision agreement I think both.
The aging ourselves believe it's joint venture that approach should be able to stay true to block development of a mind if its economic so there is a provision agreement where if we will provide a feasibility study if we move to development plan to present that we appreciate the neglects adoption participate to 50%.
Then theres a mechanism for each of those would equate to independent financial advisor and based on the economics of the feasibility slush development plan.
If.
They all week, whether facilities and interest as a mechanism to come up with us. So theres also a provision where they can drop potentially to 30% interest.
And so we feel very confident that fiscal of is a goal.
The Companys Dick I wish you. Good I would expect was which has NJ with what to participate in 50%, especially since we're going to doing work.
And secondly, though there's a mechanism whereby we can move on and with this is a big nut to crack in terms of the financing as we were like liquor looks a lot, but we have lots alternatives. If we if that happens because we could.
We have a partner in for 30% or whatever percent, if we give or take on the pull that I think it's worth noting though it to me is still early with the work to do you get the feasibility those decision, but if you look at the.
Cash generation from US based on current projections over the next this year in the next few years to somewhere around $1.62 billion, so given effective or it could be testing by the third quarter the share woven extraordinary position to be able to finance.
Projects going forward from cash flow.
Thanks, very much that climate is very helpful answer and then.
In.
Just looking at your portfolio.
There's one asset that you guys are project, rather that you guys haven't spoken a lot about lately and that is kiaka.
In Burkina fashion I was wondering if maybe you could just quickly update us on what you're thinking is around that asset. But then also in doing so maybe maybe comment on.
Sort of geopolitical risk exposure with that asset and.
You know where I'm coming front as assuming the project economics were far superior than they are today with Kiaka I mean would building it be an obvious choice for you or is there an element geopolitical risk in Burkina Faso now that would.
Perhaps make you think twice about that decision. Thanks.
Well, obviously oil cut or so some political risk. Unfortunately became a fast. So that's had a lot of significant issues that considered all of us over the last well liquidity the mining industry or in general no safety, where people is paramount, but I think when we when we continue to evaluate the economics of jacket and see what kind of gold prices might.
Makes some sense, but I think we're also looking to see that the government continue work hard I think that are to continue to improve security in the country. If we had a call up the became a vessel fleet I think we've been working very hard with the government to build it into than than should the safety of our people. So.
We'll continue to evaluate Jack as we go forward. The honest if there was someone interested in the partnership on something like that we probably consider that.
Otherwise, we'll we'll continue to evaluate and we'll monitor the situation between the vessel that open continues to improve unfortunately.
So.
Pieces, some additional charges that make that leaving country, Molly who so to suit with a major commitment to improving.
Safety.
10000 terms being trained as we speak of them for their ongoing support contracts in the United Nations et cetera. So we'll do so it's a PFS was a great great pedigree and really the people are we hope that.
They have a save for future that we can progress providing michigan investors. So there are other operations that are looking to Florida Im sure shaped use their first priority as well.
Okay. That's great. Thanks, Thanks for your comments Clive appreciate it that's all for me.
Thanks.
Again, if he would like to ask a question press star one on your telephone.
Your next question comes from the line of Chris Thompson with Ti financial your line is Hilton.
Good morning, guys. Congratulations on a on a great year last year and thanks for taking my question just a quick.
For the clarification, and we anticipating I guess revised mine plans for Dakota recall that in the A.O. yet.
Yes, we should I mentioned that who has picked up.
Spencer's, yes, yes.
Yes, what your answers yes.
We will be updating us mine plans will be underground addition, im sorry, we will be updating the mine plans both at coal based on latest resource which came out in December I think in 2019, and then and then the approved by the board to go underground, which could also be hard yet.
For the reminder, Christy or the other thing you'll with extension for Cole of course was.
Was based on the.
Let us results.
Increasing for calling them a deal with undue indicated resource recently.
6 million ounces, we might a million ounces. So it's really some of those ounces when we started that.
Starting with four we remain open so the expansion still having a mission tenure my living with the expansion so the expansion.
As shown interest and a great decision and I think thats one of the things. So we're very proud of because as the.
Obviously were the bricks and mortars, but we will maintain entrepreneurs approach. This business having expenses recorded twice already since we've decided to first mill, leaving little to expansion and having your commitments.
It was bigger as we are building and so.
It's a great example, we approach the businesses.
The success of recall, having produced a million ounces already.
To this interest coming into the second expense.
Great. Thanks for that clearly them just to just another quick question I guess.
Can you just sort of walk us through what's happening with the snakes, the snake deposits it for colon.
Sure I'll hand, it over to Tom you saw we put up some are some some pretty intriguing results while ago, but Tom maybe what number detailed focuses are yet to see exploration at.
At the same story now this is.
So see threefold.
We're expanding the.
The satellite mineralization to the north with.
With RC drilling.
We are drilling.
Mama to try and understand and trying to extend mamba insult by deposit Mama and then we'll be looking at a couple other salty targets that are say not an eighth anaconda, an additive that will be to focus for this year's exploration.
Okay, great. Thanks, and then just a final question guys I've been on mine, but just a mad study just a very very quick comments on I guess, the grade and ER and metallurgical characteristics of Montana compared with with mainly.
John Utica.
Great I.
I believe we're going to average about a 1.82 grams per tonne correct and.
We are expecting about the 8% gold recovery, Chris from Montana.
Ill.
As a softer ore so no issues with throughput.
Okay.
Hi, guys. Congrats look forward to this year.
Pastures.
Your next question comes from the line security Mark with Haywood Your line is open.
Yeah good will.
So maybe just to extend the question for Chris is.
As loans thought, particularly on the loan and the calendar in the context of.
I guess, a rounding out who told us.
No there's a menu expansion to clear out now.
Plus the context of probably moving with the decision to go through two Gram a lot of say next.
And moving your unions team there all the time to me so I guess, we exclude who could school that.
Was wondering.
Now there's a holistic we had its.
The only condensate a potential snakes seek within within moments films is human to human resource capitals to developments on frames with cash flow requirements to attribute to that along with them, including says we'll have more of a holistic sort of mid teen growth plan because you've already got.
Well, obviously, another big news Gramalote say Lucky you come through.
Yeah, So just getting some sort of or a pool to scale thing.
Well no matter, who will review.
Sure I mean.
A waiver liver arms bit to sue if we come up with the.
Positive.
Profitability say Gremolata unlimited development is the proceeds of.
Looking at about 30 months of.
Construction as 11 million ton that they plan so.
So we might be started the second half of next year once again underweight in terms of it but the team up we'll be ready to roll because they're going to be coming off emission difficult expansion.
So that timing works out so well in terms of that economies such early days, but as a number of alternatives.
We're seeing the sampling though.
The six kilometers of before that fight levers of stake we had 800000 ounces that of overcrowded. So.
As you know it suits.
Who doesnt recur in the last thing or are crushing of this was because of that nature. The weathered rock of assembly down to 50 meters. So we've always thought as that's getting bigger now well Colin eversource through the year year for the satellite and then that would.
Does that potentially a standalone situation or or other higher grade parts of the separately then there seems to be where there are so that you like trucked out of the goal of one day lets say after surgical as first about years, averaging five in 2000 US a year, that's what to me alternatives would be to do that.
Tom doses that we might be some which are tied to analyze too much.
Secondly, because he's he's feeling cautiously optimistic on it because it's all of the potential the sulfide below.
Shoot areas. So so then even though you could be looking at us a significant standalone mine and you can sort of look at that once again, we are waiting in several years ago that could be saw the Africa velocity, but we don't we don't feel these things everyone on say the same time all the time still always reminds US you know you have your it's we're doing people come in first and the need to the thing that they can be ready to go somewhere else.
We're not going to take on building two plants are the same time I don't expect to sustain changed strategy, but we have lots of alternatives out to get there. We've got you obviously had a card as behind that a lot to in the sense of where it is moving in terms of the process of the feasibility of that permitting so we've laid out what slotted behind that but but as many alternatives.
She has been a huge mill.
The other road 20 goes down the road when you sort of looking other than a quarter delivering better that are not maybe just added that.
Parts, it's often forgotten is the engineering side, which.
We have very good engineering team in and actually slots I think very nicely. If you look at what's happening at the coal and now with that we do have some murky engineers on site. They would in the kind of third quarter after be rotated odor. Graham loyalty, then we're very well once again had waving of to project getting into.
To detailed engineering and of course that would also worked very well give time, Tom the time to finish up actually drilling and Anaconda and handing it over to the engineers sometime maybe in the second half next year really start looking at what's what's happening there. So the answer on engineering side. It fits very well I guess, just one final point that when you talk of everybody that we Didnt mentioned it's.
Very very advanced for a allegedly a P eight which we put out we only put it out as a P.A. because we were a bit surprised to find up at 45% of your but it wasn't from what I was on what has been advertise before so we have in those markets willing to do have infill drilling.
I guess, it's very consistent or by.
Tom tell them. So we're it's infill drilling is always a measured risk, but but we think that.
With that will be successful business and merchant that economics greatness opened for many of them, but as so many ways so advanced karate because.
Got it for 10 years and Thats been what money.
Quite a bit of well the VLP love could engineer were permitting work. If you have a great very good job dealing with local or does the letters of community. We have a permit so they obviously a good job and the nice thing about this is where inheriting the Graham on 18.
Which is really which is water grew to people there rather than having to restart of let's say if we'd some at Agios sold out are we at the takeovers out there from scratch, we'd be along with my further behind that we are today. So there's a metallurgy and there is always good work to do but I think.
Dosing, they're feeling very comfortable with that.
And of course has cut Super cheap are seeing 70 cents kilowatt hour and Africa. This is protected bureau of seven cents to build our because of a nearby powerline.
As a great deal year people criticize agreed we understand sometimes obsession with low grade no surprise given the feelings of many literally projects, but here you have a very low strip ratio because average to fall into the project in one way to start.
So thats, where those are very attractive factors that actually forget to some extent the low grade we can choose 1.5 gram ore bodies are you strip ratio and some inferior metallurgy than what I am not of the economics. So we're seeing hypocrite royalties. So as we always like to say nothing better smoking those isolation, great strip ratio logistics all that it all matters its all about outcomes to go.
So.
I will return to levels programmable logic, but in this year a lot more.
A lot more it was think about we haven't caught area.
Hi, This is really very resistance and silicon chips to normal tomorrow.
Just in terms it obviously threeq free cash flows so going mostly reduction Regal balance.
We'll go obviously since Q2 gross doing who was the middle of the go crust.
Second good.
Dividend payments coming out soon.
What are you thinking in terms of these include seems to go opportunities going forward. So to put in a specific input ratio was hoping to.
So John are you know exposure to rising gold price or I'm, just thinking about obviously, you putting a little to cancel the balance sheet.
Month, so look it's a using them to include.
Yes, I think where we're looking at what what we May do as we go forward I think that maybe the way to look at as we're gonna get ourselves to more of a decision point later in the year on on what we want to do.
We will have the ground allotting feasibility study by Q4, and we'll know a lot more about anaconda them.
What we're seeing from the drilling in Mali and have ideas about what we might you in terms of project finance there.
And so it's really.
Right now, we're using the funds to pay that down in the absence of.
Having a larger dividend so we'd like to do that to Q3, and then obviously, we can evaluate what our dividend policy is what our capital means our for gravel Odyssey and potentially.
Longer term out there what our capital means that would be for Anaconda all of those things can be said are considered and really the.
The first key decision point come up there will be the ended the year when we see what groundwater feasibility study shake that link.
We have with overtime, we'd like to see the dividend increase as you said you know with Alere rush into that we've had some capital expenditures and things happening this year, let's get to the debt reduction, let's get to the fourth quarter and then we'll evaluate that situation I mean that the objective here is to just to be a company that.
Some of their card as hard money or by producing gold and uses it to find warehouses and.
Develop some things that are in the pipeline the local brands, but also at the same time reward our shareholders by giving something back so that's the strategy.
And we started that process, we'll evaluate your if it's appropriate to consider increasing the dividend and of course that partly speaks to compress as well.
Okay. Great. Thank you include things, that's it's a little she's just making.
Your next question comes from the line as Carey Macquarie with Canaccord Genuity. Your line is open.
Hi, good morning, guys.
Just another question on came a lot cake.
He mentioned that the projects pretty well advanced I'm, just wondering beyond the infill drilling are there other opportunities that you're looking at their to potentially took economics.
Tommy.
First just on the drilling.
At the bear in mind that the PPA gold prices really at $1100. So when you look at higher gold prices.
Diagram lumpy as a potential to get significantly bigger.
Certainly its remains open as you go deeper in the project will find on some of that with our drilling this year.
As far as sort of other opportunities.
What else.
In Trinidad.
There's other satellite deposits that we have not included in the PA.
We did not do that deliberately because we wanted to get to decision point with this thing with the feasibility study and we just weren't meaningful infill drilled up to an indicated resource to be able to do that.
So that could add to it and you know the PD.
Of course before it is vastly improved was hitting into account uttered had a modest west so it's.
Then I agree that the increase in greater.
A little bit because opposing river rich, but sort of set a top so there is conservative other.
The deposits one deposit what's going on some of these too so we're going to be done looming over the joint alternative Ashish.
We will lead to incent drilling on and on us.
So what what what are the one of the op costs. We have is typical of our solid anything so I'd like for Cola Illogical is we may look to feasibilities positive amongst looks very good and we go through a bill decision does allow build for its built for cheap expansion again the mill so that its effect on us wasn't to come in that we leather craft that doesn't whatever we have a potential to do it that's cut.
One of our strategy. So I think sets was a little bit apart, sometimes thats, where we don't lose value by not exploring those now we like the way that but way to move forward get going get the stick built if it's appropriate on them and leading lead to leave room to more suitable for throughput of pets.
And maybe one more just your thoughts on your relationships in Colombia.
Thank you obviously, you've been there for one legal has been there for wild just relative to their what's your portfolio.
Well you know so far that it's a great relation we've got some really good meeting summit next week when Mr lives and other senior people from Colombia.
The Guzman down I'm planning a trip down.
Assumed to two to meet the governor officials, but.
In Kelvin Dushnisky has done a great job, there and sort of appeal before him of dealing with government social relationships in many countries, including cobia with a more of a port everywhere. These days, but I think ngs.
So.
Start there were more than started bidding for long term relationships. The government needle the president of the cabinet a couple of Sony He met with all to those per cabinet.
Six months ago or so.
A year ago. They were very very positive about coal mining responsible gold mining and then you've got that fuel here, where the new governor Betsy, Okay recently electives and mining in Philly learning is certainly that credit east come on very providing an sources minister of mines and others. So.
All indications are the questions, we get asked them that's down there the questions are.
When you start when you start building. This thing we also have a hit that are running as I said with having the Gremolata team. We've also deal Craig was a VP operations here, what's the country manager long time ago, Nicaragua, the came up to Vancouver assumed washing your position to help us out of a volunteer to go down to be the country manager.
Colombia, which is fantastic so we've got about.
One of one of our very experienced guys at the L. there will be well supported by all of US of course here. So the good team underneath tail. So so far that part of it is a very very encouraging it seems that there's a real.
The real push from the local for local people.
The contributors are matters. There goes on board to proceed forward and we'll continue to work.
With what we've done all of our careers fairness respected transparency accountability and the way we deal with local governments Federal goes I know the government is very happy to have a Canadian companies, what I've been hearing.
The Hell with this one and Theres, a great Canada Columbia relationship Udoka limit the opportunity before so we have some history with them as well so that so for ADESA that seems to us to be.
The economics have to be there, but it seems like this would be the best please in Colombia, Bill both the goal, but being able to ore body district and all these other positive factors, we're talking about so that's something very good.
Okay. Thank you very much.
Yes. Thanks.
There are no further questions at this time I will turn the call back over to the presenters.
Okay, well. Thank you everyone for joining has its obviously a bit of.
This was a challenging day given the meltdown of the gold price and then the gold equities, which is perhaps a little bit surprising, but we see these liquidity crisis I guess, sometimes as it moves room.
Through business, but we're very happy with where we sit and we didnt build this company based on affect the gold has to be higher. This is Alan the company had would have a gold price really almost you want to pick.
In terms of historic prices for the last while so we're excited about the future with afford to continue to deliver for our shareholders. All actually comes on the promises we make thank you.
Ladies and gentlemen, this concludes today's conference call. Thank you for participating you may now disconnect.
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