Q4 2019 Earnings Call
Ladies and gentlemen, please stand by the conference will begin momentarily. Thank you for your patience unless you to please remain on <unk>.
[music].
Greetings and welcome to the some technical 2019 fourth quarter and year end results conference call and webcast drink presentation. All participants will be now listen only mode and afterwards, we'll conduct a question answer session. If you have a question. Please rest of the one followed by the foreign your telephone it anytime during the press.
Station.
At that time your line will be accessed from the conference to obtain information.
If at any time during the conference in each region. Operator. Please press Star Zero. This conference is being recorded Thursday March 26 2020.
Now I'd like to try to comfortable to junk Pearson Vice President Investor Relations. Please go ahead.
Thank you operator.
I'd like to welcome everyone.
Centerra Gold's 2019 fourth quarter, and 2019 yearend conference call.
Our summary slides are available on a centerra gold's website, which will accompany each speaker's remarks.
Today's call is open to all members of the investment community a media.
And following the formal remarks, the operator, well give the instructions for asking a question and then we'll open the phone lines to those questions.
Please note that all figures are in U.S. dollars unless otherwise noted.
So today all of us are dialing in remotely to this call.
And joining me on the call is Scott Perry President Chief Executive Officer.
Darren Millman Chief Financial Officer.
Dan days, our Dan Chief operating officer, and use of Raymond or General account.
I would also like to caution everyone that certain statements made on this call today, maybe forward looking statement.
And as such are subject to known and unknown risks, which may cause actual results to differ from those expressed or implied.
Also certain of the measures we will discuss today, our non-GAAP measures and I refer you to our description of non-GAAP measures in our combined news release and M. DNA.
For more detailed discussion of these material assumptions risks and uncertainties. Please refer to our news release.
And the Mdna issued this morning, along with our audited financial statements and notes into our other filings, which can all be found on SEDAR and the company's weapon.
With that I'll now turn the call over to Scott Perry.
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Thanks, John and good morning, everyone. Thanks for joining our call.
I'm just kind of start off by referencing slide number five of the accompanying earnings conference call presentation that John mentioned is about <unk> website.
Starting on slide five just starting off with safety and we usually do.
Unfortunately outperformance in 2009 thing was overshadowed by two troubling safety incident that we experienced a comfortable in December 2019 February this year.
As noted in the law all three of them employees.
Recent heerema really apologize and the family friends and colleagues and he's tragic incident, and we have fully committed to understanding of money from the constituting circumstances. So that we can take all necessary steps to prevent such tragic accident.
Turning a future.
Myself and the senior leadership team remain absolutely said not resolved when children and Robertson operations can do say safely and return home safely each and every day.
Nothing more important.
Moving onto the second bullet point, Yeah, I'm, one of the key milestones during the year, what's causing the strategic agreement with the government Kurdistan.
That was closed in the month of over 60000, nothing when we think that's kind of result.
Really on that in a much improved business environment, a comfortable moving forward on the back at this agreement closing shareholders would note that we think increasingly investing and exploration and comfortable we believe those exploration investments and paying dividends and we believe that things et cetera that tend to some of the recent resorts increases that we've no.
Hum tall.
Well the point here just on also which is transitioning into being fed operating I've said very important for us strategically. Obviously this is going to represent so it's also gold productions and company.
That's Haitian moving forward and we think it's going to favorably complement our existing operating assets.
Operating asset base.
Since the end of the year at 89% completion.
Subsequently, we actually pulled out that that's going in January this year.
The operating results, we had a very strong yet at both operating assets and some of the columns are not know again you can see in the fourth bullet point here, we produce in excess of 780000 ounces.
Companywide and.
More than 79 pounds of copper.
Anyone, but MCO production higher than our guidance since I think it really speaks to the strong operating momentum that way that we saw during.
The next bullet point, just in terms of our sustaining cost.
Given that strong level companywide gold output.
Just the economy to sell that provides in terms of such a high denominator.
We saw on sustaining cost finished the year at seven or eight per hour.
And what was the favorably lower than our company wide guidance.
Next bullet point here just on Mt Milligan.
How does may recall that back when we announce that Q3 financial results.
Of the things that we had a reassessment the carrying value of the Mt. Milligan operation. What we were saying there was productivities will low oh unitary cost higher no previous life of mine 43, one on one technical open that no again, and we use that to reevaluate the economic cut off grade at Mt. Milligan.
And once we had that low economic cut off grade what we saw ones that you get a contraction in terms of besides the pit that shorten the mine life and that's what.
And revising the carrying value back in Q3 by some $230 million.
Significant accounting jobs, so within the next bullet point in terms that bottom line.
Net loss and obviously that reflects the not known carrying value adjustment.
When we look at our Jonathan I think you can see companywide in 10 minutes 181.5 million dose.
As I mentioned, the carrying value adjustment as an accounting adjustments and non cash flows.
Adam and so when you have the velocity bullet points yeah.
In terms the companywide.
Free cash flow performance.
Very strong companywide this public at 35 million, which includes 240 months Im comfortable at 27, though not know again I think a strong level of performance given that for them. Its entirety. Yeah. We were also funding construction that offset which is now next operating Goldman Cherokee.
A lot bullet point yet.
Just given the significant levels probably to free cash flow there have been generating the business being quite focused on increasing it strengthens our balance sheet and paying down debt.
You can see in totality here in 2019.
We paid down $111 million.
Yeah.
Even subsequent to this in January that she was actually now retired and discharge.
Construction financing facility that we had in tech offset project is actually pay that down here.
Yeah in terms of the 2019 year in balance sheet actually finished with that.
Debt net of cash position on.
$35 million, so I think that that makes for a strong liquidity portfolio moving forward.
Let's move on the next slide here on slide six and what we're looking to this slide is spoke more to 2020. So that the currently in that we're in now.
The first focus number one priority is safety myself and the senior executive leadership same thing Strategizing led rating quite a lot what we need to do too.
Prove out business turned show the role doubling down on us commitments to web site onsite.
That's best possible, ensuring that we are they.
A culture and operating environment.
There are.
The number of initiatives and measures have been identified and.
Like getting going on each of those initiatives.
Going back on that.
Cool.
The next bullet point into the second bullet point.
Extraordinary tons that we find ourselves in regards to cope with nine thing I just wanted to spend the time on this.
First and foremost the safety of our employees remain top priorities. During this outbreak and leasing Terra taking action based on that that's the volatile information we have.
During these extraordinary times winters prioritizing, the health safety and well being of old employees contractors communities and other stakeholders.
The date and Taro has experienced no operating all production disruptions, nor any supply chain interruption or impact.
The one thing you'll note no.
News release, the company has voluntarily decided to undertake.
Adoption of manpower and operation at the outset projects in Turkey.
Amounts on much that he says for an initial period of two weeks.
This decision was taken in response to recent Turkish government sort of advisory initiatives aimed at reducing the spread of that 'cause it might seem.
Reduction will result, nice suspension of money activities by limited limits of crews will remain on site continue placing on the heat Leach pad.
And your operating plan for other essential site services.
I'd also that we have over 1 million tons was talking about stockpile or 150000 tons of crushed for material that has evolved will step.
So it has prepared detailed plans cases other adoption will see station operations becomes necessary.
Consumer dot com turned out Milligan.
These operations continue to run for the time being in the case of comfortable.
Actually with the specific support of the other Cobiz Republic Guffman. Each side has implemented a number of proactive measures to prevent the spread of cobot 19.
Shortlist safety about employees contractors communities and other stakeholders.
Likewise, but control and mountain and again also have detailed plan, Okay reduction will see station in operations becomes necessary.
In addition to these precautionary measures operating mines like we've been actively assessing the resiliency of that supply chain.
Increasing that mine site inventories of key materials developing contingency plans will allow continued operations.
We want to notes that the situation is fluid and it's been changing rapidly images.
To reflect the company's best assessment at this time.
We remain flexible and will be revises necessary or advisor.
Recommended.
Hello, and government authorities.
With that said just moving on to the third bullet point agency in terms out recently recently released guidance, we've gotten for gold production company wide basis pies 780000, now go well as copper production of 85 million pounds from Mt. Milligan.
780000 ounces, what we're looking to do this year is increasingly showcasing a high level of diversity.
Alex that transition from construction into a operations.
Look when you mentioned the best Goepel at offset.
That was announced on that took place on January 31st.
An important milestone.
Expected to be declaring commercial production in Q O Q2 this year.
I think what you got it seems the annual profile you see a modest level and co production from offsets in Q1, but as we ramp up operation, you'll see a progressive increases quarter over quarter.
Noted he everything mining has been underway.
Some time now for more than nine months.
We continue to see good reconciliations actually being positive.
Following reconciliation of the ore tonnage and grade the underlying reserve model.
One of the announcements today with the both declared a dividend of Canadian four cents per share again that's.
Based on the.
The strong cash flow performance in the strong balance sheet.
2019.
We've also today.
We released our new comprehensive 43, one on one technical report for Mt. Milligan.
What a detailed data about won't see done now Dan.
Touching on the little bit more detail.
I would note the commodity price assumptions that we employed in that document.
Relative to the current market conditions that somewhat conservative, but even so we are seeing media meaningful.
Our cash flow and ongoing profitability from a mine move forward.
One of the third but the point here one of the key highlight without news flow is that a significant increase in results is that we've had a comfortable.
See as illustrated here I've mentioned measured and indicated resources grew by 3.3 million ounces.
I think is attributable to the ongoing investments that we've been making an exploration at concerns about an 18 2019.
It's a significant increase and terms about finding costs. We've been delineating. These results ounces at a cost of load $6 per annum.
We're now focused on as the second last bullet point here.
Finalized an updated 43, one I want to control.
And hopefully we'll be looking at bring in.
A material amount on this new results into reserve pedigree.
Hopefully that could underpinned.
Other extension and controls open pit.
So moving forward thing Thats an important catalyst.
An important development, there will be working or.
Back off of this year.
Just a last automotive notes.
Variability that we're seeing worldwide.
So frankly, the strong but in terms of that business is our assets jurisdictions that we operate in.
We are benefiting from some favorable devaluations in terms of exchange rate.
Likewise in some of the world oil price.
Regime, if you will have on what we're paying in terms that diesel fuel prices.
On a lower than what we were planned.
Commence the instances all making for.
Hopefully, making for favorable headwind sorry tableau.
Just on slide seven financial the waterfall chart in the top left that 2019 result, so you can see come to on Mt. Milligan combined contributed $329 million on free cash flow.
Red columns of decrements to illustrate how we deploy that cash during the year.
You can see symptoms of three red columns.
The repayment of debt was it was a key priority at the second one that $63 million them. The settlement expense associated with quite a news release. The agreement you can see that we funded $87 million less construction cost that offset.
I look at this chart nine vision, what these charts kind of looks like 2020.
What I would like to note is the green called should be benefiting from the favorable gold price environment missing and when it comes a debt repayments settlement expenses offset spend.
These items.
Not continuing to think about business moving forward.
Lastly, the child and at the bottom left to sell out net debt sort of continuity profile and say just on the back in the significant cash flow.
Dedicated debt repayments, we've been increasing approaching.
Transitioning into the net cash position, we're still on a net debt position.
In 2019 of the some $35 million, but.
Lending favorably.
On slide eight.
Just.
Some of their environmental social governance protocol see them.
A number of attributes here.
A pretty spoken in detailed a safety that second bullet points in terms of license to operate business interruption incidents at some 78 month.
Environmental incidents.
During the quarter increasingly now enrolling on different benches and initiatives focused on gender diversity and leading from June program also this year and rolling out.
Looking to be a diverse inclusive organization.
Got it.
Generally.
Branded people first program that we're rolling out this year.
Hospital appointed which I'll use the trends on slide nine remember the local counsel will go Council recently released their responsible gold mine principles.
Signatory to these principles.
We've seen a third bullet point, we actually probably can't control patches site Pepsi Peyton pilot Wolfort.
As program back in 2019.
Very successful program.
With that being a major capsule not compliances.
We're now working on its in earnest and here in 2020 be looking to roll this out.
All of our other operating subs as well.
With that im not going out to pass the call.
Chief operating officer.
Then days out then that was that Dan please.
Thank you Scott good morning, everyone.
Before I refer to slide I'd like to talk about safety.
We continue to focus on our operational safety with work safe home safe visible sell leadership critical controls and we had some successes in terms of substantially reducing or lost time incidents, but our safety performance was really hurt by the tragic events come tour in December and then in mid February.
We are working hard to understand where we're feeling on this area and so everyone can go home safe everyday.
Turning to safety milestones in 2019.
Even door last summer celebrated one year without a lost time incident. They approached 8 million man hours to know Milligan data similar achievement in October.
Turkey, we were under construction for the whole year and there are no approaching 2.2 million man hours without a lost time accident and approaching one year.
Cotai free.
Moving to slide seven.
That couture in Q4, we produced 148000 ounces at $657, an ounce and full year, we exceeded 600000 ounces was 600 201.
Ounces at an all in sustaining cost of $598, which better guidance.
Notably we move forward a two week mill shut down for maintenance from January 2020 into December of 2019, and we brought that the plant back up fully law online at December Thirtyth.
Due to the tragic waste dump failure on December Onest, we Didnt know mining in December and not much in January but we did receive all are necessary permits for 2020 operations and we did receive receive a restart order on January 22nd.
For the year come to our mind, 13% less tons, but it's still and achieved an impressive.
Dollar per ton cost of $1.26.
In the plan. The recovery was also very good at 83.5% where the feed grade.
3.69, which was better than planned.
Convert generated 104 million free cash flow in the fourth quarter, and 240 million, which which includes 63 million payment for to the corrugated Republic settlement.
No Milligan the full year gold production was 183000 ounces at $828 an ounce. This exceeded the gold guidance and we met our copper guidance of 71 million pounds produced.
The mill throughput that averaged 45000.
Tons per day calendar day, but we did do 51000 tonnes per day per operating day.
We did generate $27 million free cash flow and 20 Nineteena Milligan.
We did much better with water in the second half of 29 team.
And in 2020 to date, we had a wetter fourth quarter as well as we did access additional underground awkward for water, which kept our inventory of water level quite level through the winter.
Where we did not affect our ability to run the plant at full volumes.
We have prepared to access our permitted surf surface water. So we'll be going after that starting April 1st when the spring melt starts in order to increase our water inventory.
At the plant maintenance and Milligan continues to improve their for we're giving steady throughput and we that as planned in 2020.
Hi, Doug suit as Scott said, we are 89% completed at the end of year, and we did do or for school pour in January.
If you go to the next slide.
Slide 12 at OXXO, we are ramping up to commercial production with our second goal Port yesterday, and we are planning one more in the month.
We're still working through issues in our primary crusher system, but we have supplemented that with portable crushers. The HDR is running as design and we continue to increase irrigation on the heat.
Unfortunately.
We've had a number of severe weather delays caused by higher than normal levels of snow and a large number of mining days were lost with zero visibility due to fog.
This is put us slightly behind our plans, but we have the equipment in place to make up the shortfall once we have drier weather.
No Milligan, we're working closely with our partners and regulators and we expect to have ample water for the full production for the year.
Well Milligan is focused on achieving consistent and improve production through maintenance and operational controls. We've also begun to identify some substantial cost savings by converting genset power into BC hydro power.
Weve flattened our management structure, and we're saving on the fresh water pumping and other CDAI initiatives.
With the 3 million increase in the open pit resources, we are not working on an updated cooling tore technical 43, one on one and that should be completed in the second half for 2020.
We continue to spend on brownfields exploration, a total of $32 million in 2020 is budgeted specifically $20 million at couture.
If you go to slide 13. These are photos of the OCC suit facility pit Leach pad and HDR plants in the fourth quarter of 29 team.
Due to the covert 19, we are planning a temporary shutdown as Scott mentioned for two weeks at OCC suit, but we will continue to have skeleton staff onsite to continue safe operations and stocking or in the heap irrigating in running the our plan as well as provide essential care and maintenance services.
Next slide Slide 14 as announced we've now completed the technical report filed it today for Mt. Milligan, the new plan now shows a nine year mine life.
The decrease in the reserves was driven by two main factors first.
We did identify escalating costs related to water sourcing increased maintenance increased labor component and lower processing throughput as compared to what was previously reported in 2017 Technical report.
These factors have resulted in an estimated NSR cut off increase to $9.55 a ton from $8 in 12.
The second is the resource model was updated incorporating additional 122 drill holes and metallurgical recoveries were re estimated this resulted in a revised ultimate open pit design and associated were reserve decrease.
Teams have been mobilized in Q3 29 team to target both cost reductions and improve recoveries.
One example of potential future improvement is a small staged flotation reactor pilot plant that is planned to be commissioned in the second half of this year to validate some test work that we have taken to improve both copper and gold recoveries.
It should be highlighted that Milligans open pit optimization plan you the gold price, a 12 50 per ounce and copper at $3 and exchange rate of $1.25.
In the mineral reserve estimate.
Our Technip gold team at Mt. Milligan will continue to look for opportunities to further optimize a mine plan with a focus on gold or content and with the objective to lower the strip ratio, which increased since the previous technical report.
The cash flow over the nine years as you can see is a net free cash flow undiscounted bases of $398 million.
On slide 15.
For silver overview on the call that have visited the cooling tore mine site with me in my previous role as president of comfort or you will be familiar.
Come towards specific objective back in 2018 was to extend the mine life.
Thanks to the efforts of come tours team exploration geologists the corporate technical team, we are one step closer to achieving this goal.
I am tours measured and indicated resources increased by 3.3 million ounces to 6.3 million contained ounces.
That's exclusive of reserves.
This is from the inclusion of drilling results from 2018 end 2019.
What is notable is that this represents an average finding cost of it says what Scott said $6 per ounce.
I would also draw your attention to the measured gold resource grade, which has now an average of 4.1 grams.
In 2019 come to our average there are mill feed create a 3.69 and we generated significant cash flow had an average gold price of 13 69.
We're working on detailed mining plans now with a view of publishing and updated technical report on couldn't tour in the second half of this year.
Moving to slide 16.
A substantial amount of drilling was focused in the hockey stick area.
This is on the east side of the pit extends the central pit.
To the to the south as can be seen in that shaded area.
On Slide 17, we also updated the resource model for the whole central pit answered or southwest.
This further contributes to part of the resource increase.
Now I'll turn over the call to Darren.
Thanks, Dan Good morning, everyone.
For those following on our Investor deck, a lot of be speaking to initially slide octane.
Sure tear recorded 312 mean and revenue during the quarter.
This consist of 230, I mean in Gulf South.
32 million in copper sales at 42 million from number molybdenum business unit.
For the full year since hair recorded 1.4 billion in revenue.
This consisted of a bill you didn't gold sales 141 million copper sales and 213 being nimble lived in a business unit.
In 2019, we sold in excess of 780000 ounces of gold at 10% increase year on year.
We also sold 60 67.4 billion pounds of copper.
52% increase as the Mt. Milligan team were able to increase mill availability.
21% more tonnes processed during the year.
This increase attributed to preventative maintenance together with the increased water levels.
Head grade was also 25% higher year on year at 0.26% copper grade.
As Scott mentioned earlier, the company exceeded 2019 gold production at met copper production sitting here.
And net loss of 93 main was recorded for the year.
This included three components.
The 231 being non cash impairment recorded in Q3 on the map Milligan asset.
No further adjustments required with the delivery of the Mt. Milligan Technical report.
It also included the additional 10 being charge associated with the Kirbys Republic settlement also recorded in Q3.
The final significant adjustment was 34 being non cash adjustments.
Adjustment.
At the Thompson Creek mine.
<unk> expenses associated with the movement in the underlying discount or right with reference to us Treasury bond rights.
There is no change to the underlying activities required.
Yes this property.
Just moving on to slide 20.
Our adjusted net earnings after factoring in these three items resulted in a profit of 191 million, 53% betemit year on year.
This equates to an adjusted earnings per share of 60 to 62 cents for the year.
From a cost perspective, centera ended the year with a photo final quarter recording an all in sustaining cost of $790 per ounce.
This equates to 708.
All in sustaining cost per ounce for the full year.
It is important to highlight that both operations ended the year with significant value on surface that will be realized in 2020.
Comfortable finished the year with approximately 1 million contained gold ounces on surfacing stockpiles of which approximately 70% each plant you price just in 2020.
Mount Milligan ended the year with just under two shipments of copper gold concentrate on hand, which contained 85000 ounces of gold and 19.2 million pounds of copper.
At an asset level cultural recorded an all in sustaining cost of $598 per ounce.
For the year.
Walnut Milligan recorded all in sustaining cost of $828 per ads for the full year.
Adjusted consolidated cash provided by operating cash Fuck by operations was 390 said man.
78% increase comparison to the prior year.
The adjustment relating to the settlement of settlement of the Craig These payments.
For the 2009 year Centera generated 35 million in free cash flow.
It is important to highlight that centera moves into 2020.
Also adding oxy to our cash flow generation.
Plummeting, both you establish free cash flow operations of console and Mount Milligan with 303 million and 27 being free cash, which respectively generated in 2019.
This cash flow was achieved with an average gold price.
$1309 gold at an average realized copper price of $2 and died per pound.
As noted in the bottom left hand table Centera finished the year with 35 mean net debt position with 100, 615 mean and liquidity.
The bank component being the 500 me an undrawn corporate facility at year end.
The Centera board together with management spent significant time and if it in evaluating whether to Claire to declare a dividend and lot of the ever change Kobin 19 environment.
The final conclusion was reached to declare a four cents dividend in consideration several sectors.
The company's strong financial position.
The support of employees, the government and local communities in the countries we operate.
The current status with Cobot 19 communities, we operate and source of that workforce together with preventative measures taken bought by the government and the company.
We ran various financial scenarios ranging from one week after four months impacting operations.
And finally at key cash generating assets continue to operate.
Well, obviously need to kick to take careful consideration future dividends and lot of kind of adopting.
With that I'll pass it back to Scott.
Okay.
It's Darren I'm just on slide 22.
Just again, reflecting on the full year guidance the calendar year 2020, and see the calling on the thought right regarding for what should be another strong year, just given the prevailing macro environment.
Some of the company wide goat output guiding for as high as 820000 ounces gold and since the all in sustaining cost we looked at bridges that goal as low as $820 per hour.
We got the current gold price environment. This is an indicative.
All in sustaining cost much more than 700 those around.
This together with some of the exchange rate devaluations of seeing lower deal diesel fuel pricing environment should make for a good year sends a strong profitability.
I'm going strong financial performance.
It's important to note.
Due to the rapidly involving risks relating to cut that 19. This guidance will not reflects the companys estimates on this performance is there any.
Disruptions to any better operations.
Just on the next slide on Slide 23.
About financials today, we also filed out yearend reserves and resources.
As well the comprehensive 43, one on one technical life of mine plan to Mount Milligan.
The type we're getting the top of the slide.
We are reporting yearend inventory on some 11 million ounces.
Gold reserves across the company.
Well the buttons copper reserves inventory.
In addition years 1.6 billion pounds.
Copper.
Just my final slide on Slide 20, full again, just looking to use the world industry all in sustaining costs.
As a backdrop and there and we just illustrating where each of our asset.
Located on on the low cost I.
I think we at the company without business line. Our strategy, we're targeting for is to be showcasing or demonstrating that this is a portfolio that can hopefully we can get is down into lower cost profile I think thats, what's always service and Terra very well the high margin business and then that.
Regarding the where we are in this current volume.
Gold price environment.
Mission.
Maximum profitability.
Absolutely.
Free cash flow.
With that.
Operator, I'd like to pop in coal back to use to see if we have any any questions on the line.
Thank you for you'd like to register a question. Please press the one followed by the four on your telephone you will hear a three Tom prompt to acknowledge your request. If your question has been answered and you would like to withdraw your Registrational. Please press. The one followed by the Threed once again thats one for towards your four questions. One brief moment for the first question.
Oh.
Just again as a reminder for like to register for question. Please press one for.
And we do have question what.
We have a question from Trevor Turnbull Scotiabank. Please go ahead.
Yes.
Excuse me I was just.
Wondering about the new mine plan that you're working on with respect to tune charter and the resource increases you've had there and as you work through that this year I was just wondering.
Can you give us a little bit of color on what youre thinking with respect to the waste dumps is it likely you're going to end up using some of the existing dumps or are you looking at having to put in a new location. So the new mine plan.
Yes, Thanks, Trevor its Scott.
Then you have to take that question.
Yes, I can I can take that Scott.
Thanks Trevor.
Currently we have we have three waste dumps, we have the central Valley, which we are presently doing the stripping for cutback 20, and we're placing on the material in Central Valley.
For further along we have the territory valley, which is really below the sir torn southwest pit.
Where we had the waste dump failure was the Lisi Valley.
We're not.
Dumping in there right now we are currently working with.
With occurred use engineering firm and as well as the occur U.S government.
On how to safely rebuild the the waste something that valley. Our intention is to go back in that valley by in the second half of the year.
As that is the most appropriate place to place the cutback 20 and cut back 21.
Waste.
Okay, great. Thank you.
And I guess just the other question.
Respect to those resource increases.
As you mentioned that those were from 2018 in 2019 drilling.
Just drilling and maybe this was in the press release I just didn't get a chance to.
Get through at that closely but as drilling continuing.
This year are you still looking to yes, there's still opportunity for further resource gross.
From programs this year and going forward.
At the main pitch there.
And your feelings and Scott I can you I can I can take the Scott where were now focusing our drilling is the area between the hockey stick zone and our southwest pit.
There Thats, where we were focusing and thats.
In 2019 slowly in the hockey sticks on into the continuation of the trend.
Toward towards the Sarah torn southwest pit.
Okay got it take maybe you did.
Yes go ahead, sorry truck covered start the actual budget. This year is approximately $20 million us close.
Budget and that budget was on depends on the success of the prior to year.
Okay great.
Thats all I had thank you.
We have a question from Daniel Mcconvey with Rossport investments. Please go ahead.
Yes, good morning, Scott Dan everyone.
A question on on.
Milligan just looking at the costs.
And the good disclosure you did decision would happen from 2018 2019, because it's I realize it's the water issue. This is a throughput issue everything else but.
How much of a concern is is that cost escalation to you and do you think how much of that can be on done as you get throughput going this year.
And that's my first question.
Go ahead.
Yes, Thanks for question done.
Categorize it as a concern it's something that myself leadership team a quite focused on.
Right now.
With that we've spoken about this previously in terms.
The shortfalls and mill productivity the challenges at the.
The lower productivity has resulted in higher unitary cost.
Originally were having challenges in some mechanical availability. So we added resources in that regard.
I think we've been being successful in terms of establishing more than a consistent run rate in the mill facility. There in terms of so the averaging around 55000 tons today. So since all the additional costs than the Resourcing that we added it's achieved its objective, but what we had the management team down into what others, how do we how do we.
Get more lean or how do we optimize our cost structure that.
Pull back some of these costs that weve added into the business model.
Such that we can get down the result unitary cost in terms of all in sustaining costs.
That's going to be a key objective.
This year and moving forward and I think we're also seeing some opportunity just in terms of the.
Pit optimization that so the mine plan.
I think that went into that 43, one on one study it was comprehensive.
It was a short short timeline there in terms of what we could incorporate.
Into that studies I think the positive time here.
Some some action items first in terms of where we see some said the.
Value enhancing opportunities you're working on that.
The cost in this year.
Okay. Great. Thanks second question is kind of related you have two projects commencing hard rock taken nationally.
And I guess.
Maybe just if you could.
Elaborate on your on your position with both of those somewhat X. I know you're looking at.
Studies do around now for each one and.
I just wonder given given the escalation.
Yes, if there is cost Escalations in Canada did we don't fully appreciate.
Our taking place right now.
Despite the dollar.
Yes.
Right now what we're seeing now for the Canadian Canadian business, which is predominantly western Canada.
We're seeing.
Favorable macro environment in terms of the exchange rate devaluation, which I mentioned it also.
Logo product gone through a significant devaluation and we see that translating that into lower diesel fuel prices incentive payments.
By locations, including number Oregon.
In terms of out sort of getting growth pipeline.
Two Canadian.
On this out.
Getting growth options, obviously, the commence project in British Columbia in them.
The greenstein joint venture here in Ontario.
Right now when we've been discussing.
Our opportunity as we move forward with that business.
I think this year in terms of having those discussions before.
Similarly, strategizing on this but.
Quite consistently what we've been really focusing in on let's just make sure when maximizing the value of our existing.
Operating assets and with regards to offset.
Our debts in Turkey.
Let me just kind of finished construction that asset leverage just as we speak really transitioning more and more into operations mode and the big focus right now is to achieved commercial production in Q2 this year.
But even thereafter, I I'd be comfortable saying that from the Bulls perspective, they still going to want to see at least three to six months of consistent sustained operations, where we're operating at design, achieving our targets et cetera.
The four months is delivering those sort of catalysts.
You will.
Just in terms of demonstrating proof of concept on the asset.
I think early as and when would that shape that that the forward management will start.
Shifting to a different gear and sat strategizing around and what are we going into next in terms of growing the company coming back to your questions and that organic growth pipeline, which one represents the mall stronger risk reward sort of value proposition for some time in terms of Cmss greenstein each asset has different attributes.
They are going to depend on.
The underlying sort of business environmental macro environment will depend on the value proposition is a compelling.
I'm, giving you a long end to get down but right now it's not that there's no decision that is imminent I think right now is still quite focused on executing.
So.
Okay.
Appreciate the answer like the dividend like to free cash flow.
Investors are after that it's just on the on the flip side of the coin is probably if you believe if cost escalation isn't going to be a huge concern right now and of course with a dearth of new produce going ahead and.
And I.
I would just taking place in the macro level. We just seem to believe these gold prices can stay anywhere near where they are it's a great time develop produce in Canada.
Yeah.
Thank you.
Okay.
We have a question from Adam Graf with B. Riley. Please go ahead.
Thanks Scott.
Hi, skim through the 268 page technical report and the releases you put out today and maybe I missed it but how does the current cut off grade.
You guys determined didnt in Canadian dollars compare with the two sets that 2017 cut off grade.
As of the.
Yes, sorry.
Yes.
Sort of cut upgrade what weve using ones.
Canadian.
Those 55.
All $7 60 for us.
I don't have any right now.
Previously.
If you had that Dan.
Yeah, It was $8 12.
Can you Tony.
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Okay and then.
Maybe.
I am assuming you guys.
Floated a bunch of cones at different gold prices.
Do you have a field.
For.
Obviously, there is a large component of marginal or give a feel for what the Mt. Milligan reserves and resources would do at $1600 gold.
I guess.
We used a.
Commodity price assumptions on 12, 50 go and great all as the copper.
In terms of what we published in that 40 going along the did not providing.
Yes, I notice that the world class.
And then one last question what was the diesel price assumption that you guys used.
Hello, Hello, Dan or Darren.
Right, but I don't sorry.
Maybe a follow up offline that yes, sorry about that.
Great. Thanks, guys.
We have a question from Terence Ortslan from tier so many analysts. Please go ahead.
Thanks, Thanks, good morning.
Just a question on deal. Thank you for the model on the Mt. Milligan by demand for the next many years.
Can you just tell me in 2020.
Have you finished all completed your TCR see discussion on the cover.
And what are what they are.
Yes, deringer on site.
Yes, we have we sit those in.
Basically November every year.
I don't think.
Given public disclosure on that.
So.
Comfortable just give it is confidential, but it is basically the market right to the said.
Every Sunday November.
So.
It is just basically the increases in the industry levels.
Let's let us contracts are not completed in the industry opinion, you, making assumptions in the in the model what are your assumptions in the model that you have in 2020.
CRC.
Can you give a meeting.
Seem to model.
Hi, good price of copper, but you got 22 million I think point here.
That's what we'll do that jumped is enough vice president investor relation to he'll get back to us coal.
Some of the more granular detail.
Okay second question is that.
The.
On the treasury function.
The financial stress the many locations that you operate and most international banking system.
Turkey and could you stand how do you moving to cash around turned into cash and I do controlling the flow and are you keeping to cash at the end of today in terms of.
So if you're taking functions.
There.
Sure.
All that cash or any excess cash is basically retained in North America.
It come talk for example.
Every shipment every two weeks at the moment.
We have paid directly into a New York Bank accounts, so it doesn't actually touch Kurdistan.
In Turkey.
What we.
Sal occurs we we have hired Turkish lira, we can convert that that same day or within 24 hours.
And once again any excess cash is.
Distribute back to North America. So we're not seeing any constraints same put in quite some of the government.
And as I said on mine asset.
It does have been touched the a local country bank accounts.
Okay.
Thanks, very much where that thank you I'm looking forward from John to get the hazard to CRC. Thank you.
Okay.
Once again, if you'd like to Russia for questions. Please press one for we have a question from Bryce items with C.I.B.C. Please go ahead.
Hi, good morning, Thanks for taking the questions. We'll just one question firmly actually.
And it's on Mt Milligan and on the throughput right. The 60000 tons per day I was just wondering if you could discuss what the optimizations or initiatives.
That you expect.
That will enable you to hit that 60000 kind of day right.
Okay.
Thank you want to tighter.
Hi, I certainly Ken.
The numbers there are number one thing that we're working on is the plant mechanical availability.
We we regularly have days in the high 60 thousands.
And.
And what we are working on is trying to make sure that we can consistently operate up up in that area. So so theres a number of initiatives on the on the maintenance side and de bottlenecking, both the primary secondary crushing.
Before the Sag so that that's certainly one one main one that we're working on.
It's difficult there for blending so we can go to consistent type of feed because.
Because of the strip ratio being so low.
But but mostly mechanical availability and then kind of and seeing where we can find ways to too deep debottleneck. The the upper end to the cloud.
Got it thanks.
A portion of the Capex spend that's allocated towards that availability work.
In terms of the less capital than 43 will.
Yes, that's why I'm, just wondering what the costs associated with that is improving the availability.
Have been factored that.
We have incorporate right.
Sustaining capital requirement.
So.
There's a lot of processing facilities.
I see that one so that is.
Directly related to availability.
Not directly but a portion of that.
Okay.
Thanks for the thanks for answering the question.
Okay. Thanks.
And there are no further questions at this time.
Okay.
Thank you all for joining the call today and with that I.
I think we will end the call.
That does conclude the call for today, we thank you for your participation that same please disconnect your lines.
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Yes.
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