Q1 2020 Earnings Call
Thank you for standing by I'll think operator.
Welcome to the Alastair gold first quarter, Twentytwenty operating and financial results Conference call.
As a reminder, all parties because I mean, we spend only mode and the comprehensive being recorded.
Okay. The presentation, it will be an opportunity to ask questions.
Joined the question Q. you meet press started then one on your telephone keypad.
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Oh, well now like you're trying to call friends over to leave I missed it director of Investor Relations. Please go ahead.
Thank you Claudia.
Everyone and thank you for joining yesterday from last year Gold first quarter 2020 operating in financial results countries call.
Strain on the call our <unk>, our president and Chief Executive Officer.
You are back men are chief operating officer, and Mark Murchison or Chief Financial Officer.
Last year Gold is listed on the Toronto stock Exchange is A.S.R. and on the Australian stock exchange is H.U.G.
<unk> copies call is available via web cast in the Lincoln slides sure company I remarks can be found on our website at a last recall dot com.
Oh documents released today can also be found on C.D.R. dot com and asked X. Dot Com Dot you.
This presentation includes in notes and this call will also we treat include forward Lucky language.
Please refer to the forward looking information Andean notes you created at the end of our presentation.
Additionally, Oh dollar amounts to his presentation or expressed in U.S. dollars and on 100 per cent basis, unless otherwise noted.
Oh, we changed presentation, we will open up the call for a cue any session.
Turn the call over to write and taught and if you could please turn to slide too.
Hi, everyone. Thanks for joining the cold today.
Before you Scott Yeah first quarter result, I'd like to remind you.
Components for died sulfides and oxides, we developed over the last few years.
Yeah strategy is simple.
Deliver a 10 year production price fall.
The 400000 answers per year.
<unk>.
Continue to push forward without place to publish and updated technical report later this year that will outline the path why.
To achieve strategy.
She will talk about the <unk>.
One of these griped pathways lighter in the presentation.
But before we get into the quarterly results, let me take a few minutes to discuss some of the highlights from Air recently published 2000 or 19 sustainability report.
We tend to slide three.
A few weeks ago, we issued yeah for sustainability report and follow the report with a G.R.O.I. sustainability database.
<unk> has always been to protect out people and our assets and this is evident without strong environmental.
Safety record.
Some of the hard launch from the report include in 2000, and I'd say, we had no reportable environmentally incidents.
We saw at 21% decreasing gap carbon emissions take all the has produced.
Despite increasing gold production for many sulfide class.
Well you also operated 22 million hours without a last time injury.
We continue to invest in the country local community and yeah people.
We spent $1.3 billion in procurement in Turkey, since 2015 $25 million spent with lots of supplies last year.
But for water hundred and 42 academic scholarships, we 50% of the eyes to females.
Gee, we spend a million dollars on employee training and invested in a full time training facility on saw it.
S. I should development fund Easiness second you were 32 projects supporter, where we have invested.
At $420000.
We've already seen a number of success stories coming out of the sexual development fun and expect to see many more of these in the future.
In 2020 will continue to not only your previous reporting but also I wanted to take several new initiatives to build on these strong foundation and importantly recognize a new operating you brought up with the software apply now in full production.
Oh content to slide for taking minutes to discuss the archive it 19 measure in place.
We started planning a preparing for <unk> late issue when it became apparent there was a rapid escalation of the rays from these pandemic.
So I thought through the excellent if it's about saying we had had middle impacts to have people communities an asset.
We are taking all reasonable measures to ensure that we continue without safe operations.
Hi response, and mitigation efforts were built from their crisis management plays and we also implemented in infectious disease management plan on top of that.
You can see this slide.
Number of their protective actions we have taken.
We also <unk> place to protect out supplied shine, increasing inventories way possible arranging for extra storage facilities and also engaging with alternative supplies.
They are risk analysis.
<unk>, Oh liquidity position any event as a full and extended shopped Ya.
All day or a number of possible scenarios that quote a K.L. balance sheet, which is strong provides more than adequate liquidity do we stand and extended shocked yeah. If this would play to eventually that what seems less likely in a d. before.
Finally, surely our operations they reduced or temporarily suspended plans already in place for a size and orderly shutdown <unk> as soon as the conditions would've layout.
In respect to the Turkish government response to carve it they initiated a number of restrictions to retreat Regis and listen to spread including travel restrictions and locked downs in major cities over weight gains.
In addition.
It all started recently introduced a short time package of legislation he along with other countries.
To ensure liquidity and financial stability as companies operating within Turkey.
So in summary, we pay in relatively unimpacted that continue to manage and monitor the situation very closely.
Banana shaped keys.
Onto the quarterback results Scotty gone slide number five.
But had a great start to the u., despite they hate <unk> through at us.
We had another <unk> and I've worked with 200 night Ain't dies without a lost on injury.
On the operational side at plants produced 88000, the ounces of gold at it all into standing cost to $700 per rounds.
We also have successfully completed the plane shutdown of order club to during the quarter.
<unk> production, resulting 47 million if I'm, David free cash flow and we continue to do that they live yeah balance sheet, reducing our net debt to belied $25 million.
<unk> balance sheet provides us April flexibility for our various growth initiatives, which are under why.
All in old an excellent start to 2020.
I'm going to hand, Nicole I have it tomorrow onslaught number six.
Thanks, right now however on.
This slide shy as they are K. 2020 guidance numbers.
<unk> fortunate as Rod mentioned that kind of it 19 has had minimal impact tonight, allowing us to maintain the she's gardens.
<unk> production guidance reminds at 310 to 360000 ounces.
<unk> remains at 735 to $795 per S. and that Grace and capital plans for the year I run affected.
2020 will be another important you for the company as we build on at Great platform and the K. passes this will be the delivery of the updated check what district technical report light of the sheet.
Maybe just slide seven.
The slide has a summary of the financial highlights of the course huh.
90000 ounces of gold whistled during the quarter gender riding $142 million in price age.
Operating cash size of $63 million regenerated in the quarter as reflected in the cash by statement.
Attributable net profit ratings for the quarter were $49 million, all 16 cents a share.
On the right hand side of the Slide a chart reconciles the first quarter attributable H.P.S. of 16 cents per share to a normalized H.P.S. of 10 cents a share which provides a more meaningful representation of the businesses underlying performance.
You just minutes might relate to incentive tax credits recognize during the course huh unrealized noncash losses arising from the day valuation at the Techie Samirah.
Just write swap in shape ice compensation.
In relation to tax.
I've noticed the past.
Well of course is that a date how'd review of the incentives credits recognized from the all my 700 million dollar investment on the sulfide plot was under way.
The days How'd review concluded that additional costs related to this off I'd project are eligible for incentive tax credits as a result, we recognize the 48 million dollar tax benefit into one for the additional incentives that is reflected in the decided tax assets.
At quarter, and there were $224 million of incentive tax credits recognizing the decided tax assets that are available to reduce current year in future years corporate tax payable.
You got to the corporations effective cash tax right.
We forecasted right will be around 5% going forward as we continue to utilize incentive tax credits.
Finally, and most importantly cash.
You operations delivering strong cash fine.
Unleaded free cash slice of the quarter was $47 million or six days sense to share.
Consolidated cash at quarter end was $239 million outstanding debt was $262 million, resulting in net debt I was $23 million at the end of the corridor.
Strong past generation in the project company and I bought 100 million dollar distribution to be hide in January of which $20 million went red joint venture partner.
We expect distributions from the project company will continue to be paid going forward as strong cash flow generation continues.
L. and to call I that is skewed to provide enough died of operations.
Thank you, marking hello, everybody.
Before we get into the details like I'm going to start with the brief summary about how did you see see performance.
Focus on high Cissy C. has been in 10 side of the period acknowledging that out same as having to continue to operate as normal.
He added bed and then stress at the pandemic.
Compilation of the shut down with that at any incident like my watch while managing all of the <unk> positions was a real credit to out team.
We might as early stop and being a little isolated helped us to manage the <unk> getting the chip for district, we have a number of villages camps in different living quarters, including the camp that we use for the recent sell flood plain construction.
This is given as good flexibility to set Friday with grapes and in full strict separation quarantine prices for functional experts management and all the table entering saw it.
We also I set up <unk> operating nights and I just saw it.
Control nights around the world.
To allow extra support from and technical assurance from our subject matter experts to the same on the ground.
Control night in Turkey was even use to allowed par on Saint control room specialists to take part in bringing the plant back on the on off to the shutdown, while I remind in a two week oscillation after attending for break.
We have been working very closely with local authorities to best protect out communities and people end up providing them with direct support. We we think we can help. These has included equipment donations to local and regional hospitals.
<unk>, absolutely committed to continuous improvement they as J. and health and safety performance, including critical risk management. These difficult times or a poignant reminder of how important days or.
Yeah, we could please tend to slide height, and I'll provide you an update on <unk>.
[noise] well done to repair for <unk> and managed <unk> has paid dividends and we remind committed to delivering on out of 2020 gardens promise.
The performance of the sulfide plan has been really pleasing on an annual all this basis to plant ranted about 100 and fought scent of design right for the court or with an order Clyde operating utilization of just I've been already sent.
Pretty impressive given the quarter on clay to shut down a voter clive too for its first major in channel shut down.
And a short title plant shut down to complain some <unk> stage to the T.S.S.
The auto Clive was in fantastic conditions, and we will be rescheduling <unk> shut down so as a result, including probably pushing out the majors shut down of autoclave, one which was scheduled for this quarter.
We made some changes to them on sequencing Tobias manage a temporary shortfall in mind equipment, <unk> and travel restrictions and somebody the operations, even more resilient in the event that the pandemic escalates.
The new mind plan Reallocates morning flight to eye opening up morning areas in particular accessing all from nine p. and to face some of the accelerated build all the T.S.S.
While there is a small increase in mourning costs with this new schedule, we will see immediate real operating benefits for them on and plant with more blending choices for the sulfide plant.
Rather than just rely on what is at the size of the stockpiles at any time.
The T.F.F. isn't upstream lifters on with a wall built with competent mine rice.
The right of wall construction has been a function of non schedule. If you lock you can think of the T.S.F. will as a wife stumped for them on.
Then you know and schedule will slide movement of wise to the T.S.F. will however, we all mine tiny the wall right.
<unk> right at about 120% of what the plant requirement haze.
Plant recovery was naughty to send for the corridor as I said last quarter, we have a project underway to improve prices chemistry, which we are aiming to have complained key to.
We can play that subtle battalions, just last week.
We've had some especially specialist equipment fabrication in Europe <unk>, the same as drawing to get this sordid and with some of the restrictions lifting we all hype fill that will say the key about Jane.
Along with developing operational capability and discipline k. draw the for the improve plant throughput and recovery as being the improvement to out plant control systems. This initiative to improve plant formants, an assurance continues.
We've just started data in vendor engineering for the proposed supplemental flotation sick. It would engineering, who worked with this on the construction of the sulfide plant doing the engineering.
<unk> bottlenecking pathway was made possible by that now evidence significant instilled lightened plant capacity.
In particular, the capital intensive unit operations of combination pressure oxidation and the oxygen plan.
Our expectation is that we can achieve throughput of up to approximately 3 million tons per annum, which will more than offset a reduction in the eye of rural plant recovery.
The initial estimate and Claytie contingencies about $15 million capital, which includes some.
Meant for the C. I pay sick it.
Subject board and other appraisals wants to technical with his can play ambitious targeting full commissioning ease into one next year.
[noise]. They will also be the normal pivoting requirements and in preparation for this flotation sick. It was contemplated in the recent E.I.M. invent which is currently in prices.
The flight I shouldn't say could also has some other real advantages above just the mocked increasing.
Throughput and gold production.
It is expected that the flight plant where a juice.
<unk> consumption and reduce overall unit processing costs. It will also a.'s the constraints on oil presentation, allowing the sulfide plant to accept <unk> and the lowest sulfide cries and so I was expected to help reduce morning, and ray handled costs.
The flood plant will also add some cost of material to the tiling, which will assisting complexion of the tiling sit in the test set.
Effectively increasing the T.S.A.'s capacity.
These extra T.S.S. capacity.
Along with the construction of a second to sit facility how banks considered in the T. in the apply to the technical report to allows conveys some about very large resource into reserve and to extend them on life.
In summary, we believe that the <unk>, we'll reduce unit operating costs and increase title sulfide plants report and gold production.
The work on the fly Tyson sick. It continues and we plan to include detail on the technical recall, which we will deliver lighted this year.
The other significant item for the technical report, which I haven't already mentioned will be the preliminary development plans for adage. This is probably a good segue into the next slide side, you can place jump to slide and online.
Oh, So I'd planned performance has been in lawn with expectations for the quota.
Continuing to drive to find developed and deliver extra oxide dances from both within our existing Mon footprints and adjacent deposits.
The 2020 Rampup of expression drilling was slide buttons <unk> restrictions. However, the expiration time have done a great job and managed to get 10 rigs into the field in the chip the district.
Killing his underlying addicts, Chuck tip I chip.
<unk> and the chip settle at the moment.
We are working to increase the expression right. So that we can minimize any delay.
Back to the <unk> slide down we I think some delays and analysis of Joe cool as a contract labs struggled with coded restrictions. There is an expectation that we will likely see Adam see at least some delay of the pivoting prices.
While the government departments are impacted by <unk> restrictions that say there is a very strong push from top government to try to help industry to keep working through the pandemic. We I, saying this is reflected in our interactions with state local authorities and so it seems to be working.
[noise] works out at on five is one of the hey plates expansion in 29 chain, which will provide us approximately 6 million tons of additional capacity for about $12 million.
The size of the expansion will be available to start stacking on in the next few months and before the existing Hey places full.
If you look at the photos you can say in the slides and on part of the Hey pledge expansion ready for law in it.
To close out the business as well positioned to weather the storm.
And we have committed to and expecting to deliver add gardens for this year.
Very proud of that same who've been able to Cape <unk>. Several of the time is spent it sought for an extended time some separated from their families.
Really stepped up protecting out communities, how people at business and still vanishing to push for would have very tangible and value a creative greiff plans.
Thank you very much and I'll hand back to <unk>.
Pay soon thanks Mark.
Despite the challenging times I'm pleased to roof, 2020 gardens, especially given our excellent start to the thanks to outright same.
We will continue to focus on discipline investing using how strong balance sheet to deliver the next phase of growth for a lhasa.
We appreciate you were taking the cold today, and all now I've been up too cold for questions.
Thanks Claudia.
Thank you wouldn't know begin to question unanswered question.
Joined the question Q. <unk> part then one on your telephone keypad.
You will hear a tone and knowledge in your request.
If you're using a speaker phone please pick up your hand, it before pressing any Keith.
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We will parts for a moment callers joined a cue.
[noise] Hi, first question, it's from our company, how you'd be too with our B.T. copy down market. Please go ahead.
Hi, Thanks in a <unk> a good quarter and very helpful color from from the team on the call so far.
Just well it's got a few questions. So first off it's a 15 million you quote would that be kind of all all the changes you need <unk> on the plant and then it would just be maybe or I guess really jumped from P.S.F. capital aside from that is that is that.
All you need to get to the 3 million or towards that 3 million capacity.
Ah yes.
So.
Spend isn't isn't that extra spend on the T.S.S. and as I said, what we've seen an old abroad trays quite a significant <unk> when we add the <unk> material. So.
We will be able to fit more into the into the current T.S. It.
Okay, and then I guess following up on the T.F.F. point can you quantify how much incremental capacity you're.
Delta that you could see there and then I guess just the scope of that second T.S.F. that you mentioned you're also investigating.
This this is the second to say if was contemplated during the.
During the initial permitting for the for the business and so it's already pot of battery I.
And sized <unk> and from memory, it's about 25 million times.
Extra capacity in in the second taste it.
And then do you ever since about how much excess capacity you can get in the existing one from the <unk>.
Which we still complaining those numbers, but it'll it'll be <unk> substantives.
Okay, Yeah, no that's a really encouraging to here and then how can you just get a little more clarity on some of the challenge is I guess you quoted in the M.D.N.A. <unk> and I guess you'd mentioned <unk> just with the blending of this stockpiled that you're seeing with with some of the past chemistry in grade profile, So just a little color or not.
Yeah of course, so blending from the Softballs has been tough as the first thing we need to do is to get the chemistry right. So we have two we have to build them a particular in particular sulfide guides in common like rides and then we chase up to the gold.
In more recent is without morning, given a better understanding of how to plant was going to react we've been really diligent about how we blamed it ties together some of the <unk> in how they presented say.
We are great controlling those in front of ourselves to let us know, what's what's coming but we are restricted somewhat while I was presenting in the faces of the stop calls because you know you have to type a bit at the front before you can get to the bit at the back. So it makes it quite difficult for us sometimes to get the <unk> chemistry better and.
<unk>.
And of course of course, the the very basic calls that we put together in the last couple of years, we've been shame those.
<unk>.
Thing up in the area in the mine.
And we have actually we were out we are starting to present or already so.
The builds that we currently feeding to the plan. We're just starting to see all coming out of mine <unk> now give us a lot more flexibility. So if we I have enough to stop if we're in the stop Paulson, we presented with a area of low self odd for example, we've got more choices to be able to supplemented.
Hey, perfect. Thanks, and then just.
A little more high level I guess you guys have had some recent topper discoveries.
Thinking about those that that's something you want to you know flush out a little more value for any kind of figure out exactly what you got and then look to monetize similar to what you did over it get a cafe or is that something you're thinking differently if the stage.
Yeah look it it's it's it's always he very early mocking terms <unk> I'm, assuming you're you're talking about the recent exploration results that we put out as a as as we've always said if we have a discover we're sort of agnostic about the middle.
So it will depend on on what we find.
And how that turns out and how that transposing those.
<unk>, a prospect and hopefully project and hopefully mine, but <unk>, we'll see where we get too, but we'd be I've been to <unk> whole permutations, you know tight knit forward on developing that or or or you know if if the right <unk> selling these things in the future as well.
We need to do more work yet.
Okay, perfect that's a pretty thanks.
Our next question is trying to <unk> with credit see <unk>.
I think the morning, Oh come on again, James and just a few funny how apologies you could just have a date my my line dropped out partly it's really cool and it's just starting on the exploration side and and the two to three timing.
<unk> and.
How can we think about next year 2021 is that.
Expected to be a similar right as to what guarding D.C. before we can potentially get a step up.
From 2022, and then also I didn't I suppose it's contained sulfides each side during indication said the so there's still flight economics.
That's neat so the the answer to the the first question <unk> of the second part.
It hasn't shine. So we will do everything we can to sort of my time that they can't run rights for oxides and going into 2021, but remember that will be a big upgrade of what was put out in the previous tech reports.
I'm, sorry by inference that has to come through continuing with the small incremental additions to toward so I will do everything we can't until we can sort of get that step change I'm moving into one of these alba. These other areas in the future, but well again uptight that as the year progressive.
And the <unk> itself.
For 21 I'm talking about.
Okay, Yeah understood I mean, we'll we'll light on the details with a tech report but.
Conceptually they much and they kept expecting to get into that deposits.
No everything everything that's the beauty of this I think if you look at the portfolio. We have we can see the most of the options is being low capital intensity.
Because all the infrastructure builds that we have it should apply and as proximity to to check plus I think of it as a district.
I just reply, so central processing facility sovereignty. It gives us all the benefits of having having a a lower lower capital intensity and in some of these deposits as you say a relatively shall I. So <unk> they shouldn't be anything that what surprises in terms of where we get to when the.
Future I think the the limitation we have now is really just the other drilling it continued with that drooling. So we can stock converting those into reserves as docket into my plans and details random.
Yep I'm just thank you and then one just interested in your thoughts on on how you thinking about capital management and.
Laying out the limited cried sounding name you hadn't then I'll be play strong cash flow m- cash this corner.
I guess, yeah <unk>.
How are you thinking about potential.
Capital returns coming up.
Yeah look at its we're in a very strong position wait wave.
We've always said that meet our way out objective is to live with it out millions into utilize fully out balance sheet to become so funding for for the.
Managing the portfolio in growing the <unk> in the future and I think we're we're obviously well on the eye tracker to do that and you know the tuning air attention to what else to do with a cache because we do generate a lot of money I'm in a lot of cash flow over the next few use.
Capital returns have some shape or form is definitely on the agenda with their board to to keep on discussing considering but the objective for this year is as I said before is we want it to build some cash on the ballot shape provide us with that sort of you know that liquidity I'm going to catch prosody perspective.
And got sit out the sort of three or four you playing around the gripe initiative. So we can see what what would be left and have we we can see it capital returns, but are we on the agenda Lady she.
Okay, great. Thanks right.
Once again, if you had a question please press a than one on your tennis huh.
Our next question, it's from Daniel Mccombie weight loss part investment. Please go ahead.
Hi, get gay rights to everyone. Congratulations on another good quarter in and I guess right around now you've eliminate your net debt. So <unk> okay <unk>.
<unk> two questions one [noise] just done Kobe getting people in the <unk> the restrictions. It. So if you have a driller coming from I don't know, Canada, Europe or somewhere how how would it which would have the.
<unk> what does he have to do to get into Turkey to say right. Now is there is here quarantine period or.
And so are we done bring drilling from Canada, 'cause too expensive.
I came up when we bring Pam.
So I haven't gotten downside moving in and out of the countries restricted at the moment, but we've seen the country anybody who comes to suck we quarantine them.
Before by.
Well they stopped working with anybody else for two weeks. So they have to go and also I should for two weeks and we've been doing that since the beginning of March.
So if you go go in for no break including.
Including if we find out the the locals been going into the the next city across Cold is in June.
So we've been within a very taught about controlling movement.
Where do you quarantine them Stuart tedious to give a facility.
Yeah, we've been using we've been using the M.C.C.P. camp.
So we have the came the came from the construction that just completed and it has a number of separate wings in it.
We have we have the camp on saw it and then we also have separate residences in the town.
So we've separated where different <unk>. We've also I separated the management time for example, but on.
General manager and Basil who these these two g. and haven't haven't been together for a number of ways to spot Bang on saw it. So we can't kept the grapes and functional lakes that support as well site.
Wanting engineering, great done all go to the office at the same Tom the going in an ultimate dies stuff, we lose the morning engineer. We dined. We if somebody comes down we got we don't have everybody come down at the same time.
And we've all size sit ups. These remote control knowledge to allow people, who the subject matter experts, who helped US commission and build a plant.
<unk> to dial into the plant revolve it'd be the extra I was taught.
Well, we got through this process.
Okay. Great. Thank you can you remind me what I delirious, helping you I I can see here again, what <unk> what percent of your costs were 30 your costs be leery denominated.
Yeah.
<unk> data for good he's he's right.
Okay, Great alright, thanks, guys.
Thanks.
He spoke with the question and answer session and today's conference call. You make is connected line fifties time. Thank you for effect dissipating and have a pleasant.
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