Q4 2019 Earnings Call

Stuart President and Chief operating Officer.

Every barely chief Financial Officer, Pennsylvania, <unk> Senior Vice President of exploration.

After the speakers presentation, there will be a question and answer session.

If you like to ask a question. During this time simply press star followed by the number one on your telephone keypad.

If you would like to withdraw your question press the pound <unk>.

I'll now turn the call over to Mr., Robert given chief owner.

Thank you operator.

Good afternoon.

For our shareholders past and present or management and myself.

Last year was a terrible year.

We all know our share price fell out of the sky.

And I want to start this call with a very sincere apology to everyone.

We gave you guidance throughout the year.

For operational performance and we failed miserably, we did not deliver.

By the end of the year it was impossible to believe any forecast we provided for operation.

This was very unfortunate because considerable success.

It does need.

On the exploration front at Black Fox.

This success was completely overshadowed by the bad news from operation.

I know, it's going to take many quarters of delivering on guidance before we gain you're confident.

And I can say.

The last year.

Was the worst year I have ever experienced in business.

And I'm sure you experience is very unpleasant for you.

I want to assure you that we're working hard not to repeat it.

Today, we're going to provide our perspectives on our 2019 operating financial and exploration results and talk about.

2020 looks like.

I will now turn the.

The call over to marry who will start by providing a high level overview of our financial results.

Thanks.

Good afternoon, everyone [laughter] during 2019 always consolidated production was 174400 Onek, we've all been altrus approximately equal to our production last year and total sales were 175500 overseas.

Total sales were comprised of 85 100 gold equivalent ounces from all 100% online.

Wonderful gold bar, and Ohio, and 90300 don't see sort attributable to was 49% interest in the San Jose Molly.

2019 revenue for almost a 100% on volumes totaled 170 million.

Similarly, 9% lower than in 2018.

If we included the revenue attributable to was 49% interesting Sanofi that would have added 110 29 million. That's revenue from San Jose is not included you know income statements because we use the equity method of accounting for this asset.

We have created a new metrics that is designed to help you evaluate our operations ability to generate cash flow using non-GAAP measure disclosing <unk> form 10-K, Kohl's cash gross profit cash gross profit is calculated by adding back depletion in depreciation to gross profit.

2019 cash gross profits from all were 100% owned operation was 33.7 million compared to GAAP gross profit of 9 million.

Cash gross profit attributable to wall, 49% interesting Sanofi was 51 million compared to GAAP gross profit of 16.6 million.

However, we do not consolidate Sanofi as mentioned earlier.

During 2019, we received 8.9 million in dividends from all the interesting San Jose.

I'll now discuss the main components contributing to our net loss in 2019.

During the year, we invested 37.7 million exploration with 90% spend or the black Fox complex and the balance of the gold bar and nobody in Nevada.

Depreciation and depletion expenses were 24.8 million, we spend 9.5 million in growth projects, including spending for advancing to prune projecting team in some Cherry Hill Phoenix project in Mexico Engineering and pulled me to work at the gold bar soap property, Nevada, and preproduction expenditures physical environment.

[music].

We included a loss of 8.8 meal, when all 49% investment in the San Jose Joint venture company, bringing the book value of our investment in the joint venture to 110 million.

We incurred interest expense of 6.8 million related primarily to all debt and GE any expenses of 12.8 million.

We also realized the gain on the sale of marketable securities or 5.3 million a gain on the recovery of tax fees of 2.8 million and 2 million. Other income in total our consolidated net loss for 2019 was 59.7 million or 70 cents per share.

Financing activities during 2019, including included the Sean So 54.9 million common shares and 29.8 million warrants for gross proceeds of 77 million for never reach of 1.4 per share share issuance is full cash during 2019 resulted in equity dilution of 16.

For some basic shares outstanding at the end of 2018.

At December 31st 2019 liquid assets increased to 49.7 million from Sept 37.8 million at the end of 2018.

Working capital increased to 43.2 million from 23.4 million at the end of 18 debt outstanding remain at 50 million.

Looking ahead to 2020, we expect a significant reduction in our exploration expenses to wander 10 million spending on growth projects off approximately 14 million, probably mostly of the black Fox complex.

That's a repayment any interest expense will increase to 14.7 million.

We are currently making adjustments to our budget given the fact is more than a lower than planned.

Production from gold bar mining 2020, but so we do not have details yet of this change is well known now turn the call over to produce toward for discussion on mining operation.

Thank you Mary.

Hi, going over the operational highlights for each operation starting with San Jose.

Or San Jose Joint venture line, and Argentina had a good year in 2000 might be.

In our guidance for gold and silver production for 2020, our share of production from San Jose is expected to be 45700 ounces of gold and 3.2 million ounces of silver for getting them.

Alan gold equivalent ounces.

Average gold silver <unk> Q1.

Midpoint jobs crossing all in sustaining cost or 975 in 1225.

Equivalent ounce respectively.

Moving to Mexico.

Still residual leaching.

2000 might D., we produce 16333 gold equivalent ounces on an attractive residual leaching Thompson $680 per gold equivalent ounce sold.

2020 or guidance was 12000 gold equivalent ounces.

Moving to becomes area or Black Fox mine encountered some one off events at the beginning of 2019, we have discussed in detail in prior quarters due to the challenges production was delayed.

Mining flexibility with restricting during 2019.

The result reduced or we reduced our production guidance here.

Total production was 35700 gold equivalent ounces in 2019 compared to 40900 in 2018 [laughter] no.

Is that despite the revised production ounces, our team was able to decrease or cash cost of $825 per geo.

$845 in 2018.

<unk> increase in are all in sustaining cost to $1225 per gold equivalent ounces from 11 37 in 2018.

Looking ahead to 2020, a black box or production guidance was 35000 40000 gold ounces.

Point cash costs and all in sustaining costs of 1070, fives and $1200 per game equivalent ounce respectively.

This guidance was given what the benefit over two years of operating expertise since the acquisition and a revised forecast juniper, which includes risk factors assigned to each mine area plan during the year.

With respect to capital spending.

[noise] Black box, we're actively developing the access rents in the Black Fox open to.

Nearby frame ore body.

And is expected to have associated development expenses in 21 million over passionately. The next 15 15 months.

And to provide or production per passionately two years beginning in Q4.

2020.

The mineralization enough room is different from black box and not as much sicker more homogeneous that's enabling more productive.

Transfers mining method, which should reduce our costs. The schematic on this slide illustrates the difference between the organizational mining methods, which is used a black box and the transfers mining method, which we will we will be employing fruit.

Using the transfers mining method or internal studies on schedule calls for him to produce 65000 gold ounces.

In 2020 to 45000 gold ounces in 2023.

From cash costs are estimated to be approximately $850 and all in sustaining cost $926 per ounce.

Was framed the life of the Black Fox complex and extend into 2023.

Moreover, our objective is to expand production by drawing board from multiple sources filler mill.

And extend the mine waste substantially today, we're going to introduce central plan, which is at various stages of engineering.

Peter blames exploration success than Sylvia human delivered over the last two years.

I'll turn it over to source, so bad to discuss the exploration and resource definition that black Fox Grey Fox and stock properties.

Thank you Chris.

Our lives from over 2019 exploration program in Simmons include.

Discovery of stock with an important news on of mineralization.

A significant increase in indicate that the resource grey Fox and highly positive drill intersections.

Several targets in the area.

And positive due to resolve near existing axes mining area of Black Fox.

A bit more detail about stock with.

We're drilling off year led to the discovery and early definition of an impressive news on of mineralization.

We have a total of 31 drill holes into this area mineralize intersection hovers around five gram per tonne goal over average weeks ranging from 15 to 20 meters.

These strong drill results a cure in an area measure maturing 265, neither along strike and 200 meter hurt calling.

The new mineralized zone is located less than 350 meter from existing on the ground of Laufman, unless there's an acute I'm as or from our mill.

This talk with zone remains open in all directions, and our 2020 exploration program is designed to produce an initial mineral resource estimate and also to test the extension of the monetization.

In order to assess the potential size of the discovery.

Other shallowly, let's talk the surgical spot mine.

It is an opportunity to explore below the existing working.

Reviewing interpretation of do surgical vehicle and through the program blending or currently underway.

Moving to Grey Fox drilling generated high rate of success, leading to an increase of 33 person or 155000 ounces to the indicated the resources to move.

For a total of 620000 ounces at an average degree the 7.2 gram per tonne goal.

Our approach was to focus on is running mineralized cross structures that were previously not well understood or do you really tested which led off to multiple exciting intersection over a 1.5 square kilometer Oreo.

Also the resource area had the whiskey Jack target drill results, including a reason a recent Gunther section the 53 Gram per tonne goal over 6.7 meter indicate a strongly mineralized system with very good potential to define the news zone of mineralization.

We've been.

[noise] grief walks.

At the Black Fox Mine mall.

We have on the ground drill block platforms to explore the west.

Dep extension of the mine Hi, good results were intersected on the upper Western extension of the mines, such 79 Gram per tonne over 2.6 meter.

41 Gram per tonne over 3.3 meter and 78 Gram per tonne over 1.8 from either these positive during the results indicate the potential to extend mining in this area minimization contains high grades or an intersection extending as far as one of them.

20 meter to de risk of the numerous mining face.

Hi, great intersection of 105 Gram per tonne over 1.5 meter was also recently intersected close to winding development on the depth extension of the mine. The intersection this half we don't loans toward the deep of 55 Gram per tonne exploration it.

The mines 10 50 meter level.

Suggesting concerning to you have the algorithm acquisition on the depth extension of the mine.

On this back to Chris.

Thanks, so much.

How did you have heard or read of exploration success suggests that the black Fox mine has the potential produce to produce for several more years. Our vision is to use the window. We have we had during the next 12 to 24 months to begin putting in place the development needed to produce from two to three deposits concurrently.

Hi, Stacie multiple sources that production we could reach.

A 100 225000 ounce production levels in five years.

Great Fox has grown since the acquisition, we're commencing the feasibility study on the project.

Can initially on him open pit mine.

I would eventually transition to an underground operation similar to our current Black Fox mine.

The schematic illustrates potential open pits on the contact and 147 zones, which is the extent of what we have studied so far.

47, Murphy, so often come subsurface and it may be included in the open pit plan.

Preliminary analysis shows that the two I agreed pence around three grams per tonne would provide significant morphine for November five to seven year like.

We anticipate having the feasibility study completed in Q4 this year.

Correct me permitting is being carried out simultaneously with the feasibility study work.

The schematic shows the development involved with gaining access to the old stock mine and additional development to access the stock went so.

We envision a portal in the new ran from surface to access the old mine workings as existing shop is no longer usable for personal transport.

To address would be developed to connect the stock whetstone to the existing mine.

Great benefit we haven't stock is that this is a permitted saying they're pretty quickly develop an underground mining plan.

Moving it seems as planned to be implemented relatively soon after access the previous established.

The exploration program of 20, my team to find the mineral inventory in Stark west.

We're planning to continue to exploration happens and to complete a complaint resource estimates and 2020.

Moving to gold bar reproduce 30700 gold equivalent ounces in 2000 might be compared or original guidance of 55000 ounces gas cost and all in sustaining God or 1100.

At $1 and 1200 $82 per gold equivalent ounce respectively.

It is important to understand the various factors that contributed to the shortfall in 24300 ounces versus our original plan.

Higher costs, we incurred five principal reasons.

First.

Was delayed commercial production was planning to begin in March 2019.

Not achieved until may of this.

This resulted in fewer ounces on the heap leach pad and less time to recover them.

Second was gold grade.

We moved approximately of a number of tons, we plan in 2019, but murder achieve that we needed to mind, some lower grade stockpiles and the pre stripping in the pick that could be lower grade tons, then predicted in our model.

Third was recovery.

Experts in the field of heap Leach, we will achieve the expected ultimate recovery on crushing and agglomeration material.

We expect it to take much longer to reach that number.

Also on the factor.

As our decision to selectively fact run of mine material, which by definition will not recover as well as crush material.

For all their decision to exploit the concrete ore body ahead of our original schedule to improve glass rose. This decision gone certainly complications with your handling system because of the hired play gone down and wet winter weather.

In Pittsburgh deficiencies that overtime with the engineering and construction of the mine infrastructure for example, and amount of programming carbon to be materials used in the heap Leach pad construction.

Hi, dinners and process plant, resulting from an attrition, but also cause preg robbing Ami heap Leach pad.

Recently, we haven't found another significant hurdle like gold bar.

Our initial experienced mining from the two cabin Creek, that's was positive in that.

In the sense that they continue to be present more Goldman was predicted by reserve model, because it's not unusual and it was a pleasant result for us.

Recently, we have transitioned the mining almost exclusively from that picked deposit.

Typically the pick west pit.

Theres quite a bit of waste stripping associated with pick west and we have been working our way closer to the ore zones advancing about 120 foot bench per month.

Our experience mining pick west has been about the reconciliations of the reserve model has been very poor for origins as well as gold grade.

But then as now advancing a point where remains a better material and what we see or the actual tons are still down relative to the model and graders up although we don't have enough data got to reliably predict the differences.

Distributor reevaluation of the resource reserve modeling, which we have been advancing on the maximum piece possible.

I have an initial dropped resource interpretation completed and wire geological team does not to give those optimized we know enough to understand that the resource reserve estimates will likely decreased and the mine plan will change.

There are several mitigating circumstances, I mean, partially offsetting the reduction.

It's been balances, which I will mention so people are aware.

First fewer tons green stress and higher gold grades potentially gives us a higher margin on each toward placed on the heap Leach higher grades also tend to recovery better.

And secondly, certain capital costs, such as an expansion of the heap Leach pad may not need to take place.

Some of you will appreciate a geological a geologic explanation of what we see in the pit that was caused us to refiner modeling criteria for gold <unk> going to hand over to discussing this event to present you with some details.

Thank you Chris.

We've been using your information from fifth mapping and infill drilling to revise and refine our resource model for gold bar.

Previous modeling rely mainly on bidding control, which means the Golden acquisition was mostly this reviews and can fall into specific talk a little bit beds of the gold bar that Belleville recently, a better on the sending the structural controls to locate and culture and the addition of positive law.

A key component to the bidding control.

Resulting in what we believe is a more raul both model.

The updated structural cultural summarization led to these indication of several new airline target, that's where a lot incorporated in previous or current resource models.

Two loads real density Mackenzie also called in the resource teams are working with Pisarski consulting to incorporate the realized source rolling realization control. In addition to the bidding comfortable and update them in their own resource of the gold Big defaulted preliminary mall goal I've been completed and mix, you and and as far as.

We are continuing work to address and optimize the mobile.

The revised model is expected to be cool completed in Q2.

We're also working to incorporated the gold bar Salt satellite deposits into mine plan.

Gold bar Salt provides an attractive opportunity to add new or source to the Goldwater mine.

It is a near surface defaulted located to the salt piece of the Leach pad.

During 2019 gold bar Salt was real and the resource was upgraded to measure and indicated category footballing all 63000 ounces goal at an average grade of 1.1 Gram per table.

There is upside potential to grow the resource and additional drilling is plan over the salt He's a default extension, which remain open then over the north.

Portion of the deposit which has recently become fully accessible for drilling.

Overall.

Thank you Phil Man.

Let me leave you with fourth time.

Bars still facing challenges.

As a result, we're reworking the gold reserves and resources along with the mine plan.

This will take us sometime and we are moving as quickly as possible to resolve this issue.

Second San Jose is forecast is delivered another solid year.

However.

Very recent big change in the silver gold ratios.

If it were to pursue to mine will be generating.

Fewer dividends.

Three exploration at Black Fox at the Black Fox complex has grown.

Our existing resources and discovered a new resource.

We are optimistic that our investment in exploration.

Has provided us.

With the opportunity to increase production and extend the mine life on the Black Fox property.

And for.

The massive injection of capital now being deployed to combat the spread.

And deal with the adverse economic.

Damage being caused by the Corona virus.

Will overtime the extremely inflationary.

I believe that in an environment with zero interest rate 10, this new worldwide.

Quantitative easing.

We'll go over this year accelerate the flow of investment dollars into gold.

Now I'd like to open the session for questions.

As a reminder to ask a question you will need to press star followed by the number one on your telephone.

To withdraw your question press the pound Keith.

Our first question comes from and takes a kolsky with Roth Capital Partners. Your line is open.

Okay Robin seems thanks for taking my questions and I. Appreciate you guys hosting the call today and in light of what's going on in the world.

Oh, you're welcome game.

Just a few a quick questions on my end starting at gold Bar I know details here are still a work in process.

But I'm just wondering should we expect 2020 guidance to be issued at gold bar once the updated reserve and mine plan or I'm, just trying to get a handle on weapons might look like going forward.

Absolutely.

But that won't be for a month anymore.

That's helpful.

In looking at gold bar, South I know you guys were talking about potentially.

Bringing that into the mine plan how quickly would you say that can be brought online. It if that's the decision that's made over the next couple of quarters.

Oh, we're moving forward with the permitting and that's supposed to be about a year, maybe a little bit longer.

Once we get the permit then we'd open it up a nice things like gold bar. So it's located at a lower altitude and we've had issues processing the ore during the winter in mining up on the Hill.

Just due to snow and not so it's lower altitude, it's a slight uphill drive from.

To the to the pad.

At the same distance so you don't have the weather impacting.

As much.

Okay. That's helpful. And then just at Black Fox It looks like exploration still the focus here and in from starting to look like the next leg of growth. They're there I'm. Just wondering are there any remaining permits you guys need there to move forward with that conceptual mine plan that.

Spoken about earlier.

Over it saw the mine is permitted and it's currently and the status is temporarily suspended.

It's a shallow nine.

Now those down about 330 meters.

It has been de watered in the past and we heard the last time, they deepwater that it took about four months to do that.

We don't know the state of the underground and that's five.

Chris was talking about driving a ramp.

Off to it and then linking up with the underground system to provide ventilation and other access.

So in terms of timing.

We'd like to get a better handle on the.

Southwest.

Zone.

But some more drilling in their solely to.

Forward with a more comprehensive plan, but what we've already seen so far.

As likely it's consistent grades.

Close in close proximity to the existing workings of the old line.

We're also seeing values it yes.

Below the old working.

And in fact, we have all drill hole down there that the boat 600 meters below the.

The past working quite an attractive grade, suggesting that the ore body.

Continues below.

We're also looking at.

Areas.

[music].

Around the existing workings that appear to have a resources that were outlined.

Okay. So it sounds like it can be advanced certainly quickly. Okay. That's all I had my and thanks again for hosting the call I'm, taking my questions. Thank you Jay.

[noise] into your next question is from Heiko Ihle with H.C. Wainwright. Your line is open.

Hey, guys I'm going to build a little bit only a question that the jewelry.

Yes, So I went through your Mdna on seed or this morning, and on page 44, you state and this is a quote with respect to the gold bar and mine has a significant reduction in cash flow results from changes to the reserve estimate mine plan as discussed on page 45, maybe necessary to curtail the first to spend operationally expenditures and always cap.

Uhhuh various financing that those.

Yes. Good question here is this risk mitigation or their real contingency plans you guys already looking at.

And if you or looking at certain scenarios I mean can you just sort of give us an idea at least have like a base negative and hopeful case scenario and what kind of gold prices using those scenarios. Please.

Sure. Thank you Michael.

You were reading from the risk factors, we set out in the 10-K.

All right it was the M.D. and Avi in on seed or.

Yes, Matt its repeated in the 10-K.

In there there is concern that we could be Louisiana is and tonnage as the tonnage.

Initially seems to me.

It's very preliminary but we think there'll be a reduction in 10 inch analysis huh.

We don't know the extent.

Okay.

Here are the Dee Ann I assume you don't have an answer this one yet either you don't know the spend on exploration activities at gold bar for 2020, right in order to 2018, 2019, enrollees, well 2020 inches soil work in progress because nobody knows.

We had some numbers, but a lot of things being thrown out there.

We don't know what I think the entire industry and for that matter all industries are being disrupted by Corona virus.

So, it's becoming a little difficult to predict.

What is the impact if if the site wasn't affected and shutdown for awhile.

Uh huh.

We just did a very lead through to my next question, because I was going to ask more or less exactly that what precaution and ordering just for the organization out score as everybody working from home.

The opposite both to shut down I mean, probably international travel, especially is extremely curtails frankly, it should be what changes have been made in the should we expect see anything out of you guys. In the next couple of weeks in regards to.

Thank you for taking my questions.

Oh, we haven't had any reported incidences.

I've grown a virus in the firm.

I thought I might have been exposed to it during the PDAC.

But my 14 days is passed and.

No symptoms.

Our offices operating on a skeleton staff right now.

Chris has plans in place that our operations to deal with.

Anything is occurring there as you mentioned international travels and stopped most travel spend stopped at the moment.

And we're taking a very seriously.

Hi, Chris would you like to add anything to that.

Yeah, I don't think drop eco yeah.

Were more or less following along.

As other mining companies are ensuring that you know where mine sites in operations are protected were checking temperatures of people got me to say restricted visitors no no unnecessary visitors are allowed on site.

ER and yeah, we've put in a lot of information to our people as well links to sort of keep track of this and we are providing updates to our people on sites on a daily basis.

And weve educating them on self monitoring that thing I've traveled we're putting them on for 14 based and so corn bean and monitor themselves.

So we're we're taking all the proper dotcoms to ensure that we can hopefully avoid having this crap out or operations level.

Hello.

Thank you guys and lastly, so.

You should anika. Thank you.

Your next question is from Adam Graf with B. Riley Your line is open.

Hi, guys.

Just a quick question following up on.

Rona preparedness have you guys I'm, taking account of supplies grinding media.

Cyanide or other other spare parts in case supply chains get cut off that you can continue operations without without running out of a key a key supply.

Throw it over to you Chris.

Yeah. Thanks.

And we've been in contact and we continue to be in regular contract in contact with our suppliers.

And as of now again, they're taking similar precautions as to what we are.

And there are open for business with respect to stockpiling or more.

You know cyanide, we don't have containment to have additional cyanide on side a lot of these chemicals you have your containments and that's what you have and you can't get permits you know overnight essentially store more so we are relying on our supplier network to continue and you know answers Myra spreads, it's pretty hard to determine what the overall impact will be to her business.

We are certainly maintain regular contact with our suppliers and sure enough, we're getting stockpiling, what we can onsite within reason.

And yeah, we'll have to sort of keep monitoring this and make adjustments as we go here.

Yes.

Thank you.

You're welcome kind of.

Your next question comes from him back to you are running with Alliance Culbertson, Sir Your line is open.

Good morning, guys.

Just a quick one you know last year, you had some pretty high grade intercepts add Black Fox mine Oh I'm curious are you guys planning to go back and explore more Oh busier and your exploration budgets like when you funny.

Oh, yes, a buck <unk>. That's a good question then yes, we have.

Recently, good success on the west flank of the Black Fox mine as you know it's been developing on the ground to provide better access to drill the west and step extension of the mine.

So we've been drilling there and.

Got positive intersection.

[noise] 10, 50 meter and level and we have a new it a hybrid answers.

Section of one the whole FID run the thumb all in between.

Where we are mining right now and the deep us into Texas again, typical black Fox high grade mineralization.

It's only the month trading that the system remain open and the mining can extend a bolt on the west potentially on the with flank.

And also on the dip extension of the mine and and we keep drilling on the ground. So we have four rigs running underground.

Got it and in the past do you have kind of talked about you know from being an additional you know deposit, but the production would be coming from in addition to Black Fox mine [laughter] do you still seeing that exploration results that you haven't blades or do you think you know money and 2022, you would be exclusively mining.

From from deposit at this point.

<unk>.

Your question back to you if I understand whether it's above the mining of room or exploration around from its its combined the boat I mean, a you know the black Fox the men burdensome update that do but yesterday. It has about less than two years of mine life at Black Fox.

I'm thrilled is expected to come online imported bought it off twentytwenty. So I'm wondering you know given the exploration dissolve the black Fox mine itself do you see the mine life expanding beyond the end up next year or do you think you would be exclusively mining come from starting Twentytwenty do.

Hi, Chris do you want that part of our conceptual plans would you like go over that again.

Yeah sure so so though.

So yeah, I mean, we've had over a lot of exploration success looking at on the western flank we've got.

A lot of really getting old hundred 50 meters away from current development.

So we're pretty excited about what we're seeing on the western flank, but we do need to continue to drill that build that into.

New resource and reserve.

And what we view with stock you know we think we can.

Sort of keep black Fox moving along until freeing comes into play and then from gives US a couple of years of production.

And then at that point in time right now our current plan.

Barring any.

Pardon a whole bunch of more success in growing the resource significantly our plan is to essentially.

Slowdown or stop at Black Fox and give the drills and opportunity that really drill.

And build our resource I read believers, we're pretty bullish on block, possibly there's a lot more gold there, but we need the time to allow the drills to get there instead of drilling on top of development on top of mine, which is not official as everyone knows when you're trying to run of mine. So.

From you know is planned to do 1500 tonnes per day those on a bit of a harder work index, the black box and our mills capacity is around 2400 tons and tons produced when we do have some flexibility when we're in for him. If we can pick up some.

Additional ore at Black Fox, we'd certainly look to put down through the mill, but our main focus on black box. Once we get from started would be the building resource and to what we think it can actually be.

Got it does somebody husband, Thank you and they got to development all through could you maybe you know walk us through how long would you pay for the development to complete and what else needs to be done before do you being through them into production in fourth quarter on Monday, 20, 2021, I'm sorry.

Sure, Yes, so fun.

For a or B C driving twin drifts. We are we called the point is in the fall and we just got started driving the dress here in March we are absolutely contractor down slightly read off the started because we've got to be 5000 ounces from a western edge of the Black Fox Pitt.

Which is in our mine plan for 20 2020 for the underground so we've actually got them to color the drips, and where we're going to drive the ramps to access those ounces <unk> because we can't get there from the current underground workings.

So we've done not done the now there will be heading down the hill omission free.

And you know that we expect I'll take just told me I'm done.

Oh, we should be down there in late Q1, 2021, and I'm of course, we have the mine to develop and get the stoping set up and we'd be looking at moving into production in Q4 2021.

With respect to you know there's no permits required everything presented were ready to go it's basically just get down there get ourselves.

When we can start mining we're already Albert ventilation circuit. So nothing that's why we're driving twin ramps.

Well have friends here and return air handlers gateways and everything will be.

All said and we're driving reposition the ramps will come right in the sorted out.

The bottom third of the mine.

We can basically hit the.

Hi agreed zones, and the thicker zones right off the bat ramp up or production quickly.

So.

And I'm just one more follow up if I could easily understand you previously mentioned the production from drilling is gonna be 65000 ounces. The first get in 45 in the second yet.

Right.

Okay I'm moving to when we bought a I know you said that he wanted evaluating and be modeling the reserve Oh for the Boise deposit Oh, the Golden age is it's kind of small what are your thoughts on you know to evaluating barbies, Rick redid, the meaning the resource there.

Yes, what we are focusing right long, but he is the other priorities pick the the pick a model, but right after that we keep.

Doing the same type of exercise with with the information we have a gold rich.

The big.

Then theres a few on that we ever thought with a goal because having access to new exposure in the bid.

We also have of course, the mining going on and good control and formation, so a lot more detail them.

What we have in the past and we are using doesn't for mission to be incorporated two to the mobile two to really update and refund.

The understanding of what we have there regarding sutherland position uncomfortable.

Got it and just one follow up did you all guys mind I'd go he became idle getting this time.

No not yet the mining is a gold gold pick with currently.

Okay. Thank you very much that's it from my side.

Thank you.

Your next question comes from a John Tumazos with it John Tumazos very independent research. Your line is open.

Thank you.

Does the stock.

Indicated resource of 121000 ounces.

Include the benefit is a good drove results in the past year.

How much of it doesn't include.

Hi, John the so by speaking yes.

Just talk east only on this is an upgrade of the resorts, though you know there's there's still scenario for open just on the ground that we'd be looking up we have a lot better density and of getting over this is.

They all had thought our targets if you want.

You know our focus that's Soc I've been over a three kilometers strike long that include the old stock mine.

We see good potential right below the old mining there you know compiling the information the sort of calling formation.

No. This why not been shut down in low gold price.

And there is a bunch of goes into recession, just below the mine. So that's probably the first place would be looking up.

In the short term when we when we advance bulk and going through the wells as you know this this talk with this is a significant new discovery, we all know still.

The real Oh, five or potential of the zone, we want to go back in the two to two main objects as long as to infill talk west to bring it to a resource.

He made and also.

Really the extension of this new discovery to us a size potential.

So there's there's three kilometer strike along with the mine in the middle and good potential wed below the mind.

And going to live with side. We believe we have this is the big price with stock wealth and we still have stuck east. This this new upgraded the resource that we have that include some high grid modernization into a lower grade a large larger of local from acquisition.

[noise] trucking those questions Rob assignment.

Given that you don't have a production forecast for the moment from gold bar.

And ER.

The Black Fox complex is going to be a transition be too from the old mine.

To fruit.

And the evaluation of Grey Fox.

Do you think you should significantly cut the exploration spending.

And put a project on a nice.

Just in case.

Oh, the the that are Ontario output isn't as good as you wish to worse.

[noise] fewer balls in the air given the uncertainty.

Absolutely John but we've been looking to rationalize our portfolio propping properties.

And focusing it seems that.

Black Fox, which was considered I'm not to have a lot of future by many we've had good exploration results there and that's likely could build production.

And so buyer, which is going to be star.

Yeah.

Little a handicapped at the moment and hobbling along.

So we're just looking to.

Reign in some of our expenditures on exploration in other areas.

And focusing that we have the funds to develop these other sources of production.

The two six it to de watering.

Further evaluation of stock.

Should continue or be put on hold pending the.

Subsequent performance in Nevada, and it's like Fox.

We're thinking about those matters.

We'll have a.

Better way of evaluating that once we get the gold bar.

Numbers in hand, I'm sure I apologize for posing the question, while you're in the evaluation phase I don't know, it's a very rational question to ask.

Thank you.

With a focus needs to be.

Yeah.

The silver and did you want to add something yeah, yeah, maybe doing a a can a few points due to this set of questions on you know I agree the investment and exploration over the last two years actually I've been quite important.

But really quickly this I'm a little off to focus our efforts and of course, you only in a few area, where we've been quite successful.

You know a there's there's the black Fox mine itself, but we keep depending on the girl.

And we see a potential two to two axtone acquisition and hopefully mining.

Then we focus on the Grey Fox Oreo, where we've been quite successful.

Increasing.

Centric and resource of things can agree with minimization coming to surface on our mind properties, so that give off pretty interesting unfortunate before open pit mining.

To start with the.

Grey Fox and stock have been that moving up.

If you all of the project faster than expected, a especially with the stock with discovery. So right now our focus is only of the Black Fox mine.

Talk with other discovery.

And we don't really see a need to two or any additional significant exploration right now agreed folks because we have critical mass that although off to keep advancing saw these toward that will often a full course, we would like to to bring it to a resource stage.

And based on it we can really support.

No additional studies and.

Potential de watering or give laufman the off of the Star project and gold bar all all of the experts and that we're planning a gold bar. This year will be my next so near mine exploration to keep drilling into the pits or on the pits to get on says back into it.

Or increase and gold bar saw because we'll bar salt, it's a quality satellite deposit.

Sydney coverage, so very very limited to Lee.

Alterations, all sub cropping, and the seventh grade or not far from our operation or that Florida Division. So we see that the court attractive and go more south is open to the fault. The last six cents a default is in mineralization and the northern areas only partially drill.

So we see growth potential there.

Thank you.

Hey, Wabco.

Your next question is from Adam Graf with B. Riley Your line is open.

Hey, guys just a quick follow up question.

Regarding this slide your number seven with your with your conceptual plans for for tenants.

You guys talked about a little bit before.

You guys clarified that Froome is is permitted and stock because it was never officially closed is is permitted does that include all of stock you know the potential for the open pit stock west.

Cetera, and then obviously between in this conceptual plan between you know stock and Froome is is grey Fox and what if any permitting is necessary there.

Froome is permitted.

Stock. The mine is permitted if we were to go underground to stock west that would be Herman that's permanent.

Blaine underground.

Stock East.

Well, we don't know Thats open pit or underground.

If you were underground it will be connecting with the existing mines so that permit.

Wouldn't be an issue, but if you wanted an open pit it would be an issue.

Only in that it would take time.

And then grey Fox.

He is on our property.

And no permit.

No no permit okay. Okay. So it sounds to me it's your real it's really just about.

Planning engineering drilled density.

Versus any.

Any type of.

Regulatory hurdles per se.

Well, Oh grey Fox you'd have to deal with water.

Mmm containment just.

Larry and run off that satisfy the regulators about that.

Yeah.

But yeah, what kind of a process is that robin good that delay grey fox or or or swap around some of your conceptual plan here.

It could take.

No.

You need to add some studies done and that it might take the better part of three quarters of the year.

Mhm.

There's just.

Water in archeological issues to satisfy.

Well you got do you guys expect to sort of give us periodic revisions on this conceptual plan as.

As your knowledge and and and plans evolve.

Absolutely no we see that this is a bit of a light at the end of the tunnel.

And then yes, I think it would be very helpful to two analysts and the market too.

To stay up to date on on how this can.

How the potential year can be can be unlocked.

Chase story significantly.

No we will be doing that well be doing it eagerly Adam.

Thank you.

You're welcome.

Your next question comes from a Bill powers private Investor Bill Your line is open.

Thank you. Thank you for hosting this call Robin I appreciate your candor beginning of the calls most certainly but ice ive a few questions and I guess I'll start with kind of an easy one.

For Grey Fox when you did the call in December I believe it was Ken who had mentioned that the he had found up to 12.

Uh huh significant or potentially strikes along grey Fox, I guess would be or or right around by whiskey, Jack and he also had mentioned that the and from what I can read the most recent press releases is that the.

With that seem to be wider than what you had been finding previously I guess.

On this topic, one I guess is that something that youve seen continue it and it was end was this incorporated into the most recent.

Resource update.

Ah yes for the question Daniel Thank you and you're right about a about grey Fox we've been successful.

You know intersecting acquisition, we have a very good jobs, calling the sending in multiple there.

And you know or a focus have been testing northeast salt with trending.

A structure that are quite high grade and we've been adding a news on the 147, nor TV set the tone on on that slide there. It's a new discoveries that we made.

In 2018 that we've been evidencing and there's there's about 1000 ounces a few months as phone.

Right in the middle of this.

Very helpful area. In addition to adult we've been also advancing with on on many trends are structures and and the main ones are they going to shown on the slide there and we have a high rate of doing successful we know that more drilling.

Well certainly bring more success.

And we'll keep increasing the resource assuming additional investment currently we stand at 620000 ounces.

And this is only and then because its category I'm, not including <unk> and her here and they're going to 7.2 Gram per tonne, which is pretty good as I mentioned some of them or was there some come to surface. So we have started.

Points, where we could potentially.

Dr and go for bulk sample or potential eventually open pit mining there.

So we see we see grey Fox quite a a key assets and in addition to to what we have on the rest of their property at Black Fox and Froome.

But currently Oh. This is a highly exciting but there is there is already that seems can resource define there and as I mentioned, a probably good enough to advance with permitting and studies to see what's the best way forward and a in parallel with that we we are quite excited by spoke to you know uses.

The old line.

Totally has struck a an reactivate them and really trying to define what we are dealing with of the stock with discovery. This is a zone that was never ever touch hardware than the boss.

That was first is real Oh, and the middle of this summer.

Great Thats. Good thickness is good it's its a good style of mineralization that into the high grade as part of those wise on the five grams, averaging intersection. So we see this has as the probably the most exciting.

New discovery, we have.

And our Timmins complex right now.

Yes, and as far as say as far as cost wise that would be I guess on par with for whom as far as printing that.

Or would you estimate that would be a far lower cost.

Then something like Grey Fox as far as Remediating him.

Stock property is that.

Yes.

The initial estimates as far as the way you could see it.

Well, they tend to Chris or up on this.

It still it's it's still early we never have a good fix on the numbers yet.

Okay.

The other question I had was regarding Blackhawk. According to your press release from yesterday, our board. This morning. It it appears that you had.

Some areas that.

Went came out of the resource or reserve estimate because they were at and accessible and could you.

And it looks like I was a little surprised given the the drill intercepts that you had along the west that you didn't have a little bit bigger rather gross but could you give a little color on how much came out and how much was added I I'm I'm guessing it's probably in your Oh.

Reserve report, but I wasn't able to located.

Quickly.

Oh, yes, we would allow I look oh, the number Chris maybe you want to talk about those those offices that are not my nimble and regarding.

The increase in girl of the resource the the issue we were facing is access to drill.

More to the Wes.

Side of the mine. So we didn't hub proper drilling platforms now, we do and we are adding holes to the west and ended up extension and this this will contribute to hopefully everything and increasing the resource.

With respect.

Oh I'm sorry go ahead.

No go ahead.

No I I say it was you say you would think it said.

Say that you would estimate that it was a how many approximately how many ounces became my mind bolt is just what really question was in at Black Fox.

Yeah, I guess going into the most recent reserve update.

And also so what we did Wilson evaluation in 2019 of the I'd be reserves are black off and I.

How about 16000 ounces came out of the reserve as you will no longer my animal.

So we had areas essentially when you get sort of went redid, the math and looked at the cost of rehabilitating.

Right now at Black Fox, we're down to the mining you know for lack of a better word or you sort of kibbles 'n bits around the mine we have no a couple of main areas with.

Some decent strike length from new stopes that a lot of it as we're sort of running around picking up little stopes here and there the gather the remaining ounces that were sort of left behind given the increase in gold Bryce.

We're able to make some of these stopes economics, but at the same time, there's a number of stopes in there that were in the old work into the mine be occasions ground failures and stuff. So essentially it doesn't make it worthwhile going to get that to you know stope. That's got 500 ounces are the biggest go get it when you have to do all this work so we reevaluated all right.

And remove those ounces on them. So the growth. So you actually see probably a bit more girls and what you sort of looks like on first plus when you're just looking out the numbers given we removed ounces we added the backend.

And when you consider you know we mined.

HM 30.

35000 ounces [laughter] at the end of the day.

Our reserve is down to like of 66, there about 65.

So we lost a bit but we added back in so.

The western flank that we've had a lot of drilling success of silver and mentioned, but we need the increase the the density get the proper.

Drilled platforms to drill it properly, which we now have in place we worked hard on that in the latter half of 2019, Soviets recent groups actually got proper drill stations to.

To be drilling out on to drill sort of perpendicular to the ore bodies I would get good result, so that's what they're working on now is basically trying to build out aten.

You got me no 2020, and given the success. So far we're we're optimistic that we can add some more ounces back in even remember mining.

30, yes.

Sure.

Okay, and you would you consider doing any out like a midyear reserve update on on you know given the importance of black box to.

The operations at this point.

I would say, there's a lot of crackers around nine again, you know was Corona virus and you know that we need to shutter up and down at some point here and so it's pretty hard to sort of give you any color on that will certainly you know things progressing.

Get the drilled performance there the though it was a bit and get those footage and rather than something together, well certainly try and keep people apprised of progress on on Black box for sure because yes. It is you know renowned sort of single source of production dumbing over demos gaps.

Yes.

One last.

Quick question I know there what's been the.

So next project there has been.

Getting that that's the study out the door I know there's been some difficulties with that as far as that goes is that is that still on track or I guess.

First quarter or the first half of this year.

Yes on the feasibility studies is complete and you know incomes are not significantly different from out of the TV. So okay. That's right now is if we're not gonna constructive them, there's not a learn a lot of benefit the publishing that right now so.

Okay.

That's that's fine I was just and I would just.

Wanted to say you know thanks again for holding this call I would recommend you know just as a quick side now as far as essentially at since you're not going to do you didnt I'm not going to be Tony any conferences are there probably know conferences I think the everyone learned a lot from the December drilling update.

And I don't know where they're getting those.

Once a quarter would be greatly appreciated until.

Because I'm guessing that the public communication, it's going to be reduced let me availability, but I.

I, certainly would like to see more updates rather than Q.

Possibly manage that that would be greatly appreciate it but but thank you very much.

Thank you for that suggestion dough.

Thank you for your question.

And our last question comes from and Gary Megson shareholder Your line is open.

Thank you for taking this call I listen to all this stuff for years since I first bought when you took over the company mystery cooling appreciate your effort.

My questions don't have to do with all the mining stuff because I don't really understand that as much as I probably should.

My main question had to do with.

Where the stock prices sitting right now.

New York Stock Exchange has a one dollar limit as to when you stay on exchange is that correct. That's correct.

How long does that last four.

Well it may change with what's happened recently, but.

They usually notify you after a certain period with your stock below.

If your stock Okay. My question is.

If that point is reached.

Do you have any idea as to whether or not you would do a reverse split on the stock because I know what's happening with reverse split stocks in the past what companies that have done that.

Does that anywhere in your plans are you considering that or are you not at liberty to say, what you're planning to do on that because.

Were recently below a dollar and.

Oh not to stay down there, but if there were 30 consecutive days below a dollar then the New York stock Exchange will advise you.

That they don't want you on the stock exchange and but you have six month to remedy that a situation.

Okay I understand that know what do you have six months to remedy to situation.

A question is how do you go about reminiscing of that because it does not appear to weigh the economy is and what does virus thing that everything that's going on.

Be honest with you I do not expecting me queuing stock to be over a dollar and in near future.

Sitting probably around to 75% Mark and that's been where it's been hanging for awhile.

People just are not investing and this is no reflection on you where the company, but it's just a situation away. It is people are just cashing out we're running for the hills.

That's why my estimate on it is that the stock is.

Probably not going to reach that dollar threshold any in the near term even know hopefully it will in the longer term.

Hi question again comes back to.

Have you taken that into consideration as to what you.

They have planned to either stay on in New York stock exchange or.

Should available at that point.

Well.

It's always our intention to stay on the New York Stock Exchange, we only recently gone below the dollar.

This year, we haven't been notified by the New York Stock Exchange.

And I share consolidation would be a last resort.

Lee and just by way of a bit of history.

Here long term shareholder you might remember we got.

When the.

Well share market is absolutely guy back in 2015 hit its bottom.

We were below a dollar and.

Didn't stay there and satisfy the New York requirements to remain listed on the exchange so.

And I don't share.

Your belief at the moment lets stable a dollar.

That's a well I hope you're right on that but I, just don't see people buying anything right now and I don't see them buying anything any near term future.

I would agree I would agree with you that.

In the very near future all eyes are focused on Corona virus and trying to say avoiding it.

And the economic.

Repercussions of it.

But here.

Governments around the world, they're making very large commitments to pop.

Large amounts of money into the system drop interest rates, they're working hard to ensure that this.

Damage, that's being sustained right now it can be mitigated.

And that to me is.

Making their balance sheets look increasingly a problematic.

Yeah, I understand how pumping money into the system works I'm not too keen on understanding everything with all the gold reports that I see in here every time I listen to this report, but I'm very familiar with how money going into the system works I just have one other question because I didn't hear anything at all mentioned today about Los Azules lists which to me.

He is as I looked at everything is ER.

I still think it's a very significant holding but I haven't heard a word about it today anything new on it.

No price koppers down to 240 to 46.

And we're looking to put eroding to the site and alternative road that would give US 12 month access rather than the current form on.

Four or five month access.

ER.

It'll be somewhere I've done this year on the road to give the access I think thats critical component and moving that forward.

Argentina is still trying to figure out what it wants to do.

It's experiencing.

Hi, inflation, just recently, putting new government in.

They would like to provoke mining.

Just unfortunate right now that base metals.

Under a lot of pressure and right.

Actions that they have taken have discouraged a lot of capital investment foreign capital investment in their country.

Hey, Thank you very much for taking my question appreciate it. Thanks again, Gary Thank you for being shareholder.

And there are no further questions at this time, Mr. Rob Accuen I turn the call back over to you.

Thank you operator.

Just one leave you message you wish that everyone stays healthy right now.

Thanks, very much ladies and gentlemen, this does conclude today's conference call. Thank you for your participation and you may now disconnect.

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