Q1 2020 Earnings Call
Good morning, My name is China, and I will be a conference operator case.
Time, I would like to welcome everyone to the Alamo School first quarter 20 claim adults conference call and webcast.
I'll now turn call over to Mr., Jamie Porter, our most chief Financial Officer. Please go ahead.
Thank you operator, and thanks, everyone for attending Alamos. This first quarter 2020 conference call.
In addition to myself, we have won the line today, both John Mccluskey, President and CEO, and Peter Macphail, Vice President and CEO.
We will be referring to a presentation. During the conference call that is available to the webcast and on our website I would also like to remind everyone that her presentation will be followed by Q and as such.
As we will be making forward looking statements. During this call. Please refer to the cautionary notes included in the presentation news release and Mdna as well the risks factors set out in our annual information form technical information. This presentation has been reviewed and approved by Chris Bostwick, Our Vice President of technical services and a qualified person also please bear in mind that all the dollar amounts.
I mentioned in this conference call or in U.S. dollars unless otherwise noted.
Now I'll pass it over to John to provide you with an already.
Thank you Jamie good.
Good morning, everyone and welcome to the call.
We had a number of highlights to start the year in what has been very challenging environment Cobot 19 crisis.
We had a strong first quarter from operations, while also making good progress on our growth initiatives at young Davidson an island gold.
Which we expect will be transparent transformative for the company.
We produced 110800 ounces of gold exceeding the top end up our first quarter guidance.
With particularly strong performances at island gold them, a lot dose consolidated total cash seven out of cash cost of $759 per ounce and all in sustaining costs of $1010 per ounce. We're both at the low end of our original annual guidance.
Moving to slide four.
Our foremost priority has and will continue to be the health and safety of our employees their families.
And our local communities.
We are fortunate.
We don't have any confirmed cases of cold at 19 at any of our operations or offices, but that has not stopped us from taking action action.
To help prevent potential spread of Iris.
Throughout March we instituted a number of increasingly strict health and safety protocols across the company. These ranged from medical screening for all personnel prior to site entry to.
The social dispensing practices across our operations.
On March 20, Fiveth, we voluntarily placed island gold and temporary care and maintenance in early April we spend if operations up molotovs following the mandate by the Mexican government to suspend <unk> non essential businesses.
In light of the temporary operational suspensions at island gold them a lot dose we withdrew 2020 guidance on April 2nd the suspensions will impact our second quarter results, but not take away from our strong second half half outlook.
We expect to resume operations at island gold in early May and we'll do so safely in a staged manner. We're also positioned to resume operations at Molotovs once the government suspension is lifted.
Our strong outlook is detailed on stroke slide five.
In terms of our growth initiatives. The phase three expansion study at island Gold continues to progress and we expect to announce those results mid year.
Given the significant growth of the deposit over the past few years. We expect this study will showcase island gold as a bigger and very profitable long life operation.
At young Davidson the lower mine expansion, it's in the final stages, having commenced the tie into the upper and lower mines in February.
We recently completed several critical path items, including the installation of the crusher and connected the upper and lower portions of the north North case shaft through the removal of the rock pen tests.
We continue to make good progress, albeit at a slightly slower pace, given some labor and productivity limitations related to the covert 19 precautionary measures we put in place.
We now expect ore mine expansion to be completed in early July of this year, a slight delay from previous guidance of June.
The completion of this expansion will be a big driver of strong companywide free cash flow in the second half of 2020.
I'll now turn the call over to our CFO, Jamie Porter to review, our financial performance in the quarter and our strong financial positioning.
Where do you Jamie.
Thank you John.
Moving on to slide six we sold a total of 111900 ounces of gold at a realized price of $1582 per ounce driving strong first quarter revenues of 177 million.
Total cash cost of $759 per ounce and all in sustaining costs of $1010 per ounce, where both at the lower end up our regional guidance.
In addition to strong operational performances from both island gold and Molotovs, our costs are benefiting from both the weaker Canadian dollar and the weaker Mexican peso.
And I haven't gold or total cash costs decreased to a multiyear lows at $452 per ounce on top of a solid quarter operationally I haven't gold's costs benefited from the repurchase of a 3% NSR royalty in March for 55 million. The royalty was payable on the majority of reserves and resources at island gold and its repurchase has reduced.
Cost by approximately $45 per ounce and reduce the effective royalty on reserves to approximately 2.2% from 4.4% previously.
We also recently received terrific news from the Ontario Government that island gold was accepted into the northern industrial electrical rebate or near program during the quarter, which is expected to reduce electricity costs by approximately 20% going forward.
With this strong performance on costs I haven't goal generate an impressive 20 million of mine site free cash flow in the first quarter.
Operating cash flow before changes the noncash working capital was a near record 82 million or 21 cents per share in the first quarter I reported net loss of 12 million or three cents per share included unrealized foreign exchange losses of 42 million largely within deferred taxes that resulted from the significant movements in foreign exchange rates in Macau.
Excluding these items, our adjusted net earnings were 29 million or eight cents per share.
Between higher revenues and lower operating costs are Jeff adjusted net earnings nearly tripled from a year ago.
Capital spending totaled 63 million in the first quarter, including 18 million of sustaining capital 41 million of growth capital and 5 million of capitalized exploration.
Majority of the growth capital is focused on completing the lower mine expansion at young Davidson work on the tailings facilities at both young Davidson and island gold and other infrastructure projects at Island gold.
We were active under our share buyback program during the first quarter repurchasing 1.1 million shares at an average price of 490 U.S. per share approximately 45% below our current share price.
We also paid a quarterly dividend of 6 million in March which represent a 50% increase from the previous quarter. In total we returned 12 million to shareholders in the first quarter.
We ended the quarter with cash from 215 million and 400 million of additional liquidity. This includes 100 million drawn on our 500 million revolving credit facility during the quarter to enhance our financial flexibility in light of Coca 19, we have no other debt.
We have stress tested our balance sheet under a range of scenarios. In every case, we remain very well positioned with as temporary shutdowns at island gold and Molotovs and completion of the lower mine expansion at young Davidson, we do expect to be free cash flow negative in the second quarter. However, we expect to transition to strong free cash flow growth starting in the third quarter this year and beyond.
With that I'll turn the call over to our COO, Peter but failed to provide an overview of our operations.
Thank you Jamie.
Okay.
Moving to slide seven young Davidson produced 28700 ounces in first quarter.
That's planned this was down from previous quarters, reflecting lower tons mined and processed with the shutdown that the northgate shopped in February.
Sleep tie in of the upper and lower lives.
Prior to the started to tie in mining rates were consistent but those achieved in 2019 at 6700 tonnes per day.
This decrease this planned following the started the tying in February and March to approximately 3000 tonnes per day with or truck to surface from the upper mine.
Total cash cost of $1093 per ounce and mine site all in sustaining costs.
1200, $42 droughts, both increased from previous quarters due to the planned lower mining and processing rates during the tie it.
Costs are expected to temporarily increased in the second quarter until we complete the lower mine expansion.
We expect cost decreased significantly once we begin skipping or from the lower line infrastructure in July.
Moving to slide eight young Davidson has continued to operate under strict healthy safety protocols.
As John noted, we've not had a conversion cases of cobot 19 about any of our employees are contractors and we have implemented the number of measures to help keep it that way.
These measures include medical screening for entry to site in physical dispensing practices across their sites.
Give you some perspective on some of those social distinction practices, we're now, allowing only for people in the mine cage, whereas normally we would have about 12.
These measures have resulted in some labor productivity constraints. This is slightly slowed or progress with the lower might expansion now expected to be completed in July.
Despite these challenges we've made significant pros it progress on lower might expansion completing several critical path items over the past few months as illustrated on slide nine intent.
We completed the main ramp from the upper minds, the lower might infrastructure.
80, 940 level loaded pocket is completed and ready for commissioning.
Crushers fully installed we're ready for commissioning.
Skips ropes and south, but I'm still be removed from the mid south loading pocket.
Finally, the penta separating the upper lower portions of the north to get chapters drilled off blasted in removed earlier this month.
During the second quarter, we completing the 90 25 level rock Breakers station and of course or bins stalling, the new ropes and scripts.
Finishing the 80 930 loaded.
This work is all expected to be completed in July following which we expect mining rates to wrap up to 7500 tonnes per day by the end of 2020.
This will drive.
And higher cost significantly lower in the second half of this year.
On Slide 11 Island gold produced 38800 ounces during the first quarter.
Presenting the first quarter of 2019, despite suspending operations last week March.
Even with the downtime underground mining rates increased average a new record of 1200 40 tons per day, 40% higher than the first quarter of 2019 and above our guidance range of 12000, <unk> or 1200 tonnes per day.
Bill throughput also increased average a new record of 1100 64 tons per day for the quarter with grades process, averaging a 11.7 grams per tonne.
Total cash costs of $452 Trouncing mine site, all in sustaining cost of $670 per ounce, we're both better than the original guidance, reflecting strong operational performance conclusion to the near electrical rebate.
I don't gold has been on temporary care and maintenance since the last week of March we made the decision to suspend operations given that you need unique set up to the operation with half of its work force being fly in fly out and how is that a cap located directly within the local community.
We're planning a phase we started the operation in early May under strict health and safety protocols.
The phase three expansion study by the gold continues with results expected to be completed mid year.
Given the substantial growth in the deposit over the last several years, including the 920000 ounce increase in no reserves and resources.
We announced in February we expect this will be a positive study showing island gold digger longer life more profitable operation.
Slide jobs.
Molotovs had a strong quarter.
Producing 42000 600000.
Total cash cost of 800 told dollar sprouts and.
Mine site, all in sustaining cost $958 droughts.
Production was 10% higher than the first quarter 2019, driven by higher grades and tons stacked on the pad.
Great stacked averaged 1.25 grams per tonne, 20%, 28% increase from a year ago, reflecting new production from the higher grade surplus deposit.
Operations that mulatto switch to spend it on April 2nd response to the Mexican government mandate to suspend all non essential businesses.
The suspension has been extended to may 31st with the possibility of listing restrictions on may 18 in regions that have seen little to no impact.
To date, we've not had anything from cases that molotovs nor in the surrounding region.
Well mining and stacking activities were suspended in early April we continued recovery cultural each god given the strong inventory of ounces stacked in the first quarter.
Well positions to restart mining crushing and stack youre when the government mandates.
Suspension is lifted.
With respect to like Nike ground date. The project designed in economics are being finalized and we expect to make construction decision later this year.
Given its high grades relative that made lots of spirit, we expect lay actually growing they will be a significant driver lower cost at molotovs once in production.
With that I'll turn the call back to John.
Alright, Thank you Peter.
Thanks, everyone for listening that concludes our formal presentation I'll now turn the call over to our operator to open the calls for your questions.
Thank you.
Ladies and gentlemen, we will now begin the question and answer session should you have a question. Please press the star followed by the one honor Touchtone phone you will hear lets me Tom functionality in the class.
Did you listed with giant class. Please press star followed by channel.
Using speakerphone, please let the handset before I think any keys.
Your first question comes from Dalton Dorado from Canaccord. Please go ahead.
Thank you good morning, everybody.
Reservations and an excellent quarter.
My first question is around island gold, maybe John or Peter can you explain to me what a phased restart would look like.
I'm happy to join go ahead go ahead, Peter Yeah, Yeah, I'm happy to take that yeah. Thanks Dalton so.
We're starting up.
Arcades restart is first week, they shipped always local employees people from the community.
Well then go to day and night shift again with local <unk> employees, and then we'll start bringing in a people from outside how we've changed we used to have the cap rate in the middle of town.
There's that cap is still there, but we've added to that.
Through last year and just conditions.
I cant closer into the mine site, so we'll be using that predominantly although we probably still need to use the other one so.
Over the course of about a month will be up to a full speed.
Perfect. That's helpful. And then just maybe sticking with island. Those are the study the extension studies almost done any chance, we can get a sneak peak around the parameters in terms of size any shot variances ramp that sort of thing.
Sure I mean, I think it's yeah. We've stated before you know we're looking at you know higher production rates, obviously, and that's 1200 tonnes per day, where we're currently permitted.
We're looking at wrapped in shops, we're looking at.
Several options.
But it wouldn't be surprising to see us.
Looking at either a ramp or a shaft option it around that 15 1600.
<unk> per day range.
And maybe shopping alone options.
Sneaking a bit higher than that so that's kind of where we're looking right now.
Okay Perfect and then just maybe one more for me that then I'll jump back in queue and I apologize I missed this new disclosure, but have you guys loves it locking in the current exchange rates and deal prices, particularly in Mexico.
Yeah, I don't if it's Jamie we do were fairly active honor currency hedging program. So we are well we put some hedging in place at the start of the year and were continuing to do so now to take advantage of the Oh certainly the weakness in both the Canadian dollar and the Mexican peso as of now we've got about two thirds of our.
Canadian dollar exposure for the remainder of the you're hedged.
Oh between about 70, 72, and a half in 76 cents and we've got about 80% of our Mexican peso exposure hedged between 19 and 22, we are adding to our hedge positions currently.
More so in Mexico, where we're seeing.
Color ranges of up between.
22, and 32, so there's good opportunities now to a you know to lock in.
Very oh.
Very low a a currency prices.
Okay. That's helpful guys. Thanks, I'll jump back in Q.
Thank you. The next question comes from Mike Parkin from National Bank. Please go ahead.
Hi, guys, Thanks, and congrats on the good quarter a couple of questions for me.
With regards to Molotovs, where are we with the power line is that insight and connected or still further upside in terms of cost reductions become.
Yeah, Mike Peter No. It's not it's not connected yet it's it's actively be worked on it it should be connected data later this year, probably the third quarter Willbe.
Barring unforeseen covert restrictions.
And in the we've seen the nominal dropping costs because of a cap on the royalty what would this in addition, a drop off my gets its Jamie it's about another $30 an ounce.
Okay Super.
And then what why D.
Your lower my connection gets done.
Sorry, do in terms of staffing for the mind you need to add more people I remember, it's quite heavily automated compared to the mid low level loading pocket, yeah more than sufficient staff on the books now or would you actually be hiring if you in the third quarter.
Now, we're pretty a pretty static with the staffs are that you know demanding a levels between you know the upper mind at 6700 tonnes a day in and the lower mine wrapping up to 7500 times day by the end of the year. It is more automated so it yes, you should you get more banks for your Buchter.
Yes, that's it from you guys. Thanks, so much.
Thank you. The next question comes from Cosmos Chiu Fancy RBC. Please go ahead.
Hi, Thanks, John Jamie and Peter.
Maybe first off just a quick one you're at a I don't gold could you remind me what a percentage of the workforce is actually local.
Versus fly in fly out it's about a it's about half the house.
Tough enough, Okay, and then a and then you know maybe Peter as well in Mexico here clearly.
<unk> restart is dependent on you know the Mexican government, giving the okay, maybe as soon as may 18th.
Well go to talk about you know is oh potentially going to be a staged approach in terms of the restart as well and have if it is and then what are the different stages.
Yeah, I think once we get the go well we would be.
Be able to come back a full steam ahead. If it wasn't staged approach you know we have that we have a contingency there where we could you know we have quite a stockpile of that Oh.
Well FICC material this asset slightly lower recovery, but higher grade. So we could certainly dip into that and just crush hsas and put on the on the under Leach pad with six significantly lower numbers on site. So that's that's an are back pocket, if we need it.
Great and then why do you know as you mentioned a deanna you know Q1 I'm you know the throughput went down to about 3000 tons, but I realize you connect a lower mine <unk> as you couldn't continue to work on a lower in line.
You know now trucking or up the rents.
Is that sort of the throughput that we should be expecting once again in Q2.
Yeah, I think we had guided 2500 tonnes a day. So we we exceeded that is it in a in Q1, you know we're continuing to try to exceed that so I mean, we establish that that's what we can do and we'll try to keep it there.
Yeah that was my other question as well Peter in terms of how are you able to a seed you know your expectations in Q1 and and as you mentioned can you continue the into Q2.
[laughter] good operators.
[laughter], but and I, maybe a one last question. There you know bigger picture you know with gold hitting 1700 Bucks, an ounce and I haven't seen enough for a while no but all the other had what do you know covert 19 restrictions you know how does that change how you look at capital allocation clearly you know.
So John you are active on a share buybacks in the past quarter and you have you know island gold you know the expansion study coming in you have you know the potential here at Lucky grown day, no bigger picture has that changed or has it nod and how do you look at.
Well it hasn't changed substantially as far as our or our current capital expenditures plants are concerned were.
Well positioned as you know from a balance sheet perspective.
To continue with what we're doing so you know we have the or we have the option. If we want for example to to pick our pace as far as the pre strip Utley Yaki grind is concerned. So we can approach that a little more aggressively with a with higher gold prices in view and of course, we're going to be generating.
City strong free cash flow in the second half of the year.
As.
Young Davidson comes on a full steam from the Oh ore mined infrastructure. So I really don't I don't see us backing off on our current schedule. It's nice to know that if if something unexpected happens we have the option to to do that.
But we're not a you know where we're not planning we weren't planning any capital expenditures that we.
We couldn't afford to do and and our financial situation actually it looks very strong so we're going to good position to to keep going.
Well I guess on the other had John would you speed it up because you know the other factor is that we're hitting you know fairly high Oh good numbers in terms of the commodity itself. You know how does that does that change or your plans and you know rope again, even like Lynn Lake and somebody other assets as well.
Well, we're we're going at I'm, a very good pace Atlanta Lake right now and you know if we thought that that the gold price movement was a was merely a blip I I guess, what you would do is you push everything as hard as you could to take advantage of the a of the gold price.
We don't believe it's a blip. We think these higher prices are are going to be around for a.
Number of years ahead, and and we think that the.
The production that we have coming online as we bring on new assets vote will benefit from higher gold prices.
Great. Thank you goes all the questions I have thanks a lot.
Thanks Cosmos.
Thank you. The next question comes from Kevin Smith from Haywood Securities. Please go ahead.
Oh, thanks operator.
Maybe Jamie can answer this question just on a hedging I know you've got.
Just right around 61000 ounces hedged this year and those in those callers do you have the flexibility.
Under that a that hedging program to deliver all your production into the hedge whenever the gold prices below 17, or nine announce or are you mandated to deliver a certain number of ounces every month, let's say and you can't deliver anymore. Despite what the gold price may or may not be.
Are they carry I know you I mean, we do have some flexibility in terms of being able to roll those contracts or or move them move that forward, but the majority of those contracts are spread out kind of on a monthly basis. So a in over the over the next six or seven months. It's a they go around 8000 ounces a month the the hedge book.
No impact on our realized gold prices as you would've seen you know we came in at within a dollar of the London PM effects in the first quarter and we're right at the kind of top end up though colors currently but we are as if they were delivering into them on a monthly basis, so they'll be up.
That exposure is pretty limited now a and a any any additions to the hedge book her at obviously substantially higher substantially higher rate.
And is there a plan then jamie to to add to that hedge book over the course your time lets say into 2021 today or what is the thought process. Yeah. So our policy is that we can do up to 20% of Ah you know our plan kind of steady state production around 500000 ounces. So that's 100 and how thousand ounces total.
Only 12 months out and we're not we're not increasing that land that were not extending beyond the 12 months just given the you know the positive momentum in the gold price, what we think it's prudent to be be conservative here. So we're doing some short term additional color I think we just added some what the 1600 floor in the 1950 ceiling.
But were yeah, I can say, what we're taking a fairly conservative approach.
Okay, and then maybe Peter just on my plateaus. The grade in Q1 was quite a bit better than I expected and I presume the grade at the main pit must have been better than you were budgeting because they can't imagine that palone delivered that that big bump in grade all by itself, where how how did you get that better grade.
Well prolonged did deliver a big bump and grade we were mining you know multiple grams per tonne there of oxide putting it on the pad. So was it was really good stuff the main pit.
Did wells as well I think it was maybe a bit higher than than than plant.
Okay. So said the greatest alone was quite a bit better than prior then perhaps you were expecting.
No we're expecting to be high in the first quarter and it.
It came in around where we we expected it actually in first quarter. We were you know we expected production to be about hiring first quarter at blacklist and.
First test and the second huh Okay.
Okay.
Okay, great. Thanks, that's all my questions.
Thank you. The next question is a follow up from Dalton, but I know at Canaccord. Please go ahead.
Oh, Thanks again I just wanted to ask one question on Turkey.
John just given the fiscal situation in Cherokee now and just restrictions.
On Koby 19, and large guidance that sort of stuff has that in any way kind of improved your odds of renewing mining concessions in the near term.
I I would say, it's and it's definitely improved our odds if you want but I I'm not expecting.
Anything eminent certainly not before the end of Ramadan and.
You know the situation in Turkey, you've got to watch the politics as much as anything else and.
Right now that the government is facing pressures from multiple sites, but the real key one is is the economy and just like you've seen in in many countries unemployment, which already was was suffering in Turkey.
Turkey went into a recession.
Ah two quarters ago.
The unemployment rate has has a has soared and in the region, where we are it's a in excess of 25%. So this is this is something that's going to off if it were very heavily on.
On the government and and <unk> and even the local even though the local party <unk>. The government is isn't really I'm sort of controlling the local mayor ships.
And they only have half the m. piece in that region. So the CHP is just fairly prominence in the each anomaly region. They can't really afford to a stand very strongly in opposition for in opposition to investment and employment you know regardless of what you know me one element of that party might think by and large the CHP party is very supportive.
<unk> mining and has been since the very beginning of of Turkey.
So I do see things shaping up well for us just because of.
Economic pressures and there's also been a very strong shift in sentiment due to the fact that this whole crisis was essentially.
Precipitated by a social media campaign that was just.
Oh standing on a foundation of life, there's not a single thing they were alleging that was true.
So you can get away without for so long and but eventually you know given enough time and effort and we've certainly been putting in the effort.
You can start to make people question those initial assertions when they have to stare the facts interface.
So while the the people that are opposed to that project still try to.
As you still try to.
Push the the old allegations by and large.
The people in general know that they're not true so its its only those that are.
Just opposed to the mine no matter what the case, maybe those are the ones that remain a sort of strongly in opposition and I would say there's been a huge shift in sentiment as far as they sort of the general public is concerned and if it's also important to note that we've always had very strong support from below.
Communities, who are aware from the very start that that what was being said about the project is fundamentally wasn't true another thing to point out is that.
There were two additional court challenges brought against the project over the last year. The last one was a dealt within in January we didn't think it had a snowballs chance in hell, but nevertheless, a it got a hearing and and they were unsuccessful again. So the court has has real.
Heatedly upheld the the project and the Oh all the permits.
Which were being attacked and the and the court case, all the permits were upheld and and justified by the court. So I would say from a whole variety of perspectives to the project is is looking I'm looking very likely to get risk renewed on and I don't think the alternative is.
As one that the the government could really afford and that would be.
Them, just going ahead and seizing the project and then forcing us into some sort of international arbitration, where we would undoubtedly when I. Just don't think that is what Turkey wants to do it it really needs to encourage foreign investment its.
It's very low on U.S. dollars right now they can't really count on.
The can't really count on.
What would be but they typically get in the in the spring in the summer is a big tourists trade and it brings a lot of foreign currency into Turkey.
That's probably not going to happen in 2020 and that means a particularly in the region like generically, which is really relying on tourism quite heavily its going to mean projects like ours take on much more importance. So I would say that.
I hate to go on too much about Turkey, but and I I I do know that it's getting virtually no value in our.
And our share price, but if you look at it just in terms of those facts you you can see that our position is really quite good and you know the government has always supported the project and they're just waiting for a.
An opportunity, where it's going to faces little opposition is as possible to.
<unk> to bring to the project back at this stage it looks very good I think another important thing to point out is there are no protesters left at the site. There was a very small group small, but vocal group sort of maintaining a vigil at that site for though last number of months, but that site has ah being completely.
We're now and the Forestry Department is in the process of actually planting that area with trees and fencing. It off so I I, just don't think there's going to be any.
Any further scope during this whole covert 19 crisis I don't think there's going to be any further scope for that.
Two.
To continue to bother us.
That's very comprehensive unhelpful. Thanks, Josh So if I can ask a follow up and this is kind of related to like Kosmos was asking earlier on the capital allocation side, you know if we assume that the mining concessions are renewed in the next few months I'd say.
Would you guys have the appetite to take on could rise Lee you know the island gold phase three and lay Aki ground. They all have the same time.
[noise], John John I can I can touch on that just just are quickly as an adult and I think you are our strategy in terms of capital allocation hasn't changed over the last three years, it's been a once we start generating that that meaningful free cash flow that a that we'll start seeing in the second half of this year a third of that will go to further bolstering our balance sheets are building up our cash balance.
Third we'll go to returning capital to shareholders, which Weve a you know we've been doing with the share buybacks and dividends and a third we'll go to our internal project development pipeline. So that's why Yaki Ron Debbie if you look at current prices and at our plant production for next year.
Young Davidson Island gold will will generate well north of 200 million U.S. up between the two of them Molotovs will generate enough free cash flow to support construction of La Yaqui ground day, a and then some so that will not have all the investment in lay actually around they will still be generating free cash so I think theres room.
Two if we wanted to go ahead with that with currently at Bath Lynn Lake Oh, well building La Yaqui Grondahl, there's there's room to do that within our one third one third went there are a plant.
So yeah, I don't see that as a as being an issue at all and with respect to the phase three expansion Island gold.
We'd be looking at about 18 to 24 months of permitting before we started spending any any significant capital and not so that doesn't there's no real cash outflow associated with that for the for the next couple of years.
Perfect. That's all for me. Thank you guys.
<unk>.
Thank you no no further questions at this time. This concludes this morning's call. If you have any further questions that have not been inside please feel free to contact Mr. Scott prices.
Well I won 6369.
993, Q extension I for me. Thank you.
[noise].