Q1 2020 Earnings Call

Good afternoon, ladies and gentlemen, welcome to be two goes first quarter 2020, <unk> earnings Conference call I would now like to turn the call over to Mr. Clive Johnson, President and CEO you May proceed Mr. Johnson.

Thank you operator.

One to the garbage called today to discuss the first quarter 2020 financial results for beat your Goldfish Crackers said.

Just a few introductory words.

How should all good like cinnamon, there's going to walk you through.

The result of financial results Bill Lydalls Gonna come on the CDC operations reporting on whats happening operationally and.

Kerrigan's Gonna come on and told you little bit about what we're doing exploration in terms of what you are we had an actual cool very strong quarter again with record.

Oh production gold revenue cash flows and a record low cash operating costs.

$367 an email.

So we're very happy with the quarter.

Obviously, we're in challenging times these days with the in the world might impact of the.

Well the corporate 19 virus me the continue to operate extremely well.

Through the chime in I do like to tickets due impart to get jumping on.

They're jumping on the seriousness of ours very early on and back to bring on our side Chanel she'd like to take it should because of the experience of our team that are great teams at the mine should have many years and years of experience and.

As of June through good times, and bad we've done a very good job and partly because of that we are maintaining our guidance for 2000.

And 20, well in terms of strategy going forward, it's gonna be very much the same first and foremost.

I hope to see if youve or people, who is our there's are paramount concern and always our top priority theaters is to maximize continues relax measure.

Well fuel gold production.

Looking into our pipeline for growth.

Bill about the expansion of the so called a mill and the new fleet. That's just that's come on.

Six coming on very successfully ever on schedule to meet the.

Expansion.

I felt the mill by the two quarter well this year Oh, so when we look at our pipeline the opportunities narrow gram a lottery, which we'll talk about getting back on track their drilling in a feasibility studies. It looks the we'll we're looking for the first quarter 2000.

21, now they have them download bottle PK study and we are most so of course in the pipeline. It seems like expression, which Tom will talk a little bit about about looking to a 20 kilometers north.

That's cool or the other called area and then big Cardinal area, which is pretty close to.

The the causes itself the trickle deposit so.

<unk>.

That's really where we are strategically and the.

Mission competition or guidance and remember the tremendous financial strength seeing or debt reduction continue.

No we're confident enough in our financials to double the dividend or should we just announced yesterday as well, but that doesn't pass it over to make cinnamon and he'll give you an update as I said another at the end of law will open up for questions or do you like [noise].

Thanks, Mike just to check.

Checked in can you hear me okay.

Okay.

Yeah.

Well as close as very good first quarter and quite a few records a result stuck with comments on.

Firstly on the revenue side revenue for the quarter was 380 million launch a quarterly rockwood on sales, it's running 39000 ounces and we realized an average price of just on the 50 that might be bucks an ounce.

Which is considerably higher on the season, the price, we budgeted Virginia pension system.

Also contributing to the increase against budget was we had approximately a 5% more ounces sold.

Peter than anticipated.

Moving to production production from continuing operations was 251000 ounces. Another 17 says moves is heightened budget, mainly led by some color. If you I didn't on share of.

Our 34% attributable sure.

Clubbers Nicaraguan production, that's 14000 ounces, our total gold production was 265000 ounces, which is another quarterly production Rockwood for the company.

You comment to caliber is number we originally when we push those production beliefs.

We had asked of any calibers production and 12000 ounces, but they've subsequently issued their their production results. So it was actually 14, so for 2000 ounces higher than than total production than we released.

In Mexico.

Just to comment in some of the individual components of that supported led the charge ethical had 164000 ounces, which was 14.96 ahead of budget.

That's that's it's a change of the several factors to namely to the higher than budgeted grade mine phase for the past. We also had some of the expansion fleet onsite early in the quarter and got their commission billings, we had the benefit of that.

As it was everyone's aware you know this is a year restitching in French and plan, which included optimization of the kids designs in the mine plan and actually going after high grade earlier and general than originally on the original feasibility study.

Another point to no I think is getting what was going on in the world than the corporate related risks that were being experienced a run the world We decided to temporarily mine hired where do they slated for coal a pit.

No. The idea was to supplement the ore stockpiles are just just in case you ever find yourselves how difficult your stock alone scenario, but the good news as we continue to run very well, that's a cool and checked all the other sites like break through the quarter lights with initial in quite sometime damage and I think builds going to conduct a bit in a bit more detail on that later after the that's an actual up there.

I just know business not even starting up 45000 ounces, just just still be budget by a thousand ounces for pretty much on budget.

And.

But that was achieved.

Even though we did lower than budgeted to put it to now and and lower mining activity, even though we budgeted we had higher than budgeted posted who says grade and recovery and that's really a function of the timing of good again.

To Montana, we had we had budgeted to be in Montana away from the started the year once infections and we've been getting a until early 2000 February 2020 constantly we focus more on me.

And we have better ore grade better oxide ore tonnage and total replenish the main being up them as modeled and not resulted in a higher than budget agreed with Henry.

Gross decoder 42000 ounces 2000 ounces ahead of budget just it just a solid quarter, Georgia photo.

Were higher than last year, and that's the US a function of us being an has made or in the world shaping the first quarter 2020, we didnt get into will shake last year until the second half.

So overall, a 251000 ounces from our three operating mines and.

65000 total launches there's several records for the company.

And talk a little bit of on costs now and so on a consolidated basis, a total costs from all operations, including.

Archera caliber $399, an ounce <unk> do you look at the cash bonds from our three operating mines that we can so 367.

Dollars, an ounce and that's a record low consolidated cash wants to introduce it kind of thing.

I am on a per ounce sold it was $382 events.

Again, if you look at the dig into the components of that it was led by circle up So cool had a quarterly record low for its operation of $251 punch produced.

$286 current still well below budget by approximately $40 an ounce.

And that's that's that's predominantly can pull that was due to higher gold production probably production.

And in the same overall costs led to lower cost range I should comment maybe just one comment on fuel. That's good color. We have seen obviously the global fuel prices decline.

Yeah, we didn't experience overall fuel price declines at some coli yet we're starting to see them come down now and sort of near some of that the white crude price points. It just seems just simply anyway that is the in Mali.

The government sets the price personal ones one Superman in advance and also in West Africa, There's there's a certain fixed price component to fuel fuel has to be brought in my clay court in that case to car and then it shifts through one continuing over another border into Molly and it. So it had cell type of components said.

Hi, Chris for the past.

And the other thing that we do what we typically keep you know twod almost three months fuel in the tree on site and on hand. So we built up there was still inventories during the fourth quarter 2019, one cost a bit higher and we've been growing those tax down in Q1 as we utilized on fuel. So overall fuel cost didn't we didn't see expense.

Decline in fuel costs.

In Mali for the quarter <unk>, they were slightly higher than budget, but we are starting to see that is fuel costs drop as we move forward.

The study.

Cost around $722, an ounce again significantly under budget place just over 60 Bucks an ounce.

Favorable budget variances were.

Function and cost savings because of lower mine 20, something less listed Wes waste stripping activity.

And also the temporary suspension of mining activities later in March when we had to shut down for a week or so I do disruptions in the fuel supply cost like over 19, and as we announced it would be how do we have the fleet up and running again very quickly interesting we shutdown, we didnt didnt cease milling operations only mining activity and we Gotta go up and running again very quickly and.

Minds open then again, though.

No.

We also did season started we saw a lower than budgeted she'll crisis axle unit prices the they flow through quicker to let's say.

And what's your totaled 441 Bucks, an ounce, which again $64 on your budget margin you had production than budgeted. It really is said and lower costs are a function of lower fuel costs are both seasonal nature total lower reagent costs and a weaker than budgeted the million dollar and we saw the Iran.

Plummet.

In in March and then maybe dollar followed we probably in foreign exchange saving of somewhere around $2 million, just for labor and much due to that decline.

The currency.

And just to comment on all in sustaining cost $721, an ounce consolidated 695 remarks, we operating mines and 721. If you include Archer Rs diminish your calendars cost.

And from our point of view, our operating mines were $110, an ounce lower than budgeted and and that's that's a function of the lower cash cost per ounce. It's approximately $50 and then really the other component is a timing of capital expenditures, we didn't see some significant capital capital expenditure on.

I'm bridges <unk> at several of the sites.

And also slightly lower exploration costs than anticipated June.

The accessibility some sites later in March but through the year. We've stuck there was sort of us and overall just a comment on capex generally for the year, we were still budgeting made before capex that we've seen.

For the total year, we haven't changed your guidance are budgeted number here.

Maybe a common thing on overall guidance production guidance, we had guided to I'm going to 955 solemnly the guidance for the year and that includes our true culture caliber between 45.

50000 ounces 45 building 50000 ounces.

And caliber announced late in March the Big suspended operations in Nicaragua took we're actively managed show any totaling 19 related issues there and it's not really it's unclear at this point Wayne when I'm not ready now to me come back up and running game.

However.

Given that were 40000 ounces ahead, I'd say 70000 ounces from our own minds after already in Q1.

We retain or consulting production guidance, such as we think will cover any shortfall that might kinda calendar is not able to get its operations up and running in the near term.

And on the cash cost Nolan sustaining cost just remind we <unk> we.

We are continuing the same guidance for 15 to for 55.

<unk>.

Branch cash Pos and 780 day 20, all in sustaining costs.

Couple of comments, maybe on on the operations overall, if I took over the expansion is going well and build I think after after the segment those kinda give you a bit more detail not so I'll leave it to them to give you. The the overall picture also call a solar we did we did announce that we were slowing down the solar we temporarily halted.

The activity there just to allow us to to better prepare for any covert related.

Sure changes and and people management at equivalent so that is temporarily suspended but.

We expect that once we started again, we'll be able to have that up and running even completed within six months are starting to gain.

Or did you quoted just remind me with the board has approved the development Wolfshag underground mats portable goldman's expected in Q3 2020.

Gremolata those going to give me an update on where we are there, but just just a comment here that we had an obligation to sold 113.9 million in order to earn or way back to 50 50 in the joint venture and to maintain our position as manager and by the end of quarter. One we read so fun to 12.7 million. So we're almost back to that.

We have almost that you've got 13.9 million so funding amount by the end of the corridor.

And maybe just a general comment too when fuel hedging we kinda two questions on that and a fuel hedging. We've always said that you'll hit was certainly for the last few years, we've had a fuel hedging program.

Our goal is typically have 50% of one one years usage hedged out and then 25% of the following 12 months.

Everybody hedges.

We ended the quarter, we had approximately 40% of our one year total hedged and 20% next 12 months would subsequently subsequent to the quarter end, we've actually updated that we put on more positions and <unk> were up two or target of 50 to 125 for them at 50% for the first year in 25% for the next.

We didn't have a.

We did put a bunch of hedges on we obviously started the year with some in place. So you will see on the income statement, others, an unrealized mark to market lots of 14 million image majority of that is fuel.

Some of those hedges that we put on.

And earlier periods were hit by the declines, let's just overall because our hedging goal is to never be more than 50% and we never lose looks results enough benefiting from fuel.

From fuel price declines.

Okay. Just couple of comments, maybe on the income statement, you'll see interest and finance of expense a significantly lower this year than last and that's a function of us having paid down.

200 million and data last year and seem to be for this year.

We did announce.

Earlier in early April that we had as a preemptive measure drawn down 250 million on our revolver.

That's money that was purely precautionary that was money that you don't need.

Now for operations or we don't have antennas for any other purpose right now it was just precautionary given the sort of economic environment that we saw around the world.

And so we'll see.

And that money was just reinvested.

It's sitting there it is our intention overall as we will know through the year.

To keep monitoring that cash position and we expect to be probably in and that cash positive position. Some.

<unk> lingering this quarter and certainly have the ability at some point during the year to be able to repay that that if we see that's on the economic environment and settled a little bit and then and there is easier movement of goods and services around the world.

[noise] also comments on the current income taxes 63 million quite a big jump from the prior year quarter 25, that's a function of more profitable operations, especially for colon and much higher oil prices that maybe the primary driver for that.

In that total was 47 million supposed to call. It 37 of it is for tenants income taxes.

And then 10 million a is the priority dividend. So that's the upset first 10% interest if the government value all in sickle operations and best reflected as a tax just remember that.

[noise] when it comes as no a few comments on Oh, sorry, maybe just a comment any P.S. too. So when you put all the results together and where we got to on a GAAP basis, we yes seven cents, Chris you weren't on an adjusted EPS, taking on some of the large non cash items.

We came up to 10 cents per share.

[noise] well one of the cash flow another another quarterly record to highlight 269 and operating tax lessons from operations on includes as well any working capital movements, but that equates to 21% 2021 cents per share of operating cash flow.

A record operating cash flows and I should say as long as you, but what we saw as a certainly later in the third and the third month or the last month for the quarter in March as individual countries were impacted by changes in airline schedules are international flights being canceled or or or ban on it certainly doesn't.

More difficult to ship go from sites, but we were successful at all or sites and being able to continue to do that using our own or shared charters with other companies when needed. So.

We've continued to be able to ship gold and also our refinery refiners grew around refinery in South Africa and novel Orange switching when they leave continued operations uninterrupted as well. So we haven't had any overall issues and being able to ship hold our refined product and then having been the for sale.

We've been able to take advantage of these high go crazy.

One other comment in the operating cash flow.

Guided through the year that we expected that 1500 dollar goals for the full year, we saw operating cash flows would be somewhere around 700 million.

If we see goal they were those right now around the 1700 gallacher on smart for the balance of the year, we expect operating cash flows to be somewhere north of 800 million the here.

Sure the comments just on on.

I'm items and the cash the so 25 million, we repaid on the revolver that was pre us doing a preemptive draw up to 50 in early April and like I said is it wasn't always our intention to pay down debt outstanding revolver that 200 million.

This year and we can we have for 25 drawn in fact preemptive drop then like we said, we do expect could be generating enough cash flow that it that would be in cash that's positive territory.

By the end of the current quarter and certainly our goal will be tomorrow to listen hopefully paydown entire months about that later in the year.

Uh huh.

Gross.

Dividend just to comment we did see our second quarterly dividend of one cents for sure we started to be treated patients for seven dividend and quarterly dividend in the last quarter to one of them team at once and for sure. We repeated that the first quarter for cost of 10 million.

It's like mentioned, we have announced that we're doubling.

Our quarterly dividend from one cents, a two cents for sure U.S. and we expect.

[noise] Sinclair the first two cents dividend later in June.

Cash from investment flow from investing activities, we spent 112 million on investing activity and as they said, we when I was discussing the all in.

For sure just any cost fishing, we have had some capex timing differences there was some capex. It wasn't there that sites, mainly CMO increases the mobile wallet wining.

Pre strip developmental.

And exactly and then they'd be the Nam part connection. So we didnt, we didnt get those things done in Q1 is we had originally budgeted but we are expecting that they will happen later in the year. So really those Catholics <unk> or just timing differences to comment to that say.

As we mentioned on your news release, we entered into a deal with West African reserves, just the seller and trust and the two I guess deposit outflows three of them.

For total proceeds stuffs overtime or 45 million plus a small royalties.

And.

And what's I guess, we ended the period with 200, just under 208 million in cash and very healthy situation Caslen liquidity Weiss like I said and.

Looking forward to continue strong operations from the balance of the year.

And I think that winds up but these are the main items I was planning.

[laughter] Thats right Bill can you give us a quick weren't going on.

What's happening in operations.

Yeah, how do you hear me, but I like with fading in and out when I when he was talking.

It's been static or my starting but I'm just sort of starting now but go ahead, you sound pretty pretty clear to me.

Okay. So.

Very quickly on the operations, Mike covered a lot of the stuff so I'm going to keep it relatively short.

I guess, the key takeaways that I want to speak about or our number one oh, we do continue to maintain guidance at all of our operating mines.

And our overall guidance for the year as Mike said and.

Significantly impacted our operation.

It hasn't impacted significantly impact if any of our operations.

Also.

Be to go very very early on got in front of the pandemic.

Early on in February we made the decision that we were going to.

Cease all necessary all unnecessary travel and.

Have a stay at stay at home order.

Please.

And that is that has helped and that's being successful in implementing our operational requirements just going through the operation.

Effort.

At the Cola in Mali, Molly has has.

Had a restriction on the country since the since the.

Beginning of April and they Maverick they indicated that Mike.

So we've been we've been able to continue to operate.

And then able to continue to receive.

[noise] indicated we have expedited mining and phase for so we currently have a very large stockpile to get us through not only the second quarter, but also through the second half a year.

So we continue to maintain our guidance at 600000, the 620000 ounces for the year.

On the expansion.

The expansion it is kind of three parts if it's a full enterprise expansion on the mining side. The mining fleet was ordered in June of last year June of 2019.

And at the beginning of Q1 2020 ahead of the pandemic that mining fleet has been put into operation.

And as I already noted.

We've we've advanced see the mining rate and had a very large stockpile to support.

And from 6 million to seven to half million tons per annum.

That expansion continues to be on schedule.

For for completion and commissioning at the end of Q3 2020.

In addition to that we talked about doing a double.

Tailings lift.

Head of the rainy season for 2020 that project is almost finished more than 90% complete now and we anticipate that.

Sure.

Even if 2020 Thatll give us capacity.

In the 2023, so that'll give us a couple of years to.

Designed and developed the next lift.

Additionally, as Mike indicated the solar plant.

Was put on hold that solar plant expansion was not required to support the expansion of the mill that expansion was designed to reduce costs.

And as Mike indicated one.

[noise] bring the solar group back in and we anticipate within six months, having the solar power solar plant complete and operational.

[noise] at my thought they so my thought the in the Philippines.

Maintaining guidance of 200 210000 ounces for this year.

The.

The pandemic it has hit the Philippines quite hard with more than 9000 kit.

It was shut down or not only international travel, but but had to stay at home or stay at home order for the entire population.

That has been reduced or lifted a little bit now its a.

Uh huh as they bring.

The economy backup the island of my thought they is as it does not have any cases of covert 19 and so there.

That's a bringing our workers back from from their self warranty.

Getting back to full strength. Our plan is we're currently mining in both the main vein and but the Montana pit and biting at full strength. So we're not changing guidance there for this year as well.

And what's your scotto, what's your Goto.

Early on decided to too.

Isolate the country.

First they separate about the issues related to the population.

Living living in and formal settlement with no power and water.

So they went ahead and did a that corn team for the.

City event took in that region as well as all of the coast region were most the population is located.

That has been very successful to date, there's less than 20 cases in Namibia reported.

And based on that at.

Yes.

It from the government decided to start really start to release somebody restrictions and the quarantined and so the otjikoto minus currently in the process of a of ramping back up to full production on the mining side.

So there once again, we maintained guidance for the year and.

And do not see any lasting issues related to covert 19.

At this time.

And just.

Hi, I'm a lumpy so graph.

There is.

We announced that when the pandemic broke out that.

We decided in consultation with both the community and the government.

Despite the fact that we were allowed to continue to operate we made the decision to.

Temporarily suspend exploration.

The process. There is as we were supposed to complete a feasibility study by the end of Twentytwenty and then.

Make a decision in early 2021 with Anglo gold.

We publicly announced that that would be delayed until the end of Q1 2021 completion of the feasibility study.

So that's due to the fact that we suspended the drilling but in the meantime, we have continued to develop the.

The feasibility study the metallurgy metallurgical testing has been ongoing our getting ready to do some work.

With our with our feasibility engineer or our our mill engineer.

And.

Mine the mining had been the binding design has been ongoing.

So on the engineering side, we continue.

On schedule and we anticipate within six months six months of us getting back up to full speed that we'll be able to.

A little bit of resource into the engineering group.

So.

Maybe sometime in the first quarter, maybe a little bit sooner, we're seeing what the schedule will be once when for drilling gets up and running.

Like I say it for me, it's really it's hit and Miss on what I'm, saying, because I can hear a bunch of background noise.

You're already got the just the you're cutting or other better you've done.

[laughter] I've got I'd stuff. If there were granted you wanted me to.

Okay. No I think there that's good don't accept it just one thing I would have the right mix and match of the primitive I think one of the keys what have you just first success and dealing with.

With little bit and the.

I'm, continuing so well under operations as is our relationships with our employees and government you know I think that we pride ourselves there when those on our culture and I suspect and transparency in the way, we treat people and I think at times like this themes. The mutual trust fees earned engage with our employees and the government's which we work really comes at the forefront. So it's a great Corporation or.

Well it has been amazing and a they wanted to work through unions and our employees water to keep working if they could be safe and the governments and the countries where and want to those to keep working if we could be safe. We have had an accrued in the past or critics, we're talking about political risk in the areas that we are in the world.

Yeah, I understand though but I think it's important to point out that <unk> Where's your some positive things could be in countries that once you would be there are they want the tax revenue and they want the good jobs, if they can be safe and if you take care of the environment and if you're socially responsible and do the right things and delivering the promises your make so sort of the flipside of political risk sometimes is the fact.

Countries real world that you're very important part of the economy and your important part of socially and environmentally and what's happening and I think that's the case for beat your goal. So I think a lot of our success in.

In the normal times, just use out of our success in terms of crisis. The crisis management comes from a vast experience in doing this around the world for years. When it comes from relationships you ever people the government's where we are locally incredibly trust as.

We build trust relationship both ways for them on our employees have a high level of trust. They wrote for their interest. So I think those are some of the Keystone to our success I'd now like to get Tom to give us a quick update on what's happening in terms of exploration. You know we continue to successfully explore around their minds and they're looking for major discoveries that she just ounces are always the ones you find that we've done a lot about.

No not continues or would you talk.

Hey, good fiber engineer or hearing all right.

Okay, well [laughter], Okay. Because you are afternoon are good morning, everybody.

Aspiration or could be two as continued on that the at the mine sites that are not only last body in North Dakota through this time, he a lot of or grassroots exploration has been cut back to minimally field work or none at all due to limitations created by Kobe, but we hope to get back going in some of those as.

He is Oh later on in the summer.

In terms of a expiration of mass body, we've drilled 7000 meters that have a 25000 meter program. So far the focus of the program has been on drilling a near the basis. It's as as we see that it's not that great potential to get merger with a higher gold prices are continue iron ore prices so referrals.

As seen on the bottom girls because there is.

That Oh Dakota, we've drilled 4000 meters of those 14000 budget, we're focusing allergic auto is has been.

To drill down to one on on Wolfshag as we're looking at the underground and all that coming into the area. We want to see what it looks like going down we've had success, so far and continuing to mineralization and now we want to get a better handle on grain, but tighter space drilling well. So this is grassroots drilling near the mine site on several other parallel.

Because we see have potential.

That at Ah Cola exploration has continued on through these times.

So far this year, we've drilled or about 5000 meters of Oh, sorry, 10000 meters of diamond drilling over 24000 meters RC drilling.

Uh huh.

For coal area focus has been mainly on two areas Mumbai area to the north San <unk> rated related parallel structures are down upon that matter and then we started the focus a lot more on the Cardinal area. In fact, we're shifting our exploration focus for summer exploration focus.

To the Cardinal area currently or is it just a little bit west of a difficult pit.

Then 500 meters of difficult pets in fact area that was originally planned for some waste area. We've had quite a bit of good success in that area and are starting to define a resource were re refocusing the drilling in that area with infill drilling and testing out where the edges of this is to see how big it can get that'll continue for the rest.

The year, but we will continue with at least Oh, one or two drills in them. All very also we also kind of the started doing some met testing on the cardinal or in the near future.

I have no other discussion or would you like.

[noise] Big Thanks, Tom Okay, I think operator, we'll open it up for questions now.

Thank you as a reminder.

Question do we need to press star one on your telephone nice, though we currently have yeah, Oh with Babbitt Jordi Mark Kris Thompson, Josh Wolfson carry mccurry and Lawson Winder.

Who is it your on the mainline and you're on the main line.

Hello.

Hello.

Hello, do you what were open up for questions repeatable.

And your first question comes from a virus hobby.

Yeah.

Hi can you hear me.

Sure of ours, you, obviously don't.

Good.

Okay I, everyone. A again just wanted to say congrats on a.

Good work and also congrats on being able to maintain your guidance doing these on Unprecedent times.

Look like just my first question is on the cooled off five how should we be looking at the call a in the second half in terms of production and cost I mean, you've got a mid expansion kicking in in Q3 yards and then though Q3.

And you do you expect a this high agreed.

It's four to continue into the second half as well.

Yeah.

No I don't think so I'm going to pass it over to Bill.

Yeah, No Oh, they said basically the whole concept. This as we pulled ounces forward to make sure that we work that we had the ounces for Q3 Q4. So.

Just kind of where we're not comfortable and think that that we're going to continue the grade through Q3 in Q4 that wed like to say that we're going to meet guidance at this time until we know what's going to happen with the mill expansion.

And I don't mean, when I'm trying to ask Bill is like I mean is that kind of show grapes backlog that you guys have on site that you guys can blend to win in Q3 in Q4 was it just continuing to go through phase four and then into phase five.

Oh, Yeah, there's a lot of a great stock pile on site.

Okay. So just I just moving on to must not too, though you know obviously the oxides. It must about a you know I think we've talked about in the past that there was supposed to ending or.

2017, and you guys have continued to mine excuse oxide into this quarter.

Are these transition and ounces that have turned into oxide.

Or or where we're not tested as oxides and then you expect these oxide continue into the second half.

[noise], though there's that yeah. There's a question today. The answer is yes. There are some transition oxides, which have turned into oxide, but a lot of it is is that we're mining through surface dumps and some of the stock works from some of the old underground, which had been backfill with material. It's now can basically considered.

Sure.

And so I can't answer that you know going forward or something that we continue to look at what I will tell you is that that somebody does come up as a surprise.

As upside and that we continue to hold our guidance.

Got it okay, Okay, guys I'll leave it up here and pass it onto others. Thank again [laughter] next question. Please.

Your next question comes from Jordi Mark.

Good day goes.

So on there but its.

Yeah, maybe some.

We have since she tells us and.

In terms of tableau.

Sure.

Andreas you did mention I was like that it was like from there.

This is till after mineralization.

And it's cool full or do you see it yeah.

Good comp you kind of break it up good or George I think I got was just a bit about cardinal asking about cardinal probably have a comment on that.

I I couldn't hear Jordi very well, but in general Cardinal is is it is it's slightly different from from patrol its whole should within <unk>.

A combination of die rights and I guess, you called black channels.

And they are much gone.

Zones.

Multiple zones associated very intense alteration disseminated supplies are little bit of copper and occasionally some of the visible gold they're different definitely different styles zone, there more shares on related.

However.

Pretty wide space drilled so far so we're still learning about it.

Is that your questions already I couldn't hear you very well.

Yeah that was thank you and maybe sort of pull along for for Bill in terms of.

Coal mining fleet and mining fleet capacity.

As you have today.

Any any thoughts in terms of changing that modern fleet capacity gold price, where it is changing.

I think to strip ratios stopped falling strategies given your.

Sure bonding capacity that you instituted.

I didn't get that question at all.

Fourth.

Is there Oh, yes, we have I might just brought these out there we can we can take it off.

Yeah, maybe you've got to pick up your Darby.

[noise] sector.

Operator.

Your next question comes from Chris Thompson.

Hi, good good morning, guys, congratulations on absolutely stellar quarter.

They said, it's really good you guys are holding cost guidance through a through a tough period.

The second one question I guess it relates to the other snake deposits, obviously within within reach of for color. There can you give us a sense of where we sit by way of the testing of the economics of these deposits.

Well I guess how.

I guess I would say that Chris the where were looking out the softer late you know there. So it was either frozen out something that resource a little over grandmother separately, but just not gotten quite a bit bigger it appears there getting bigger and now he's going to getting some very nice hits and the lower leases you know when the sulfide bills I remember you know to conduct.

Right now we are waiting to see up because you have to be Frank. So I think we would be too too is this additional feed down the road for Coca Cola simply in time in the mill was 20 kilometers away as you know or is this a standalone scenario. So we're really giving Tom the build the here are the time to aggressively drew.

All these these multiple targets we've seen in the sulfides now and find out one how big does a separate get secondly are we looking at potentially significant deposit in the sulfide ore deposits in this whole foods as well so I would think that as we go through the end of the year and into next year, probably going to start getting a bit of a better handle I would you agree with you sit up here to say Tom.

[noise], yes, CLI that so that's pretty good.

If I could add to that.

[laughter], we've had multiple and if the in this whole kinds and it's certainly a mom, but we've now seen at least two very good bookings continued zones of mineralization there have a shallow fun.

We're working on Counterproposals and with the drilling that we're doing on satellite we continue to find other areas of satellite man [laughter] I would say, it's still early stage and as I said.

They've given us the chance to try and figure out where it's going and how big it I'll go going before I hand, it over time that resources to the engineers.

Great guys. Just one quick question, maybe just a on Mezz Betty.

Give us a sense of sort of steady state run weight sort of the split between main vein and Montana.

No.

[noise] steady state well it [laughter], we're kind of changes that right now because you know originally we were projected to be into main or into Montana in February and now we've gotten in there now and so we're actually looking at that right now so I wouldn't want to come right out, let's say what I'd say.

The steady state what's gonna be for the rest of year until we get our revised mine plant up and running.

Okay got it thanks a lot.

It appears to exercise.

Your next question comes from Josh Wolfson.

[noise] [noise]. Thank you.

Just a quick question.

[noise] for your Josh line.

Yeah, I can you hear me.

Are you cut out a bit they'll go get.

Okay.

We seem to loss Josh.

Yes, Hello, everybody, let's say in Mclean here, obviously had a tough time into line. If anybody has any questions that didn't get through please email and directly to me and I'll I'll point, you to the right direction knows that people, who can answer that for you.

[noise] anywhere Carson copper.

Your next question comes from Kerry Macquarie.

Hi can you guys you're right.

Yeah, I can hear occur yeah. Okay. So maybe just another question on for color for Bill you know $251 in quarter is there anything sort of unusual quarter that no one should expect.

Reverse in later quarters, and then secondly, any color on the cost no mining versus the milling et cetera.

In terms of what you're seeing them you know productivity.

No.

And in terms or no watches milling costs.

Yeah, Yeah, well, so no I mean certainly.

We don't see anything as far as production I mean, we're basically a implement.

You know when we went a little bit fast ramp phase four and a little bit slower on phase five.

We see some of the capital expenditures that which were deferred in Q1 I'll be pushed out I think that that might get rd comment on that that basically we're not.

Adjusting our capital costs down for the or we're going to say exactly what they were going to stay on budget for that.

Okay, maybe I think the question Jordi was trying to ask was in terms of the mining fleet pretty expansion at that now fully deployed and up and running.

I didn't get tech I didn't get but the question as I'm sorry.

He's asking for the money leadership is a fully fully of running now the new mining fleet.

Oh, Okay, no. So sorry, I am really struggling to here on this line. So the answer is no <unk>. The phase one of the mining fleet is up and running a phase two is arriving at site right now we actually literally within the last you could have been receiving the next the next batch of 60 forties and 79 trucks.

Jerry anywhere else.

I would now like to hand, the conference back over to Clive Johnson.

Okay, well, thanks, everybody I'm here, maybe you can talk to whoever is a ship this call up and see if so we can improve it next time, where your somebody else. We can put them out on the moon, we should be able to ever for the garbage go. Okay. Thanks, everybody for a your participation.

Stacey I have a nice day.

[laughter].

[noise]. This concludes todays conference call you may now disconnect.

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