Q1 2020 Earnings Call

Single Stope over the quarter in terms of the other point that page sustainability, you know that continues to be a focus app through the recent. Over the last couple of months. We've been doing a lot of work in terms of assisting the local communities in terms of health initiative that's been based on both the ongoing corporate work, but also personal donations from management and the board and then as a company we've contributed in industry jobs wide efforts in country to support some of the testing facilities with financial assistance to help the testing regime in Ghana.

Moving on to slide six. I mentioned that we may have a bit of progress on 17 level setting that up. But to be honest that was summer is shadowed in the quarter by the fatality that we suffered in March with the loss of a colleague we made I think a lot of progress over all a business and depressed day here in terms of a number of safety initiatives, but I think this is shown us that we've still got a lot more to do and will redouble our efforts in that respect. I think more broadly on our various CSR initiatives. It's pleasing that most of those were able to continue with some modifications with the current wage in nineteen situation, but we are able to continue most of those and help further build those relationships with our host communities.

The next slide on slide seven. Um, we communicated during the quarter some of the initiatives that we've taken with the respect the challenges posed by Iraq covid-19 really with the first day of protecting the health of our employees and also those jobs in our host communities and then through that ensuring business continuity. We acted quite early in terms of putting those plans that we had developed from previous Ebola outbreaks in West Africa, and we put those in practice early in the year both of the site level as well as the corporate level and that pandemic management plan is been evolving as we've gone through the last couple of months. There's been a lot of good coordination with the authorities have been very supportive.

They've even gone her and showed a good but sensible determination to help keep the industry operating and with the local communities as well. We've had a lot of contingency planning quite naturally over that. Because the threat remains very real Garner is behind in terms of evolution of the spread of covid-19. When you compare it at the North America or most of Europe so we don't yet know how the situation will evolve so I am showing that we keep all of our measures fully operational a lot of communication internally externally with all of our stakeholders and increased us at this point. We hope to see have some inconvenient some logistical challenges, but no material impact on the business and obviously we will do wage.

Speaking with an alcohol to ensure that That Remains the Same with that our hand over to Grandma's going to talk in a bit more detail about the operations Graham.

Thanks Andrew. So with that moving on to slide 9 and and talking more specifically about why you know, I think that you know, covid-19 70,000 second half of the quarter was certainly something that was occupying, you know, our attention and um and the you know, managing those controls that Andrew talks about and I you know, we've certainly stepped up all of our screening and social distancing, you know people that we can have working from home. This is not just true of water but swam across the business. So, you know, there's been a lot of thought and planning going to that with that happening, um, what an Andrew mentioned they continue to show the flexibility and robustness of that operation. Um, um, you know mining rates still continuing to increase over $44,300.

dies Andrew mentioned

Um, and so firmly on track, um to meet the guidance for the year, I guess pleasingly the key projects that we had over this year. So significant investment in this year continuing with flags some potential impacts with those but it's pleasing to see that those are progressing and and remain on a schedule at this point in time and just some of the highlights is to remind people I guess on the the, you know, the the growth at Wasa just looking them slide nine at the you know, the extent of the inferred resource which. We'll talk more about when we when we talk about the resource, um update but you know, it's a it's an amazing system with with a lot more potential when um, when we get the chance to to Really study it so yeah, so I guess the phase one growth dead.

Is really about utilizing the decline capacity. We have and expanding the information in front of us that you know to push down the decline open up more levels get those drilled off, you know to be able to optimize the the the production of panel to where we're we're really just getting started now and and onto panel three and then, you know, the the second phase of growth understanding the that southern extension Zone and how we can optimize the operation, you know, looking at shaft and trucking options and so on so long as the the production capacity we have there with the processing plant, you know, almost almost double what we're doing now in terms of underground production. So moving on to 6 or 10:00 just a quick update on some of the projects that I that I briefly mentioned that the pace called plant is, you know, the probably one of the biggest projects happening birth.

Walser at the moment and you know pleasing pleasing that that is progressing on on schedule and cost and you know, even even with the challenges of covid-19 coming in the second half of the quarter. We did flag earlier in the year that we had some equipment coming out of China that equipment is in transit, which means the the schedule is still intact for that project which is pleasing and you can see from the photographs on that slide that it's continuing to progress I speak today. So it's a really good progress on that and just just to remind us an important project. Um, guess the key benefit of that project is improving our extraction percentage and essentially enables us to extract 100% of the auto body as we as we go forward and we're looking at ways to recover some of the pillars and Etc that we wage.

To leave up today. Um

The electrical upgrade also another key project goes hand-in-hand with the with the pace Bill and also pumping upgrades as well. So, you know quite a lot still going into water in terms of investment.

Moving on to slide eleven and just having a look at some of the production, you know, as we mentioned continuing to see improved production in terms of all tons coming out of water, you know without a lot of increase in terms of equipment and so on so, you know, we're just talking about incremental optimizing um of the operation as we go in terms of the grade, um little bit below expectations on grade for the quarter and I'm really just an artifact of where we're morning some of the some of the hanging wall states, which is the the the bulk of the production through quarter 1/4 Wasa and a bit of a mess on schedule wise with with one high-grade stock in the quarter. So we certainly expect to see that that great coming out and we've seen that grade wage.

Coming up through this quarter with that. We also we also made the decision in the quarter to the start start practicing some of the libraries. Files we've got remaining from the open-pit really the last the last of the low-grade stockpiles, but with the with the gold price, we saw it as an opportunity to uh to utilize the Milling capacity and pleasing to see that, you know with a little bit of that material starting to come into the production plan the recovery still acting up very strongly. So, you know, seeing consistent performance out of the processing plant and uh, you know, as Andrew is Andrew mentioned wage and you know a bit of a mess on grade it was a we continue we continue to meet production expectations and and and make cash like, you know really dead.

Really good to see the the progress of the team and the performance there are moving on to slide 12. Just just looking at some of the Baptist metrics. They're really just in line with the with the production. Um, but again as Andrew mentioned pretty pretty tightly contained and if you look at the mine has a cost of $32 a time when you uh, when when it's starting to get the sort of volumes that we we're looking to see at water. It's pleasing to see that those are those mine cost of but I would be competitive anywhere so so yeah good performance from a cost perspective at Masa and as I mentioned earlier that I'm delivering cash with significant investment still going into, you know, extending development getting declines down Pace plant electrical upgrade company system et cetera so dead.

Some good progress here.

What's up over the quarter?

Moving on to slide 14 and talking about prestia and you know as Andrew mentioned, you know, it would be Syria if it's not too not too, you know, remember that we had the loss of a colleague there over the quarter and it does it does highlight the challenges that we have in that operation and the work that is remaining to do and you know, we're very much in in providing support to the family and and to those people that were affected by that so but in terms of in terms of where we're at with prestia in terms of progress, so who very clear elements of the month and uh, 24 level, um working through the recommendations there.

Probably slightly behind where we'd like to be in terms of improvement. There. We are now developing stoves North and South which will you know in life in this quarter into into the second-half start to improve flexibility on 24 level. We're still really constrained Sandra mentioned. We had a had a problem with one stone early in the corner of the well actually light and quarter for that that came through continued through quarter one and you know, all of your production then is is hinging on 1 Stoke wage order at Seventeen level definitely making good progress are getting getting the development in place to start the Long Haul open stopping just outside the quarter that in, you know recent weeks. We've had the the truck turned up on site and got that underground so that will help improve the the development rates in the productivity and suck.

Saying that being said we started doing some or development during the quarter. So we're we're into the OR development and Seventeen level, um, getting being a wage level getting um, the a maintenance Workshop area set up getting the ventilation set up. So progressing well with setting up Seventeen level for long-haul open stoking a little bit impacted with some some of the equipment that we purchased coming out of Europe. So some some minor delays on equipment there. So just assessing you know where that leads us later in the year with the long hold stopping really coming into into the planning before so

yeah, that's that's really the the summary on on prestia moving on to slide fifteen months really just kind of backing that up in in terms of numbers, you know, sort of disappointing production given given the stock availability issues that we had with s 13 and then dilution coming into S14 as we as we get twenty four level setup page still supplementing a little bit of open-pit oxide material to support the plan that process there, but that's really the the last of that material, um a little bit coming out in in this quarter, but then then really up to the underground so to deliver

Moving on to slide 16 with a cost really reflective of the volume. The one thing I'd say about the all-in sustaining cost. You know, you're seeing a lot of the cost of getting up 17 level coming through and you know with with the production not seeing quite where we want it to be that you're seeing you think both of those things come through in life in the olden sustaining costs. So, you know, we're still we're still working to improve flexibility on 24 and then get 17 level set up for Long Highway talking in the in the second half of the year with that. I'll hand over to Paul to talk about how that comes out in the financials.

Great. Thank you Graham. Turn to slide 18 for the financials solid quarter. You can see in terms of Google revenues. The average realized price is $14.77. So that's 18% up in terms of year on year and 5.5% quarter-on-quarter. This is offset by a production volumes as we've just going through and a shipment deferral in terms of the shipment deferral. This is one of the impacts of covid-19. So like many of our peers commercial flights were canceled. So then caused issues in terms of transporting Dory to refining facilities. So at the end of the quarter we had like five point four thousand ounces of gold which was produced but wasn't actually built to Fields. So it was actually transported a pre-owned and then recognized

And sales Trend in April. So the impact of that was about six point two million on revenues and cash 2.5 million impact Thursday and then a few point four million increase in terms of working capital as a consequence of that has been alluded to the woods with an impact in terms of wage is like between a difference in the air the parents sold and produced in terms of when this will unwind it's obviously line wind as soon as commercial flights get back on track again, post covid-19 restrictions and our actual Define and start being billed for the main site pick-up Point as opposed to on deliver very active fighting facility.

Just turning night to ebitda adjusted eat it so we can see that in the quarter. We had to eat it eighteen point five million dollars. They were to primary adjustments. That would be the gain in the financial instruments of 4.1 million. So that breaks down into two components. So you've got the gain on the convertible debenture of 3.7 months and then there's a point four million game in terms of hatred things that are zero-cost colors that we have in place or other expenses of 2.7 million months essentially one aux in terms of severance. We had to be a contribution to the Chamber of mining in Ghana as mentioned boundary earlier in the month of October nineteen efforts, and then they also the change and the rehabilitation calculation following changes in interest rates and discount rates used to prepare that calculation.

one thing from

Accounting perspectives to highlight is the in terms of the ups and the adjusted loss per share which is of course a non-gaap measure in terms of height adjustment was prepared historically in previously. This is actually been changed now, so it was decided that it was more appropriate to actually exclude some of the adjustments which took me to start click specifically in relation to the share-based compensation cost and the total income cost. So that means that these are not adjusted for as one of items and these calculations. So, um, it's been we've obviously restated these and they're known Gap measures. It's really important to know that there's no impact in the Consolidated statement of comprehensive income balance sheet or the cash flow statement itself.

If we could turn to slide nineteen now, we've got the cash flow here. So we started the quarter with just over $53,000 and ended the corporate for $2000000 some movement of eleven point five million dollars. So when we exclude the impact of the working capital moved and one-off costs, the business is broadly cash neutral so of the eleven point five million working tax or sorry a million living in the cash. We have 9.8 million, which is attributed to working capital and then we have one of course of 1.8 million, which is broadly point nine million salaries point six million of other one off course, and then our office relocation from Toronto to London as I'm sure you're all aware of which was completed in April.

So but then working capital movement of the 9.8 million. We have had a bit of a roll over and turned four tanks cable from Q4 2019. So that was a total cash out to a peak point seven million and then we had uh, we had an inventory build-up of approximately 5.2 million and that relates to our goals in terms of that 4.4 thousand ounces, which wasn't actually sold and booted Revenue at the quarter and there's also wage increase in some of the other entities there on hand in terms of Maintenance paid Provisions in this is in relation to domestic in action with reference to covid-19.

Overall cash in the net that following the adjustment for the impact of the shipment would have been forty million and thousand of cash and then that question of 59.2 million respectively looking forward. We've got the Macquarie principal repayments which commences in June next year but six five million a quarter and then the other point of note in terms of our balance sheet position is the convertible debenture, which is not due to be repaid until August 2021.