Q1 2020 Earnings Call
Good morning, everyone and welcome to assess our mining first quarter 2020, <unk> conference call.
This call is being recorded.
It's time for opening remarks, and introduction I would like to turn the call over to Michael Macdonald Investor Relations for Us it's our mining.
Thank you operator, good morning, ladies and gentlemen.
Welcome to assess our minds first quarter 2020 conference call during which we will provide an update on our business at a review of our financial performance.
Financial statements and management's discussion and analysis have been filed on SEDAR and Edgar and are also available on our website.
To accompany our call there was an online web cast and you will find the information to access the webcast in our news release relating to this call.
Please note that all figures discussed during the call are in U.S. dollars unless otherwise indicated.
All references to cash costs and all in sustaining costs are per payable ounce of metals sold.
We'll be making forward looking statements today. So please read the disclosures in the relevant documents.
Joining us on the call. This morning, our Paul Benson President and CEO.
Greg Martin our CFO.
Been o'kane, COO and Carl Edmunds, Vice President exploration.
Also presents its John to kill them in senior Vice President business development and strategy.
Now I'd like to turn the call over to Paul for opening remarks.
Good morning, ladies and gentlemen, I'm very pleased to welcome you to AK coal to discuss helped this quarter 2020 operating and financial results.
Firstly I hope everyone on this call concisely navigating the brave new world, it's kind of at 19.
Later in the call Kevin will find the impacts on each of outside send the status of our planning to raise studying CB and put it out.
Obviously cobot is impacting the communities with L. people work and live and last month, we announced where it doesn't adding $350000 tilt to assist the communities around them on some projects get through this difficult period.
Looking back on the first quarter, we got off to a very strong start for the year as we produced over 107000 gold equivalent ounces and all three operations delivered solid performance.
At Marigold, we produced over 58000 ounces of gold setting the mine up well for what we what will hopefully be another year record annual gold production.
Let's see B, we delivered quarterly production of it but 29000 ounces of gold.
Importantly mill throughput averaged over a thousand 50 times could die in the past him out so the quota.
The paranoia silver production was 1.8 million ounces as we continue to achieve steady state operating operating metrics with mill throughput consistently above the right. So she him in the PFS.
So overall I'm pleased with the solid results to leave it by each operation.
From an exploration perspective, as Carl will speak to shortly we've had some exciting grow results with both Marigold NCB.
We're also pleased with that financial performance during the quarter.
In March we repaid the remaining outstanding portion about 2013 convertible notes and still ended the quarter with an enviable cash balance of just under $400 million.
With that repayment, we now have no debt maturities until 2026.
We disclose yesterday, we sold our stake Silvercrest for gross proceeds of 19 million Canadian dollars and the pretax profit of 55 million in Canadian dollars, which will further enhance up financial flexibility moving forward.
Finally on Monday, we announced a zero premium merger with Alex the gold the transaction combines our diversified portfolio with Alice's tier one trip mine positioning it says a mining as a leading intermediate producer.
The pro forma company will have near term annual production of it.
[music].
Gold equivalent ounces with highly prospective ground across the portfolio and a very strong balance sheet that will enable us to shoot internal and external value adding growth opportunities.
Subject to shareholder approvals, we look forward to integrating the two companies and collaborating on value enhancing initiatives and continuing to invest heavily in exploration activities.
I encourage everyone to listen to the replay of the transaction announcement cool and to read the deal presentation posted on that home page.
I briefly want to comment on that coal I made the mistake, but not actually referencing what was happening to me in the transaction I assumed it would come up as a question, but when it didn't I didn't bother raising it I did have a number of questions raised by shareholders. Thereafter, so photos and I've spoken to them, but I thought was with wall covering it now.
Over the last five years, we've continued to look for external opportunities. It anything from my weighs down to advanced exploration projects.
With respect to end my ways. There. They are always difficult I think out of the 30 or so companies that technically could qualify as an M.L.A., we'd probably just kept a 20 or so just because they're not attractive from our shareholders point of view it with the others say the other 10, often the conversations are quite challenging often go along the way.
Lines of would you like to discuss a potential Emily and the response is fine as long as I keep the top job outboard keeps their job. The names stays the same and they had also stays inside and clearly that's not a recipe for.
Successful merger of equals.
<unk> wrote an i., Roger and told the C O. The Allissa and I started talking November last year.
In very early on we agreed the key terms to the deal. It was the C. O comes from one company the chairman from the other and the split down the middle on the Board and then best people for the job throughout the management team.
Very early on in the process I decided that broad was the best person to lead the company going forward to me there a number of clip and logical reasons. One he put together the team that built the pressure oxidation plant in.
In Turkey and is doing a very successful plant.
Operation.
More importantly, though that operating in Turkey, so that relationships and wrote has built relationships in the throughout the different live a level of politics communities and also with the key joint venture partner.
Once I made that decision that was in very easy the.
She goes through the process I need to step away from the company.
A number of shareholders asked why I didn't stay on as a non executive nonexecutive direct up and I think the answer it's very clear I wouldn't be independent and the la cygne see other needs as they have a pharmacy I was sitting behind them with spring advice in there yes.
I think finally.
The point is that all too often in when deals are done the leaving so you take some of the furniture with them there isn't that a spin out there isn't a royalty stream going anywhere else all the pot, albeit a very happy and contented shareholder cheering from the sidelines. So that's why I just want to make that very clear.
Ill now turn the call over to Kevin who will discuss our operational performance in more detail.
Thank you Paul.
Well, we certainly ended the quarter in a different contact so what do we start. Despite this we had strong operating results for the first quarter of 2020.
Well, we suspended operations for the March 20.
CV during the last week quarter across the three operations, we still produced 107000 gold equivalent ounces, a cash cost of $824 per gold equivalent dolls, we had strong well performance CV well average throughput.
The average throughput during January February over a thousand that's 50 tons per day.
Material movement at Marigold was over 20 million tons.
Operated at a steady state with mill throughput above the PFS projections.
I'm proud of the teams at all or sites projects offices.
And whats say about it was the growing cobot like gene crisis in a safe responsible manner.
We suspended operations to the March 20 and compliance.
<unk> degree and efficiently manage the movement of our people back to their homes, despite complexity across potential travel.
Provided supported resources communities near the operations.
CB, we voluntarily suspended operations during the last week with March went on care and maintenance because we determined about time. This was the right thing to do it for the safety health of our employees their families and communities in which they live.
As you know wearable does not have to complexities of the remoteness of cap environment of the other two sites and we continued operations with strict controls for social distance, so and other protocols.
Implemented robust screening in contact chosen tools for entry on to the site and those that cat or working from home.
At Marigold.
It is 58500 ounces of gold in Q1, consistent with Q4, two no change.
Cash costs for Q1 of 2020 were $824 rose, 6% higher than in Q4, two low teens because of the lower lower recoverable I was just stock therefore higher unit inventory costs and an increase in royalty costs from the higher gold prices.
Direct costs were lower than planned.
During Q1, approximately 5 million tonnes of ore at a gold grade observed 0.3 grams per tonne were delivered to the heap leach pads consistent with expectations compared to six point.
6.7 billion tons gold grade of 036 grams per ton in Q4 two lighting.
20 million tons of material, whereby an increase of 10% from Q4, two lighting, mainly because of shorter haul distances associated with increased waste movement and some benefits from the new hydraulic shovels Commission during the first quarter.
The gold grade delivered to the Leach pad was 17% lower than the prior quarter and the strip ratio increased by 76% to three to one.
The decrease in gold grade an increase in strip ratio or do the completion of higher grade ore deliveries from back you faced five and the transition mining equipment to strictly looks like you phases, six and eight was or deliveries from actually chase for continuing.
Gold grades will increase through your total losses stocks and H., two should be 50% higher than H. War.
Engineering of the new Leach pad is progressing per plan as approaches on trucks, we concluded during the year.
During the first quarter 2012, there were fewer tons stocked at lower rates compared to the fourth quarter. Two line too well production levels were similar compared to the fourth quarter two lighting due to a drawdown under leach pad inventories and benefits of the newly commissioned Leach pad.
While lower than Q4, two lighting the ounces stacked in Q1 2021 side more than plug sees a higher proportion of out of stock during the second half a year as I mentioned previously.
Chris announced the stock will positively impact cost during wage too.
Operating during that covered 19 crisis as the challenging for the Marigold team, but I'd like to recognize the great job they're doing.
Moving to the operation with the disappoint use social distance.
Other important protocols.
Moving on to CB. The mine produced 29500 ounces of gold in the first quarter of 2020, or 34% increase compared to the fourth quarter due mainly to higher mill feed grades gold sales were 27400 ounces, a 14, 14% increase from Q4, two like too.
Cash costs were $544 barrels compared to $505 crowds in Q4 2013.
Several factors contributed to the higher costs.
I, just productivity, which of course don't hurt you for higher Momo maintenance costs, mostly timing and I would like development to access higher grade areas and the up higher returns in the upper areas of sounds like should we start to the flat late this year and finally compensation payments, which are timed for Q1.
During the first quarter 89300 tonnes of ore milled average gold grade was 10.3 grams per tonne and recovery apply the 0.1%. This compares to 87400 tonnes of ore milled at an average gold grade of 7.9 grams per tonne recovery or slightly 7.9% in the fourth quarter two lighting.
Five throughput exceeded 1050 tons per day during January and February it was impacted by the write down of operations in March.
Mining unit costs were $68 per ton by the first quarter, a 15% increase compared to the prior quarter were impacted mainly by higher mobile equipment maintenance costs and the outlet development work I mentioned.
We completed all climb transport costs the ice float.
As previously reported were excited with capacity, we're tired of the storage facilities to accommodate the expected increase in my life.
Activities, we commenced in the quarter, but were put on all of a suspension of operations in March.
During April we assessed options to restart operations, we continue to manage required activities, which are the safety of our floors and the environment and develop the stage increasing term activities restart schedule.
At the beginning of May we doubled the size of the care and maintenance crew on site and should begin to critical underground activities at the end of the loans over the first part of June.
Depending on our ability to balance the cobot lighting protocols and with the easing of government restrictions, we could restart by production posting our processing operations before the end of second quarter.
Good operations produced 1.1 point 8 million ounces of silver during the first quarter of 2012% to 17% lower than the fourth quarter are too low teens due mainly to lower throughput as result of the suspension of operations on March 20.
Prove notes and level recovers we saw in Q4, two low teen continued in the first quarter.
Cash costs were 13 14, so so for the quarter.
Hard to 890 per ounces silver in the fourth quarter. This difference is entirely due to the dog do a noncash write down of inventory because of the significant drop in silver Bay. So prices at the end of the quarter.
Oh literal mine during the first quarter, while plan to be lower than in Q4, 219 was also impacted by weather events and associated temporary suspension of operations.
Existing ore stockpiles are sufficient or lending activity for a phase reserve operations in the near term.
During April the government declared mining in the central business, we are evaluating saes restarted options.
Labeled a safe resumption of operations and that comply with government regulations and guidelines.
Continuing to manage required activities to ensure the safety of our employees and carefully embark.
We expect at the earliest we will achieve steady state cloud operations will be done in June and July in the mine.
In summary, the operations again delivered.
Again delivered solid safety performance and production results during the quarter, especially considering the us escalating covert gene crisis towards the end of the quarter.
I'd now like to make a few comments on the Alessia gold merger, we conducted comprehensive due diligence over the last few months, including a visit by several members of our tool to that Super operation and we look forward to them by the list tier one also with our diversified portfolio. We have been impressed with their safety culture, the successful deliberate salt life side and the.
Overall potential the operation.
And to combine the operational excellence processes that we have successfully deployed at our operations with LSW or goals programs to further improve performance across all the operations and deliver additional value for the shareholders I will now hand over to call who will take you through all our exploration activities.
Thank you Kevin.
For 2020, our objectives at Marigold are to discover additional mineral resources south of the currently producing Mackie pit that trend Canyon.
Yes, the salt and crossfire.
The goals at CVR to increase mineral resources and reserves that Santoy gap hanging wall Santoy, a and sound 29, eight through nine see zones.
We also plan to aggressive greenfield activity Fisher and select areas close to existing mine infrastructure at standpoint and CB.
Given the health and travel restrictions presently in place. It is unlikely that we will be able to complete all of our planned exploration activities in Scotland.
At Marigold 2020 work includes 64000 meters RFP.
[noise] core drilling and during the first quarter, we completed over 18700 meters of drilling and 55 holes on trend Canyon Mackie involved.
Trend can receive most of the drill meters, where we are confirming historical results and exploring for extensions to known mineralization.
We also initiated a limited core drilling program to explore for high grade sulfide ore potential at that.
Yesterday, we released exciting results from exploration drilling a trend canyon with one whole demonstrating high grades broad with sulfide mineralization in proximity to three additional mineralized holes.
In particular, EMR, a 70 178 intercepted a 94 and a half meter interval of 5.2 grams per tonne gold that includes 7.6 meters, a 44.7 grams per tonne gold.
The new zone is located 300 meters north of Trenton Canyon, South pit and has a dip length of at least 150 meters and then a fundamental thickness of 50 to 70 meters.
Importantly, all four drill holes have ended in mineralization in the mineralization, which has opened on debt and to the north and to the south.
Our experience indicates that these results.
Upgrade and with characteristics consistent with underground mine successfully operating in Nevada today, and we look forward to getting the next few step out holes underway.
Confirmation drilling a trend canyon has progressed to plan with a notable intercept of 108.2 meters a 3.1 grams per tonne from 27 meters below surface.
This result, along with additional oxide intercept that we reported are expected to contribute to an inaugural FSR oxide mineral resources estimate trend Canyon. When we report at year end 2020.
Additional positive results in the quarters drilling came from Mackie pit involving.
We also expect these will contribute to mineral resources when reported at year end 2020.
The one core whole completed in the quarter near relay rich provided valuable structural and logic information, which will be tied in with a plan seismic survey as an eight to locating further goal targets.
At the Seabee gold operation the first quarter underground drilling totaled approximately 11400 meters and surface drilling totaled over 4800 meters on near mine targets.
The majority of underground drilling was it the GAAP hanging wall zone, where we reported positive resorts extension result of 7.6 meters of 14.8 grams per tonne gold and 2.6 meters of 28.9 grams per tonne gold.
Importantly from a growth perspective, the latter intercept is 210 meters down plunge from the GAAP hanging wall resource limit.
Looking at 20% plans like increase if continuous.
Q1, Greenfield drilling activity CB was conducted Batman leg and on several targets at Fisher.
Objective with this work is to identify areas of discovery and new resource potential.
At the Joker target located at 650 meters South of Santoy mine workings, we completed almost 3500 meters of drilling in 13 halt following up surface gold showings.
Year, one whole returned a resource grade intercepts of 3.6 meters of 37.9 grams per tonne goal at shallow depth.
With two old pending and one on plans with anomalous results, we'll follow up drilling plan for this goal discovery area.
At Fisher during the quarter, we drilled almost 9500 meters on Mac, North able lake and Aurora targets following up on surface gold showings and 2019 drilling results.
Resource grade intercepts of 1.9 meters of 9.1 grams per tonne and 2.3 meters of 13.7 grams per tonne gold were returned from Mac, North Andean targets respectively.
This winter season has been one of our most successful in exploration on new targets.
And provide support for continuing with the saw geochemistry prospecting and mapping approach.
Finally, we are keen to see the closure of the Alister gold merger, which brings approximately 16600 hectares of prospective terrain near their existing operation and another 105000 hectares across the region into the company.
We consider the exploration potential to be excellent as evidenced by the widespread port related intermediate sulfonation mineralization and by Alice there's numerous or success with numerous new gold discoveries in recent years.
We look forward to working with the team in place that Alex or realize the resource potential in country.
Now over to Greg for a discussion of our financial results.
Thanks, Carl and good morning to everyone I hope, you're all keeping well through these interesting times.
We will all remember Q1 of 2020 for both personal and family reasons, but also for the extreme economic and market sell off late in the quarter.
We are fortunate that while our business like most has been impacted by the coven pandemic. Our business model has only been strengthened and we see that through our strong first quarter results.
We generated revenues of $164.5 million from the sale of 105000 gold equivalent ounces.
Revenues were a 30% increase from the comparative quarter.
Revenue growth would have been even more significant if not due to the 8.7 million dollar negative mark to market impact on provisionally priced concentrate sales caused by the drop in the silver and base metal prices coinciding with corridor end.
With a bounce in silver prices off at quarter end lows, we have already clawed back some of that impact.
Income from mine operations was $44.8 million, an almost 50% increase from the comparative period.
Income from mine operations were impacted by both the 8.7 million dollar mark to market adjustment referenced.
And then eight and a half million dollar noncash fair value adjustment on tuna ore stockpiles.
Most due to the drop in silver in base metal prices at March 31st.
Operating income was strong at $34.8 million aided by lower DNA due to share based compensation reversals.
You will note on the income statement, a 1.3 million dollar expense for care and maintenance activities.
These costs relate to food operations, where operations were suspended before quarter end.
We did not record any care and maintenance costs for CB.
For the quarter, we reported net income of $24 million or 19 cents per share almost four times, the comparative quarter at 19% above the fourth quarter.
Adjusted income totaled $39 million or 31 cents per share a strong result, reflecting the solid operating results and higher average metal prices.
Our adjusted income considers the fair value write down on stockpiles, but we don't reverse quarterly mark to market changes.
Cash generated by operating activities for the quarter totaled $58.7 million versus zero in the comparative period, and 21% above the fourth quarter.
Clearly showing the stronger business model.
Investments in the quarter were $54 million, which were elevated relative to our average quarterly run rate.
Generally to items I raised on our Q4 call.
At Marigold with the new loader received in the fourth quarter fully commissioned at new from accruals into capital and we received one of the two new haul trucks at Marigold during the quarter ahead of schedule.
Also marigold recorded higher deferred stripping as expected due to mine sequencing.
Capital items, arriving at CB over the ice road concentrate their recognition a recognition in the quarter also as expected.
Overall capital is tracking at or below budget on each individual project.
Also as announced late in the quarter, we purchased the remaining $115 million of outstanding 2013 convertible notes at face value.
Our debt is now solely the $230 million of 2019 notes with an effective term of six years, requiring only interest payments at 2.5%.
We closed the quarter with $398 million of cash.
Based on our investment in Silvercrest, which was worth an additional $50 million at that time working capital was $646 million.
So our balance sheet remains in fantastic shape.
Our divestment of Silvercrests yesterday for gross proceeds of Canadian $90 million improves that position.
Turning to cost in the quarter the operating spend was consistent with budget at all operations.
Reported cost show normal impacts of the seasonality at each operation.
Winter conditions at Marigold rains that tuna and ice road operations at CB.
Combined with some business operations towards the end of the corridor as all three sites dealt with operating changes required by the coven crisis.
And it poon NCB phasing into care and maintenance.
Higher gold prices were also evident in marigolds reported cash costs.
And well Poon as reported cash costs were high backing out the ore stockpile adjustment puts them at $8.60 per payable silver ounce actually below the fourth quarter of 2019.
So overall costs were consistent to our plans and had put us on track for our targets.
Looking ahead clearly the second quarter is going to be impacted by the temporary mine closures.
We have provided guidance on our care and maintenance costs, and we will seek to offset a portion of these with government support where applicable, particularly the Canadian emergency wage subsidy.
With Marigold operating in the mines into a phase to restart I don't anticipate much overall impact on our liquidity position.
With regard to our announcement earlier this week on the merger with a last Sir.
The transaction provides a unique opportunity to build a strong and diversified portfolio that will generate significant free cash flows.
I am confident we can build on the success of both companies to continue the track record of delivery the operational and financial objectives.
The merger makes for a strong pro forma business with exceptional liquidity to drive market recognition and superior value.
It's another step that builds from strength and continues to differentiate SSR mining.
But those comments I'll turn the call back to Paul.
Thanks, Greg.
In summary, this was an important quarter for SSR mining zero premium merger with Allissa is an important strategic step and will position SSR mining as a leading free cash flow focused diversified gold producer.
Upon closing as this would have annual gold equivalent production in the order of 780000 ounces and a market capitalization around $4.3 billion at today's equity prices.
The company will have appealed leading balance sheet and cash generation.
The closing of the deal requires positive votes by the shareholders of SSR mining and Elissa at meetings, we expect to be held in July pleasingly, We've had very strong support during a marketing of the transaction. This week and are encouraged by the market reaction to date.
Looking forward, we have a lot of work hard work ahead of us over the coming quarters with the reopening of CB and putting up and the integration of the two companies.
The inclusion of the World class tip operation into our portfolio. It's just the next chapter in our company's evolution.
With that enviable financial position will be able to continue doing what we do well creating value for shareholders by maximizing the value of our own assets and looking externally for new opportunities.
This concludes the formal remarks about earnings call I'll now pass along to the operator to take any questions you might have.
Thank you Mr. Benson well now begin the question and answer session to join the question to you May Press Star then one on your telephone keypad, you will hear a tone acknowledging your request. If you are using a speakerphone. Please pick up your hands the fourth pressing any Keith.
To withdraw your question. Please press Star then too well pause for a moment as colors strain MCU.
Your first question comes from Mike Parkin, The National Bank. Please go ahead.
Hi, guys. Thanks for taking my question lots of interesting stuff that this morning, I'd like to start with the Batman zone looks like the.
The one intercept the books really interesting is very close to surface. You've got a couple where assets are pending so any thoughts towards that being a potential open pit or source.
Oh my.
My General comment most of these tend to be relatively narrow and you end up with some you'd end up with a fairly stable well the strip ratio would increase relatively quickly I think it's something that we've talked about with a few different.
Sort of outcropping mineralization is up there, but nothing that will work that call you will view.
It's it's narrow vein it's.
Unsuitable really for any any open pit and plus there is there's surface water around there.
That always is a bit of a down a up at Tom. So maybe if you come near those likes it can really make the open pit difficult.
Okay.
And then.
In terms of moving down the Marigold.
On the new wins packages of Trenton, Canyoning Buffalo Valley.
For the royalty rates different there than what you are paying off at the oxide mine.
Yes, the significantly low.
I'm.
Im just going to us Johnny to common to give an update on what but they are them. There yeah, there that might they differ anywhere from call it 2% to 4% sort of depends on some of the different sections that are there, but they are they're probably close to a third of what you see in general at the Marigold Mackie area.
Great. So that's great news.
Right now that's it for me I'll, let some others ask some questions. Thanks very much got thank you.
Our next question comes from Chris Thompson Pi financial Please go ahead.
Hey, good morning, guys. Thanks for taking my questions.
Just a quick notes.
Just to fuel future endeavors, there it's been great having you at the helm.
Congratulations on the on the announcement, obviously without us earlier this week.
Just a couple of quick questions I guess as far as these results.
You know you do you mentioned, obviously, a high grades are going to be stacked.
At Marigold in the second half of this year can you put a number to that.
No I mean, we haven't changed guidance that Marigold side, just run off what we've got there at the moment, obviously the only.
Thing that you probably can.
Think about is that if gold price keeps on going that impacts al pull cost on cash cost because that includes the royalty, but otherwise we're comfortable with.
The full car or the guidance, we've given to marigold at the beginning of the.
Okay, all right, thanks for that and maybe.
Maybe this is a question for you I mean greater results from trends in Kenya, and and you make my reference I guess so the in the news release, the similarities with Turquoise Ridge I wanted to kind of expand upon that and maybe comment on the mineralization that you see and.
Possible, it's sort of metallurgical similarities with.
With took was.
Well, what what we what we think we know from the core drilling work that we do it just near relay rich is approximately 300 meters down we think we get into the comas formation with the lower plate rocks the host turquoise Ridge.
And at this area here, albeit we only have RFP information on it we're seeing a logical change just above where these intercepts are occurring so we come out of.
More what I understand is more volley looking rock types, which of those units that are up above the commerce and.
And then go into water carbonaceous milestones the the nature of the mineralization is.
We're seeing is very fine grained pyrite in.
Variably solidified rock and now this is all being pulled from our see chips, but thats what were seeing so the.
Similarities at present, our that its.
We've got some pretty interesting looking high grades.
And it's sulfide.
Some of the differences would be that we're not seeing the.
The reality, our orpiment and some of the other those other.
More.
Exotic minerals and it we're not seeing any of that I would say yet we may see that in the future but.
At least we're seeing the grade which is the part that that we're interested in and as soon as we can follow up with some core holes will be able to provide some detail as to where where we sit where we think it really fits in the street take or.
Just a couple of other points on that we.
When we've got the package of land, we were restricted on where we could drill so a lot of the drilling in the first half was on this to land. We now have the permits to go and drill where we want to.
So that will be great. The first call Hall.
Yeah. It was a long long haul one the half kilometers we haven't got all the outsize back I think of that is sort of like a rosetta stone to try and I understand the lithology, we're going to do so we're going to seismic down there and really what then you're looking for trying to interpret the structures and extrapolating lithology. So yeah. This is going to be a long term.
We've always said yeah, we want to the initial budget issues 2 million, we yeah, we'd expect to be spending that sort of money for five years, but with success you can always allocate more capital to so that's a good story doesn't it.
No good stuff guys congratulations.
I just try one thing in they obviously if.
If we do come across that sort of material and its refractory yeah. That's the technology that.
Hello sort of just build successfully ivor in Turkey.
Absolutely that's exactly what I was thinking.
Okay next question.
Once again, if you have a question. Please press Star then one.
Our next question comes from Michael Gray with Agentes capital. Please go ahead.
Hey, Thanks for taking my call I couldn't resist calling in here.
On the on the results and the wish you well, Paul and your team going forward congratulations on the deal.
Question is on trend Canyon, and I'm sure caught a Carl and Jim Herbert.
Really wish they had corvels right now, but just.
Just asking.
Mineralization in cross section looks like it's kind of got a lot of sun shape.
And I'm, just wondering is it a discordant or strata form or it can you tell right now.
And that the rest of my questions really been answered in terms of it actually being mccomas I think this is a really great breakthrough and really excited for you guys.
Upfront, we can't tell to too much from the from the chips, obviously, but.
In the near surface, it's looking like it's following the general the general orientation of the rock package.
The boldly rocks that are at surface Mike there.
They've they've got their theres fall pockets that are in there so.
It's a chevron to a little tighter folded.
In general that.
The package is off to the east. So we've we've either got a structure. That's bounding. We're thinking this is interpretive now structure that's sitting in the hanging wall of these these intercepts it's between.
What might be the valmy package in the call much lower play package.
Or its you know with or it's that that major thrust so.
You have stratigraphic contact.
Okay, and I missed whether you would actually image did already with geophysics and see it up for yes, we had that that's a planned for the second quarter and with the some of the.
The.
Over 19 travel restrictions for contractors out of state and so on we've decided to delay that until we can really get to a clear picture on when we can initiate it so it's sometime in the near future and hopefully the when when the area starts to get over that those travel restrict.
As we can mobilize the contractors, we have approvals to do the work that we're all set for it.
Okay fantastic congratulations and congratulations again on the deal.
Yeah. Thanks, very much you'll have to start covering large cap companies are they keep on top of us.
[laughter].
Next question.
Our next question comes from John Tumazos, John Tumazos shows very independent research. Please go ahead.
Good morning, congratulations on so many things.
Thank you Wes if I'm, having this up right Theres about 870 million U.S. of gross cash.
Oh across the two companies.
Pro forma the silvercrest sale in the merger and the results.
[noise].
Should we assume.
Just the merger and the Silvercrest divestiture.
[noise], there's enough corporate activity to keep you busy.
For a good six months nothing more is going to happen.
Should we assume that you just said there was this nice cash position.
And don't retire or any.
The various liabilities leases short term et cetera.
Although you do have a few liabilities you could repay.
Just looking at the pro forma.
In the table that we put out on when we put the announcement out page knowing the cash and marketable securities was 707.
Million U.S. and that included the marketable securities included the.
So Chris Steak says that's moving it from marketable securities across the cash.
In terms of debt as isn't.
As is the convertible note. The 230, that's not repayable until 2026, I would say no reason for doing that.
And Alaska has a project loan, which yeah. They young they can pay back early without penalty I understand if I want to but yeah, that's something to to be discussed light up.
Yes, I still think cash is a strategic asset it has been for us so.
Yeah, we've found that we pay no we've done well by keeping a significant proportion of cash on the balance sheet.
I think both companies.
Leading into the announcement of the deal with yeah, certainly, giving significant consideration to capital return I'd say that down at the Paymode conference that.
Earlier this year that once we got through.
2019, we were holding off because we weren't sure whether we needed extra capital at Marigold to bring in the Red Dot deposit into reserves once we got through that.
Decision to yeah, pleasingly, we didnt a the extra capital I said mid way through the she is obviously something that the board would have to Conns would pleasingly yeah.
Enjoy considering potential capital return I think realistically, we put that on hold until we get out of code that yeah. The I think it would be.
No it wouldn't be prudent to do anything in advance of understanding the full impact of cobot, but certainly with our balance sheet and now forecast cash generation then, yes, I think that will be a key attribute of the company going forward.
Do you think.
[noise] four mines on.
Three continents is an expandable platform.
Some companies.
Managed growth better than others, a few years ago BHP divested all their smaller mines.
32.
Oh, there's different philosophies.
How many moving pieces, how far apart or manageable.
Both rod and I've come it's been sometime the career in mages fee at Rio May It BHP and I started off my career with an intermediate back in Australia, Renison, Goldfields, which had that I don't know and operations, but to me the sweet spot somewhere between five to eight mines. So I think.
Above that you probably start to get Diseconomies head office becomes too bureaucratic, but I think you can really leverage the head office, if you're in that sweet spots I, we absolutely have room to grow and at some point yeah I.
I think REO back in its heyday, yeah. If you go back in seven these ideas knowing if they would really into sort of winnowing out.
As I added a new high quality asset yeah, they would sell something lower down the portfolio. So I think thats a discipline that you need.
To me one or the other great benefits of building the portfolio, adding more assets is how you can help develop.
People in acreage you can move them around between mines, which is something that.
We haven't got to that point, yet and very much looking forward to that so absolutely, yes, there's no way that.
If this our after bringing trip was reached the end of it some growth potential.
So you would just don't on that evolution and hopefully we continue to add more.
Thank you.
Excellent.
Okay.
I understand that.
[noise] concludes the question and answer session I will turn the call back to Mr. sensing.
Thanks, operator, thanks to everyone listening today I hope you have a good day.
Oh.
This concludes today's conference call you may disconnect. Your lines. Thank you for participating and have a pleasant thing.
Oh.
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