Q1 2020 Earnings Call
Thank you for standing by this is the chorus call conference operator, welcome to the I am Gold first quarter 2020, operating and financial results Conference call and webcast. As a reminder, all participants are in listen only mode and the conference is being recorded.
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At this time I would like to turn the conference over to India, coping Nathan Vice President Investor Relations and corporate communications for I Am Gold. Please go ahead.
Thank you very much areas and welcome everyone to the I'm Gold first quarter 2020 conference call.
Joining me today on the call Gord, Stothart, President and Chief Executive Officer.
Carol Banducci Executive Vice President and Chief Financial Officer.
We are no lemelin senior Vice President operations and project.
Craig Macdougall Senior Vice President exploration and Jeff No senior Vice President of this development and General Counsel.
Our remarks on this call will include forward looking statements. Please refer to the cautionary language regarding forward forward looking information in our disclosure documents and be advised that the same cautionary language applies to our remarks during the call. The floods weapons on this call. It can be viewed on our website.
I will now turn the call over to our President and CEO Gordon.
Well. Thank you Andy I'm good morning, everyone and thank you for joining us I hope.
Everyone is is safe and healthy and.
And managing through their own little private Groundhog day experience anyway.
So last night, we issued our first quarter 2020 results, which demonstrate our leveraged the gold price and strong operating cash flows before we get into the discussion on the quarter I wanted to touch on the current environment and how our company is situated in.
In this uncertain environment caused by the global Cobot 19 crisis, I and gold is fortunate to be operating from a patient position of strength.
We have a strong balance sheet to withstand operational and or market disruptions, we have operations and diverse jurisdictions, which in turn which in turn diversifies our risk exposure to the current crisis.
Our team is enacted and effective multi level crisis management process very early on in the outbreak, which has enabled timely implementation a strict protocols and a quick and I JOL response to a fluid situation I.
I am gold has a deep bench strength across the organization at both the operations and corporate level to support the business and we've been successful and taking a collaborative approach to government in community relations. Despite the challenges of the current situation. We've continued to move the business forward as evidenced by the completion of the Saramacca.
You JV agreement with the search enemies stayed on petroleum company stat solely that we announced a couple of weeks ago brutal will provide some additional details a little later, but I'd like to say that stat solely represents a solid partner for Roosevelt given their experience as a partner with newmont over the past several years on the Marissa mine in Suriname.
So our strengths have enabled us to respond in a timely and effective manner to the global Cobot 19 crisis, once again, reflecting our commitment to zero harm.
Our response started with the activation of our cross functional crisis committees, which combined expertise from various disciplines across the company to assess and planned actions.
From a health and safety perspective, we've taken extensive steps to protect the health and safety of employees and contractors and bring all these are sharing some pictures and a few minutes to give you a better sense of what has been implemented.
In addition, we've been working where their host regional and local governments to safeguard vulnerable communities by both string Feutz food security donating medical equipment and contributing to covert 19 relief programs.
The crisis had limited impact on our mining operations in Q1 with production interrupted uninterrupted excuse me ADESA cannon rosabel, while the impact to Westwood was limited to the six days in March the operation was placed on care and maintenance along with other mining companies province wide following a director from the Cubs.
Provincial government. However, sales were impacted it asset can as they were postponed that the quarter end due to the global Cobot 19 crisis.
Those those gold ounces not sold in March where we did we have sold since in April.
I am gold is committed to achieving high standards and environmental social and government practices. There's been a very straight it's been very straightforward for the organization to maintain these standards as they are perfectly aligned with our zero harm vision, which has been a guiding principle that the company for over a dozen years.
One of the recent highlights is a problem public private partnership with a Canadian government. The one dropped foundation and cold water on the tree, adding to the low project in Burkina Faso in order to bring portable water to 200000 people around the S. A cat mine over the past few years.
We have also develop the Suriname community fund this past year with initial funding of $2.5 million.
Slide graphs to local projects, which demonstrate positive economic and social impacts.
[noise] I'm very pleased to announce that we strengthened our leadership technical and stakeholder engagement talent with the appointment of rural level into senior Vice President operations and projects.
Who will speak a little later and also the appointment of Humar Toby any just senior Vice President International Affairs and sustainability.
In his new role Bruno has oversight of all operational and project development activities across the organization, having joined the company in 2014. After a 10 year career with extract out now Glencore and then with SNC Lavalin.
No transitions from the role of regional Vice President Americas for I'm gold.
Whom ours, new responsibilities will be to manage I am gold's relationships with overseas host governments and other stakeholders in West Africa, and South America.
Our joint Island gold in 2012, bringing over 25 years experience in exploration project development and operations for various commodities, including gold base metals and bauxite in Africa, Europe, South America, and the and the Caribbean Humar transitions from the role of regional Vice President West Africa for I am gold.
Following our review of 2020 guidance in the context of impacts of the Cobot 19 crisis to date. We've made the following revisions we have lowered production guidance for ethic and to the range of 350000 to 370000 ounces, we slightly increased production guidance for rosabel to the range of 200 and <unk>.
2000 270000 ounces.
We have lowered production guidance for Westwood <unk> 85000 to 100000 ounces largely due to the impact of the mandated care and maintenance shutdown from March 26 through April 15th combined with the restart activities and adjustments to new working protocols. These changes shift at attributable guidance for the company down.
About 2% to the range of 685000 ounces to 740000 ounces for 2020 [noise].
With the impact on production.
And the adjustments, we're all making we have adjusted cost guidance as follows cost of sales between $955 and $995 per ounce sold.
Total cash costs of $920, a $960 per ounce produced.
All in sustaining costs of between a $1195 at $1245 per ounce sold.
Oh, our outlook for capital expenditures was also enjoy adjusted in the context of Cobot 19 domain changes are at efficacy a reduction of non sustaining costs to $80 million from $100 million due to lower levels of capitalized stripping and timing of spend at Roosevelt an increase of 5 million.
$1, a sustaining capital due to a shift of spend from from non sustaining capital.
At Westwood, a reduction of $10 million non sustaining capital due to reserve reduced development.
At Coty, our planned capital expenditures for 2020 were increased by $10 million to $45 million to support progress on the early works phase, including site. The tree clearing work from the first quarter access road development advancement of the construction camp facilities and advancement of detailed project engineering.
At Boto planned capital expenditures in 2020 or reduced by 5 million to $25 million in total these adjustments comprise a net increase of $5 million of sustaining capital and that decrease of $30 million in non sustaining capital and the total capital spend in 2020.
As planned at 300, and a $45 million net decrease of $25 million.
[laughter] I'll note here that are 2021 guidance remains unchanged, but is under review as the cobot 19 pandemic unfolds and we better understand the effect of 2020 adjustments on our plans for 2021.
As we continue to operate optimize our existing operations and de risk our development projects, we have a number of catalyst upcoming in 2020.
We're currently working on the and I 43, one on one report for Westwood for mid 2020.
This is expected to the outline the details of a safe profitable and long life mine plan.
[noise] at Roosevelt. The main haul road is substantially complete for Saramacca and were hauling on it now we expect to be at the target run rate for mining at Saramacca later in the year.
The mill optimization project asset can aimed at increasing throughput by about 10% is ongoing and we hope to get that online toward the end of the year.
In exploration, we're working on further resource delineation programs at various projects, including Nelligan and the Rubicon project in Quebec.
Gossip around at Coty, and Ontario, and the New Korea Discovery in Guinea.
And we continue to review our options for strategic growth with a pending decision as to which of our shovel ready greenfields projects boto or Coty will move forward into construction once it as appropriate to do so.
Our work plan for 2020 sets up 2021 for Westwood to expand production in accordance with the New mine plans announced last December.
For Roosevelt production to increase with Saramacca online and for an optimized African mail demonstrating increased throughput.
On that note I will now pass the call over to Carroll to review our financial results.
Thank you go art.
The company saw strong gold margins in the quarter, resulting in strong operating cash flows although rosabel and ask you can were impacted by lower sales volumes in the quarter compared to the same prior year period.
Earnings were impacted by embedded derivatives related to the pros about power purchase agreement and our senior notes.
We have continued to prudently manage our balance sheet cash cash equivalents short term investments and restricted cash totaling $829.8 million at March 31st.
We also amended our credit facility extending the maturity of $447 million a credit to January 31st 2024.
As we all know Cobot 19 has impacted mine operations globally, and we are no exception.
In this time of uncertainty, we also see opportunity and we were able to execute a number of currency and fuel hedges that level that compare very favorably to our internal planning right.
Earlier Gore laid out our revised production and cost guidance more 2020 I'll note here that we expect depreciation expense in 2020 to be in the range at 250 million to $260 million down $10 million from the previous guidance.
Guidance for cash taxes remains the same at 30 million to $45 million.
Net cash from offering activities before changes and working capital total $72.8 million.
Because I noted earlier b. or prudently men junior balance sheet in these uncertain times.
The total liquidity possession, excluding restricted cash, including our current 500 million dollar credit facility of $1.3 billion.
Are $400 million in senior notes or not do until 2025.
It's next slide highlights the strength of our financial position relative to our peer group and as you can see we are in a net cash position with <unk> leading liquidity.
Oh now passed along the call over to Bruno to discuss operation.
<unk>.
We are committed to the health and safety oval plenty of our employees.
The first quarter of Twentytwenty, we were Slovakia bug only targets.
<unk>, which sends four days a week restricted or transfer due to your 0.6 before.
Do you work every day to meet or exceed two or three tables.
Implemented thing and refreshing a number of initiative to ensure a safer work environment.
Including a comprehensive behavior and they.
He's the safety program.
[noise] slide towards the this Lloyd summarizing all results for the quarter with <unk> <unk> <unk> 170000 homes was.
<unk> Oh $1054 per on so.
Cash question of 993 daughters amounts goodies.
Audiences think of word 1200 $30 per own so for the cruise quarter.
Oh, <unk> H. operation in third.
But this like <unk> production for the first quarter Twentytwenty was 84000 utterances.
The key factor and they get T.V. infecting production was lower tons of mine done plan.
You to lower consideration rates and sequencing.
Two volumes were lower for the quarter of nodes.
Pardon sustaining costs were 1000 fish before.
At a quarter large really impacted by the Lord than a dog.
In response to Kobe My team that's like on was moved to island movie with current Ping processes in place for personal moving in and out of this flick.
In print do 20.
Our focus is on new optimization, a second which vargas improvements in throughput of about 10 person as will Ah recovery improvements.
Completion of this work this lady billing and we expect this to be completed leave this year.
It is a highway stripping year for a second with about $65 million in non sustaining capital plan for push Bucks.
In addition on the explanation from.
<unk> <unk>, just complete and we are combining these results.
This resource pretentious.
[noise] as Gordon mentioned, we are the number of measures and placed <unk> or our workforce from the coven of ours.
And these pictures, we are allowed to click and cleaning and disinfection of cargo that takes place at the second.
Well as the stations installed to encourage frequent in Washington.
Cause there are pretty mutable go production for the first quarter was 64000 announces.
Production benefited from I. or grades <unk>, and which where Ireland plan.
Improve grade reconciliation in the quarter, however, throughput was supplemented with lower grade football and material.
The caliber in calling plan continued to operate as expected recovering 3000 announces from fading into first quarter.
Marginal operating costs of approximately $35 per ounce to cover additional power and illusion cops.
Bothering sustaining costs were 1200 $48 for the quarter.
Oh, no I will mention of well that we have made good progress since last year.
<unk> minors, we know it's <unk>.
We have been back to normal operations since the fall last year, and we continue to work with our community and governments stakeholders toward developing a sustainable long term solution.
10 responds to called him 19 rules, they're like effect on it was also a move to Ireland move.
<unk> current team processes in place for personal moving in and out of the sites.
<unk> well your thing well with the main all road connected proved to Southern America.
The first quarter and all of them up saramacca or since mid March.
We expect mining rate's, two entries from 22224 and our on schedule to achieve our target Ram rape.
In the second half of the year.
In late April Roosevelt find a nun incorporate a joint venture agreement with that solely relating to.
So the concession areas within the U.G.D. area of interest which includes some America.
The U.G.V. exclude the existing gross Roosevelt mining confession, which is 95% owned by Roosevelt and 5% owned by the they put <unk>.
Roosevelt old 70% <unk> interest in that so the old 30 person, but speeding interestingly EGD on behalf of their Republic absurd.
That's all they as paid Roosevelt, an initial amount of $34 million toward that <unk> $54.9 million for all operating and capital expenses related to the Santa Monica project.
The remaining amount would be paid out because that's really goes and buys.
I wouldn't know that this this is <unk> agreement <unk> was previously agreed to in the second amendment to them in General agreement I know in June 23rd thing with that told emailed to you knew G.D. partner, replacing the original entity me if it by be Republic of three man.
Too old <unk>, 30% interest.
From a health and safety perspective, we included a couple of pictures from those daylight thing or a strict physical dispensing protocols in place in areas such as the kids kitchen line up and the bus if a point.
<unk> 22000 announces for the first quarter Twentytwenty.
Well no that target production rates and costs were achieved prior to it to the <unk> 19 responses.
Which wasn't wasn't care and maintenance for six days in the first quarter.
Carrying maintenance suspension the work at Westwood <unk>, the first Oh, they <unk> resume production.
Pardon sustaining costs were 1200.
$42 for on so.
<unk>.
Well, while higher than the same period less scared you to the normalization of the all insist then told them I wouldn't know that are.
The F.B.I.S.C. guidance for Westwood during the rent the <unk> <unk> <unk>.
I'm 25 to 1200 and $25 Brown so.
Or mix milestones for Westwood the completion of the life of mine plan and accompanying national instrument 42, we want to want technical report mid year Twentytwenty.
We will also provide enough they they'd resource and reserve statement had that thing.
I want to add the area the theme I, plus what did offending job in responding quickly and efficiency and putting the site on care.
And again in bringing it back on line with a new protocols and planes.
In the picture over the last few can see are successful first attempt to bring workers underground onto the new work protocol.
<unk> is a picture of the supervisors loose, which are separated with panels and enclosed with screens.
On the project strong we have to shovel ready projects in battle goals and Portugal.
We continued to the risk into one both prior to that cause in 19 prices and then during the crisis <unk> activities.
I'd Love to engineering work is ongoing and we are able to consider explanation given the remote nature of the site.
Cool they we have completed a collection of 256% of detail project engineering at the end of the quarter and the larger Lee complete the Creek, leaving work with our first nation partners from before winding down. This activity, we continue to be risk coated with ongoing detail engineering work.
I will not during the color alert Craig to discuss exploration.
[noise]. Thank you for no good morning, everyone.
Before I begin please note that the results. They talk about today have been previously disclosed in accordance with securities regulation and find a way to qualified persons within the company reporting.
2020, or planned exploration Spanish $52 million.
Excluding project development activities and study, which represents $5 million.
Prior guidance in order to support additional resource development drilling and Roosevelt.
For 2020 resource development and exploration program.
I, certainly 190002 210000 meters.
Diamond and reverse circulation drilling.
Let's begin with this chart, which shows the population.
We reserve base amongst them over a period.
You can see industry reserve.
Steady decline 2012.
Well I am goal has been working hard to differentiate ourselves from this industry trends.
<unk> generating a 48%.
Over that time.
It was 2016, we have at at some point 9 million ounces more than doubling the office.
Surveys.
This is the result that will sustain commitment to exploration.
And the hard work of our exploration in mind Geologies.
We believe this is a significant competitive advantage frying gold and our future.
I want to a few highlights for the poor.
During the quarter. It all together, we completed approximately 5000 meters of dining drilling designing further tests.
Continuity of mineralization associated with the Renard zone.
You will remember we announced the meeting mineral resources.
<unk> old project in the fourth quarter at 2019.
Resources on 100% basis totally 3.2 million ounces.
For a category.
Yeah, the rate of 1.02 grams per time at all.
At the nearby and wants to relate project located 15 kilometers south of the knowing and goal project. We have completed approximately 1600 meters of diamond drilling.
On testing the Anish years on target in an effort to extend the mineralization we intersect.
2019.
We also completed approximately 4700 meters of diamond drilling during the quarter focused on evaluating the resort potential of their newly discovered caused one's own.
I don't recall table project, taking advantage of the winter drilling conditions.
Oh this winter.
In West Africa during the first quarter exploration activities were focused on resorts conversion it sobota gold projects in Senegal.
Well as exploring selected high priority she had come up on geophysical targets within a 20 kilometer radius of the Diakrit deposit located to the seventh and Molly.
We also announcing updated mineral resorts estimate at the pet an eagle projects in Brazil during the quarter upgrading over 52% of the infrared resorted to an educated category.
Current mineral resources are comprised of indicated resources totaling 3.3 million tongue.
4.4 grams.
<unk> for 470000 ounces of contains old well inferred resources totaled 3.6 million tons.
3.8 grams per ton at all for 430000 office.
Angel.
Ongoing exploration continue to evaluate.
Sorry ongoing I for it to continue to evaluate selected targets within the remainder of the 180 square kilometer project.
Check though of discovering additional.
It relies on.
I am told his develop continues to invest in a healthy pipeline of early to advance greenfield projects geographically diverse location.
As well as near mine Bromfield exploration target to leverage are existing infrastructure.
Well now pass the call over to board to conclude.
Well, thanks, Craig I want to take them all to truly sank our team around the organization who have exhibited the outstanding professionalism all dealing with this unprecedented situation brought on by the Kobe 19 pandemic.
We believe eggs I am gold has an exciting future with a great foundation of existing operations superior balance sheet and what are the best growth portfolio, So development assets and exploration projects in the industry. All of this is underpinned by a savvy experience team of technical operational and financial professionals.
We remain focused on improving our cash flow outlook well safely executing on are better than plan. Our goal over the next few months is to provide clarity regarding our company growth strategy and we look forward to speaking with you again at that time. Thank you for joining us.
We will now be getting the question and answer session.
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Our first question comes from so Hot Tehreek of Credit Suisse. Please go ahead.
Hi, Good morning. Thanks for say my question can you give it a bit more color on the 2020 cost guidance I'm just trying to reconcile you know production guidance was revised down just a little bit to present, the costs went up quite a bit more <unk> eight or 9%.
And and two out of the three minds weren't really shut down for Cove. It I can appreciate there's some additional protocols in place, but I I'm just trying to figure out how much of this is.
Kind of <unk> related the cost escalation how much of it is maybe something else, whether it's mind sequence same or something I'll just any color on that would be would be helpful things.
Yeah.
Go ahead freak.
So there's a there's a couple things at work as you as you correctly point out the the guidance has changed in in terms of production. So we are producing a few or ounces and we had originally booked in into our into our analysis.
On the cost guidance, we are seeing some direct covert related costs, some indirect covert rate related costs as you point out both.
The changes and the the productivity <unk> due to the do the protocols some outright additional cautious as we've had to change some of our housing facilities and.
And and our housing of of employees a lot.
Not bringing in employees on a daily basis from from a few of the sites. We have seen some some additional costs due to hedge reconciliation with with a lower oil price. So that that has added to the costs.
And as well our initial budget numbers were done at a 13 50 gold price. So we're seeing significant increases up to I think it's around $15 an ounce going forward looking at at royalty costs, which are also embedded in like in the cash.
Costs.
There is some re sequencing and we have.
While africana rosabel continued to produce through the the full period, we have seen some adjustments and we are we have at both sites been putting more stockpile material in when we when we have some productivity or or manpower adjustments to.
The to the mining rights.
As we look forward that impact is really gonna, mostly falling to to him and we feel will be recovering a lot of a lot of that in the second half the year.
Carol would you add anything else.
No I think that's a good summary, I think you know again, having to Don stockpile certainly in pop into the costs and as you pointed out just the probably can't be levels were in talking at the two site more specifically ask that can wrote about do too.
Just different protocols and measures that we took my social distant seen in acquiring land and take care of maintenance and maintenance went last went so they get summed it up pretty well part.
Thanks.
That's a crummy thanks.
Our next question comes from Josh Wilson of IVC capital markets. Please go ahead.
You might be on mute Josh.
Oh, sorry about that <unk> relates to to Sadiola. When we should we expect closing for that transaction and and what ultimately is pending here for approval.
I actually going to turn that call over to Jeff Snow Who's who's on the call.
Sorry, Josh you you cut okay repeat the question.
Yeah, sorry for Sadiola, what remained pending for the approval here the sail and when should we expect closing.
Lower scheduling closing for end of May and the only things remaining really are the government to sign off on the documentation.
[noise] all has been agreed but it takes a while to work its way up to the various levels and the government in terms of obtaining signatures, but we're scheduling the end of may for the for the Finalization of the deal.
Okay, great. Thank you.
And then with regards to 2021 Guy in scored you know they the existing members. We're we're maintain but they are noted as being under review what what do you consider to be the big doctors here that could change the forecast for next year.
Really the only well I guess for two biggest factors that were reviewing right now as as we're we're working with our forecast not only through the end of this year, but but through the end of 2021 is just understanding if any sequencing changes arising from changes to this year's plan impact next year's plan.
And also of course, just reviewing the costs and trying to understand productivity levels.
And being prudent around how long the current protocols, we'll have to be kept in place going forward and what if any impact setup battle half as of right. Now we don't see any specific impacts on 2021, we just felt it was prudent.
To complete our reviews and and be transparent with the market that in fact, we are we are having a good hard look at that to understand where 2021 might go.
But it and then last question on <unk> with I guess, 60% of the detailed engineering now complete are there any sort of indications of you know direction. We how would the project is looking versus what expectations were beforehand.
I mean, certainly there there there are some changes to the to the timing of of what the shuttle looked like versus where we lucked out that earlier the the current situation as as a forced us to go back and sort of revisit timing on a cost basis, we have seen yeah.
On a total basis slightly a little bit of of cost I, just more from holding costs over the last while however, going forward, we do see some real opportunities to maybe recoup some of those and the go forward cost is really not materially different from anything we've said previously.
We we can execute on this this project pretty well within the budget.
I mean, one nice thing about advancing the engineering as it's really narrowed the goal posts on on what the size of the capital not will be we have a lot of a word not a lot, but we have a number of bids in in hand already that help us understand rather than Oh, the engineering estimate what <unk>.
Real life estimate of those costs will be so we're adjusting our plans accordingly, and the other piece that we're we're looking at.
In our favor over the next little while.
As our opportunity to perhaps do some hedge work on on on the Canadian dollar exchange rate and on the on the fewer price through the construction period.
As our estimates today have all been done it at $1.30 Canadian.
Exchange rate and and I have I think a 65 or 70 dollar oil price. So we <unk>. We can we can maybe lock in some nice benefits on that side if if.
If and when we choose to move forward with with Coke day.
And those will be pretty substantial I mean, the Canadian dollar exposure.
To the capital cost is is around 80% to 85% of of the of the capital cost. So $1.41. Canadian dollar is is hugely beneficial to us in in U.S. dollar terms.
Okay, great and when should we expect an update either on the project or the strategic review.
You know we're we're we're just going through that analysis now we had our board meeting yesterday, and we're discussing the timing I'm I'm, hoping.
Certainly by you know by the middle of the year, we'll be able to to to come out with a really clear messages to how we're going to proceed.
But those are all my question. Thank you very much thanks, Josh.
Our next question comes from Tanya check Us clinic.
Bank. Please go ahead.
I'm good morning, everybody I'm just wanted to come back like two yes.
It cost that have gone upon higher than we had expected fat for 2020, and I'm trying to find a stand I I think it went from that that clarity on on the you know that the corporate color, but I'll be eight nine per cent increase that you put out in an overall estimate I mean, I don't have related to call.
<unk>.
It's just <unk>.
Yeah, well, it and and I I I I appreciate that Tonya, we we ourselves have been looking at it. It's it's it's been a challenge we did look at at perhaps putting a bit of reconciliation in our disclosure, but as we went back through I did it it it's a little challenging to date too specific.
Assign some of the costs in and out however, I would <unk> you know at a high level I would say at least 75 per cent of that increase or in the neighborhood of 75 per cent of that increase is split between the cold dead the increases in in the direct covert.
Costs, some productivity adjustments, we've had to make and some costs incurred obviously for for care and maintenance and other costs the oil hedge adjustment and the royalty the increase royalties at the higher gold price. So that you know, we we can see pretty clear line of sight.
Two.
They say around 75, maybe even a little more per cent of that increase directly tied to those three items.
It's just for us down to stand going for it because you know maybe share with us the productivity I mean, how much have you seen and productivity law.
Well it it varies by site and again, if it's tough to quantify it I mean.
We haven't in the mind apartment, we've probably seen 80 per cent productivity impacts at rosabel and maybe 85.
<unk> verse.
Down 20, or down 15 add africana at at a Westwood, we're still evaluating what those impacts are.
In the mail the males are still running full out we haven't really seen any throughput impacts are not again sort of a washes over into what you're seeing on the grade impacts certainly I'd ask the can rosabel as as because of sequencing has gotten into some nicer grade material, so they've been able to to.
<unk> to compensate for that for that split but that's.
You know that's roughly what you're seeing you know when we're looking at our forecasts going out we see that.
Ongoing for two two and we also see that as we get into the second half a year through some some improvement through some adjustments we expect to claw most of that back and we'll be operating pretty close to full productivity is in the second half the year.
Okay. So then looking for that it's going to be some going back and forth productivity to say the second half that there's gonna be some current cost from this call that 19 that you're still trying to quantify that you think are going to now be embedded in the cost structure going for it.
Yeah for for Awhile for Awhile.
<unk>, we'll work on trying to clarify that at at the Q2 for sure.
It's it's a pretty <unk> dynamic situation and attribute being costs to one center or another is a little bit of a judgment call. So we want to make sure. We got the numbers right before we come up with full disclosure on it.
And then just maybe I'll ask the cat because I was a bit surprised on on on the impact for that assets.
It just that the Mel optimization is taking three months longer to do which is why our credit the climbing and came to is that what nah. It's much more of the cold Buddy impacts they the the throughput expansion was.
It was only shuttled to come into effect for the for Q4 so.
Really the impact is more on the sequencing as as Bruno elitist alluded to and the use of stockpiles in the first half a year and yeah, Yeah, I'll I'll leave it at that so it's just a cue to impact and then went back to normal capacity and Q3 to four.
Well, we're back to <unk> current capacity, but we won't see the completion of the D. bottlenecking for Q4, Okay. <unk>. Okay. And then just my last question how pass it on to someone else maybe someone can just give us some insights on this new like I'm going on at that regulation is there now.
[noise], Yeah, I can speak to it so that the the this new currency law was was brought forward answering them.
About five weeks ago, now I'm I'm not sure of the exact timing.
We obviously.
Studied the issue very very closely what I can say is that civil society. Both from the general populace standpoint, as well as a business community has pushed back very very aggressively with the government.
So even though the law was passed.
They haven't enacted a they haven't started enacting any of the main provisions that we're we're in that law.
Our position and we validated that with with external counselling internal council and with the government is that our mental agreement stands.
Carries precedence over this this revised law.
Because of embedded stability agreements and the mineral agreement was actually very thorough and quite explicit as to what are what our own currency.
Options are and and and what we are allowed to do.
And we can you know they're the same things we've always done and we have clarified with the government that we expect the same going forward and haven't received any push back.
Okay.
They could like thank you.
Pretty much Tanya.
Our next question comes from Anita Sunny and C.I.B.C. Please go ahead.
Hi, I'm most of my questions the banana, but just let me know this ah.
Surface deposit that you are you you know the service to <unk> the low grade a deposit that you I think with 100 miles key terms that went into the <unk> Westwood is that something that we should be modeling going forward for the remainder of years out more just a localized issue due to call. It.
Bruno do you want to speak a little bit too Grand Duke and let the plan is for that and what they'll see in the 43 one on one.
Yes going.
Anyway, so the economic.
Is going to be a very small deposit to complement the or.
Production hold Westwood for this year on me.
So in terms of modeling and it's a very limited.
And we we gold or the the task.
10 minutes to ensure that twist would stand on its own merit for the underground operation So as per the.
Yeah, the press release in December.
The main having a nice ramp up over the next three four years that about 120000 uncle bounce for Westwood Hmm.
I don't think is just.
Just a nice simple some feed that we are no no capturing considering the gold price environment.
Mmm.
And it was and then <unk> I need I would also add that <unk> Grand Duke was in our original guidance for for 2020, and 2021 where actually.
As we're getting in in mining at seeing maybe a little bit more opportunity, but we're just evaluating that right. Now I mean, you will see <unk> numbers in the 43 one of one that's released at mid year, it's a small opportunity, but we had to spare capacity in the Mel sort exploiting it.
Okay, and then I'm just in terms of the costs associated with that obviously, it's not as you know it does not costly for those that for those mounted as the as the underground can you just give us an idea about how we should be modeling on in terms of money hostile time.
Oh.
Bruno did you have the the mining costs for time.
Yeah, well, maybe we what we can do is to come back to their 22 in that regard because we have the ability to the costs.
For the surface and the underground so we can do that slip.
Okay sounds good. Thank you very much is around my questions in lock and bring them.
Thanks for NATO.
This can quit his time allocated for questions on today's call and will now have to call back over to Indy coping anything for any closing remarks.
Thank you very much area and thanks to everyone for joining us this morning and for your continued interest in I'm Cold, we look forward to having to join US again for our second quarter or 2020 conference call in August.
They say if everyone could get by.
This can cleats today's conference call you May disconnected airlines, thanks for participating and have a pleasant day.
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