Q1 2020 Earnings Call
Please be advised that today's conference is being recorded if you're acquiring any further assistance. Please press star zero I would like to know hand, the conference over to your speaker today, and Dave Vice President of Investor Relations. Please go ahead ma'am.
Thank you operator, and good morning, everyone. We appreciate you joining us today for a new goals first quarter 2020 earnings conference call and webcast and I hope, everyone as well and staying safe.
We will begin today's session with rupture say CFO of new gold present, our Q1 financial results and then follow with Renaud Adams CFO to discuss our operational results.
After the presentations have been completed we will open the lines for a brief Q1 I period.
Before the team begins presentations today I would like to direct your attention to our cautionary language related to forward looking statements out in the presentation.
Today's commentary includes forward looking statements relating to new gold in this respect refer you to are detailed cautionary note regarding forward looking statements in the presentation.
You are cautioned that actual results in future events could differ materially from those expressed or implied in forward looking statement.
Slide two and three provide additional information and should be reviewed.
We also refer you to the section entitled Risk factors and new goals latest Mdna another filings available on SEDAR, which set of certain material factors that could cause actual results to differ.
Please note that all amounts are presented in U.S. dollar.
In addition included in the presentation. There are number then notes that provide important information and should be reviewed in conjunction with material presented I will now turn the call over to Rob show say.
Like San and good morning, I'm now turning to slide five which provides our operating highlights.
For Q1 2020 [noise].
The details are consistent with our April production press release overall, our quarter was impacted by lower grades higher sustaining capital when compared to prior year quarter.
During Q1, the company produced 103435 gold equivalent ounces. The amount consisted of 18 on a half million pounds of copper 50380, 1000 gold ounces from rainy River in 16409 gold ounces from new Afton total gold of 66.
2790 ounces lower gold production was compared to the prior year quarter is primarily due to planned lower grades at rainy River and the 12 days that the rainy River mine was suspended.
Operating expense per equivalent ounce was higher than the prior year quarter due to lower metal grades and lower sales volumes consolidated all in sustaining cost for the quarter were 14 46 per equivalent ounce, 33% a higher than the prior year quarter due to lower grades and lower sales volumes.
Turning to our financial results on slide six first quarter revenue from continuing operation. It was 142 million driven by sales of approximately 68800 gold ounces at an average realized gold price.
14, 58 per ounce and sales of 17.7 million pounds of copper to 56 per pound [laughter] Q1 revenue was 15% lower than the prior year quarter due to lower grade, partially offset by higher gold price operating cash flow before working capital adjustments was 47 million or seven cents.
For sure for the quarter.
Lower than the prior year quarter again, primarily due to lower grades the company recorded a net loss of 28.3 million or four cents per share during Q1 compared to a loss of 13.4 cents per share in Q1 2019 after adjusting for certain charges net loss was 17.8 million.
Or three cents three cents for sure and Q1 compared to net earnings of mills sense for shared in the first quarter 2019. Our Q1 adjusted earnings includes adjustments related to inventory write down and other gains and losses, including the unrealized adjustments on our gold price option contracts and the stream mark to market.
Mdna has additional details on a non-GAAP measures discussed here.
Slide seven provides a breakdown of our Q1 2020 capital expenditures, our total sustaining capital and leases up for the quarter was 49.1 million spend was primarily related to tailings work and with drains growth capital was focused on project development at new Afton.
As at March 30, Onest 2020, we had approximately 400 million in cash and approximately 600 million and liquidity.
With that I'll turn the call over to Reno.
Thank you, Rob and good morning, everyone I'm on slide 10, before we touch base on the operating performance I'd like to two and discuss some aspects of the Kobin 19.
The early stage of depend they make a crisis, we created our common gold objective.
Long be preserving under protecting their health and safety or for our people the environment in communities.
While preserving the viability and in particular reaffirmed mines in business.
Thanks to the tremendous commitment any involvement normal or we've been pretty successful to date to deliver one that statement.
When it comes to different backstrom or fall off the employee contractors and community health and safety well. This is where it really the prior hits the ROE and a true sustainability it takes place.
But feel if new that I'm extremely proud of work that's been achieved to date a wire we are physically separated.
Hi, truly feel much closer than ever to our employees and community.
I want to go to the details our favorite thing that has been in place I would summarize by saying that.
I really feel that they were both sides and other corporate level.
Working with the local governments and helps agency recommendation that we've put in place every single aspect.
What we consider to be the best practice are currently in place and has spurred a rules oh anymore or when it comes to a more specifically on the rainy or we have adopted I became situation, we have adapted to transportation as well.
But very key or we have been created as well some community base consultation, which has been absolutely key to date and this is how I feel I really feel that on their biggest crisis that we have significantly raised the bar when it comes through.
Are you could see more on our website I'm very de are the Covanta 19 on their view <unk> web site.
Just a Justin term office supply chain or continued t. as well, so somewhat surprised but they're very happy to <unk> to see that that truly to supply chain has not been impacted or we haven't the proper inventory on hand and required going to keep in their maintain our long term.
Schedule right time, as well I remain there remain as planned.
Our creative business continued to plans both sides are fully mobilized with the response team.
We have different scenarios in the ramping up and ramping down in adjusting has we continued to.
To address their operations and ramp up and bringing more as we are needed for comparator arm execution as well.
We've talked about large on our financial status as well, so I'm very discovered crisis or while our two mines are currently operating or of course, but feel that we if we have a significantly raise the bar with regards to financial.
Properly funded to go through this crisis.
The only release a suspended the slight activities to date has to do more with their exploration regional exploration program. As a result, so far more priority from government men are been [laughter] currently focused on a more operating permit in more pricing. So we are expecting a bit up a delayed there, but nothing nothing AMETEK.
Well to our plans and we continue to believe we've executed.
And Oh of course that key as well as this spring terms are will be the are the importance our execution of our capital project timelines as well and execution and again, we've been adopting this I apparent as Oh.
That's pretty cobot.
As a closing remark I would say that are we are currently actively engaged in initiative to bring some testing capacity or per site, which we believe is crucial to significantly improve health and safety profile. Since we continue to increase the amount of activity.
On Slide 11 are on February 13, we released our new updated 43, one or one.
The release, where a pretty a there really is was pretty detailed are probably to ramp gas or presentation targeting the results were on the on a year by year basis. So I'm looking up to our quarterly plans that that's served to build a 2020 year one off the plan and I would say that I'm very pleased.
That aren't productions results for Q1 considering.
The 12 these suspension at a rainy river as a result of the Cove it.
With a cash golf and all in sustaining costs also aligned with our plan and somewhat below.
While we are have withdrawn our guidance, we definitely continue to focus on executing our disclose plant, which remain our for time being our internal scorecard.
Operation our operation restarted pepperoni reborn approach a third and now after a total of 14 days of suspension and is currently ramping up on operating capacity, but also an equally important in term of capacity for capital execution.
It is all about a two safely we incorporating some orders correctly using mostly the local workforce, which is about 70% him to total workforce, but as we advance we need to bring more specialized employees and contractors. So we could execute our capital project and also continued to ramp up operation back too.
Right now.
The mail has been operating super well since the restart using direct feed him stockpile generating hauling inline with our plan.
On slide 12 and term perfect key performance indicators for rainy River mine. The highlight is the great performance of the mine in term of total times efficiencies and unit costs when compared to our plan. Our prior says prior to suspension. The open bit set was operating at an average of 440000 tons.
Dave and we're very pleased with that performance our strip ratio was lower in Q1 compared to last year or ask Brian or the mill did well in term of ability availability on recovery.
Maybe the only sponsor on our filing Q1 at rainy you're framing why the ramp up of the mail up to 24000 tonnes, a day or much harder rock by February we weren't there, but it wasn't even more difficult at start in January we worked on improving frankman fragmentation in a bad at commission to pay.
Mobile crusher properly and improve our on blend as a as a result demand is now performing very well.
Capital project events in the Q1 and as planned we are anticipating some increase in Q2 in Q3 as the core of the tier may the tailing management and a week drains or the water management will be completed potentially opt to Q4.
I'm on slide 13.
New Afton. We also released on February 13, and New Technical report dating to capital execution in operations are there would be three mcl grading, bringing to life of mine to 2030.
We are very pleased with a wonderful work achieve at new Afton, where operation was on a terrific during the quarter and continue.
While cobot or while remaining Covanta case free what action taken which we believe our was key whereas the implementation or for 14, 14 schedule right and seven seven which provide for proper sale price relations every 14 days and for 14 days.
While our gardens, whereas our withdrawn or we concentrated focus on execution are far new plan.
Our gold production cash cost and all in sustaining so were aligned with our clients.
Action was below our plans due to lower grade mill that plan.
Sustaining a sustaining and girls capital were slightly below than originally planned but nothing specific to discuss morning timing of certain activities. Our capital spend also expected to increase in Q2 in Q3 times more schedule work will take place.
On slide 14 in term of key performance indicator for new Afton mine again, when compared to our plan I would say that I'm very pleased with our underground mining and milling productivity both recovery for gold copper warehouse plan, despite a lower copper grade mail in the quarter.
We are reviewing some potential operational aspect, causing to higher dilution than expected in Q1, and resulting in the lower copper grade.
We're pleased with the 12, a 131 meters or be Threec zone development achieve in Q1, but believed that the new safety protocol put in place well in short term slowed down a bit the productivity.
To be Signaldemand stated that priority will be gave into the for the time being to more pressing and operating permits or we are expecting some delays with regards to regional exploration permit.
On slide four a 15 and Ana.
And on the Blackwater just a quick just a quick comment we have far we've now completed our internal scoping study.
We'd likely result, and I would like to hopefully make a decision before the end of Q2 with regards to the next step which could lead to a new 43, one on one compliance study based on the new scoping. So March income as as we advance and on our Q2.
I was a closing remark on slide 16.
Sure a lot has been down over the last 12 to 18 months with regards to repositioning Hugo.
Now a clear path forward to achieve operational profitability and growing free cash flow and the closing of our recent strategic deal with Ontario teachers are significantly improve our financial position and balance sheet.
Lot exploration in the revaluation of Blackwater continue to provide optionality to our shareholders.
This will close the are the formal presentation and I will turn the call back to operators for UQM me a portion of the call.
Thank you.
As a reminder to ask a question you will need to press star one on your telephone to withdraw your question press the pound or Heskey. Please standby, we've compiled acuity roster.
Your first question comes on line of Matthew Fields from Bank of America.
Your line is now open.
Hi.
I understand you know the expectations are probably not where you wanted to be.
Coming into the quarter, but under the circumstances.
Wanted to ask about your balance sheet now that you have the extra 300 million of cash from the Ontario teachers transaction.
Is there a priority towards doing some kind of refinancing transaction on those 20 twos.
Maybe using some of those proceeds.
For that purpose.
Yeah, certainly and as you mentioned in the market is.
An interesting one as we sit here so definitely a priority to take care of the 22 bonds, which are are still two and a half years away from maturity. So.
I think we can be patient and prudent as we addressed all of those bonds and and.
Watch the market farm.
Beneath them and then the.
Opportunistic when I when we see the market come around so certainly we want to.
Reduce our debt load and then also a deal with any steps that are that are out there through an opportunistic capital markets move.
Okay. I mean, just for the record you know maybe the market was not there a month ago at the end of March but your bonds have certainly rallied back pretty hard along with the rest of the market. So I would say the market is there and lots of other metals and mining companies are trying to come to the market now because they don't know if the market is going to be available in the future. So.
You know.
I'm not a leverage finance banker, but they would usually say you take the money what it's available not when it's a the right time, but.
Good luck and hopefully you can address those short term maturities to buy yourself more more time and case.
Every isn't as quick as people think thank you.
Okay. Thanks.
Your next question comes from line of ahead treat credit Suisse. Your line is now open.
Hi, Good morning, Thanks for taking my question just a modeling one for me on rainy river or how should we be thinking about grades and the second quarter given that a proportion of the mill feed will be from the reduce mining, but then also stockpiles I'm just trying to get a sense as are we back at Q4 levels for grades.
Any color there would be helpful. Thanks.
Yeah. Good question, a reason why we are and I'm not trying to be a to avoid the question here, but you would I understand you know that though you know we withdraw milgard the guidance for a reason I think we're ramping up as we speak.
It's all about you know how rapidly you know we could get back to feeding the may our went basically 100% from to mine, even though our original plan was considering the Uh huh.
Considering they use as well a mid grade stockpile in a blending and so it's all part of the of the plan, but yes. So technically if we weren't too or is it to a to stay up to about 70, 75% of the capacity of the mind, you're absolutely right. You should expect you know where lower grade because we'll be.
He will be a feeding the mill and you know with more than a originate fan.
But at what level I think as we advance and as we explained well being better position later on you know in the quarter to come up, but but yes, technically if you're if you want to keep the mail, they're running and at the mine is not capable to produce 100% event you would be you use.
Adding a lower grade stockpile and therefore, you could be down to our two lower level, maybe similar to Q4.
Okay, Great. That's helpful and just a quick follow up I might've missed this are there but is there a change in the cadence of the Capex at rainy River for Q2 to Q4 or is that kind of hasn't been really important not so much to be I mean like of course, you know like or something would happen you know when this situation with that wouldn't get worse than that.
And ER and they will be imply you know like a suspension of operations things will be adjusted but this is not where we're looking at when looking at a ramping up when looking at executive options. So we hope that we would be executing.
Most if not all the capital that we had originally planned for 2020, a maybe a little bit of deal delay or are you know what maybe we could somehow expand your now to the Q4 and remember that our original objective was to turn in to our free cash flow after Tim.
Hundred dollars by Q4, so while we're not necessarily interested in postponing and then pushing everything towards the end of the year, but there is some ramp up activities as well. We're working very closely are with the community. How are we going to do this knowing we have to potentially bring people from outside his own so in.
In short, maybe a little bit of a timing issue, but the objective remain to execute our plan.
Okay. Thank you.
Thanks.
Your next question comes from the line of Anita Sonus from CBC Bank. Your line is now open.
[noise] Anita Soni from CNBC Bank. Your line is now open.
Sorry operators I'm sure the same for you, but I, we can here and the question.
I don't hear anything I think should Amazon.
Yes. Please.
Your next question comes in line of Don Maclean from Baird paradigm capital. Your line is now open.
Pretty close operator on the name thanks.
Thanks, guys for having the.
During the call.
I just was hoping you could give us a little bit more color on the dilution of the new Afton mine.
What what can you do given it's a block cave and how important is that particular source of feed for.
For the overall production profile.
I did a good good question and on I mean, there's definitely more to look at a there is a two things right. There is the like you're saying remember that we are now when does and the timing.
I between to be three and completing the escape and a west gave then you have some pillar is recovery as well Oh and the rehab them. So there is a lot of Oh.
I would say our component you know to look at as we speak so absolutely absolutely agree with you when it comes through a block cave you know you already have Mike So but is it you know like radiata crosses or margin dilution on across is like more.
Spotty, what about the pillars recovery what about the bland.
What about demand the true, but this is where I mean, there's a lot to lock out too early stage. If we were in a position to ER to give more details a you know we would we're not.
There's a few things that are clearly you know they didn't work as planned in Q1 with regards to where the copper grade done now will be our will be a and we are as we speak in though I looking up more I would be in better position. Later on you know into Q2 two to be more specific about that they've done went on for the moment I wouldn't say there is made.
Before or five parameters, we can look that and that we're going to weaken or are we going to go to the discount so feature them and hopefully correct the situation.
Okay. So I guess the bottom line or the takeaway is that you're optimistic that you have enough.
Parameters and levers to pull that you can.
Address at least partially this.
Extra.
I think I think it's a fair comment at this stage.
Okay, great. Thank you.
Thank you.
Your next question comes from the line of Mike Parkin.
Please state your company and your line is open.
Hi, Thanks for taking my question guys, It's Mike Parkin from National Bank or just following up on that can you give us an idea of what the new apps in Q1 budget grade was.
A very very pretty much aligned with the full year, a you know when you're looking at our technical report you know as a reference.
You are like in the very low Eightys, a 0.8% and we did.
Looking at the details here processing rate yeah. So.
Uh huh.
Where.
Somewhat you know like maybe 10% below than what we were hoping.
Okay.
And then are you seeing that continue into the month of April or.
It was it well I mean like I think it yeah, I think I think it's fair to say you know that Weve turned the corner you know in 24 hours, but but like I called a previous or questions I mean, where we're very much at looking at it.
You know if you recall last year, we did had a couple quarters it malware or copper was actually lower but you know goal was higher silver equivalent basis, you know we run the business on equipment in base anyway, but this quarter into Q1 of our goal was a was pretty much you know align with plans, but unfortunately, we.
We saw that copper been below so we need to look at it and early stage.
Again, if I have more information I wouldn't be providing yet, but uh huh.
But yes, we were about 10% below plan into Q1.
And can you just remind me again on the.
There's a period, there where you get into a supergene copper material.
That.
Where you're at right now we are an observer Union. We are in a supergene right. Now we are producing a concentrated you know like are they a copper oh the separated from the.
So far concentrate so it's already happening right now and we've been very good maintained a recovery on the adjusted sales and strategy and so forth. So its worthy working ask plan.
All right and one last question.
What's the greed of the medium grade stockpile at rainy River.
The mediums stockpile is a you know the medium what we call mediums stockpile is usually between the 0.5 end 0.9. So our assumption is that the averages about and the midpoint of it we have some zone, sometimes that are high your sums on maybe closer to that bring five.
But technically and all your could technically you are bound like the 0.75.
Average.
For any all right that's it.
Thank you for me thanks, guys.
Your next question comes from the line of Trevor Turnbull from Scotiabank. Your line is now open.
[noise] Trevor Turnbull your line is now open.
Okay, hoping we're not having a nice issue here, but Uh huh.
Ken here that one.
Do you likely to move onto the next question.
Yes. Please.
Your next question comes from the line of Anita Soni. She Ibcs CNBC Bank. Your line is now open.
I couldn't hear a little bit of background here, but again just like you. So just in case I meet those listening to us So why don't you.
Yes, please reach out directly to and after called and I will take your question on the one on one sorry about that just can hear you [noise].
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Well, yes, that's it.
Hello, everyone, a we're having some technical issues obviously.
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Ladies and gentlemen, this concludes today's conference call. Thanks for participating you may now disconnect.
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