Q1 2020 Earnings Call
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Good morning, Ladies and gentlemen, this is the conference operator today's conference call is scheduled to begin momentarily until that time your lines will again be placed on needs a cool. Thank you for your patience.
Amazons become a lifeline too many show.
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Good morning, My name is Adrian and I will be a conference separate it today at this time I would like to welcome everyone to the Monday mining first quarter results conference call.
All lines have been placed on each tubing any background noise.
The speakers remarks, there will be a question and answer session.
If you will like to ask a question. During this time simply press star in the number one on your telephone keypad.
If you like to withdraw your question I see pounds key.
Thank you I would now like to turn the call but to your host.
Very interesting.
Please go ahead.
[noise].
[noise]. Thank you operator.
And thank you everyone for joining money Minings first quarter 2020 results call.
As always I would like to draw your attention to the cautionary statements and light you.
Well be making several forwardlooking statements rather sports in this presentation unlikely in Germany as well.
On the call today to assist you the presentation and answering questions. Our gen. He Magee, our senior Vice President and Chief Financial Officer, and Peter Richardson, Our senior Vice President and Chief operating Officer.
Your prepared remarks, when will we will be focusing on the quarter results and our current.
We recognize that there's continuing interest in our readiness in response, Kobin 19, and we'll be happy to answer any questions in detail during the human Adas specifically address their activities in this regard.
Am I mean mining safety is one of our four fundamental values and as always if it's more of our business decision.
19, as a global threat.
Which requires United response from government industry in our communities to ensure the safety health and wellbeing of all.
Your operations are continuing to managing response within the framework of the company's pandemic response plan recommendation doesn't help authority and local and national regulatory requirements.
Well greatly and at each operation, we continue to identifying important measures to protect our workforce and our community.
Tony mining, we are taking numerous steps to ensure needs are being addressed in the communities and regions in which we operate.
We are sharing action plans and that preventative measures being taken with our employees unions contractors communities and industry peers, while seeking considering their input to ensure we are delivering response of action consistent with broader effort.
Further we are actively providing support in the form of many donations of emergency funding central supplies and numerous other form.
The photos on this page demonstrate some the basic measures being implemented in the coordination with government and local health authorities to protect our workforce and our communities.
There are numerous other measures. We are taking just one example is I candle area, where we have provided an air condition construction trailer to help local authorities conduct affected roadside health check.
I would like to acknowledge all millennium mining employees in our contractors, who are working tirelessly and had risen to many challenges to keep our operations running and most importantly safe.
Well the 19 is impacting away we operate but we will strive to continue delivering on our mission to responsibly mine base metals vital to society delivering meaningful value to all of our stakeholders.
And now I'll turn the call over to Jim He to look at our summary financial results Ginny.
Thank you Mary.
Looking at as one revolve yourself on slide four operations in AG is it could be.
Well south of tens of basis.
We said he thousand default.
First quarter.
We sold over 101000 tons of payable base metals, and approximately 79000 ounces of gold generating revenue of 300.
[noise] the quarter's revenue with it didnt significantly impacted by negative provisional pricing.
Given the decline in the marketplace and many other metals <unk>.
The negative impact on revenue was $63 million for prior periods.
And $86 million in total the 12 cents per share city mark to market.
Yeah.
Additional information on a provisional pricing and type adjustment is included in.
No 12.
64% other revenues were generating copper.
All contributed to increased 15% over all that again with a contribution is unencumbered gold production of Japan stuff and the song gold price.
Zinc nickel unmet contributed a combined 20 watts is that she told all that.
Slide five presents a summary of the quarter's financial results the details of which are not financial statements and DNA issues.
First quarter revenue was 9% below that at the same quarter last year impart owing to the when metal prices and negative I suggest that Cisco.
The price decline was offset by higher copper nickel and gold sales volumes, mainly due to the acquisition in Japan and increased production.
Yeah.
Gross profit was significantly lower reflecting the decline in revenue as well as conclusion that you've had a production and depreciation teaching.
And if we emphasize Asian, let's get it kind of area with my idiocy.
And I feel good.
Attributable loss from operations was 15 cents per ship.
First quarter net loss was negatively impacted by the gross profit as discussed.
$10 million or eight cents per share of deferred taxes that such a pot of I just the foreign exchange translation, which has no.
Pat.
Adjusted loss was six cents per share for the quarter details will be Justin losses, and DNA issues.
Despite the negative provisional pricing adjustments, we generated EBITDA of over $90 million in the quarter.
Cash flow from operations was $83 million, an adjusted operating cash flow before changes in noncash working capital was $28 million for censorship.
First quarter capital expenditures on attachment, it's $441 million.
We will discuss more details of Capex leader in the context everything this years overall capital expenditure guidance by 30%.
We ended the quarter in a strong financial position for $367 million is.
Equivalent net debt of $180 million at a further $430 million available under the Companys revolving credit facility, excluding the 200 million dollar accordion.
In much the company do down $150 million on the revolver and took out any additional tremblant attendant, let me ask a cautionary that you're just I guess, it's an honor that searches.
He is reflected in the easy in the debt position this quarter.
Yesterday, our board of directors declared a regular quarterly dividend of four cents Canadian per share 60 cents.
<unk> Canadian on annualized basis, maintaining the increase announced last quarter.
Remain at a strong financial position with ample liquidity and minimal financial leverage.
I'll now turn the call back to me to discuss the operations in college.
Thanks Julie.
I'm fine six candle area had a good operating quarter, particularly in the context of implementing operating changes to protect our workforce in communities from called the 19.
Production was impacted by ore hardness and available operational hours is diagnosed with limited the mill throughput, while we work to minimize the impact of the mill optimization project in the quarter construction interferences and other operational downtime affected mill throughput more than planned.
We've now completed upgrades on three of the four ball mill.
On the line were both formula rates have been completed we're seeing the expected performance increase a finer grades and increased recovery optimization work continued overall construction was approximately 87% complete on an handler you know optimization project at the end of quarter.
Yeah, well phone the upgrades on the fourth and final ball mill, given restrictions arising from cobot 19, limiting the ability to safely mobilize contractors and consultant.
Especially completion at the mill optimization program in the second half the year assumes that we will be able to safely mobilize the necessary personnel and coordinate with a plan no maintenance shutdown.
Ore hardness is expected to decrease between beginning this quarter through the remainder of the year in its considered in our lives production guidance.
We have widened the copper production guidance range for the year, maintaining a high end with a modest reduction at the low end with modestly realized gold production as well.
Aggregate site operating costs were below plan for the quarter, owing primarily to the favorable exchange rate.
The Chilean Chilean peso U.S. DRD was able to versus our plan of 675.
Full year cash cost guidance has been improved to a dollarsthirty five from kind of copper from $1.45 per pound. The majority of the decrease was to a more favorable exchange rate assumption with the majority of our operating cost Chilean peso dominant denominated and driven.
Lower diesel price and electricity price assumptions also contribute to this.
Ancillary sustaining capital expenditure guidance for the year has been reduced by approximately 13% to 230 million of this approximately 150 million remain with 77 million capitalized in the first quarter.
Capitalized stripping is expected to be lower mainly due to the deferred volume as well as lower mining costs. Also included is deferral of some underground mine development and technology implementation as well from drilling equipment 2020 was already a low cap if your candle area compared to the previous two years average of greater than 400 million per year.
2020 exploration expenditure guidance has been reduced to 15 million from 20 million. The 5 million dollar reduction is related to drilling and drifting candle area has long mine life already ahead in the <unk> proven and probable mineral reserve category owing in large part two are significant and successful exploration.
Programs over the last several years.
Candle area is positioned to deliver over 30% production growth by 2021 over 2019 with improving cash costs.
Moving onto Japan on slide seven.
Got it also had a good operating quarter, particularly again in the context of implementing the operating changes and reducing the number of people on site to protect the health and safety ever worked for us and communities.
The mine performed well during what turned out to be a very heavy rainy season and mill throughput was above plan gold production was impacted by poor recovery, which has since improved to level levels comparable to the fourth quarter of last year.
Higher copper production guidance has been maintained well gold production guidance has been moderately reduced to reflect the first quarter results.
Copper cast cost were better than planned benefiting primarily from favorable foreign exchange rate and from strong gold prices, which improved the realized byproduct credit.
The majority of Japan as operating costs, our Brazilian real denominated.
It was slightly above it and averaged 446 versus plan of 375.
The goal Titan price averaged 15, Athree Brown and while this is still well below current pricing it was significantly better than our plan of 13 50.
Full year cash cost guidance has been improved to 85 cents per pound of copper from 115 as a result of the more favorable foreign exchange and gold price assumption.
Capital expenditure guidance for two about her husband lowered by approximately 33% to 40 million approximately 4 million was capitalized in the first quarter.
Roughly 7 million other reduction is related to capitalized stripping, reflecting both a lower expected stripping ratio as well as exchange rate benefit.
Discretionary exploration land acquisitions have also been deferred.
The remaining significant items are small project deferrals and some minor equipment replacement.
The 2020 exploration expenditure guidance has been lower modestly from 7 million two 7 million from 10 million previously.
In responding to cover 19, the exploration program has been reduced in the short term to minimize the number of employees and contractors on site.
We have brought from drilling activities back on our planning on how to increase drilling again, it's a situation allows approximately 40000 meters of drilling in time for the year from 50000 meters previously with the majority of moves to focus on near mine target approximately 5400 meters were completed in the first quarter.
We believe there's significant valleys degree to be created to pass through expansion at the appropriate time. The study work is ongoing.
As we have indicated previously the expansion strategy will be underpinned by the exploration success that we can achieve.
Moving on endeavors Corvo on Friday.
The operation had a challenging quarter, particularly in March with a significant number of employees working from home and a large number of contractor suspended for cobot 19 risk mitigation measures.
The zinc expansion project was temporarily suspended and the workforce demobilised.
Zinc production was as expected with plant throughput.
Head grade and recovery all in line with plan.
Copper production was impacted primarily by below plan head grade mining in lower grade ore zones in particular, lower grade ores from the corbo ore body had a large impact on the copper grade and nustar metal production.
Aggregate site operating costs were better than planned before a favorable exchange rates. However on a cash cost basis. These benefits were negatively impacted by lower copper production levels and think byproduct pricing, resulting in the Q1 cash cost of $2.24 per pound of copper.
Full year copper production guidance has been reduced reflecting the first quarter results.
Zinc production guidance has been revised to reflect production from current operations only due to the uncertain timing of the restart is is that we're also reviewing potential impacts on the 2021 thing production estimates.
Hopper cash cost guidance has been revised to $2.10 per pound.
One $1.80 previously, reflecting reducing byproduct production and lower pricing assumption.
Capital expenditure guidance has been reduced by 120 million or 52% 210 million. The majority of this reduction 100 million reflects the temporary suspension of the engine.
The project advanced very well during the quarter on track for the phase start up and production during the year prior to the temporary suspension in mid March 55 million is forecast to be capitalize on those up this year on a cash basis.
A little under 31 million haven't capitalized during the first quarter, which means 24 million over the remainder of the year. This relates mainly to payment for work that has already been completed and continuation of some minor works.
Sustaining capital expenditure guidance has been reduced by 20 million to 55 million approximately 16 million was capitalized in the first quarter. The majority of the deferral relates to mine development as well as underground drilling mobile equipment and other smaller items.
The 2020 exploration program has effectively been curtailed with expenditure guidance lowered to 2 million from 7 million previously first quarter expenditures were approximately 1.2 million and no additional drilling as president Lee planned for the year.
I'll now turn the call over to Peter to review the zinc expansion program up to the suspension date as well as the performance for Eagle and degree than peers.
Thanks, Laurie we continue to make good progress advancing does that project in the fourth quarter.
Good for construction had recorded the highest monthly progress rate did they prior to that temporary suspension.
Slide nine so some of the progress that too.
I'd be ended the quarter the underground aspects of deposits were 88% complete.
Civil and mechanical locks were largely complete.
Development lower scope.
Well, what the first two sub level acts as a continued.
Two pictures on them. So that number two trials were tower across the chamber nearing completion.
Brokers construction was nearly 80% complete with the materials handling and the saga more than 98.
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The photo and the middle right. So the missile Sag mill commissioning work in progress and the photo on the right. So it's all a basketball peso circuit, we're preparing for commissioning as well.
I was like you go mine and Hobbled mills performed well during the quarter.
Got it responds accordingly, we have modest fido computers have you go in accordance with state and local health recommendations.
Approximately 45% over own employees at Eagle on a daily basis are working from home in order to cool physical discipline.
Developer equally <unk> legal fees is 13% onto their original cost estimates yeah go ahead of schedule.
As lining progressive into the higher grade readers of Eagle. These ore body grades are expected to increase.
We are currently, causing notably higher nickel grades and these will be profitable throughout the <unk>.
The first quarters has caused a 143 for problem nickel wasn't aligned with plan despite lower byproduct comfortably.
Oh, yeah, nickel and copper production.
Okay crossing capital expenditure guidance have all been maintain.
Eagle Twenty's, winning nickel production, it's got to increase more than 3000, Todd or 22% over 2019, a reduced past talk quite a great Eagle before continues.
Tribute to the milk.
Similarly, copper production is expected to increase more than 2200 times for 15% this year.
Our goal remains well positioned to generate meaningful free cash flow and even in the current metal price environment.
Lastly, I think everyone on slide 11.
We have modified work arrangements to reduce the number of your site and helping sanitation regions and implementing several changes some cool physical disposal.
We are implementing many other preventive and helps measures I think given that we are all our other offers.
During the first quarter zinc, we want to achieve excellent performance and the mine and mill Dozing production was negatively impacted by the thing.
We have we seek was winding up several sold due to temporary or ground stability consideration.
Rescheduling, Unfortunately me and pushing out mighty of some higher grade things until later in the Oh lowering of the expected a good then grade for the.
Hi, good <unk> efforts on old costs were better than planned in the border even before the impact of favorable foreign exchange rate.
The increase the casebook guidance relates primarily to the degree so being productive.
Well through an assumption <unk> lower than bad the by product.
Well they taught it capital expenditure guidance of the lowered by mail and 45 million. This includes deferral ups on mobile equipment as well as the elimination of small called that foreign exchange benefits makes it off the balance.
Approximately 8 million what's happened late in the first quarter.
Exploration efforts continued in the quarter on existing ore body from underground umbrella targeting all these deposits also.
Oh, you're expenditure guidance reduce the 7 million hold 50 million geophysical surveys and some good thing activities have been deferred.
The land drilling has been reduced to approximately 17000 meters from 60000 need as previously I will now turn the call back to Larry.
Thanks Peter.
We have discussed the revisions to our production and cash cost guidance in each of the operation sections and in detail in or Mdna.
This table provides a summary of the current guidance.
As we've noted our operations have not experienced significant disruption to production shipment of concentrate or supply chains as a result of corporate 19.
However, we have reassessed the production in light of the temporary suspension of the big expansion and operating procedures implemented to reduce the risk of infection better site.
There are cost reduction programs have been implemented to respond to the low metal price environment.
Similarly, slide 13 provides a summary of our capital and exploration expenditure guidance. We have discussed revision in previous operational section then in detail in or Mdna as we had with the call.
Our 2020 capital expenditure guidance has been reduced by 180 million or over 30% Q4 hundred 40 million as a result of the temporary suspension of the thing expansion and cost reduction programs implemented to respond to the low metal price environment.
Land exploration expenditures had been reduced by 36% EUR 20 million to 35 million refocus remaining on near mine targets.
Our assets, which have active exploration program all have long mine life ahead of them and proven and probable mineral reserves. This reflects successful exploration programs over the last several years, we do not expect the deferral of exploration expenditures to have a significant impact on the near or medium term mine plans.
We believe there remains significant value to be created at our operations through exploration, we will ramp up these programs with consideration given to help them safety and economic condition.
Turning to slide 14 familiar slide, though a slight modification this quarter from our current assets. We continue to have an excellent gross production profile now benefiting from previous significant investment initiatives over the last few years.
We continue to die for over 30% growth and attributable copper production from our current assets from 2019 2021 to both is primarily attributed to realizing the benefits of the low risk high return investments, we're making over the last two years and our nearly complete I candle area. In addition to the Japan acquisition.
With the temporary suspension of the never Squabbling project. We're currently are reviewing the 2021 and 2020 choosing production forecast.
The addition of Japan has increased our gold production and more importantly has significantly increased our attributable and fully exposed gold production to nearly 100000 ounces. This year based on our current guidance lastly, nickel production is set to increase as a higher grade ores of Eagle East our mind.
Before opening the line for questions I would like to reiterate a few key points on our strategy an advantageous position.
We aim to operate upgrade and grow a base metals portfolio that provides leading returns for our shareholders throughout the cycle.
We believe a copper dominant portfolio, coupled with other well position base metal mine and precious metal byproduct.
We'll continue to enable the best returns throughout the cycle.
Assets with a competitive cost position such as ours reduce the real or perceived risk the potential curtailment and the trough of the cycle, while offering leverage and ability to create meaningful value through the upswing.
We aim to maintain low leverage and a flexible balance sheet, while increasing direct shareholder return it's difficult to predict when the cycle may turn and as it often does so quickly.
Operating with low leverage and a flexible balance sheet has positioned us well to navigate the economic impact of the pandemic, while maintaining direct shareholder return and without operator, I would like to open the lines for questions.
As a reminder, if you like to ask a question for star the number one that is far once the question.
First question comes from the line up or is that it's got to them.
Hi.
Good morning.
Forster from Scotia Bank.
If we can get a bit more color on dovish cargo.
When I look at your revised guidance it would imply essentially no growth from 2019 levels.
Does that does that imply that you're effectively assuming that that is delayed until the end the year.
Hi, Good morning, Orest, Yeah, that's correct and a we've taken out there is that.
From the 29 team and we've assumed that we're not going to restart in our base case plan, we've assumed that a restart not until January one and there are a couple of reasons for that's the first being not you know we could try to bring it back in the summer or another time and but at the moment, we feel there's a risk that we will have to curtail.
Again, if there's a second wave of Colin and so we don't want to demob Remobilize doesn't have to do a partial or full demob again anything that would be really value destructive and plus right now with the zinc prices, where they are we're not in any screaming rush to bring on zinc when teaser as high as.
They are in the prices as well as it is so.
No I, if we can preserve vendor for that $100 million that we still have left to spend in a closing price environment. We think that's a prudent thing to do.
I see I realize you're you're still reviewing your operating plans then for 21 22, but it's kind of you know the right way to think about it if just safe would take the old mine plan pushed back a year.
Rough guess.
I wouldn't I wouldn't necessarily say year, maybe nine mind to do you want to be conservative than any year. Peter what would you say I think we need three months of ramp up on the you know essentially what we were going to start in March we will start on Jan one according to the current plan.
Got left correctly.
Okay. Thank you very much.
Yep.
The next question comes from the line of Dalton <unk>.
So.
What's kind of course.
Thanks, Good morning, guys My first.
A question he's on what Murray touched on in terms of the FX rates of diesel and be important implications.
Not Chile, and Brazil as was the diesel prices.
We have not.
Although I know gen. He's been looking at this with the sites a in particular with Uh huh.
The <unk> the cost to lock in prices when they compelling Jun. He do you want to give an update on that.
Sure.
I still can't go area.
Are we happened looking at.
[laughter] IDN locking in some places at this point.
Yeah, hi seem to be compelling at this point, but we will continue to that.
In the market.
Sure I mean, it's just you.
It is an unnecessary element of volatility here have you.
Yeah, that's something that we have never done we have always Dave make it up.
Oh pricing and.
And we always get the question.
You know praise for not doing it when the prices go up.
So our position.
Our policy is to not headroom metal exposure.
Okay, and then maybe.
Presumably these are by their necessary, a higher risk or high return projects I should say.
So just give please.
Uh huh.
It's a little bit about discipline Dalton I mean, some of the things that we have kept in there for example, the mobile crusher.
We have kept in there.
That easily could have been child, a lot of the deferral as well we'll have to do with the fact that we have restrictions.
That can come to our site.
And especially if they're traveling from other regions. So if you're doing a an improvement project that requires a.
Especially just consultants to assist in the implement.
Wayside some things we're just looking prudently you know and asking the sites that are they take extra special care because of the low metal price environment and not they employ.
And then some cuts in order to preserve their cash flowing Ah.
And we have a good plan, we have been able to caught without hurting the future production and I think gets its prudent and.
And.
Mhm, there's nothing there that is a really high value item that we have.
Great. That's all from you guys. Thank you.
Okay. Thanks.
The next question comes from the line up great fun TV.
The Q.
Thank you please sag mill operational hours issue.
So.
Larry is that all just related to see muscle was this something else going on notice it's cool stuff this year.
No we did have some challenges with the ore hardness.
Oh say about 65, but that would do with.
So simo and another operational issues on 35 cells of the loss.
Was due to ore hardness.
We did have publications are going to see mob work called the third ball mill motor.
Upgrade.
But also other operational issues during the quarter that way.
Hello.
So that is fully with us I guess going into Q2.
Yep.
Which further you slowed that down and so you still considering the studies on expansion.
Scenarios for the operation.
But it's a slowing down what kind of decision timing, we could think about so when you would come out with some view on what you're going to do it yourself.
Well the reason we slowed down initially it wasn't for economic reasons or a need to preserve Todd.
Curtail at the moment in order to reduce the number of people at site and the number of visitors to site.
And the exploration wells.
Number of people that site. So that was really until that 19 response.
The exploration programs initially as a cobot 19 response [laughter].
And we're already looking at how we ramped back up and bringing people back to get the drills. Turning again, we have proceeded with then the desktop studies I.
[noise] kind of thinking of the an 18 month kind of timeframe and if we.
We don't get did the drilling that we need you know maybe we need to laid out by a couple of months. So it's hard to say right.
Yep.
The next.
Question comes from them on Huh, Jackie Sebaski with CMO capital more.
Hi, Thanks, I know you guys have gone through a lot of the de pillar is supposed to assess after a couple of quick ones I'm personally and see idea, though in Q1 do you I did buy back. Some shares is wondering if you could maybe talk a little bit about ones.
[noise], yes, what we did talk about the capital allocation and and whether you know how we look at capital over.
Can during of quite low metal price environment, and if we end up having any suspensions due to old breaks out our minds. So we ran a number.
Areas and and you know were fairly healthy with a 30 and 60 day suspension.
Still in fine shape, but we decided that we would probably not prioritized DNC Ivy.
The maintaining the dividend given our financial strength so.
Right now we are proceeding.
Seamless dividend.
And.
But maybe just a oh this is probably dumb question, but Ah I noticed on your Q1, the toxins that you're part of where we're pretty high can you give me a little bit of a color as to.
Why they were high in Q1.
And maybe what was going except for the rest here.
Yeah, not a dumb question at all and this is.
Then he's heard me rant about this.
<unk> up and down but didn't he can you elaborate on that for Jackie.
Sure absolutely yeah, Jack it's not a dumb question not you know, we're just joking about how you know the top.
But it inside is very much of Ekati driven thing so occupied out because our finance.
Taxes are filed in Brazilian real nice when we're calculating our deferred taxes, we have to actually we translate our U.S.C. balances on that asset backed to Brazilian right.
So what this does is it changes the cost base in the local currency, which then raises a deferred tax cells in a in Q1, where we had a weakening Brazilian ray I basically translated into higher local currency amount and.
<unk> expense.
So I guess I'm you know just on the expectations going forward.
It's really hard to predict what that's likely because it really does depend on the at the Brazilian win.
That relationship. So at the continues to weekend. Then you know will continue to see some additional expense if that strengthens and we'll see of recovery.
Sure.
Got it thanks very much fixation.
That's it.
The next question comes from the line.
So awesome.
See I.
[noise] as you are undergoing beer provision over that Nevis corvels sync expansion.
You know first came about because that's incorrect worth six approval of old one goal or in your comments for the first question you mentioned.
Higher T C.
So just wondering if you could help us I'm thinking of it.
Like.
With the project going box at the beginning of January.
Are you thinking about you know what has doubled rationalization is also.
As opposed to servicing surplus.
Is there anything you can do it no understand that this phone calls is there, but so are you thinking about it.
I'm not as I've I've kind of missed a little bit other question there Oscar but.
In terms of the it's it's a balanced in the T.C. and ER and the price you know that Tcs have an impact on.
No.
The metrics as well.
And when we're looking at you know save.
It's going to have you have 100000 times and that's going to be a million dollars difference right.
[noise] so.
It's.
We always look at that he sees an awful weather escalators and the pace.
And the reality for Natus Corvo is that it will be better for productivity and for the fixed cost coverage. If we have more production.
So you know I think ultimately the zinc expansion project is a project that will help the mine and be more profitable and.
And it's something that we need to.
And there's no rush to bring on the zinc when the prices are so low.
And if we're in cash preservation mode. It makes sense to suspend that since we've had to demobilize because of called the 19th.
I don't know if I did not yeah, not Lloyd dawsonville.
So I guess, if if there's absolutely no further suspension.
You just gave us an idea what remobilize will decide whats calls.
And I'm, saying is if you could.
Lowered the thing production or is it better.
So.
Fully utilize the boots.
Well I guess it those are things that we look out on a continuous basis and we continue to study and you know Nevis corvo of all of our minds that one has the lowest margins typically and we've challenged the site to you know studies.
What they can do to improve that and so we're always looking at ways to improve and the optimal net.
The melt full at all the time it may be some lesser number but to get a better recovery or a better quality. So those are things that.
When we do our planning.
And and life of mine plans.
Every year as well.
Okay. That's that's helpful or you think you then.
Majority of the reduction in.
In both kinda alone.
To quantify how much of that reduction was up and were higher by products.
Yeah, the them for candle areas, there wouldn't have been im a big change in the byproduct because a lot of our gold is is streamed.
But say for example at.
He was kind of our cost might be in the local currency.
So you can go I'm, not I'm on that basis, whereas at candle Ariadne.
Maybe it.
60 to 70.
So in the local currency.
But we also did have a benefit from those two sites from the Divas diesel price as well.
[noise] total safer for example, candle ariad $50 a barrel we might have a 30 million dollar cost.
You know if it's much lower than not you can.
Okay. So if they work who want to see what was economic slowdown with.
Continue is.
Is there more in the system, where you can you know you can pick on more more cost.
<unk>.
Hi, there definitely things that we can do to take out cost and it's a question.
What they how far do you want to go and what was your mine plan look like in machine.
Socs are sorry in Capex and it's the deferred stripping in the underground mine development work.
And it won't interfere with you keeping.
Mills running I mean, we can park, all the Tropicana malaria and run off the stockpiles in the same thing out Japan to let them. We're not doing this development we need to go forward and those are scenarios that we run.
No it.
Things that we would look at doing.
Okay. Okay. Thanks, very much worse and best of luck.
Okay. Thanks Oscar.
[noise] Cynic question comes from the line Lawson Winder with Bank of America.
[noise], but I just wanted to go back to the hot in Brazil and Doug.
Alarming number of over 19, Chris It cases in the country and just sort of dig down a little bit on your contingencies.
One is there.
And just sort of what we'll give you confidence that you could potentially keep running there and although I wasn't sure if.
Yes, another option as opposed to us et cetera.
And im to do well a lot of our workforce where lives in the local town, which.
10 minutes from the site.
So at.
You know, we don't have the facilities to isolate people on site.
Because they're close to the major center. So we don't have any kind of cancer or anything like that.
It is our increasing and Ah right now within 100 mile radius of the mine. There's one confirm case that were aware of in a town called Kevin RT and.
Yeah, it's at a truck driver who works in another town who's not associated with the mine who is currently isolated.
You know we've done a number of things there.
Okay.
As well as all the things that we're doing at the site, which.
Lots of different things and <unk>.
On visitors travel alere, they have temperature checks at the mine gate now.
No we have mandatory quarantine for people, who may have had incidental contactor exposure and.
HM.
Yeah, we've changed a lot of our work processes to reduce the amount of contractors that site significantly.
Yeah. So we've taken all of the steps that you would expect that we would take in order to reduce the risks.
He did have an outbreak and had to have a shutdown. We would we do have shut down plant.
At each of our sites, we have pandemic response plan and have outlined emerging to shut down plan.
And also in Brazil, we've had we've been in contact with the authorities that we've.
Safeguard the the people at the site and we've had good feedback that they're very satisfied with that so you know all we can do is continue to be done.
And and continue to.
To try to reduce the risk to our people and respond when and if we do have an exposure.
[noise] would you have any additional comments on the lower gold recoveries, there and just.
Why is it that they are now expected to.
To improving to do that was a great.
Oh, yeah definitely because that's something we've been focusing on Peter do you want to elaborate on that.
Yeah, I I can elaborate on that so.
Mostly due to lithology.
So different bought them.
Good places on the the pit so I'm just.
Oh, Yes, and also some of the ore was from higher bank is a little bit oxidized.
It's a live feed 'em late in the quarter and within.
<unk>.
The gold recovery bounced back to normal for normal levels. So that's something that.
We are affecting the go forward and that's also captured in our forecast guidance.
Okay, great way as well.
No go ahead please.
So it's it's more related to a different mythologies of the different production areas in the mine.
But I know that's great. Thanks, very clear and then not just one final one for me you know that Andy the a breakdown of your cash balance that it was over 357 million in terms of various currencies, just we get an idea of potential exposure there on a translation risk but.
Hi, Yes are we we maintain most of our off.
Cash and you.
Dollars.
And then the rest mid 20% would be in a safe.
Average anyway, I just for working capital I mean can purposes.
[noise] right. Thank you very much guys facility.
[noise] Sydney question comes.
[noise] hi.
Hey from previous thanks for the presentation.
Russians the first one we've heard from.
[noise] onto the gas to another operates in Chile in particular that you're running substantially reduced on site.
You mentioned lower levels of stripping development et cetera.
Can you give us a sense, particularly candle area, but also elsewhere how much on.
So the situation of Porsche restriction.
Could last fall before it would start to impact.
Plans, either in 2020 or 2021.
Sure I'm just looking at the the numbers from the most recent numbers of staff we have updated.
We still have 3000 people working on site.
And there you.
You know at candle area I'm talking about candle area at the moment.
We do have call at 250 working from home another 107 in Ah.
In high risk category, I guess with Ah.
Virus, so they've been in order to stay home to protect them.
And Ah.
We have 400 and Fiftyish contractors, who.
Suspended from the site. So in terms of order of magnitude. It can deliver who don't have a huge amount of people away from the site.
In terms of the total workforce, but we have done a number of things that.
<unk>.
During the this shift to schedule changes and changing the bussing patterns and catheter green patterns and things like that.
So on for quite some time as we are going at where it would get concerning is where we have to do major maintenance stops and things, where we need to have people coming from external like a specialist who will come to do certain types of maintena.
Since and a certain projects for us that aren't able to travel or can't come to site is.
That's a with Japan, we have probably about as Peter correct me. If we're wrong 600 contractors have been temporarily put on suspension there.
[laughter].
And and not is mainly in the deferred stripping area and not in the production area. So obviously the.
You know six month of not doing it will probably not have a big impacts, but beyond that you Wanna get going.
And started doing those things.
You know those are the two they'd ones Eagle end market is working.
Offsite, except for the people, who can work from home Youre still productive.
And then driven as you know Sweden's taking a very different approach than the rest of the world. So it's business as usual and think driven.
And who did I Miss Nems Carlo we have a significant amount of people ask suspended from site I'd never say horrible doing underground development on long.
The door as well surface works and and number of other contractors. So there's one site, where we do have a significant amount of people.
Offsite and a you've seen the impact that has had on our plans relieved withdrawn or think guidance.
Okay. So I guess.
Few months at least the current situation has nice threat to the kindness patents you've laid out.
This year next.
No you can see other than for zinc leave.
We reaffirmed our our guidance or on a three year base.
Okay.
Yes, the 100 million Zaidi piece is squarely with that.
All right deferral in terms of the 80 million of sustaining and then on the production and.
At this point you assuming you can catch most of that up and twentytwenty ones that we should be adding that to all capex estimates are 2021 will not be.
So the spread out over a number of years in terms of catching up on that.
That's sustainable double that all will depend on the site because at some sites is only so much you can do and.
Year, So say for example.
Never Squaretwo underground development, if you defer it you're just pushing it out by X amount of months, because you're not going to suddenly double up the amount of underground development you do any year. So that's more a that's pushing it out a rather than a catching it up if that makes sense.
And end with their deferred stripping at Kendall area and potash.
Contractors to to do this stripping so that's one where we'll have to make the decision about.
How much more we want to do next year, but I would say.
I wouldn't just <unk>.
[noise] for the for the other sites other than candle area.
Okay got it useful thanks.
And then just want to quick on just catch it what's the undrawn.
Credit facility liquid.
And then what what's the Undrawn credit.
Yeah didn't he can you give that number.
Should run down crisis $430 million.
Excellent. Thank you very much.
I'm not without the accordion option correct.
Yes, correct. We also have a 200 million dollar accordion option on copper back.
[noise], Okay cool thanks.
[noise]. My next question comes from the line of I am not bothered with Morgan Stanley.
Yes, thanks, very much for that presentation or a couple of questions left from my side.
The first one another school when Ah.
Nine months and busy fries feel where it is today and.
The expectations around beyond young Pcs is for US you know stable development.
And assuming vehicle, we don't break if somebody control how would you feel about restarting the project from a Johnny first since I'm still feel little economics.
The project then I'll stop there for the first question.
[noise] and.
No I, we plan to start to restart on Jan one according to our base case right now what the assumptions that we had in the queue or.
In the quarter, which was I believe jinhui 80 cents thinking.
[noise] certain certainly I was on [laughter].