Q1 2020 Earnings Call
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Standby do not disconnect. The Oceana Gold conference call will begin momentarily. Thank you for your patience.
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Good morning, good afternoon, ladies and gentlemen, and welcome to de Oceana Gold Q1, 2020 financial results webcast and conference call.
I'm all lines or a notion only moved following the presentation. We will conduct a question answer session.
If at any time during this call you require made at the systems. Please press star zero for the operator note that this call is being recorded on Thursday may 14th at 530 PM Eastern time, and I would like to turn the conference over to sample Suky. Please go ahead Sir.
Good evening good morning, welcome to Oceana goals first quarter 2020 results webcast and conference call I'm sad to duties, the Vice President of Investor Relations for Oceanica World I'm joined today by Michael homes, President and CEO Oceana go along with God Mcqueen Chief.
Financial Officer, and Jim Whittaker, our executive General manager on the hail operation.
We turned over to slide two in the cautionary statements.
Well. We proceed note that references in this presentation here to international financial reporting standards and all financial figures are denominated in us dollars unless otherwise stated.
Note that the presentation contains forward looking statements, which by their very nature are subject to some degree of uncertainty there could be no assurances that are forward looking statements will prove to be accurate as future results and events could differ materially.
It's also important to note that although we have maintained or foremost 2020 guidance. The current situation related to the Cobiz Nike virus is still fluid and could impact the current saver business. However, we have six protocols in place to safeguard the health and wellbeing of our workforce I refer you to the disclaimers I'm going forward.
Certain statements in our presentation.
Now I'll turn it over to Michael Holmes, our president and CEO.
Thank you Stan and good morning, and good evening tool.
Good day, everyone is healthy and site through some Christian in Taiwan.
Moving on to slide tray, there's all time maybe.
Despite the emergence of the case, but no one thing global pandemic, creating additional and varied risks across that level operational footprint, we delivered a good quarter of operational performance, while safeguarding the health and wellbeing about workforce.
Production unit cost were in line with expectations, which continued productivity increases at how despite the strip protocols, we put in place at the beginning in March and a higher than normal rainfall during the first quarter.
At quarter end than usual in government imposed restrictions in the white goods kinda denying thing, resulting in the could tell me a mine operations and limited processing at Mcright.
As well as the shutdown of development activity at why Hey.
On April 20, I mean regime to full operations have been cries and restarted the development of them onto underground project following easing ore bodies restrictions.
Revenue decreased from the previous quarter due to the lower gold Saab volumes.
This was partially offset by higher average gold price were saved.
The EBITDA decreased slightly quarter on quarter from lifestyles and margins, but this was partially offset by lower corporate costs.
Our adjusted net loss of $10.7 million for the quarter reflects decreased revenue as expected and the same up quarter on quarter, <unk>, depreciation and amortize actually cost related to higher pre stripping activities.
Our adjusted EPS was negative two cents.
Cash flow I. Appreciate it was 19 cents in places on the Gulf pretty styles and seven cents without the pretty styles, which was ahead of consensus.
As we manage the knee and tenant risks associated with the kind of but not in bars. We're also advancing our organic growth opportunities.
Moving on to slide four.
We've also provided is a sign of the business for the past 30 years by applying what Bob E.S.G. practices across our business.
We are proud of our ability to discover ore body do projects, a bright minds and rehabilitate the play did not.
Oh I believe street performance has been recognized by the major E.S.G., writing agency, where we had county ranked in the top five globally in the gold industry.
As an awful lot of a much of my career I recognize that managing health and safety in mining requires continued and sustained ficus.
It requires having the right culture in place and strong committed leadership that reinforces health and safety values across the workforce, whether it said, whether it's in an operation or in the corporate office.
I've always been to belabor. The there was a direct correlation between health and safety performance and operational performance.
Stops the health safety and well being all that workforce will always be paramount.
With the rapid escalation and spread to the comment not in bars, we were required to wake swiftly to safeguard our workforce.
It was nearly two months the guy that we implemented very strict protocols at each of our operation.
And for our corporate stop.
The situation remains fluid how we manage this risk effectively and today, we have no known cases, it's kinda benign thing anyway, you know business.
Hi, the role that safety performance continues to improve particularly at Highland Mcright, resulting in the company's total reportable injury frequency right trending now.
Our focus will remain on ensuring that people understand and manage risks everyday and we continue to achieve this through strong leadership and persistent communications to ensure the trend continues in the right direction.
Moving on to slide six and looking at the operational results.
And I suddenly have pile.
The first quarter household implementation of the enhanced safety and health particles to manage the kind of been not I.
More for blindfold and full cost than historical averages in this in the Carolinas.
Despite these factors, we managed to deliver on plan production and more and more material poor on quota and particularly year on year.
Hi, improved safety performance quarter on quarter, <unk> and significantly improved from the same period last year.
Oh had one recordable injury during the first quarter, reducing its trip to 5.7.
This performance reflects the thought ongoing commitment to safety leadership and increased employee engagement.
We are pleased with house this quarter operational performance production isn't always have expectations, while mining rights continue to increase and mining unit cost continued to decrease quarter on quarter year over year.
It was the fourth consecutive quarter of productivity improvements at how.
Morning cost in the first quarter were 5% lower than in the fourth quarter of 2009, and 50% lower than a year guy.
Total body movements increased <unk> same quarter on quarter and more than doubled year over year, reflecting the productivity improvements from out right at mining flight.
We ended the quarter <unk>, we had all 15 up and you come up to 730 year old trucks upright and these trucks that supported by six seven eyeq five kind of for the whole truck.
The prices plant continues to operate ahead of expectations in either the past couple of months, we've achieved record Triple died annualizing to 3.8 million tons of Brian.
No fade was 16% hi year on year, and Finland quarter on quarter. Despite an extended shutdown of the regrow I'm second in the price. This plant for planned maintenance in January.
Today's were as expected and in line with the plan process right.
Yeah, saying year on year increases in recoveries at the same relative mine right and we continue to fund.
We continued to fund chain the regarding second.
As you progress this production will increase and the old standing cost will be crazy at high.
This is simply a function of the mine sequencing my grades improved as the year progresses.
Hey, Brian in the first quarter was 1.36 grant the time.
The second quarter, we expected to be around 1.4 grams per tonne increasing to two grams per ton in the third quota and around 2.4 grams per tonne in the fourth quarter.
We also expect Amani unit cost to continue decreasing as the progressive.
With a lot leadership team and the workforce implies we are confident delivering fob garden and how.
Maybe on the slide seven in the price.
We call it the mine that keeps on giving however, it is truly the most unappreciated after the now portfolio.
During the first quarterly operation recorded no reportable injuries and I'd try to write a 3.1 billion hours worked.
We continue to see a reduction in the number and severity of injuries, reflecting strong side engagement in the high thereby psyche initiated they've implemented last year.
In the first quarter my cries produced around 39000 ounce the go.
Down year on year in quarter on quarter as expected, reflecting a lower head grade and increased otherwise movements is pretty sprint progressed at the current I should know stage pool and in this mills I've been page.
Total mill feed the craze quote unquote, a year on year due to the hotter will fade from the current <unk> stage thought.
And it also reflects some impacts some suspension of a portion of the milling stepping in light notch due to the Cabot 19 restrictions.
The all in sustaining cost of 12 lighting Perama solden plays $113 per ounce related to the purchase of a new high touchy execute Ida.
Which helped facilitate increased why statements during the quarter.
Looking ahead to the reminder, yet we expect production and the crisis in the second quarter to be lower.
Then in the first quarter two to five weeks of limited processing.
We are looking to make up the shortfall in production over the course of the year.
The second half of the year is expected to be stronger than the first with the fourth quarter expected to me the high school of production at the lowest corresponding all in sustaining cost.
It's important though also highlight them at prices generated very strong free cash flows out of the past few years.
The New Zealand denominated ballpark as another thing is hot.
Which along with the low.
Your prices in the exchange right represents a major Tywyn brand New Zealand businesses.
With that relates to the Golden point underground study in the second half of this year, we expect the dialogue mine life extension that the crime is that consistent production level of 150000 to 190000 ounces a year and an all in sustaining cost around a thousand U.S. dollars per ounce.
We expect the price to be a major source the free cash flow generation for many years pick out.
Maybe on the slide item why he reported one recordable injury during the quarter increasing its.
Sure if the right the two to 4.2 or 3.6.
The in house worked at the end of course, the at the end of 2019.
Mining activities at the major signs in the clinical underground was completed during the first quarter producing approximately 12000 ounces go.
Assisting plant shutdown in February and moving start in the fourth quarter two batch prices all from the maritime mining that will continue for the duration of this year.
We're expecting 7002 rights has announced the gold production from why he in the fourth quarter.
During the quarter, we completed our the 1500 made is a development math or underground until activities were temporarily curtailed due to kind of at 19 related restrictions, which were then lifted on April 20 <unk>.
You will know that as you progress is the development rights will continue to increase.
The different development in the second quarter lives to the five wake hiatus and despite this we remain on track the first production from matter underground in the second quarter off 2021.
Moving on to slide nine ended DP huh.
Currently all levels of government in the Philippines are responding to the kind of at 19 pandemic.
Our focus remains on lifting the strides at the mine and the renewal of the F T I.
Yes, Yeah, I'd real remains with the office of the President and we understand the president was involved in discussions about the renewal was senior government officials at the end of February.
We recognize the impact of the uncertainty of the renewal as I'll now operating and financial results shareholders as a company and importantly, the license that depend on the deep guys ongoing operation just support themselves and their families.
The mine isn't significant source of jobs taxes and revenues that we believe will be critical in contributing to the Philippines post kind of at 19 recovery.
Despite the temporary layoff of nonessential workers in mid April and the uncertainty around the timing of the kind of it crosses we do the nine pump and other positive outcome.
I'll now turn the presentation I have to Scott Mclean to take you through our financial results. Thank you Scott.
Thank you, Michael and Hello, everyone.
The next few slides Cabot some key aspects that I don't see that first quarter financial performance.
Moving to slide 11.
Which provides a snapshot of that balance it.
As at March 31, our cash balance was 177 million now net debt decreased to 121 million.
This reflected steady underlying operating cash flow in the quarter.
Corrective steps taken to enhance liquidity as well as reprice falling out twentytwenty operating cash flow to better align our capital plans until it's your optimal development timelines and actually organic growth projects.
Yes, that's included the salad equity position in JSP, which netted 22.7 million.
Continued engagement with regulators in the Philippines.
Secure approval to export and sell it just over $11 million the gold Dora, which had been on thought since mid 29 Jane.
And as noted the reprice, calling them out 2020 operating cash flow Oh, the gold price hikes executed in much bringing forward just try to $78 million from light in the second huh.
In response to the onset of kind of it nine same pandemic. We also took the preempted step of drawing down the remaining 50 million revolving credit facility given uncertainty how the crosses would impact global credit markets.
We're also seeing downward pressure on input cost across the business.
The full benefit which should start to flow through in the next in the current quarter.
It's included lower diesel costs.
Which is highly are expected to account for up to 15% operating costs and then the cries up to 10%.
We can use it on currency most I represent a significant broad based reduction in U.S. dollar terms.
Respect. The then you deal on the operating costs.
But material shifting Jay input.
We currently have night plans for additional hedging.
Our strategy at Mcrae, there's always things like some protecting margins on the downside.
That's called cross and currency and not seeking to pick the top currently spot prices as well or consensus for would expect expectation support continued strong cash margins.
So we're happy to continue to benefit from market prices current exchange rates in oil price decline on an unhedged basis.
We continue to manage the balance sheet to.
To make whatever short term challenges abroad, while ensuring we have the capacity there's live railcars growth project or the optimal timelines.
Moving to slide 12.
The quarter on quarter reductions in both revenue and EBITDA, mostly reflect the planned lower gold production and sales in the core.
A lot of volumes were only partially offset by 7% to quarter on quarter, increasing the average gold price received.
Well good luck, Jane I cost, an indirect taxes, but predominantly related to disappear.
Reported NPAC for the first quarter was a loss of 26 million, which included an unrealized mark to market loss of 21 million on revaluation of the easier London felt like old hedges.
Which reflect the material increases in spot gold prices and declines in the New Zealand dollar exchange right across the quarter.
As noted the adjusted net profit.
Excluding unrealized hedge gains and losses, there's a lot of 10.7 million or negative two cents per share fully diluted.
That's fair to Castlight summary of the bottom operating cash slice of the quarter increased from the prior quarter coming in 121 million in places like the gold pretty tight which equates not any sense the share.
On adjusted basis, after removing with working capital charges incurred in the prepayment.
The result was seven cents per share Snyder.
This quarter investing cash flows decreased 30% from the prior quarter.
Well that capital expenditure increased due to higher pre stripping.
Which offset which was offset by the file about positioning gold standard benches, netting 22.7 million as previously noted.
Financing cash flows 45 million reflects the positive impact on the 50 million drawdown from our revolving credit facility, possibly offset by quarterly finance charges.
Turning to slide 13, which provides some additional detail on that capital expenditure.
As outlined at the top of the title total capital expenditure increased 19% quarter on quarter to approximately 59 million.
The increase reflects higher pre stripping activity at high on the crime.
Partially offset by lower exploration spend.
Well, if I could sustain not ride through organic growth opportunities.
The increase in general operating capital largely reflects the purchase of the new excavator at Mcright.
Which accounted for $113 per ounce Mcright Q1, all in sustaining cost. We've recently completed and effective found on leaseback arrangement covering that excavator under a 10 million so like finance facility with respect bank.
We are happy to have yet another leading bank associated with the company.
Gross capital was relatively unchanged quarter on quarter.
Nine areas investments during the quarter, where the highly expansion, which included construction of the Texas If Wallace.
An additional peg storage capacity.
I spend a widely.
Increased reflecting a development progress at NASA underground.
As already noted Cray strip it by pile on the crime in traced materially in the first quarter as expected and consistent with their respective mine plans.
Oh, we expect the second quarter to include the highest level of capital expenditure for you right. After the tariff lift which would be completed in the third quarter sustaining capital.
And your realized country strip.
Expected to increase into the second quarter again for the third before <unk>, reducing in the cool.
The Christ catheter will decrease in Q2 in Q3 before increasing slightly in the fourth quarter.
That's really where people are prioritizing investment it in exploration at the value creator.
We have focused.
Now efforts and around Wahid, given the positive progress.
Hi, My thought in the WP.
Drilling programs.
Provide.
I'll now turn it over to Michael can discuss these opportunities most anytime.
Thank you Scott maybe on the slide 14.
We have a high quality management team and high quality assets, which is a recipe for success.
Combined with one of the best organic probably the pipelines and the gold said, though.
Over the next several years, we expect to build for underground mines in libraries jurisdictions, where we had extensive operating expertise.
Moving on to slide 15, most specifically we can say here the investment and then we are investing in new growth opportunities at each of them at different stages.
Majority of exploration activities as mentioned are in New Zealand, particularly of why he way we have significantly increased its almost 500000 the math.
100000 ounces when we acquired the assets in 2015 drive a 2.5 million ounces to die.
We haven't invested significantly in the drill bit which has successfully delivered this results expansion added discovery cost less than $3 per ounce.
We believe that today's results and why he is really only at the beginning particularly the UK pay which is new discovery with only 35000 made is a drilling to die.
The math or underground development, we will continue to progress over the course of the next year.
And a high level and subject to the results for the why he district study, we expect the math running round.
To produce approximately 40 to 50000 ounces of gold next year and ramp up to 90 to 100000 ounces of gold within a few years.
Hawaii District study, which is a preliminary economic study is expected to the released later this quarter or next quarter.
The study will provide on the an initial view of the value creating potential of the opportunities in why he Hawaii district, including the mass or underground Nwk pay.
With a lot of drilling ahead of us. It is important to highlight the district study will only include the reported.
Yes.
Well I knew capture won't we believed to be a fraction of the value of Mathrani Grand Nwk pay.
And the price we continued to advance the Golden point underground study, which we expect to highlight I knew underground mine, replacing the prices underground and access.
And extend the mine life in the cries at similar production rights.
This study is expected to be completed in the second half of this year with an updated 43, one I one technical report.
At highly EFI is permitting process isn't the final stages.
Meanwhile, we continue to optimize the horseshoe underground mine plan.
And we expect portal development to begin next year. Once horseshoe is developed we will explore more extensively at depth in the one kilometer card all between horseshoe and palomino deposits.
Where we have sparsely drilled and have identified high grade times.
Moving on to slide 16.
We are driving implementing and looking to cheat ice young adults strategic goals.
Delivering on the company's commitment and advance our organic growth opportunities over the next several years.
Together, we are managing the near term list and planning for the long chain with an acute type is on health safety and the wellbeing of at workforce.
While production was impacted me crazy in the month of I told you that because did not end restrictions. We believe we can achieve at 2020 production guidance, but coming in at the lower end of backed off of that range.
Also I'd be looking to make up for loss production throughout the course of this year.
We expect lower quarter on quarter production from New Zealand operations as why he's shutting down until the fourth quarter.
And the price had limited production in April.
This decrease is partially offset by the high expected production from higher.
We also continue to strictly enforced protocols and stice gods, we had in place at each of our operations.
To summarize we had three key initiatives. This year one is to deliver on the 2020 expectations to is to regime and operations at the dips.
And three is to progress and organic right on time and on budget.
Hi, Shanda gold has high quality operations, a high quality management team and a strong growth pipeline with the balance sheet to support it.
We continue to advance our organic growth opportunities, which again, we believe represents one of the my significant price platforms for investors in the gold industry.
Thank you very much.
And now back to Sam.
Thank you Michael.
That concludes the formal presentation segment of the webcast I will now turn the webcast over to the moderator to facilitate the Q in a session. Thank.
Thank you.
Ladies and gentlemen, if you do have a question at this time. Please press star followed by one on your touched on the phone you will hear eight three Tom prompts acknowledging you request should you decide you would like to withdraw. Your question you will need to press star followed by too and if you are using a speaker phone. We ask that you. Please lists the handset.
Before pressing any Keith.
Please go ahead and press Star one now if you have any questions.
And your first question will be from Daniel Morgan. Please.
Please go ahead Sir.
Hi, good good morning, I just a question on you've got various growth projects for underground mines, you're looking to develop over the next little while a which is quite a big gross platform.
Just wondering how that looks versus the balance sheet, where.
How you how you're going to funded do you need to stagger any of these developments other competing with each other how do you think about that and do you need more capital.
Yes, Thank you Daniel dialysis, they either for underground mines are staying inside we currently in the one underground mine tomorrow at this point in time.
When you look at the Fries is a underground mine, we currently in price in progress and sort of finishing that off at.
And the price in that most of the roll over into the Golden point underground.
So utilizing the Simon couldn't assign Paypal and and it's a fairly short sort of decline in wife's until its stride back into deals so that'll be a minimal minimal spend.
With the underground and while it's it seems as it's been deferred yeah due to the.
Current sort of restrictions with with the DPIJ as well as the Calvin and several just finalizing that and and bring that in line with the production sort of that put it at heil side the the projects.
To be funded within the yet in our current kind of cash cash flows.
Thank you and.
Materially higher gold price.
Any of us expected.
Maybe 12 months ago I, just wondering how youre thinking about that impact your business a bit to be.
How you think about reserves, how you think about.
What drives Dumont choose to mill over the next little law.
Yeah, Thanks, Daniel wave wed stuck with the counter that I am on plan.
And the ore bodies are limited to the count.
The current cut off price that we have gone.
Is the opportunities with a with a high gold price to have a little bit some of the.
No surrounding the condo bodies and what the opportunities out there for expansion of pits, particularly in the cries way right, where it is highly leveraged the gold price.
Rest of the the rest of the ore bodies are fairly well contained familiar from a had sort of geological boundary.
Or infrastructure boundary.
Okay. Thank you very much.
Thank you next question will be from Chris Thompson of P.I. financial. Please go ahead Sir.
Hi, guys. Congratulations on a good quarter I've just got a couple of quick questions here, we'll start off with a with high ill.
I see the Grace, obviously coming up in the Q1 and I.
I guess the question is what should we be expecting by way of.
Increasing grade in the second half of the yearend, but how does that sort of layer into.
The improvement in recoveries, obviously I understand you guys have been doing a lot of.
Got it would have called the processing side of things and what should we be modeling.
Yeah. Thanks, Thanks, Chris somewhat we're looking for is side with the mining shale drilling prysmian bride quarter on quarter site in quarter. One that was around the 1.36 0.2 ran about 1.4 quarter three it to grab and then according for 2.4.
And we'll be working with that I'm looking at I am the higher recoveries.
Quarter on quarter, as we sort of moved forward with the the now complete so now completed Ray grinding circuit side there is a.
Hi, all the wide presents itself is that the two thirds of the answers come out in the second half of the year.
First half the year the recoveries around the high seventys to allow our bodies in the second half of the getting up to the sort of mid two.
I'd, adding five I'd be forced by 6% recoveries in the in the second half and the highest thing the the fourth quarter.
Great. Thanks for that I appreciate the detail there.
And then just quickly moving onto me Crazy I. Just wanted you can give me a sense of the the mill tons a percentage split between the phrases underground and the open pit.
Yes, that's rises.
Currently a ever you know on Las Vegas, the best talk one I mean tons.
Prices and and at that point 9 million tons from prices undergrad.
Okay, all right I noticed a bit of a jump there in the underground mining cost was that coated related.
Maybe comment on that.
Hi, there last week of yes, I mean that we see had done masterful a full week day without any yeah.
Any mining and still covering all the OLED lighting I think it costs.
Great Thanks, Michael and.
Nice to see.
Taking the or the role.
Thank you very much.
Okay.
Thank you.
Ladies and gentlemen, as a reminder, if you do have any questions. Please press star followed by one you touched on some.
Your next question will be from John Tumazos.
I'm also very independent research. Please go ahead Sir.
Thanks for taking my.
Question.
For your service company.
Given that the gold prices.
Sure.
Yeah.
Things are moving.
In the grades picking up in the second half.
Are you feeling good enough about things to pay back to precautionary 50 million dollar drawn down on the bank line.
Yes, thanks, Thanks John.
With the drawdown with the with the current capital probably fall.
We will continue to have that drawdown until it gets triggered to the end of 2021.
Well that's a different.
Sure actions in various jurisdictions on movement.
Oh are you having any delays.
No drilling you'd like to do or equipment he'd like to have delivered.
Or independent she likes you see people.
Oh, there's things necessary to do normal day to day work.
And I'd say, it's a very good question and and the has Spain has been impact I'll have some delays with equipment, which saying.
We've we've now going to a new John by that was sort of delayed or in the in Australia. That's now headed I have it to why he and it'll be in the do it.
In on Monday.
We have seen since the lies in the new drill slate that we've ordered for higher.
But to kind of that the line the deal that we Didnt sandvik was too to actually gets and.
And second hand pieces of equipment in the in the do it what we write for that site that was always the process and to have those that flight readily available for us wall Iwould Rottweiler building, the new flights or that new flights bank line by a couple of months, but that doesn't that hasn't impacted the operations at this point at all.
I will continue demand manage and monitor that new Zealander.
It's the eradication with the strategy that has with the kind of it is allowed us to get back to from operations Dando level today.
And that the important thing for us it at highlights to ensure that.
We continue with Astrid protocols to ensure that we have no no kind of its sort of impact Ah onez type of delighted cases that I saw.
I have some friends or two years.
In Peru, or Madagascar, or is it are at risk of losing a whole year.
You know if the person has to go from.
Oh, Victoria quarantine into Western Australia, and then quarantine and isn't next country to do a week's work and then quarantine twice to come back its two months.
And some people.
Just pulled up to program.
Go through all that.
I have anything that's up bureaucratic anywhere or do you.
No. John then we will not major around one of our strategies and why that we've done that business is is a diversified model and inside the decision making is done and the employment is done at the locations that we run.
Inside the only find fly a thought that we do have in the Philippines.
That's currently in sort of denied in a state of fat suspension at this point in time, but that being said the workforce or the Philippines is 98% Filipina site, we have the the resources within the countries of our operations.
Thank you very much.
Thank you.
Next question will be from Red Spencer at Canaccord. Please go ahead.
Thank you good morning Oracle.
Few questions from baseline of could start with a pile and horseshoe undergrad can you just remind me what the take outstanding permitting Mall Stein Mart Relight study.
And following on some that's a I you get a position at this point to provide any.
Potential gardens on when you count they expect a underground production to commence that.
Yes. Thanks Ray side, we are in the assay is probably stays with US Army Corps and the department of health and environmental control. The process is to get through to a draft.
I see is and then a 45 days of community consultation process and that's.
And that was to be delivered in the first half of this year side, we still sort of working towards those timelines. Some of the frustrating things have been the ability to have the community consultation and try to work how we can do that virtually as opposed to the face to face. So that's something we're working with the the car prices and that is the highest pending prices is.
For the expanded I've been paid and the underground.
We have worked with US Army Corps of engineers in the department of health loss and environmental control.
And we've had a pre teen up to died from the AI is 29 model modification side. So there's really three.
Oh governance and bodies working with us to ensure that some of the mining and continues and unimpeded and and we can sort of achieved what we want to what shape. So we are targeting an underground development start at the beginning of next year.
We currently going through a few tried I'll say with the delay in the in the.
In the stock prices when looking at some tradeoffs.
Regards to the mining sequencing of the a bottom up or a top down the bottom up Indiana 43, one I want has this amended walk to we're also looking at a top down approach with price Phil. So we count me going through that and we'll we'll.
God the market when the when you finish the yet and they have a bit more clarity on the Hawaiian which we want to do that.
So that that then batches and the reason for that that that sort of big tights. When you can actually get somewhere else.
And the Taliban approach as you now with the Deca being a thing a lot quicker time to ore body and talk to production.
Oh, that's great. Thanks, Michael So that was actually got to be my next question.
Around.
Did that Ray assessment of the mine design there it sounds like in part it is true to that to me.
Yeah, the permitting processes and the July Evan.
Depending prices hasn't really sort of a impacted this is more the July that we sort of tries to do with similar with the DPR on on suspension tries to push from the capital program pushed the a the Highland ran out again and thats given the opportunity to investigate some other opportunities to optimize the underground mine.
Understood.
Sure. The I've said the P. I can you tell me what had previously prevented you from moving that Dora and secondly, even they.
Well I would consider positive developments with respect to government assistance and getting data went to saw it.
And that exported door I.
What does the chances of its you'd be able to shift some of the concentration you have on sought thing.
Yeah. Thanks, Reggie it's it's a it's a continual process of working with the government and and the Dalai.
The Dalai removal some softness following the but the meeting the presidential mating with ministers and governance and Congressman so an outcome of that was to allow the door right to be yet to be removed from start which requires an old transport pen.
As well as the ability for us to get 100000, ladies and fuel inside for the emergency backup generalize we have.
So we are continuing to work with that with the governments to working group.
Still backing in working which is good that was another outcome of the the meeting with the president.
Allocated a working group that sort of.
Progress the F T I.
Which was made up of of the executive second on the Deputy Funny Executive Secretary yet.
Yeah.
On the secretary from that part in the finance in the director BMG Bay.
So that prices is still working in which to where he had on getting this guy renewals in the first price as well as what are the opportunities that actually moving the cost tried some side.
It would just size and I haven't finalized.
Yeah, Okay understood understood.
Thanks, very much Michael a possible. Thank you.
Thank you next question will be from Mike Parkin National Bank. Please go ahead.
Hi, guys. Thanks for taking my question or what's with regards to heal.
One of the check to see if the water discharge plant is operational and if it is is that flowing through the costs on processing.
Thanks, Marco handed over to that question over to Jim Jim What do you go to it takes a general manager for Huh.
Yes, Hi, Jim here, a very good question. Thank you yet we as part of a contingency plan. If you remember late last year, we actually added some additional capacity to a water treatment plant.
That has that has been installed its running very well.
We're hitting higher levels of water treatment month after month, which is basically taking the pressure off the input side, which is mainly from the snake pit at this point in time.
Those costs are going directly into the milling costs.
Okay.
Great.
Thanks very much.
Thank you.
This does concludes the question period, and I would like to turn the call back to sample Suky.
Thank you.
So that does conclude the webcast and conference call replay will be available on our website later today.
Half of Michael Scott, Jim and the rest of the team. Thank you for joining us bye for now.
Thank you ladies and gentlemen, this does conclude your conference call for today. Once again, thank you for attending and at this time, we do ask that you. Please disconnect your lines.
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