Q1 2020 Earnings Call
All participants please standby your conference is ready to begin.
Thank you all for joining us this morning, welcome to the protein resources first quarter 2020 conference call.
As a reminder, all participants are in listen only mode and the conference is being recorded.
After the presentation there'll be an opportunity to ask a question.
The conference call today is being webcast live and available along with the presentation slides on perfumes website <unk> P. R E T I B M Dot com.
Ill now turn the call over to Mr., Tom yet Protium CFO. Please go ahead.
Good morning, everybody welcome to our first quarter 2020, operating a financial results call.
Joining me today on the call today is our board chair, Richard Albright and Youre prone, let's just talk credit M. as president and CEO.
Richard that job well take the opportunity to discuss our leadership transition then I will review the operational and financial highlights for the first quarter.
The into my prepared remarks deepens, our vice President operations will join and we will address your questions on the results from the first quarter.
Before we begin no our statements contain forward looking information and future oriented financial information based on certain assumptions I refer you to the cautionary language included in our news release and as well as a management discussion and analysis for the same period.
These are available on our website and I'd be filed on SEDAR.
Please note all dollar amounts mentioned on this call already knew us dollars unless otherwise noted.
Now I'll turn the call overt to watch here Richard O'brien.
Thank you Tom first I'd like to thank everyone at the company for their hard work the contributed to another profitable quarter.
The determination of our team has been even more evident over the last couple of months.
We face the unprecedented unprecedented challenges.
Well, maybe kind of covert 19 pandemic and continued safe operations at Bruce Jackson.
On Monday, we were pleased to announce the shark Paul has joined Cardium as President and Chief Executive Officer.
Happy to introduce him now.
Shocks career of over 35 years, and the global mining registry comprises walls and technical and operational leadership.
Contribution to numerous sports.
In key senior executive positions chalk served as President Chief Executive Officer into October Thompson Creek metals and tell it was acquired by some terrible.
And part of that he was director President and CEO of St Andrews Gold fields.
The board looks forward to working with him as he brings extensive underground operating experience.
And professional insights to drive the continued success approached him and the Bruce check My welcome John.
I'll turn it over the shot.
Thank you Richard.
Good morning, everyone.
I'm very happy to be here today.
After Thompson Creek metals, I vowed that I would not be turned to an active management role unless it was for the right opportunity.
Jim is that opportunity.
The Brucejack mine is a unique world class assets. It is well built with both mining and milling operations working well with excellent potential for resource expansion.
The company's find us financially robots, and that's been consistency profitable sense, achieving production with strong cash flow generation.
Most importantly, rich I'm as a solid safety record.
All of this to the credit of the team or whether that's the project from discovery to a development and into profitable operations.
Every mine has its own unique challenges and Bruce Jack is no different.
It is well known the biggest challenge has been understanding and mining the gold grades distribution of Bruce Jack its original deposit.
I believe the March 2020 update the mineral reserves and resources and the life of mine plan is a big step into right direction.
I look forward to leveraging my past experience as we move forward you unlock the potential of this asset.
However, I still have a lot to learn and we'll be rolling up my sleeves, including spending a lot of time at the mine itself in the coming weeks and months.
It keep right are we see for any incoming see always to meet with management employees stakeholder communities and first nations partners.
We are all facing an unusual situation just it depends then Nick and they need to maintain physical just anything.
I am once a week into a two week weren't seeing in Vancouver, having cross the border into Canada from the U.S.
Even if I were knocking quarantine our head office personnel are working from home right now so that creates yet another challenge in terms of getting to know everyone.
I also intends to me personally with our shareholders.
But it will likely take a bit longer than usual for that to happen.
The return of marketing road shows may not occur until sometime in the future, but in the meantime, I look forward to a virtually connecting and speaking with shareholders and I value your insight and feedback.
We are in a healthy financial position that improves with each ounce of gold produced from Bruce Jack.
We are already much better off than many other minor is at its uncertain time.
However, one of my early priorities will be our review of Christian short term liquidity.
Given the unless you all the risks related to the cold that 19 pandemic. It is prudent to consider our position.
Operationally speaking we are in the gold mining business and that's not going to change.
We remain focused on safety and profitable growth.
We will work as a team to identify areas to improve operational performance and we will continue our strategies to advance our significant exploration potential to unlock that unrecognized value.
For the long term I see great potential here and believe we are well positioned for growth.
I look forward to updating you in the coming months and I will now pass the call back over to our CFO Tom Tom.
Thank you all.
I will now provide a review of the first quarter operating financial results.
As we continue to navigate through the challenges related to the Colby 19 pandemic. The company's primary commitment is to the safety and health of our workforce and neighboring communities in northwest British Columbia.
We have taken significant steps to adjust our procedures and protocols to limit the risk of coal that 19 exposure for our stuff you're families and communities, including modification. A works you attach into the details of safely transporting our crews and ensuring a safe operating and living environment.
Worksite.
Only personnel necessary to support gold production continues to work at the money, while Colbert 19 restrictions are in place. Consequently, all capital projects an expansion drilling.
Programs have been Super suspended and crew had been demobilized.
There are also coal that pandemic. The Brucejack mine has operated continuously under the strict guidelines and directive of government health authorities.
In terms of operations Gold was 18 did not have a significant effect on first quarter gold production.
Sure as a personnel at the elsewhere. The crisis in March resulted in a minor impact on development during the quarter interruptions to the supply chain are not anticipated president and increased inventories have been established with supplies on order accordingly.
We continue to monitor to the situation I will set the potential for longer term impact my production as we evaluate the continuing risks associated with the crisis.
Subsequent to the quarter in lots of precautionary measure to increase available liquidity. The company do down 60 million other revolving portion of the loan facility and added to our March 31 cash balance a $40 million.
Over the first quarter, we produced 82880 ounces of gold at an all in sustaining costs of $996 per ounce gold sold.
We remain on track to achieve 2020 gold production guidance of 325000 to 365000 ounces this year and maintain cost within already I asked this guy this diary and just some nine or 10 $2016 per ounce of gold sold.
First quarter free cash flow was 41.8 million.
On an average realized oil price of 1600 and $5 per else.
The company remains on target to achieve free cash flow for 2020 in the range of 100 $270 million.
And the 2020 forecast is based on an average gold price 14 50 per ounce.
Foreseeable 2020 production the financial guidance remains achievable assumed there is no significant impact on operations the boost Jack might do there's a cool that pandemic.
I described earlier well, we have taken precautions to mitigate the rest of coal that 19, we are reviewing the future impact to development stope availability and production should the restrictions related to the goals at 19%.
Because the current situation continues or if the government authorities mandate temporary closures or if the company is not able to maintain operations it could happen significant impact on cost and production.
During this period on the certainty we will focus on increasing our liquidity versus discretionary debt repayments on our revolver.
In the first quarter 345139 tons or more of a process.
Equivalent to a stupid rate of 3700 93 tons per day.
The Millfield beat average 7.8 grams per tonne goal and is within the estimated 2020 guidance range.
We are processing all immediately available stopes above the upgrade to ensure consistent mill supply while continuing to advance development.
Gold recovery for the first quarter of 2020 was 96.4% compared to 96.8% the comparable period in 2019.
We continue to review the mill process to identify opportunities to improve efficiency and optimize recoveries.
Over the quarter 357674 tonnes of ore mine equivalent to a mining rate of 90 330 tons per day.
A total of 2700 84 metres of lateral development at 60 meters a vertical development Ritchie.
Do 2020, muddy will continue to focus on a best underground development and open up the mine to operate under production rate of 3800 tonnes per day.
We continue our track record about positive cash flow and profitability again this quarter as we have every quarter since achieving commercial production on July 1st off 2017.
For the quarter, we realized gold price of Sixsix hundred $5 per ounce, an increase of 22% over 2019.
Driving similarly increases year over year in earnings from mine operations and the significant adjusted earnings increase of 56% over the last year's fourth quarter.
The robust gold environment also enabled us to generate strong free cash flow, which increased 19% over last year's first quarter.
Turning to slide nine during the quarter, we sold 80460 ounces of gold compared to 81434 ounces of gold in 2019.
So $286 per hour increased in gold price contributed to the 23% increase in total revenues of $126.6 million versus the $103 million in 2019.
Both deals are proceeding as planned with multiple off takers for both dollar rate and flow concentrates no sales disruptions.
Our anticipated at this time.
We processed 3700 93 tons per day in the quarter compared to 3200 79 tons per day in Q1 of 2018.
20, Nike was a wrap up year after receiving our permits in December of 2018 to increase throughput phenomenal 2700 to 3800 tonnes per day.
This resulted in cost per ton mill of $179 for the quarter gum similar to the $180 per ton in Q1 of last year.
Turning to slide 11, our cost of sales which includes.
<unk> cash costs, depreciation depletion royalties and selling costs averaged 1100 at $12 per ounce sold.
This is compared to none or an $8 for 2019.
Depreciation and depletion expense increased in the quarter by approximately $120 per hour. So this is as the result of the updated reserves, which we report in March 2020.
Total cash cost averaged $787 per household for the quarter versus $686 per 2019.
So let's spend it wasn't on the low end up going to settle for 2020.
Total cost were 7.5 million higher than in 2019 due to these encrypt lateral development drilling this quarter as mill throughput increased over 2019.
Looking ahead the company currently expect a modest impact on cost.
Operations continue with enhanced safety measures in effect related to pull that 19.
You can see is still robust earnings, but mine operations, a 37.1 million in the first quarter compared to 29.2 million in 2019.
After deducting our core Regina because we generated operating earnings for the quarter of $31.5 million compared to 25.2 million last year.
There are two items of note our appeal. The first is interesting financing Smith of 7.7 million compared to 9.4 million in Q1 to 2019.
The decrease was driven by lower outstanding loan balances and lower LIBOR rates throughout the period.
Secondly, we incurred $18.7 million of taxes during this quarter.
This consists of $1.3 million of cash taxes.
Related to the BC, Merrell tax and 74.4 million related to deferred taxes.
The significant increase in our deferred taxes is due to the weakening of the Canadian dollar impacting the value of RBC mineral tax pools, which are denominated in Canadian dollars.
We currently paid BC mineral taxes at the minimum rate of 2% not 13%.
As we draw down or significant tax pools.
Based on the updated life of mine and current gold prices, we do not anticipate any cash taxes for federal and provincial income taxes, a three to four years thereafter, we anticipate paying taxes I read a 36.5% on mine operating earnings.
The earnings for the quarter were targets were $6.2 million or three cents per share.
Point 2 million or two cents a share for 2019.
The adjusted earnings for I, as we believe or not reflective of the underlying operations on the company. These are noncash items, consisting primarily of deferred income taxes any accretion onto convertible notes.
Adjusted earnings were $25.9 million or 14 cents per share for the quarter compared to 16.5 million or nine cents per share in the first quarter of 2019.
Turning to slide 14 for the quarter, we generated $52.5 million of cash from operations.
Just continues a record a positive cash flows from operations since start up in mid 2017.
We generated $41.8 million or free cash flow defined as cash from operations, let investing activity.
The $52.5 million of operating cash flow generated this quarter enable us to pay 22.3 million funds at service and spend $11 million on Capex, we ended the quarter with $40.6 million in cash.
At the beginning the year, our syndicated loan facility totaled $382 million.
We repaid the schedule 16.7 million dollar payment in the.
In the caught up and as a protest generic measure in response to the continuing operating risk related to call. The 19, we do down 16 million, which was available on our revolving portion of it all facility.
We will focus on really currently rather than just grocery debt repayment until the restrictions we laid the coal that the colder pandemic had been lifted.
On slide 17 for the quarter or all in sustaining costs totaled $80.2 million and is tracking at the low end of our guidance range for the year.
Assuming minimal impact so the cold and 18 kind of big we're maintaining our guidance.
We're also maintaining our target our free cash flow of $100 million to $170 million a gold price of 14 50 for up and as previously mentioned with the ongoing uncertainty related to the cold and 19 issue, we will focus on increasing our liquidity versus discretionary debt repayments.
In the quarter become we announced an updated mineral reserve and resource estimate.
And the life of mine is a boost Jack mine.
Which highlights the continued robust reckon omics, although long life underground operation.
For all of these updates we hold the investors the technical sessions, where we know where we outlined a number of strategies. We believe will help us optimize our softest side and improve the goal good grade.
A priority remains increasing mine access.
As we progress to 2020 laterals avail, but we'll continue to focus on opening the mine at depth and towards the west.
To the Brucejack fall.
That's true check does not have stockpile, maintaining gold production of the money requires the sufficient sobi inventory to support operations.
The increase the bill, but shouldn't improved access to build stope inventory.
We will then be able to increase the efficiency of the operations and then has the opportunity to blend stock material from multiple areas.
This is aimed at improving the tons available or mining and supporting grade control.
We highlighted two drilling in this those in the technical session.
For 2020.
A reverse circulation definition program to improve stope designs.
And our resource expansion program designed to follow up on value on the King style of mineralization at Dell and to the east.
These initiatives have been delayed while Golden 18 restrictions are in place.
These programs were not factored into the 2020 life of mine plan update and we're not incorporated into our 2020 production guidance.
Such.
Temporarily putting these initiatives on hold should not influence achieving our 2020 production targets.
We are however, reviewing the future impacts to development soap availability and production should the restrictions related to the gold at 19%.
We continue to take advantage of the favorable Golden Bye.
The first quarter. Our adjusted earnings were 50 were 25.9 million equivalent of 14 cents per share.
We generated 52.5 million in Castro operators and free cash flow of 41.8 million.
To sum up we have successfully navigated unusual quarter.
Well, we have addressed the immediate challenges presented by the cold and I can crisis and continue to operate the Brucejack mine, we are evaluating the potential for longer term impacts to our strategies.
And then this time, we remain on track to achieve a 2020 production and cost guidance.
Thank you that concludes the formal presentation I'll now turn the call over to the operator, we'll open the line for your questions.
Operator.
Thank you we will now begin the question and answer session to join the question Q You May Press Star then one on your telephone keypad, you'll hear a tone acknowledging your request.
If you are using a speakerphone please pick up your handset before pressing any Keith.
Withdraw your question. Please press Star then too.
Anyone wishing to join the question Q May Press Star then one now.
Our first question comes from Justin Chan of Numis Securities. Please go ahead.
Hi, Richard Joc, and Tom morning, and thanks, Thanks for hosting the call.
My first one is just on development.
It looks like you're relatively close to 1000 meter per month budget.
In Q1 can you just give us that figure for March and whether you feel that I.
And I guess why you were in April and whether that starts to become a constraint. So this year or at your current levels do you feel like yourself availability is.
Right.
Is that a point, where it shouldn't be an issue this year.
Justin Good morning, Thank you for your question.
I'll ask a dave's due to answer to answer your question Daisy.
Yes, good morning, Justin Thanks for the question development two year to date as we published you know MD and I is slightly short of up to 300 Monday may does I'm the for the year.
I'd just like last year was slightly and there's a lot just like that.
So the impact of that we're also undertaking development for the longer term exploration, which is not counting the mine plans made is we're not a which is three to five years out that drilling horizons. So obviously, we're not finishing up front and that trend mine development its values majors that.
Taking away from that long term development.
James.
So I went down due to cobot. So be it went up 300 meters and go I think we can still chance to make that it's up say you shouldn't.
Be off track by the end of the it and we should go to make days needed.
The gotten good question on stop about ability.
Well I'd like to point out that stubs vary in size and dramatically drastically different good so.
I'd, rather referred to Toms President we have drilled.
70000 tons, which is the best position that we've been since the start of the mind, we must remember that we ramped up from up to the studies.
Q4 last year and in Q4, we actually I have achieved on the throughput.
So you know we're still growing.
I mean up the mine.
Do you trade, but at this point in time standards type size, what design <unk> <unk>. So as you actually mine.
Study made is what's your thinking 25 meter like study. The study 2000 tons. We have 5.3 days a valuable to us which is around six five to six weeks of mining at 110 down at 20000 tons.
Yeah.
So we're sitting in a good position Unfortunately, some of those startups.
Sequenced constraint, which means they know they know what do we can just gone blossom one more.
Hi, Jeff technical another constraints that you would understand I'll hand, it back for the next question.
Okay. Thanks, Thanks, Dave that's really helpful and just stuff just as a follow up to that.
The numbers you report into one was there much of a trend into March is I just covered starting to have larger impact then.
I guess, if you could share what are your levels now how does that relate to that.
The levels in Q1 overall.
Yeah, Thanks, Justin I assume your questions.
I can co developments I, obviously, our biggest impact.
In Q1, Blessed because that's when you know we had trouble getting people to site and transporting fat people wanting to stay home because a family said was a peak a reduction if I can put it that why in development.
Back on track I was fully.
Human resources and pass it back up in development and were hitting into achieving target. So I think when a good position. So I was kind of it doesn't come back and he was.
Let me jump right so as of yesterday.
Right.
Exceed our goals for this year thanks Justin.
Okay excellent really really pleased to hear that I'm just I'm just two more one one I'll, let you answer and then maybe the last the last one after but on.
On transverse and long gets you know are you finding.
More results from while gets you know what are the.
One of the flooding so far that they're supportive.
Okay.
Great integration and perhaps even incremental changes from the mine plan.
That we've just received.
Dave you want to answer that.
Yes, Thanks, Justin I was just playing with the microphone that yet I'm good question.
Justin we did undertake a fair amount of but longer term.
Mining out they lost you substantial amount in fact.
But they did longer student to mining is only applicable to certain parts of the mine buckets were going out into the fold section this year with crossing the phone getting to mineralization that they would just that Nick the way it will be going to change. This morning that in certain areas of the guy that just you look at the geology, there with all the drilling summation.
I think that's coming back that's about it was from the drifting in there and you can just say that some of those areas must be transmission line. Yet other areas. You can go into you can see CLIA.
Ah prices out there why we should be on budget next won't be adopting a phased approach on this and it'll be all I can see anything.
Transmitters and long Richard unless we as we progressed the mine Glenn doesn't take buys a at this point in time, it's more transaction longer treatment, but again as we get adding to the folks on this which way just Jim injuring engine now that.
Sandage could increase or though I don't get you know.
Okay, great. Thanks, and just my last one jog and perhaps Richard.
For the button you strategically.
Hi, good opportunities to kind of review how high level.
Well the plan as you do you have anything to like to shed in terms of strategy odd.
Both operationally and certainly sort of high level for the company what the focus is out beyond you know <unk> operating well in pay down debt.
Hi, Justin I think.
You will understand it's a it's my first week in the chair so a bit a bit early to.
Two.
Did you tell the the markets, what what I think what's going to we're going to be doing.
My my intent is doing all focused on the business learned the business in the coming months DEFINITY spend some time.
With the team.
Regrouping to put together our plan going forward.
But like I said, where we the strategy for us is to generate the maximum possible value.
Which road, we're going to take to get there that needs to be determined but.
At this time, it's we're going to middle I'm, an operator, I'm going to keep my heads down focused work our.
Focus on what we can control, but we need to control to make sure that we.
We build the best possible business, and then ill discussions around strategy and now we see the future that's going to come down the road.
Okay very fair. Thanks, a lot a upset the wide, but so thanks very much guys really appreciate it.
Thank you Justin.
Our next question comes from HEICO L.A.H.C. Wainwright. Please go ahead.
Hey, Thanks for taking my questions and congratulations to you talked some on your new appointment though.
Thank you I go I think a very nice of you could say that.
Gladly gladly, hey, so can you quite some details on how many people or current we present, both above and underground at the site. The current payroll for equal versus more February and Youre quarantined requirements and also your fallback option. So I'm not I assume that the newly arriving essential stuff members are warranted offsite for.
Two weeks and I assumed or getting paid during that time, but I mean can you just provide some color on that and how many people or in the quarantine any other impacts we should look also I know, it's like six questions and one but.
[laughter] that's okay cool that's good Dave or can you give some color on a on the manpower and and who's in the news though.
For sure I got it. Thanks for the question I got very good one so typically were probably six 670 680 people on site during the peak reduction.
In March we were down to 400, 410 April but that wasn't enough to just buying or because you had people to why we couldn't get people in from at least the minus.
As of today, we're probably at full 45 50 range development taking back up.
Resource power there now.
So that's how would you will right. So you can do the math won't probably couple of hundred people I'm sorry still.
We're on construction projects and other non critical some management as well.
Quarantine, we currently have not wanting we actually feel that all the steps we've taken some time ago, something we've talked to try and keep as we move forward.
Typically so called my job since you have people in core aren't taking all the time, but ironically solely cleaning we're doing all the.
Protocols and procedures, we have in place for hygiene now session distancing and over the other carbons related.
Climates.
I guess fully supporting and backing as James.
Actually being a couple of weeks now with anyone that all important change so it's a good thing.
The next probably to be question, yes with state we did put a small quantity of personnel I'll start on the construction teams at the short dot com contracts in a couple of drilling so I believe.
But yes, we need to get their heads around in the future. What we do with the remaining 200 people than some of them as we've gotten down in in March you know, we had to ramp down quickly there because people couldn't get back to site. However that is not a sustainable number. So we didn't need to get some of those people back to sustain itself not into very short term, but for the median gentlemen.
Well, so we'd be bumping those numbers that got I hope that answers your question.
Very much so thanks for all the color there.
And then just one more and so it's a lot of people get a chance to ask some questions I went through your mdna in through your own sustaining charge here on page 39, and it seems like three things really yield to cost increase an extra someday knowing the total cash costs extra 2.3 million sustaining capital an extra one and a half smelling though.
Corporate DNA to Tom can you, maybe just provide a breakdown of the extra sustaining capital in dollar terms and also on the in the extra Gionee. Please.
Hi, Tom will actually take care.
Yeah. Thank you I feel that the gene a it was for a additional costs related to the change in the leadership, a though we accrued in March.
So that's a pretty much what that was the.
The sustaining capital.
We're still projecting approximately.
$30 million plus or minus.
For for the year.
And most of that is going to be sort of in the summer months as you typically no.
Thus the best part of the time, where we're getting most of our.
Projects completed so.
Sort of where we're out with the sustaining capital is a little lower little late in the first quarter, but it will pick up in the in the next several quarters.
Right. So those were year over year numbers I just gave you.
Oh, well just there just sort of different there just different programs will.
Between last year in this year.
Got it perfect. Thank you guys I'll get back with you.
The next cycle.
Our next question comes from Mark hydraulic of RBC capital markets. Please go ahead.
Hi, Thanks, Good morning, everyone in congrats and good luck CEOC and then you rural.
I guess my first one again you guys mentioned a focus on preserving near term liquidity over the elective a debt repayments.
Are there any other.
Initiatives, you're looking at from a liquidity perspective, obviously, you've cut fully drawn the revolver. Now so are you looking at or anything else beyond that or is it just to the fact that you're going to preserve cash and not make any elective payments on the debt how should we be thinking about that.
Well Mark.
Thank you for your question that's a good one.
So right now that we.
We I was happy to see before my arrival that the company made the decision to drive down the 16 million I think that was a very prudent decision in the current circumstances.
Hi.
I don't see any immediate.
And need for any asset.
Any additional.
Decisions however.
As we all know this cove it and they make is very unpredictable and a very difficult to understand exactly what's going to happen then when we're going to return to the new normal.
So what I want to do with the that the finance theme is to look at what are the potential alternatives.
We're not planning to do anything drastic at this time, but we want to make sure that we are in a position. If we have to do to pull levers. So we can or we can improve our and they could liquidity again, if we if we would need to.
We're not planning anything but what we're doing is we're planning for the worse and hoping for the best then we're gonna have alternatives and our back pocket.
And make sure that if we need to we'll be able to do something but again I want to say that right now based on our current plan and if the situation. The remains as it is there's no reason for us to panic at this time, there's no reason to do anything drastic.
We just want to be prepared in case that we have to do something.
You know perfecting that's a prudent approach to be taking here.
And then I guess kind of following to that.
Question appreciate it might be a little bit early for you to be in a position to answer this but as you start to think about the longer current capital structure, which you.
Continue the previous trend of trying to just Steve love in a normal world without coal that I would you be trying to just de lever the balance sheet as quickly as possible or would you be more inclined to maybe terming it out giving yourself a little more.
Discretionary capital to to invest in the business or pursue other opportunities.
Well I Uh huh another good question Mark I I.
I want to continues to reduce the data, but no. It's a balancing act all the time between our capital needs and what we want to do and what we want to achieve.
But definitely the objective of recent reducing that that the objective that the company had before continues to be to be there and I and again you know we're going to balance this with all the other requirements but.
Everything being equal and as you said, if we forget about the overhead.
No we would like to see a reduction a significant reduction of the death in the coming years.
Unfortunately for us.
We're generating significant cash flow. So we have the ability to do that and and be able to have at the same time, a sufficient resources to continue to grow the business.
Okay.
That's fair and then.
One more for me I guess, you guys quantify or are you had mentioned some cost pressures from all the initiatives you've implemented can you got a.
Kind of quantify that either on a you know that absolute basis or on a dollar per ton basis, and then how long.
Would you think.
Current situation could persist before be starting to pressure your alter your full year all in cost guidance.
Tom Good could you answered that please.
Well, we've said that.
It's been a minimal impact.
Because the pandemic big really Oh, Tim partners in the month of Marsal in the first quarter, we saw very minimal <unk> going forward.
We think there's a modest increase but were well within the guidance that we set out.
Earlier, this year and part of that is because you.
You know we've got a favorable.
Canadian dollar FX impact when we compare what we did for the budget and the forecast vis-a-vis what we're seeing today so.
I guess all ought to include is is that were well within the cost guidance at this point in time.
Okay perfect. That's it for me thanks, guys.
Thank you Mark thanks.
Our next question comes from Joseph Reagor of Roth Capital. Please go ahead.
Hi, guys. Thanks for taking my questions and welcome aboard Joc.
Thank you can you is here.
Yes.
So hopefully I'm not too redundant and that's what I'm trying to ask a slightly different way.
Can you guys quantify kind of monthly basis, what the covert 19 additional measures costs, maybe on a total dollar basis.
Yeah Tom.
Did you give some a general guidelines.
Can you general answer on this.
Well, it's like I say, if it's still within the guys.
What we're seeing is the cost.
Increases would be a little bit on on a shift change. So there's a bill a bit of overtime. We've kept most of the stuff on on board we've changed.
Doesn't seem for our transportation. So we've got more more buses and are in place.
Nominally I'll say that this is approximately.
Well $2 million, a Canadian Canadian a month.
Okay, that's very helpful.
And then.
Shifting gears a bit so the grade for Q1 was kinda towards the lower end of the scale, but within it.
For the year do you guys have some idea you know kind of as far as expectations on a quarterly basis over the remainder of the year. You know is there a specific quarter, you're expecting better than the others or you know or is it just kind of a flat guide of call. It low eight grams per tonne the rest of the year.
That's a Joseph that's a that's a very good question as as we said in our grade is gonna be within a range. That's part of our guidance not the range of degrade.
I think everybody needs to understand that.
Bruce Jack deposit is a very unique geological contacts I'm sure you all know that it's a very different geology and get it is going to can you continue to be variable.
I my understanding is that at all there is that there's been a lot of progress to understand the geology and again, great distribution, but that's not perfect yet.
So we're going to continue to see variations from from quarter to quarter, a that's going to continue but so far a plan for this year and from what I've been able to to look at been discussed with the team is within the range that was this close then it's going to be within that range and there's going to be ups and there's going to be down.
It's going to move a little bit around and that's I think everybody needs to understand that this mine is not like other gold mines, where you can you can dial in degrade and be fairly consistent quarter after quarter year. After year. This is gonna be a little different the objective that I haven't that the team has is to.
The able over time to reduce that volatility to reduce the range of grades and the which we're going to be operating but.
There will always be volatility would that be positive will never be able to say, it's gonna be acts and it's going to be X every quarter and the flat for the balance at the year. We continue to expect that some quarters will be higher than Q1, and some quarters, maybe closer to Q1, but it it's going to be with.
In that range from what we can see right now.
Alright.
Thanks for the detail there and one last one obviously you guys Express that you think you can catch up.
For the covert 19 related impacts for drilling and development Ah, but could you guys kind of give us an idea of like how long the catch up time might be like per month of time that you lose for covert 19 for development and drilling like how many months it'll take to catch that backed up.
Yeah. Thanks, Joseph Mad, Dave could you give a little bit of an answer on that one.
Yeah, I can definitely obviously I'll start with the resource drilling we that's on hold right now from stop.
So when we get back into into drilling again, which I'd say, we're thinking I'm enjoying out but again it will be depending when the restrictions are lifted we didnt have a lot of made as a program. This year. So I don't see any issues with the made as we had budgeted that will get dies.
By the end of the yet.
In regard to US see we have started I see and we showed in Toronto. The technical sessions that we had a phase one and two phase 114400 meters with 375000 into that already with the drill we have on site. So it's not as if we stop there I see we just haven't started the other two goes that we have on site lighting to decommission site.
Well I believe even with one drilled running from NASA into Yassine thrived in which the phases, one and two we showed you still get that was done. We also started that we had 100000 made as opposed to.
It hasn't made is budgeted basi.
If that doesn't happen this year it won't impact because she is production that'd be pushed off to next year it might be different days, because we'll have to stop mining in those areas toward the end of the year. So we're just a push those out to next year to one impact because she is production.
And then introduction to the development you know as I've stated before they develop makers were losing our longer term development out there for the I'm glad to 'em resource drilling so those lani back the near term production, but I do hope as a city and now that we should go to catch that is up by the end of the that's what pushing the thing for it will depend and doesn't.
As I mentioned went back up to full resources now.
You got Daddy goals and exceeding them. So just depending if we have another kind of a deep after another hope that answers. Your question. Thank you.
Yeah, great. Thanks, I'll turn it over guys.
[noise]. Thank you Joseph.
Our next question comes from Adam Graf of B. Riley. Please go ahead.
Hey, Tom talked and Richard Thanks for taking my question. Most of my questions have been asked but just a super quick here or maybe you could remind us of the quarterly debt.
Acquired that's required to be repaid.
For the rest of the year.
Yes, Tom you want to take that one.
Sure. Thanks, Adam.
Quarterly payments are $16.7 million.
That's a.
No every every quarter for the for the duration till the end of 2022.
And.
On a slightly different subject can you guys just remind us about payable rate you guys get on the concentrates.
So that we can't approximately.
92% I believe.
Plus or minus.
And then have you guys been able to make any progress on recovering more to door ray versus the Perkins concentrate.
Yeah, Dave.
I can answer this one.
Yeah, Hi, Adam as you know out of gravity recovery at Bruce Jack is exceptional exceeding 60% or which sitting the feasibility study we ran to bat fortis and about 50% levels. We are pushing out second so don't expect us to get a lot more out of it it's running pretty much it might get resistance.
The maximum there is some tweaking we could do once we get some other things sort it out, but I'd say that happening in the right now and I did I get tiny very minor adjustments increases that would be I expect to get out of that obviously, because that's quite hot rolled recovery, what getting nice I'll hand, the question back.
Alright, great. Thank you guys appreciate it.
Thank you Adam.
Our next question comes from Andrew Mckittrick of BMO capital markets.
Please go ahead.
Oh, Thank you a lot of good questions already been asked.
Maybe shekel just ask a slightly unfair question, but.
Maybe post this coal, but did you think that we should kind of expect a under your guidance a a bit of her vision on.
For lack of better word the mine plan or our priorities.
And and expectations that you guys are delivering to the market and you know all else being equal would that be kind of later this year you'd you'd expect that.
Good morning, Andrew Thanks for the question I I had this time, Andrew I, it's a bit early for me to tell you if I.
If I think are not there was going to be a need for a revision.
In the past month, you know what.
I was able to spend before before taking the job I was able to spend a lot of time looking at data and information and reports and whatnot. Then I believe the current 43, one to one Doctor and plan is a good plan makes sense.
I'm sure I'm, 100% sure that once we start to dive into the details as you know Andrew. These 43, one a long ago done now there are certain points in time, and and you get new information than you learn new things and you always come up at some at some point you have to issue. Another one to adjusting so I'm sure there's going to be some adjustments, but again I had this.
Time, I don't see any reason why or why we would I would I would expect due to put out.
A significant change no towards the end of the year next year.
That's that's not in my in my plan right now, but I guess that you never know, what's what what's going to happen but.
No no nothing on the horizon that at this time.
Okay and just one.
A question maybe for Tom I guess, it just to be clear.
I think you used the word that there was very negligible impact in Q1 from coal that precautions and costs.
Obviously does that imply based on somebody that commentary and responses that there would be a more substantial impact in Q2 at this point in time is that a fair expectation.
Tom.
Yes, I think that's that's correct and I think I, just said that we're sort of normally about 2 million Canadian on a monthly basis and there's just a sense. How long. These restrictions are going to be in place. So I think.
Oh I'll leave it up.
Great. Thank you very much for that and though that's the questions over the next person.
Our next question comes from Anita Soni of RBC World markets. Please go ahead.
Hi, Good morning, guys. So a andrew kind of covered off that you question, but I still have not yet for now but.
Okay.
Just in terms of the.
The trajectory as a great I know you talked about volatility I think we all understand there at all times.
Great, but can you just give us a bit of a road map on how your development work has an impact grade if it does it all.
Hi, Bill you want to answer that one.
Yes, Hi, you made a good question, yes, we have that mine plan set out pretty much from last year, we bring other startups in as they get more information about alone them and if they obviously meeting several constraints and a great is one of those.
We have all of the steps in this year's mine plan are the highest conference that we could gather together within the sequencing that we could mine to say.
Oh, I think there's no issues that I know so I previously stated that the development constraints or reductions on trying to understand now mine plant in the short term. So I hope that answers your question on that.
Okay, Yes, it does and then secondly in terms of the discretionary debt repayments, Tom could you tell me, which one of your what you're referring to there and which ones are discretionary what isn't.
I'm sure Yeah sure.
Well, we had set out at the beginning of year was related to the free cash flow that we regenerating.
And that was what I was referring to as discretionary.
Repayments on our revolver so.
We said that.
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We would have about $150 million to $230 million or approximately.
100 to 170 I mean.
Of free cash flow and that was going to be directed at.
Devry payments.
Well, we said that dirty year before this call that the team.
Came upon us so.
That's what was referring to is she's just use of free cash flow.
Okay. So just I just unclear I'm just wondering if you're do you have to apply for relief to your debt holders to not payer or are you free not to pay rate.
On the Rob Rob as there is no.
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Yeah, Yeah, there's no requirement would be.
Any of that down.
Okay, and then lastly, I guess my question I guess I'm kinda back to the taxes that were adjusted I wish I could you give us an idea what are what are more normalized deferred tax number would be I senior notation that you know the taxes were basically about 18 million Bucks I think.
Ah one or two with cash taxes and the rest is kinda was excluded in your adjusted number but it seems like only about $8 million a was related to the kinds of fluctuations you're talking about revaluation.
Well, it's a is it fair to say that you know the remaining amount maybe another 8 million would be a more normalized deferred tax number.
I I would generally up for for planning purposes use use our deferred tax rate at about.
A series was 36 after it's 7% approximately.
The there the fluctuations are really really based on the things that are sort of beyond our our control and just what occurs when we have changes in FX rates or changes in share prices the effect or a stock based compensation. So.
I guess, that's just sort of the way I would look at it okay.
Alright sounds good thank you. Thanks.
<unk>.
Thank you Andy.
Our next question comes from John Tumazos from John Tumazos, very independent research. Please go ahead.
[noise] congratulations joc.
Thank you John Stephens.
To instituting a dividend we're a penny would be just under 2 million U.S. and Nicole would be 9 million, it's not big money goes up $400.
And second question.
Are there any policies.
You are reevaluating.
But you don't want to alone.
Sure Yeah from the predecessors.
Oh, we heard you earlier dancing, a little bit about ore grade for example.
So first part of your question John.
On the dividend front I at this point and then the current situation.
I don't have any plans to even think about dividends I don't think it would be the right thing to do.
We still have a lot of adept on the balance sheet, we Ah we need to continue to grow this business. So.
Well the time being that that's not on my radar. However, that's a board decision that's not the CEO. This isn't the board's decision. So we'll.
No. If we have I'm sure there's going to be we're gonna have discussions about the if you want my point of view. It's it's not thought like is that this it's not on my radar right now.
And the regards to policies yes.
John I in the next month, that's I want to like I said earlier I want to learn the business I'm going to spend a lot of time. The month of me will be a time meeting or.
The team and spending time at site I want to go at site for a good seven they'll 14 days that sites in the month amazed that that's going to be number one for me number one priority and then the month of June.
I'll be looking at all all these other things and policies and whatnot and.
Come up to a conclusion on what we need to adjust to what we need to keep what we need to change.
And then like I said, you know one and in the month of July put the plan together and see how we're going to approach all these things going forward.
This concludes the question and answer session I would like to turn the conference back over to Mr. pet on for any closing remarks.
Thank you.
As we all know we're living in the very challenging times. However, the PERCIUM team has done an excellent job managing the business and this unprecedented situation and we will continue to do everything we can minimize the impact of depend the mic on our operation.
I'm excited with the potential of our company and look forward to work with the team to create value for all our stakeholders.
Thank you everyone for dialing in into our earnings call. This morning. We appreciate your comments in your questions Stacey stay healthy and wash your hands and have a great weekend, everyone by now.
This concludes today's conference call you may disconnect your lines.
Thank you for participating and have a pleasant day.
[music].