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 press human 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 will be an opportunity to ask questions.
The conference call today is being webcast slides available along with the presentation slides on perfumes website <unk> P. R. E T I M B M Dot com.
Ill now turn the call over to Mr., Tom Yes, 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 correct.
Let's just talk credit M. as president and CEO.
Richard that Joc will 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, Deprince, our vice President operations will join and we will address your questions on the results from the first quarter.
Before we begin note our statements contained 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 periods.
These are available on our website and I'll be filed on SEDAR.
Please note all dollar amounts mentioned on this call are in 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 as we face the unprecedented unprecedented challenges related to covert 19 pandemic and continued safe operations at Bruce Jack.
On Monday, we were pleased to announce the Jacques <unk> has joined podium as president and Chief Executive Officer.
I'm happy to introduce them now.
Jocks career of over 35 years, and the global mining industry comprises roles and technical and operational leadership.
And the contribution to numerous sports.
Key senior executive positions shock served as President Chief Executive Officer, and director of Thompson Creek metals, and Teller was acquired by some terrible.
And part of that he was director President and CEO of St Andrews Gold.
The board looks forward to working with him as he brings extensive underground operating experience.
And professional insights to drive the continued success a party him and the Bruce Chuck Mike.
Welcome John the Don I'll turn it over to shop.
Thank you Richard and good morning, everyone.
I'm very happy to be here today.
After Thompson Creek metals, I vowed that I would not be turned into an active management role unless it was for the right opportunity.
Great Jim is that opportunity.
The Bruce you off 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 is find us financially robust and that's been consistently profitable sense, achieving production with strong cash flow generation.
Most importantly, rich I'm as a solid safety record.
Although they did their credit of the team away advanced the project from discovery to a development and into profitable operations.
Every mine has its own unique challenges and Bruce Jack is no different.
As it is well known the biggest challenge has been understanding and mining the gold grades distribution of Bruce Jack its are watching this deposit.
I believe the March 2020 update them in their role reserves and resources and the life of mine plan is a big step in the right direction.
I look forward to leveraging my past experience as we move forward to unlock the potential of this asset.
However, I still have a lot to learn and we'll be rolling up nicely, including spending a lot of time at the mine itself in the coming weeks and months.
A key priority for any incoming see always to meet with management employees stakeholder communities and first nations partners.
We are all facing an unusual situation do sit there and then Nick and they need to maintain physical just anything.
I am one the week into a two week weren't Dean 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.
A return of marketing road shows may not occur until sometime in the future, but in the meantime, I look forward to a virtue willie 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 miners at this uncertain time.
However, one of my early priorities will be our review of correctly on the short term liquidity.
Given the and as 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 month, and I will now pass the call back over to our CFO Tom Tom.
Thank you all well then I'll provide a review of the first quarter operating financial results.
Let's begin seasonality to the challenges related to the Colby 19 pandemic. The company's primary commitment is to the safety and health of our workforce in neighboring communities in northwest British Columbia.
Well take it significant steps to adjust our procedures and protocols to limit the risk of coal that 19 exposure for our stuff their families and communities, including modification of works you attach into the details I'll safely transporting our crews and ensuring a safe operating and living environment.
Works like.
Only personnel necessary to support gold production continue to work at the money while covert 19 restrictions are in place. Consequently, all capital project 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 go live date team did not have a significant effect on first quarter gold production.
Our shores of personnel at the outset or 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 the situation and we'll assess the potential for longer term impact my production as we evaluate the continuing risks associated with the crisis.
Subsequent to the quarter in that's a 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 our.
Guys that ranges from $910060 per ounce of gold sold.
First quarter free cash flow was 41.8 million.
And it average realized gold price of 1600 $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 school price 14 50 per ounce.
Foreseeable 2020 production the financial guidance remains achievable assumed there is no significant impact on operations. The Brucejack mine due to the coldest pandemic.
As 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 cool that 19%.
Does 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 costs 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 throughput 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.
But totaled 2700 84 metres of lateral development at 60 meters of vertical development Ritchie.
Do 2020 money 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 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 a 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.
The $286 per hour increase 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 door rate and flow concentrates no sales disruptions.
Our anticipated at this time.
We process 3700, 93 tons per day in the quarter compared to 3200 79 tons per day in Q1 of 2019.
20, Nike was a wrap up year after receiving our premise 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 equals production cash cost depreciation depletion relatives in selling costs averaged 11 hunter 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 ounce sold. This is as a 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 lets spending was on the low end up going to settle for 2020.
Total costs were 7.5 million higher than in 2019 due to this 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 cobot 19.
We continue to showed robust earnings, but mine operations of 37.1 million and the first quarter compared to 29.2 million in 2019.
After deducting our corporate Gionee costs, we generated operating earnings for the quarter of $31.5 million compared to 25.2 million last year.
There are two items of note are up you know 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 babysitting mineral taxes at the minimum rate of 2% not 13% as we draw down or significant tax pools.
Based on the updated Likemind incurring 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 at a rate of 36.5% on mine operating earnings.
Net earnings for the quarter were talks were $6.2 million or three cents per share versus 4.2 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.
Yes, it 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 off cash from operations.
Just continues a record a positive cash flows from operations and startup in mid 2017.
We generated $41.8 million or free cash flow defined as cash from operations that investing activity.
The $52.5 million of operating cash flow generated this quarter enable us to pay 22.3 million on debt service and spent 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.
And the quota and as our care scenario measure in response to the continuing operating risk related to call that 19.
We do down 16 million, which was available on our revolving portion of it all facility.
We will focus on recorded the RASM discretionary debt repayment until the restrictions related to call that the colder pandemic have been lifted.
On slide 17 for the quarter, our all in sustaining cost totaled $80.2 million and is tracking to the low end of our guidance range for the year.
Assuming minimal impact so the Colvin night seem kind of be we're maintaining our guidance.
We're also maintaining our target our free cash flow of $100 million to $170 million at a gold price of Fourteenfifty for up and as previously mentioned with the ongoing uncertainty related to the coal that 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 the boost Jack mine.
Which highlights the continued robust reckon omics, although long life underground operation.
[noise] fall. These updates we hold to investors the technical sessions, where we know where we outlined a number of strategies. We believe will help us optimize our salt design and improve the goal get great.
A priority remains increasing mine access.
As we progressed to 2020 laterals available we'll continue to focus on opening the mine at depth and towards the west.
Through the Bruce Dark pool.
As Bruce Jack does not have a stockpile maintaining gold production of the mine requires the sufficient soap inventory to support operations.
The increase avail, but should improve access to build still be inventory.
I 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 for mining and supporting grade control.
We highlighted two drilling in this though in the technical sessions.
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 mineralization.
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.
So it's.
Temporarily putting these initiatives on hold should not influence achieving our 2020 production targets.
We are however, reviewing the future impact to development soap availability and production should the restrictions related to the golden 18%.
We continue to take advantage of the favorable Golden bear.
In the first quarter, our adjusted earnings were 15, or 25.9 million equivalent to 14 cents per share.
We generated $52.5 million Castro operators and free cash flow a 41.8 million.
To sum up we have successfully navigated unusual quarter.
Well, we have addressed the immediate challenges presented by the cobot nights and crisis and continue to operate the Bruce 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 lines 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 to.
Anyone wishing to join the question can you make press Star then one now.
Our first question.
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.
I'm in Q1 can you just give us that figure from marching whether you feel that.
And I guess, where you were in April and whether that starts to become a constraint for this year or add your current levels.
And feel like yourself availability is.
And as well.
Does that imply where it shouldn't be an issue this year.
Justin Good morning. Thank you for your question, Alaska 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 an eye is slightly short approximately 300 Monday may does I'm the for the year.
I'd just like last year was slightly and that's what I'd just like that.
Despite the impact of that we're also undertaking development for the longer term exploration, which is not currently in a mine plans have made as we're not which is three to five years out that drilling horizons.
Obviously, we're not punishing them upfront and that's a mine development.
As majors that are.
Being taken away from that long term development.
Programs.
So you know.
Dan due to cope with the went up 300 meters and go I think we can still have changed to Mike that's up say you shouldn't.
Be off track by the end of the it and we should go to make days needed.
On the getting good question on stuck with volatility I'd like to point out that stops vary in size and dramatically drastically.
So as I'd, rather referred to Toms and present, we have drove 70000 tons.
Which is the best position that we being in since the start of the mine we must remember we ramped up from up to the study a younger Tommy Q4 last year and in Q4, we actually I have achieved on the throughput by Jim.
I would still growing.
Well I bring up the mine.
What do you trade, but at this point in time standards type size for design <unk> not decided to stand so as you actually mine.
Study made as much as being 25 meter like stop the study 2000 tons. We have 5.3 days a valuable to us which is around six five to six weeks of mining at 100 and turned down at 20000 tons per month.
So we're sitting in a good position. Unfortunately, some of those startups constrained sequence constraint, which means they know they know what do we can just gone blossom one more.
Dependent on price Geo technical another constraints that you would understand I'll hand, it back for the next question.
Okay. Thanks, Thanks, Dave Thats really helpful and just just doesn't follow up to that.
The numbers you reported in Q1 was there much of a trend into March is covered started to have larger impact and I.
I guess, if you could share what are your levels now.
Does that relate to that.
As a levels in Q1 overall.
Yeah, Thanks, Justin I assume your questions.
I concur developments I, obviously have biggest impact.
In Q1 was because that's what do you know we had trouble getting people decide 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 endo achieving target. So I think when it would position. So I was kind of it doesn't come back inhibits.
Let me jump right so as of yesterday.
Nate.
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 I'll ask the last one after but on.
On trend person long gets you know are you finding.
More results from one gets you know what are the.
What are the findings so far that they're supportive.
UBS greater integration and perhaps even incremental changes from the mine plan that that we've just received.
They do 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 a longer journal.
Mining out they lost you substantial amount in fact.
But the longer Jordan the mining is any 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 addicted to wait there will be going and change this morning that and certain areas of the via Guy. They just do you look at the geology, there with all the information and then somebody should we have coming back that's about it was from the drifting.
In there and you can just say that some of those areas must be changed his mind yet other areas. You can go either you can see CLIA.
Prices out there why we should beat on budget and so we'll be adopting a phased approach on this and it'll be I can see it think.
Transmitters and longer churn when as we as we progressed the mine plan doesn't take buys a at this point in time, it's more transaction longer <unk>, but again as we get adding to the folks on this which way just joint venturing into generic 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 but can you strategically.
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 on.
Both operationally and certainly sort of high level for the company.
Well the focuses on beyond you know all trading while in pay down debt.
Hi, Justin I think.
You will understand it's a it's my first weaken the chair so a bit a bit early to.
To to.
Did you tell the the markets what what I think what's there we're going to be doing.
My my intent is doing all focused on the business learning the business in the coming months DEFINITY spend some time.
With the team.
Regrouping to put together our plan going forward.
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 that.
At this time, it's we're going to minimal 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, what I'll say at 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 New York 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 were currently present, both above and underground at the site the harm payroll for equal versus margin that'd be already 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 Fritz.
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 are in the quarantine than the other impacts. We should look also I know, it's like six questions of one but I.
[laughter] that's okay cool that's good Dave can you give some color on the on the manpower and and who's in the news.
Bush show I guess, thanks for the question that I got very good one.
So typically where it probably six 670 680 people on site during the peak reduction that.
Notch, we're down to 400, 410, Paypal, but that wasn't enough to just fine obviously had people to why we couldn't get people in from at least the minus a as of today would probably fall 45 full 50 range development taking backup.
Resource power there now.
So that tells you will right. So you can do the math on probably couple of hundred people I'm sorry still.
We're on construction projects and other non critical some management as well.
Current team. 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 new jobs and you have people in core aren't taking all the time, but ironically solely cleaning were doing although.
Protocols and procedures, we have in place for hygiene now social distancing and on the other carbons related.
Requirements that way.
Fully supporting and backing as our team we've actually been a couple of weeks now with anyone at all or unchanged. So it's a good thing.
The next proud to be question, yes, with state we did put a small quantity of personnel off better on the construction teams in the short dot com contracts and a couple of Germans I believe.
But yes, we need to get their heads around in the future what we do with a there were 9200 Paypal.
Some of them as we got down in in March 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 in the very short term, but for the medium term as well so we'd be bumping those numbers that got I hope that answers your question Hi, guys.
A very much so thanks for all the color there.
And then just one more sort of other people get a chance to ask questions I went through your Mdna and through your all in sustaining charge here on page 39, and it seems like three things really yield to cost increase next or some of 8 million of total cash cost extra 2.3 million sustaining capital at an extra one and a half million of.
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 DNA. Please.
Well the actually take care.
Yeah. Thank you Michael.
The gene a it was for additional costs related to the change in the leadership.
So we accrued in March.
So that's a pretty much what that was.
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 that's 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 did there just sort of different there just different programs will go between last year and this year.
Got it perfect. Thank you guys I'll get back in Q.
The next cycle.
Our next question comes from Mark Hi, Jarvik of RBC capital markets. Please go ahead.
Hi, Thanks, Good morning, everyone. Congrats and good luck CEOC and then you rural.
I guess my first one again you guys mentioned.
Just on preserving near term liquidity over that elective 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.
Anything else beyond not or is it just the fact that you're going to preserve cash and not making you 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.
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 covidien pandemic is very unpredictable and 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 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 that position. If we have two 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 going to 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 the prudent approach to be taking here.
And then I guess kind of following to that.
Question appreciate it might get a little bit early for you to be in a position to answer this but as you start to think it with the longer term capital structure would you.
Continue the previous trend of trying to just be less than a normal world with Covance 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 [laughter] another good question Mark I I.
I want to continue 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, 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 are 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'd quantify or are you guys mentioned some cost pressures from all the initiatives you've implemented can you got a.
Kind of quantify that either on an.
Absolute basis or on a dollar per ton basis, and then how long.
Would you think the 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 the it's been a minimal impact.
Because the Pan Doug really Oh, Tim pause in the month of Marsal in the first quarter, we saw very minimal 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.
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 the questions and welcome aboard Joc.
Thank you can years here.
Yes.
So hopefully I'm not too redundant and this but I'm trying to ask a slightly different way.
Can you guys quantify kind of monthly basis, what the covert 19 additional measures costs you maybe on a total dollar basis.
Yeah, Tom or did you give some general guidelines on Oh can 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 little bit of overtime. We've kept most of the staff on on board we've changed.
So it doesn't seem for our transportation, so we've got more and more buses and.
In place.
Nominally I'll say that this is approximately.
About $2 million, a Canadian Canadian a month.
Okay, that's very helpful.
And then.
Shifting gears a bit so the grade for Q1 was kind of towards the lower end of the scale, but within that.
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's specific quarter, you're expecting better than the others or is it just kind of a flat guide of call. It low eight grams per tonne the rest of the year.
That's just 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, it and get it is going to can you continue to be variable I my understanding is that at all.
There's a there's been a lot of progress do you understand the geology and the gate 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 plan for this year and from what I've been able to to look at them discussed with the team is within the range that was disclosed then it's going to be within that range and there's going to be ups and there was going to be down.
And it's going to move a little bit around there. 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 going to be a little different.
The objective that I haven't that the team has is to be able over time to reduce that volatility to reduce the range of grades and in 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 in some quarters, maybe closer to Q1, but it it's going to be within.
In that range from what we can see right now.
Alright.
Thanks for the detail there and one last one obviously you guys expressed that you think you can catch up.
For the covert 19 related impacts for drilling and development.
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. Thank you 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.
Yeah, that's on hold right now from stop.
So when we get back into drilling again, which I play, we're thinking I'm enjoying out but again, there will be depending when the restrictions are lifted.
We didn't 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.
And we got 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 haven't side. So it's not as if we stop do I see we just haven't started the other two goals that we have on site lighting to decommission site.
I believe even with one drill running from that the entirety of Yassine thrived in which the phases, one and two we should we still get that was done. We also started that we had at 100000 made as opposed to <unk> thousand latest budgeted basi if that doesn't happen. This year why don't impact because she is production that'd be pushed off to next year it might be just.
Hi, guys, because we'll have to stop mining in those areas toward the end of the year. So we're just a push those after next year to one impact because she is production.
And then in relation to the development you know as I stated before the development because we're losing our longer term development there for the I'm glad to 'em resource drilling so those London packed and it turned 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 does.
As I mentioned went back up to full resources now, we're achieving 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.
Okay.
Hey, Tom Joc, then Richard Thanks for taking my question. Most of my questions have been asked but just a super quick here, 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.
Our 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 of the payable rate you guys get on the concentrates.
So that we get 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.
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 into bad for this and about 50% levels. We are pushing that second so don't expect us to get a lot more out of it it's running pretty much it matters and so.
Maximum there is some tweaking we could do once we get some other things sorted out.
That happening in the right now and I didn't get sounding very minor adjustments.
Cases that would be I expect to get out of that obviously, because I've hydro recovery we're getting.
Okay and 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 cold, but did you think that we should kind of the expect a into your guidance a bit of revision on.
For lack of better word the the mine plan or priorities.
And and expectations that you guys are delivering to the market and you know although thing equally that'd 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 you. If I think are not there was going to be a need for a revision.
In the past months, you know what I was 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 and I believe the current 43, one the 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 have 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.
Thank you used the word that there was very negligible impact in Q1 from coven 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.
Yes, I think that's a that's correct and I think I, just said that we're sort of nominally about 2 million Canadian on a monthly basis and it just depends 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 kinda covered off that you question, but I felt have not yet.
Right.
And just in terms of the.
The trajectory as a great I know you talked about volatility I think we all understand the variables.
Great, but can you just give us a bit of a road map on how you were development work has an impact grade if it does it all.
Hi be you do 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 along them and if they obviously meeting several constraints and grade 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.
[music].
We would have about $150 million to $230 million approximately.
100 to 100, something I mean.
Of free cash flow and that was going to be direct to that.
Debt repayments.
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 right now.
On the Rob Rob as there is no.
<unk>.
Yeah, Yeah, there's no requirement would be.
Any of that though.
Okay.
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.
One or two with cash taxes and the rest is kinda with 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 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, just thought that sort of the way I would look at it okay.
Alright sounds good thank you. Thanks.
<unk>.
Thank you anything.
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.
Premier.
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.
For the time being that that's not on my radar. However, that's a board decision that's not the CEO decision the board decision. So we'll.
No. If we have I'm sure there's going to be we're gonna have discussions about if you want my point of view. It's it's not saw like is that this it's not on my radar right now.
And in 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 sites 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 is that 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 premium 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 they 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].