Q1 2020 Earnings Call
[music].
Greetings and welcome to and it doesn't mining first quarter 2022 webcast. At this time, all participants I want to listen only mode. A brief question answer session will follow the formal presentation page and anyone should be quite a appraisal joining the conference. Please press Star then no telephone keypad.
As a reminder, this conference is being recorded it is now my pleasure to introduce your host Mr. sebastiano them on to suit CEO of endeavor mining Corporation. Thank you mr. them onto fit you may begin.
Thank you operator.
Good morning, good afternoon, everyone and thank you for joining or Q1 operational and financial results presentation. My name is Sebastian democracy I'm, the CEO of endeavor mining and it's a pleasure to be talking to you all at once again.
Before we start I'd like to us fuel to please note today's call is covered by a disclaimer and though to some forward looking statements.
The format for todays call will follow our usual formats for quarterly results I will provide an overview of the results our CFO to sell Brian will then review our financial performance followed by Macmall Coleman, who will discuss the operations and I will conclude before opening the journey.
Head of exploration Patrick is also with US here today and available to answer any exploration questions you may have.
Before we dive into our results just wanted to briefly touch on our response to the corn. The virus endemic I'm pleased to say that all our operations are currently running at normal levels and we are still shipping gold abate was increased health and safety measures to keep our workers safe and prevent the spread of the.
It is to keep and spread the of the virus.
Back in March we did have a few employees were tested positive for covered 19 and I'm pleased to say they have all fully recovered.
Since then we have not had any reported cases to date.
Across West Africa, Governments' were quick to implement strong measures to minimize the spread of the virus by leveraging their experience from the able at crisis.
So far this country's of a whole successfully contain the spread of covered 19 without proactive responses. However, we continue to remain extremely vigilant.
Our response to a covered 19 that is being managed by a designated team were supported by a well regarded epidemiologist and an 11% medical team from a leading us angio, who will be deployed as and when the need arises throughout the countries, where we operate.
Here on slide seven you can see a snapshot of the epidemiological civilians system, we've developed with our team to life track cases at each of our operations and across the street countries, where we operate.
This is helping us to design that mitigation and business continued to efforts for the group, while also ensuring with best support our communities and the national authorities.
Our primary focus throughout this crisis has been to protection of employees contractors and local communities.
We also making sure that we contribute meaningfully to the national and local efforts in our host countries, helping to supply key medical equipment and training dozens of local has workers.
On top of this we have committed so far $6 million to support local and national efforts, including salary donations from a leadership team.
Turning now to slide nine I will briefly touch upon our business continued to plans alongside the health and safety measures. We have reviewed and stress tested different business operations supply chain and shipping scenarios based on values escalations of corrective measures.
These ran from normal course of business to care and maintenance and you can see the details of those here on this slide.
We currently are operating in a level one environment with enhance preventive measures to ensure that we can continue to ship and sell gold. Despite the closure of borders.
Alongside our focus on the commercial aspects that we have also reviewed offsite rosters systems to ensure we had key people on sites before border stores closed.
This has worked well and were very grateful to them in helping to keep our operations running.
I must say that it's a time like this during your prices that you find out about your own team and I've been really impressed by them.
Im proud of the speed and dedication that all of our people have shown in their response to this crisis and I thank them for it.
Good my employing this to my employees and staff listening to the school. In addition to dealing with the koby. The outbreak. We now also need to make the taking management a priority as I know that some of you are now into your second straight was roster and we will reiterate this on our internal quarterly results call later today.
I was just described we have whether the club in 19 crazy as well, so far and I'm pleased to see our strategies and precautionary measures have worked.
However, whilst we are seeing the lock down being lifted across a number of European countries, we need to remain cautious and vigilant in West Africa.
Turning now to our performance this quarter I'm pleased to report that our Q1 results are consistent with our 2020 guidance and that we have achieved a record operating cash flow this quarter.
Looking at our group Ltd frequency rate it remains well below the industry average point 26 for the last 12 months.
Group production for Q1 stands at 172000 ounces, placing us on track to meet our 682 740000 homes guidance.
And the same is true of our group or in sustaining cost level standing at $899 per owns this quarter, which we expect to see decrease in the second half of the year into our guidance range as we will begin to benefit from the high grade carry palm deposit at Hyundai.
Moving to slide 11, and our safety record and Fortunately our company experience to LT eyes during Q1.
As I mentioned on our last call for our 2019 year end results, we regrettably had a fatality at our common mine back in February.
Since then we've done a full assessment of the accident to make sure. This doesn't happen again and I will let mark run through through this later in the presentation.
Safety has and always will be the most important factor for us and we will continue to be vigilant in identifying root causes of LT eyes, and further increasing the safety of our operations.
As I mentioned earlier, we need to be careful with fatigue management, we must keep placing health and safety first while doing our best to operate in this challenging environment.
And sharing our employees go home safely everyday is the most important goal we have.
Endeavor, so another strong quarter in terms of production, which increased by 54%. This quarter over Q1 19, driven by the startup of the Tcl operation.
All in sustaining cost increased by 3% to 809, $9 drones, driven by the scheduled higher cost at both whom they interact though and higher royalties, which were partially offset with lower cost from DTC I'll operations startup and Karma.
In addition to lower corporate costs.
Despite operating under the cover 19 environment Q1 production decreased by only 3% cover over Q4 19 due to slight increases that owned ATM comma.
All in sustaining cost increased by 80 dollar announced in Q1 compared to Q4 19 due to higher royalties and the guide at a higher cost at Hyundai IPO and Karma as we have previously disclosed.
As you can see on this next slide with generated over $100 million per quarter of all in sustaining margin over the last nine months.
This is a substantial increase compared to Q1 last year, thanks to a stronger gold price and MTCL production ramping up.
Our margin improved over Q4 last year due to the benefit of the higher gold price, which offset our expected higher cost due to capex being H one weighted.
Moving to slide 14.
As you can see we reached a record level of operating cash flow is particularly pleasing to see this increasing curve and I will let Luis walk you through the underlying details into fine and section.
Looking closer at our free cash flow generation before debt servicing on slide 15, you can see ahead that Q3 of last year, where the inflection point for us after finishing construction at IGI.
We are proud to have generated $187 million since this inflection point with $55 million net cash generated in Q1.
This is particularly compelling for us as the second half of the year is expected to be significantly stronger due to our expected higher production at lower all in sustaining cost.
In addition, we will also benefit from our from the hand of our aging program at the end of June.
Moving onto slide 16.
As a result of this sustained period of cash flow generation, we've reduced our net debt by nearly $190 million over the past three quarters.
Overall, we have decrease from a peak net debt of $660 million at the end of the second quarter last year to $473 million, which resulted in a significant improvement in our net debt to EBITDA ratio to just above one time.
It's worth bearing in mind that we have decreased this ratio from a peak of almost three times.
Just 12 months ago.
This quick deleveraging will of course allow us to accelerate our shareholder return strategy, which we are looking forward to formalizing later this year.
And now I'd like to hand over to lease to take you through the financials in greater details over to you lease.
Thanks, very much sebastiana and Hello to everyone. That's about say this has been a good quarter and looking at slide 18, you can see that we have enjoyed a record quarter in terms of revenues adjusted EBITDA as well as operating cash flow.
The increase in revenues against relatively stable operating cost meant that our adjusted EBITDA increased by 52% over the past quarter to $130 million. That's also an increase of 217% from the same quarter last year I.
Meanwhile, our operating cash flow before working capital increased by 4600, 46% from quarter, one twinkie $19 million to $119 million.
Over the next few slides I'll walk you through the details behind these numbers.
Let's turn now to slide 19, we we have provided a breakdown of the major elements used to derive outwardly margin.
We have highlighted some key elements and I'd like to take you through them now starting with revenue as I noted earlier revenue increased as others. As the result of more gold sold by the company and the higher realized gold price.
Cash cost of sales increased on a nominal basis due to higher production compared to quarter Onetwenty 19.
On a dollar spent on spices equaled $661 per ounce in quarter, one twentytwenty up $24 pounds and down $2 per ounce compared to quarter for quarter, one of 2019, respectively.
The increase over quarter for its mainly driven by higher cost at between Diane Echo, which was slightly offset by lower costs at Connor.
Royalties increased every quarter for due to higher realized gold price and an increase in government royalty rights based on different sliding scales details of which have been provided in the news release and the Mdna.
Looking at our sustaining capital screen. The increase is mainly due to increased life's capitalization at one day as you might have noticed in our guidance capital screen for this year is more heavily weighted to the first half.
Answer finding capital spend decreased slightly over quarter for you to decrease as I commented died which is slightly offset by an increase at DCT, mainly related to eight TSS rights.
The non sustaining exploration of capital extreme for quarter, one twentytwenty increased over quarter for last year, you to exploration drilling mining in carried out during the first half of the to take advantage of the dry season.
We can see that it was up slightly ever quarter, Onetwenty 19, which Patrick will comment on lighter in salary. These changes resulted in a decrease of the ordering margin by $5 million over quarter for 29 team and an increase of $58 million compared to quarter 129 team.
On the next slide we start from the all in margin as shown on the previous slide and work our way to the net cash inflows for the group.
Starting with working capital affect the reduction of $9 million was recorded in working capital levels compared to quarter for opportunity 19, most notably reduction in inventories of $11 million during the quarter.
More detail is provided in the table at the top line of this slide.
Excess paid increase compared to quarter Onetwenty 19, mainly due to provisional tax paid at the when they're in line, while they significantly decreased every quarter for you to the scheduling a pain.
The interest fight increase compared to quarter, Onetwenty 19, mainly due to interest payments on equipment pieces that you team.
The increase over quarter for Meanwhile, is due to the timing of convertible bond coupon payment.
Moving to our M&A line item for quarter. One Twentytwenty. This includes the consideration for the increased 5% ownership.
And we obtained during the first quarter and advisory fees related to the proposed MSR transaction, a previous engagement with the board of sentiment.
Finally in terms of proceeds of long term date.
$120 million was drawn on the revolving credit facility as part of October 19 business continuity program.
This was IP caution to ensure that endeavor would have substantial liquidity and financial flexibility to operate under various space taste scenario.
Moving to slide to anyone.
We can see the increasing cash flow before working capital per share since quarter, one tranche 19.
And our cash flow per share at recorded at the end of the fourth quarter of $1.14 cents. The slide highlights the steady increase that you've seen over the last part quotas an increase of 93 cents since quarter 129 King.
Turning to slide 23 22.
We have highlighted a significant improvement of our financial position through the lens overall reduce nate and reduce net debt to EBITDA metrics as the Boston touched on earlier.
Net debt amounted to $473 million at the first quarter.
Decrease of $197 million since reaching a peak net debt of $660 million during quarter two of 29 team.
Similarly, the net debt to adjusted EBITDA ratio significantly improved over the quarter decreasing from 1.48 times at the end of 29 team to 1.06 turns at the end of the first quarter based on a trailing 12 month adjusted EBITDA.
This marks a large increase from the corresponding period last year, we that ratio stood at 2.96 times.
As I noted earlier as part of our covered 19 business continuity program, we drew down the entirety of our available revolving credit facility, increasing our cash reserves to $357 million at the end of the quarter.
Slide 20 see details on net earnings and adjusted earnings per share 30 cents for quarter. One Twentytwenty underlying earnings were also positive at 24 cents fishing.
My takeaway yeah.
Is that this was a much cleaner quarter than in prior quarters with relatively few adjustment relating to nonrecurring costs in order to arrive at the adjusted earnings number.
Finally, moving onto slide 24.
You can see how our 40 adjusted and have trained that since the start of 2019, we finished construction at 18.
Paid with quota Onetwenty 19, we have seen an increase of 35 cents fishing.
And that's it from me I'll be happy to answer any questions at the end and I'll now hand over to Mark to give us an update on each of the mine and the projects.
Thanks, Louise and Hello to everyone of the cold quite a your old doing well in whatever level of component you are currently enjoying.
Before we dug into the quarterly performance I just thought to reflect on the fatality that it could come in late February which involve the loss of controller for greater retention filed near the top of the Campbell correct.
We conducted an internal and external investigation into this fatality.
Adopted many actually the calendar and across the group to prevent returns.
Thanks lessens the parts of the why we conducted its one of my interests related checks that we undertake operational checks on an agent six tiering and packaging systems, along with a number of other actions.
Importantly, they placed in supply not just a heavy bonding equipment.
A lot vehicles cranes and contract just like.
It's the fatality the payment counsel have responded really well in terms of renewed focus on operational safety and performance.
She coffee operations overview the production bridge on slide 26, how lots of variances actually in quarter, 120, 20, and the corresponding period last year.
The completion of the sale project has had by far the greatest impact on their results over the last 12 month with the first go forward contract in place at the end of Q1 and 29 time.
We are happy with our Q1 performance, that's a great restructuring in lawn <unk> garden and I'm extremely proud of how the team is working together in the cobot launching environment.
I would like to if I Sebastian in thanking our teams for the hardware and dedication three this strong.
As already mentioned during the first quarter, we operated at near normal levels, and we will keep monitoring how the situation evolves.
Our workforce and your unions have worked closely together.
So that we manage fatigue and will be.
With longer than normal where crosses to manage in country current chain requirement.
That's the part China's responded well to ensure adequate stock levels of pay reagents.
The area that has been much difficulty at age is where we are quite especially skills for planned and unplanned Todd.
There were not able to travel to West Africa.
Which ties we appreciate the support.
Similar to how similar to how many of US So currently working.
Turning to slide 27, I will stop or taking you through performance at 18.
You can say that production has remained flat in the past quarter as high a straightforward recoveries compensated for the slot take rates in the process right.
Total tons margin traced predominately Jay to bring out which utilize the large amani trucks.
Hi space on the work done to improve roadways, and other already running surfaces and lift trying interruptions.
Increased volumes of flights for launch so the timing Sam lift which will be completed by the end of night.
In terms of all in sustaining cost when you say the decrease due to increased volumes of gold toe.
Lower unit money and thought Jane I costs, which were partially offset by higher sustaining capital.
The company courses or production sources will vary with buckets are dropping out in the second half of the year due predominantly to the rainy season, well production from the price increase.
This will be complementary crude oil from the Collins would fit in the second half of the year with freight from you start stop post continuing to supplement plant site.
We also expect recovery right. So decrease as an increasing proportion of fresh ore is prices.
On the exploration front, we expect to announce updated laplaca resources and reserves midyear, but.
Along with an updated if you want to incorporate the expanded laplaca renewals price.
Yeah, well underway the prices to get but necessary permits and approvals for the clock in the upcoming courses.
Moving onto Hyundai production remained flat at slightly higher than choice.
So let me high throughput offset slightly lower recovery right.
Well what price this guy cried remind side.
That might place just continue to be bulk twice morning. Additionally, I pit.
Which was given the boost with the arrival of the pace Eightthree thousand excavator from common.
And ladies we settled into hard parties productivity money at below center.
The addition of this machine and trade with the larger doses from 18 will enable them onto a chain hyatt's hurdle Bonnie volumes planned for 2020.
Page 29 chain.
And then enable us to lighten up the kits for increased oil production in the second half of the year.
Price you ask rights remained stable as real stockpiles to supplement the more insight during the quarter.
All in sustaining costs increased as you can say here, although less than anticipated.
This was mainly due to higher sustaining capital and unit processing costs.
Which was partially offset by lower unit, Bonnie and Jay and I crossed.
Looking ahead, all like right. So posts are expected to.
Sure continues to supplement no freight well Mani focuses on Weiss capitalization.
The 2020 as a whole Hyundai is expected to finish the strongly on the basis of currency money at carry pump as board production winds down.
The permitting process is well underway and their expectation is that this will be received in quarter 320 20.
Patrick will have exploration in more detail in his section.
It's worth noting that an updated resource estimate is expected to be or at least mid tier along with my lighten reserves are carried west which will be followed by the publication of an updated on diamond plane.
Sure check continued exploration success around the carry sante area.
The new mineralized signed was discovered which was nine browser imaginatively has carried yet.
Consequently, an updated resource estimate will be announced media with Mightn't reserves later in the case are ongoing metallurgical and geotechnical and helps us get permits increased size.
Turning to slide 29, Here's a quick look at EQT about where production decreased in line with expect expectations.
As money made for inflation in west pick five.
Requiring recommencement of oil production from the north pit.
Lower grade ore from the south pit.
Slightly lower planned recoveries, which each of the fresh ore feed from north pit, although we did achieve high throughput.
So less influence in the blame from the slightly with football.
All in sustaining cost increase due to lower gold style.
Sustaining capital and high higher mining unit cost cheery commencement of money in the north pit.
Which was partially offset by lower processing and GE and I unit costs.
For the rest of the year, we expect to continue modeling in the north and South pit.
Contributions from the western shopping in the second half a year.
It's things that's very important recovery rights are expected to decrease in the second half of the.
Describe the volumes of hot official processed.
Clark said he takes us to comma, where production remained flat at increasing great stat compensated for module bakeries insect tonnage and recovery.
Morning was concentrated on the count North pit, which provided the majority of the all time stack so the quarter.
So importantly monitoring what started mid quarter at the change he wanted to.
Well control sufficient fade over the course of the year.
JJ wanted just located approximately five kilometers west of the heap Leach facility.
Whereas count all his mind is located 12 kilometers to the southwest.
And consequently, the money change it very well to split the fleet and maintained good production rights throughout the quarter.
The higher grades at Kendall claim that the stock price increased marginally.
All in sustaining cost increased albeit outperforming god.
Mainly trips the increase in wanting Angie and I, you know costs, along with increased royalties and sustaining capital.
Looking at the rest of the year, we will continue mining at the candle fit and JG one.
So with the commencement of the next phase of the candle.
JJ run will make up a high proportion of the awfully, which will take rates come down slightly.
Before I hand over to Patrick for an exploration update.
Sorry, 31 provides an overview of the status of work on that say stable and projects.
Studies are underway with the aim of publishing a P. Eight on credit cards and pay a fast on Kalina later this year.
Cray rates coming completed early stage studies based on the current 1.3 million that's resort.
To help formulate general view of the project.
The exploration team is currently working on increasing the resort, which will be updated in the coming month, and which will hold but bonding inventory for the pre feasibility study.
Let's say studies published on for the Crown Kalina.
We will be better positions us to decide which project we prioritized.
In addition, we will also made to roughly the same quite projects in that project assessment.
This concludes my section Patrick I appreciate it thank you.
Thanks, Mark and Hello to everyone on the core so a quick update on all exploration they fall this quarter.
Look it got like 31, you can see or stop short of far extortion like heavy in Q1 Twentytwenty.
We saw a companywide exploration spend or for a long $17 million each quarter, we presented keurig approximately 40% off the hook twentytwenty full year leisure it.
It's worth monkeys by the fed body, we use a it doesn't mean, a quite doorway goldcorp to or Fourk TV T Force.
I would say there are some time or like some of our competitor we weren't even more to you on exploration home wasn't respecting sleek reserve Corvisa preventing places.
In total the spend punk later the into over why not more than 8000 meter being dreams of course.
Our exit.
But mainly focused on to be more concentrated on wouldn't be tea and 50 coal you can see here on the right I was just spending these crop dogs beaten splitter <unk> costs, all Neal mining defeated exploration activities. This quarter basically to sell fall bald warm for either bottom feeder then once it all falls into the.
On critical.
Tiki or most of their but he didn't contemplate to them. The looked like Korea as we continue to explore guattari, our vips on their old shore extending the looked like depots eat 12 Euro solves with new are they are dr. was not known before where the expanding or the total vitro blocking main then.
No.
Oh, we have you noticed a walking on the dark blue salts waste on the.
Target are you all are aware, we all delineating samples you reserve that we are the a few years ago.
I think or exploration focus.
Main on Lucky they pose eat it does to be notice that the during the last quarter all for two days ago 19.
Reading ahs been X or expanding and though today, we have expanded significantly users should lucky good impose eat.
We plan to bleed falls it from Buffalo, New York or at least 60000 meter, which are only or I would say, 40%. That's been really do you have over so walk, though we are walking today, we see sleeves on 50 coal on the I've said before we plan to our non so all mean year or you.
The increase Reashure liver, who can't go head to the rest of the yeah. We expect to see the result of quality faults, including the resource increases for the carry out our today again in Gary will include the sold increased Reashure indicated resource in Gary waste in Gary Centerville.
The new resource on the yard named carry gap, which you sit the separating carry centre and Gary cells.
Although blackout Tiki also then we increasingly shorts and all short through the coal as you can see ear and Hallmark Slide also is going to be a very exciting Phelps dogs, or New York fall and Devor under full youre horribly into the same way.
If we'd be good for under rule do a increases.
Sure its base as we previously and on the oil exploration along.
We are quite well you can you indicate more the outcome.
I look forward to update you come to you all mall whole guys nice quarter, I'm, not worried and out.
You back to say about your now to wrap up to court.
Okay.
Thank you very much a luis smoking Patrick before we conclude I wanted to touch on our combination with simple.
As you know we announced this combination a in late March with their shareholder meetings scheduled on May 28.
This transaction is something we are very excited about us together, we will create a leading west African producer.
Not only this but the merger will provide the operational diversification across six mines four of which will have combined production a little bit 800000 on so you're.
On this slide that we have mapped out a snapshot of course, all my Q1 results for the two companies demonstrating the strong portfolio metrics.
The company's together produce a quarter of a million homes at very similar audience is tending caused below $900.
As you see highlighted in the bugs these generated nearly $190 million in operating cash flow.
As we previously mentioned the combined group, we don't have a very healthy balance sheet, which when you include the upcoming launch equity placements her presenting 0.5 times net debt to adjusted EBITDA ratio.
This increase the size and liquidity is important for us as it means that we wouldn't be able to meet the investment hurdles for a number of larger funds that turn if he wants to invest in us.
Moving to slide 30, fives or we have annualized across all my Q1 key metrics to give you a flavor or what the combined group might look like on a full year basis.
The company's together can produce over a million homes at below 900 dollar bronze equating to approximately $750 million in operating cash flow.
More by the way then be took all these forecasting.
At this rate net debt to EBITDA would sit close to zero by year end.
I believe that these are conservative numbers as most companies expect a strong second half of the year.
On the end of aside things to higher grades that carry pump and talking about postings to the restart of Google.
This is one of many reasons why we're very excited about the outlook for the combined companies.
Moving to slide 36, you can see how this combination can translate into a tangible rerating potential for the group.
This will place this will be a top 15 within the top 15 gold producer globally and also make is the largest gold producer in could do well in booking a vessel.
Finally, before we wrap up the call I'd like to show you de consensus 2020 free cash will yield for the combined group, which sits up 12%.
As you see here, if you annualize Q1, two or at least ends at 16%.
We believe that as we continue to deliver free cash flow. This should lead to a significant re rating. It is interesting to see that if we were to trade at the peer average of 6% yield this would represent a share price appreciation of nearly 100%.
To wrap up our presentation and before we take questions I'd like to take a brief look at the year ahead of four endeavor and the key moments for us.
As I mentioned understand the shareholder meeting is scheduled on 28 of made and we urge you to vote.
You might also have seen this morning that we received a notice from the director of investments under the investment in Canada Act, indicating that the minister of innovation Science and economic development is considering whether to order a national security review of this transaction.
This ties back to the Canadian government announcing in the hands to review measures under the investment in Canada Act in response to come in 19.
As we do not have assets in Canada, and we do not produce anything national security related we don't expect that this will be an issue and looks like and expect to close this transaction sometime in June.
There might have been a mistake will be T map transaction in Shandong investment.
In terms of our exploration projects, we expect an updated looked like resource estimate that he was in Q2 with the reserve estimate following soon after media.
I wouldn't be an updated carry area resource estimate is also expected in Q2, two with Amazing reserve estimate for carrier west by mid year.
Finally, we split the CRO unabated resource estimate is doing the middle of the year. We then hope to carry out a P.A. in Q3.
What do you know, it's a very exciting year for endeavor and I'd like to sing the team for their incredibly hard work boasts over the past few years to help US reached a strong financial position and also over the last quarter during which we had to grapple with the challenges of covering 19.
I'm incredibly proud of what we've achieved as a team when I look forward to seeing what the rest of the your brings for us.
And when they have some time to take your questions. Thank you very much.
Thank you, ladies and gentlemen, as a reminder, if you wish to ask a question. Please press star one on your telephone and way appealing to the announce kulish to come to your question. Please press Star ski once again. Please press Star then one if you wish to ask a question.
Your first question comes from the line of I have is heavy Scottrade Bank. Please go ahead.
Hi, everyone and congrats on a great quarter.
Sebastian I just had a couple of questions more relates to cobot.
And looked was really great to hear that all your operations are running.
Mostly do you see any impacts to costs as a as you deployed followed new covert protocols and procedures.
Thanks advice no at this stage I mean, we don't see a impact on on cost whether on the supply chain or on our operations. I mean, the cost is mainly the the cost of responding to covered 19 through the enhance equipments that weve.
Provider to our sites, but also.
To the donation that we've made to the host countries, where we operate a and at this point, we have a total investment cost either for internal responses or for supporting the host countries of about $6 million.
Got it and just just on that and in terms of obviously the government also a little bit distracted with this all cobot situation.
Are you witnessing any any delays in sort of.
Receiving or even talking about permits with the government officials.
I'm, specifically talking about you know look like and Gary pump areas and looks like everything seems to be running smoothly and you guys are looking to at least start mining at carried bump up by the end goal, but this year.
Yeah, we have I think that a you know things are going a a pretty smoothly and the I think thats, probably things to the a stronger relationship that we've been building progressively with a with a host countries.
They want a us they want to support us a they know that those operations are also a important and key for them.
And a you know I must say that a you know in both could be willing book enough I. So.
We've done and despite the cooking 19 crises and work at home principles and quarantines and so on a we've been working very efficiently and diligently with a the two ministry of mines and could you are in Burkina Faso, and we have made some extremely positive progress on the on both phones.
As an example for a you know carry pump we have the a commission a of the a government which is scheduled for the end of May and therefore, we are expecting to have a probably even earlier than what we expected. The a the carry from permit which means you know as early as a end of Q2.
Excellent.
That's it for me as much in them, but again just wanted to say congrats on a on a great quarter.
Thank you very much advice.
Thank you and your next question comes from line of Chris Thompson P.I. Financial. Please go ahead.
Hi, guys, congratulations and absolutely stellar quarter, I think I bases onset or other asked a number the questions I was going to us, but I have one remaining here just looking at.
The mindset that approval.
Obviously deposit here.
What are you noticing as far as the.
Metallurgical characteristics of the deposit are they are they inline with expectations. Obviously this is going to be an important component I guess the.
The second half production.
Sure. Thanks, Chris Mark you want to give some some color on that.
Yeah, Chris we run a number of different trials I'm looking at thing I guess.
And it relates to the threshold and that yeah.
Alright content and we've done some trials on by like ride and high grade I guess encouragingly when we put in the light right.
Fortunately, they say that they sent recovery sort of in the range of the mid 70%.
All that compares like when we put the highs that can we take things in the lower recoveries richer.
Indicated anyway they affect.
What we're doing.
Because we we do recognize that vary so like caught a lot of go going under the tailings dam over the life of the deposit.
So what we're doing is that a number two metallurgical tests, which are well underway.
And we are considering some you know what we can they with the flame shape.
To try and recover from additional gold.
As all starting at this point, Tom that's sort of tracking with the day affair.
We do recognize the on the loss of Contra timing.
Great. Thanks, just smart just quickly I would sort of components that percentage wise of mill feed with a with the flow.
Comprise.
For all the yeah.
Probably sitting at about 30% of the mill site, 25% to 10%.
Okay, great. Thanks, guys congratulations.
Thanks, Chris.
Thank you and your next question comes from the line of Justin Chan Muni Securities. Please go ahead.
Afternoon, guys. Thanks, a lot and again like that is that on a restaurant corridor.
My first questions I'm, a little bit relating to a non crop perhaps.
Karma had a very good quarter and get on sustained margin contribution gold prices is now quite attractive and that that asset.
I believe should have a fair amount of price Optionality, just given that the volume of material you made a fairly large write down there is there any.
I guess can you give us your latest thinking on how you look at that operation how much does the gold price change things and is this quarter, an indication that things might be better that than you expected might we see some.
Changes to two that write down perhaps reversing.
Yeah. Thanks, Justin what I think on on Karma, we are and we tend to have always a cautious approach to a toward our assets. We've been running just asset in the a you know 1200 1300, you know gold price environment, rather than a 17 under plus you know a gold price environment, which obviously a.
Changing the the option or the option value of a of karma going forward.
Including in the vicinity for a additional resources.
And including the potential for a adding significant resources on the refractory side, which we never really looked at a in the past given the the gold price environment. So you know we keep that option in the books for you will see going forward. If you know this option is best use for us or best use for someone else.
We don't have to rush, but the good thing.
The and therefore, we are we're happy with Ah you know the way have been have been changing over the last 12 18 months.
I think.
Another one is related to covet and just the situation in country and the integration of.
There's some AFFO assets, one that when that transaction, presumably closes as that is the current state of affairs.
In country, such that you'd be able to too quickly integrated operations.
And turning into endeavor operations is there much work today from that perspective.
And just from a security perspective can you remind me what the status of the.
The landing strip side some of our assets another cover the or anything else is is impacted on that timeline.
Sure well on the on integration. So we are actively working as a as a join team on the a on the integration and particular pre closing within a very active and we have a numerous streams on all functions and operations going on.
Although to be a as effective as possible from from day one of the closing the good thing is that a enovos. Both companies have you know strong teams in the in country, which means that a this bank of in 19, yeah and other things that can be done from a from day, one from an operation standpoint.
On the on the security front a ahead of security has been actively working with the same AFFO guys too to review.
All the semaphore security protocols and prepare you know to put in place a oh no security protocols from the closing date.
So this is a this is progressing well also.
On the I would say security in country. There has been some or somebody progress already made in the a in the north part of a book you know a you probably a you know I mentioned several times that Oh, we were hoping that you know the fact that the year French were repositioning the the Bakken force all the 3005.
On the French soldiers, which are deployed in the Emily a that have been a repositioning the a a street bought a region in the North softer book you know we've seen some significant already progress on the on that front or they're not doing a lot of ER publicity on it but we know on the ground that there has been a summary, some good progress made a in in the north.
And the thing that a you know this will help going forward to to keep our also some some strong operation in the east bust of the country, which is important for us for the restart of mood that we're still scheduling to be in a in Q4 has been some good progress we see muscle on the.
Finalizing the.
Warding the a a contract mining to third party has been a shortlist and and we hope that the you know this will be done in finalized in June or July. So overall I think we were in good shape as a very strong again coordination and communication on the on a daily basis between the same after teams and you never team a in order to have.
Very smooth and effective transition by by the closing date.
I see and just sorry.
On the S chipsets.
None of that had been grew our they are they completed now and.
It's not like what's the plan or what do they expected timeline on that.
They're not completed yet, but no is the one that.
We'll be prepared and ready very shortly or well boom would you objective is to have it ready before we are we restart the mining and we'll go so again you know before.
Beginning of Q4.
Okay. Thanks, that's really helpful and my last one done on Hyundai and the just just the Capex profile there perhaps for the group I'm just reading the test it seems like some degree of Capex and the Fred.
I guess can can you give me a sense of your Capex profile in Q2 in Q3 is there any.
Still over from the first half into the second half at this point.
Overall, I think the only I would say there was $2 million on on the there's been a delayed the compare to what we initially expected from a from Q1 and that will be spread between Q2 in Q3.
But I'm not I'm not expecting a bigger big impact on that and again the biggest point for US was to ensure that we get ready with ER, which carry pump and no. We were hoping that the covered 19 environment with the delay a the award of the carry from a mining permit.
And so far sings of ER organize a very well so no hopefully we should have this dummy before before end of Q2 or beginning of a very early beginning of Q3.
I see and so that and that will determine sort of a degree of pre strip timing is is that fair to say.
Yeah exactly.
Okay, great. Thanks, a lot guys again congrats.
For that the line.
Thank you very much Justin.
Thank you and your next question comes the line of Richard Hatch Fathom that please go ahead.
Thanks, very much yeah, thanks, David and congrats on that and I saw the quota and fast ones just on that on the cash by statement and you say she one you didnt see T. Well you didn't see much for working capital if any to and is there anything going on there and should we expect to see any kind of working cap too.
They'll just in terms of stocks and inventories and such like and into key sake.
Can I say Medrano said I'm sorry, yeah. The wisdom you want to go.
Yeah, I was expecting the Crichton Richard Thanks for that what I did flag at at at the at the full year results. When you asked me. The question was that receivables that.
Going into an election year and became a far so and you know I'm getting that recovered and might be challenging and I think that's that's the one change we've seen since the end of the yeah. So you know they've introduced a new prices fall for certification.
I would have had an impact on on them in terms of getting officials to the often so.
So there has been a build up they on VAT receivable in terms of inventories at the moment.
We have seen I.
And reduction in country and level.
You're not expect.
Big change at this point in time.
Over the second quota, we've always had drawn down on inventories as Mark has picked up in these operations report and finished goods. So.
I don't think at this stage.
We anticipate major Chinese insightful and fantasy Liberals potentially at this stage.
Okay helpful. Thanks, and then and the other thing I would said Richard is or on the only working cap in particular in consumable we're starting to see inside the impact of the policies that we started 12 18 months ago in renegotiating older contracts at the group level for endeavor and in particular moving on and stuff.
Consignment with a lot of our two suppliers and therefore, reducing progressively our own inventories.
Okay Cool say just help them in <unk> and it centralized happening country rather than on your I'm function.
Yeah, exactly and they hold the stock for us on the on site and we pay as we as we take them rather than having to pay for the so.
Okay cool thanks.
But as to the business.
Question on so take crate and.
Patrick if he would take place you're realizing dream, let's see what do you think that you could take that resource take.
Don't don't tell to all oleo tricks Patrick.
Sure.
[laughter].
And then like Patrick is still on the on the line, yes, yes, yes. The driver here, yeah, well the I cannot answer too about the fact either.
Or <unk> or what I can save up or since we are longer 1.2 million also indicated it doesn't mean there.
Going quite a bit quite workforce.
We are being expanding or significantly or if it they quote wallboard salt.
In both are in all our reality, but some girl and we'll know and also in Google sump pump off.
So its beat the difficult for me to until these question. We are very happy with the reserves. We have to date, we see double let's say or a 30% of Google It didn't get resolved to be receiving to be integrated I don't know about two I see goes increase is going to be sure.
If he can compared to the 1.2 million on since we announced last year and again.
With the coal will not be Lucky gave we love the clothes that you run after what we publishers Isa resource there is either.
A lot there have been shown on the potential out there will be so sorry, not too long so to give any number of up to Oh, we are very a hobby or we see so we'll see what leads coming are becoming nicer on myself.
Thank you so right because the tricky question and then last say and first one I just don't carry center and the gap and.
Sorry, just to be clear is there anything we should be read into that in terms. If you haven't Steve additional work on the matlack in the jet black or is that just simply isn't a late in the relates to stand stateside.
Oh sure if I may go on just a yes or if you'll remember that carries handled was not very lofty [noise].
We are building leap, one or more than 40000 ounces.
On top of Darko grade was.
Oh, it real World Gary work on the indeed, Gary Brown or.
What we already know walking on these two closing the gap. So the name of Kinda yup between loan carries until I'm. Just curious how it's already are up it. So we're not going to be huge but he's going to be significantly could we expect the grades to be or.
Or even between carry with on the carry pump so its significance on the due to these are we are ordering right now geotech admit this on the sorry also that's why are we are going to quarterly result won't carry what we treat as much more advanced and later on that we the euro.
Ongoing building or carry center or carry GAAP aren't ready to be galleries, how to what do we will be able to book.
Okay. Thank Keith.
Sorry, My last one is just on the T. just a nice phase that you had to pay in the quota and.
Based on the which you know kind of increasing your interest Andrew just with the exploration what you're doing that should we expect to see anymore and cash like going out in terms of that.
Not sure richer, which are which fee you are you referring to.
I think we'd like $5 million fade cash they statement with regard to.
And.
So bloody so.
Does it look like.
That was a there was probably four look like this was the or how do you called out the earn out on the acquisition of of the lost a 20% or interest in EG.
Yeah, well agreed that.
Any any further discoveries.
We would pay about $1 per a indicated launches that we discover so it's not a it's not a not big amounts.
Okay.
But just based on like a fine art can pull it up the light Trump I never thanks for your time not congrats.
Thank you Richard.
Thank you and your next question comes the line off five times a week from credit Suisse. Please go ahead.
Hi, Thanks for taking my questions I noticed there wasn't much discussion on kalina, even though a prefeasibility is expected in the second half of the or can you talk a little bit about how that fits into the.
Kind of priorities it sounds like that across as it's a bit more of a priority is that fair or make any color on that would be helpful.
Yeah, well no it's not that though in terms of priority. It's downgraded. It's more that current strategy is a 20 and 21 to be completely focus on cash flow generation and therefore, we not expects to launch any new a new project before the end of 21 beginning of two.
You do a and therefore, what we wanted to have a as much optionality as possible in the portfolio in being able to.
Figure out by end of 21, which one from a a return perspective is the most attractive between the due from the you know projects that we will have India in the portfolio by that time.
So kalina is pretty well.
Vincent we are expecting the updated PFS in a in September and therefore, there's been more focused right now on 50, calling order for physical to come as quickly as possible I thought in terms of development Askelon now so that we can really take a I would say a a proper decision on one or the other by the end of two.
Anyone.
Okay, Great. That's really helpful and my only other question was I'm just switching gears on a security in Burkina Faso has have there been any more discussions with the government potentially providing security support I, particularly now that you know your youre once the deal close as you will become the.
Largest gold mine or in the country any updates there.
Well, we have a very oh, I would say very open and.
And frequent dialogue with the authorities in booking I saw in particular and security I think we have a very strong relationship with them and the hopefully a in or you'd be able to see a those through the when we'll be announcing the restart of who in the older security plans that goes with.
We will move.
Which I think we'll we'll demonstrate that we've made some some very good progress around the around Lulu and that a that particular area on the rest of the assets that we currently operate or the other assets. So simple a again they are all in regions and bust of looking at vessel, where there is no real.
I would say challenge from a security perspective, and therefore, the isn't there hasn't been any particular updates except the fact that we've been progressively increasing in reviewing whenever it's required a with zone or was on team.
Okay, great. Thank you.
Things are.
Thank you we will now take our final question and the question from the line of Jody Mark Haywood Securities. Please go ahead.
Thanks, and good afternoon, thanks for the time today.
Just just quickly then and transition or use from some operations are going to ensure the too. So the holistic viewpoint on the company going forward, there given you've mentioned sort of asset portfolio basis.
Well likely to get this summer, it's Andrew I'm, giving you a two so not even on a holistic sort of approach to most times and this sort of thresholds that you'd be looking at.
In terms of managing those assets going forward in terms of what could be cool known cool you would look like in terms of your maturing alone developing part one of its a true.
And what you see is being manageable number investments.
Okay.
Thanks.
Hi, Thanks, Jody well, we I think we presented at the end of a softer value or in reserves for 19 and that our target is to bring progressively the overall portfolio of endeavor to closer and closer to 20 or 20% return on capital employed.
In order to reach that when you look at Sno on a per asset basis. Obviously, there are some assets, which are a far away from a from that number in particular calmer.
So we will continue to review as we've done in the past in terms of portfolio optimization noble to ensure that we.
We keep and focus on management team on assets that are really generating the level of returns that we are expecting for the companion for a and for our shareholders. So obviously gone mice clearly under under scrutiny in terms of overall number of a of assets are always said that the you know between five to eight assets is a is.
One thing, which is manageable in particular, if those assets are orla a into the same a I would say region and this is why we've been refocusing as much as we can and continuing to grow in West Africa, rather than having to go outside West Africa, because from a pure operational standpoint.
He is a large or our management structure and ability to to manage more assets into into the same region.
Correct.
Thank you very much.
Thank you George.
Thank you I'll now hand back ever T cell for closing remarks.
Thank you very much operator, thank you all for attending our Q1 results Hope you keep all safe in this could be 19 crises and are looking forward to speaking again to a all of you for our Q2 results at the end of July. Thank you very much in half.
But all day.
Thank you that does conclude.
Today. Thank you for participation you may all disconnect.
[music].
[noise] [noise].
[music].
Mm.
[music].
[music].
[noise].