Q1 2020 Earnings Call
[music].
Ladies and gentlemen, my name is telecom I know repeal conference over till today I would like to welcome everyone to pick monthly Cool conference call on West Coast to these calls the company's first what those 320 financial and operating results all lines have been placed on mute to prevent any park romley, but it's because.
Very much there would be a question on substantial if you'd like to ask a question on doing just fine seem to press Star then to number one on your telephone keypad. If you would like to withdraw. Your question. You May proceed to foam key read that I would now like to tend to call overall, two flights precedent or that's probably initial marketing.
Thanks, very much operator, and good afternoon, everyone.
Welcome to work first quarter 2020, caulkins called webcast.
On today's call, we will review the quarter.
And also discuss some of our projects as well as recent exploration results.
Well I buy some update information on the coping 19 response by the company.
With me today are many members of the Kirkland Lake Cool Senior management team.
Speaking today will be Tony Mckool, Smith, our president and CEO.
David storage, our advice, our chief financial Officer.
Duncan King or vice President of Australian operations.
Haven't culture, our general manager Kirkland Lake operations.
Dave on Dano, our detour mine general manager.
And Eric Kallio, our senior Vice President of expiration.
As mentioned there are other members and the room as well of the management team in the room as well.
As I'm sure. Many of you are we're doing are called remotely today consistent with our Kogan 19 health and safety protocols.
After we go through the presentation. We'll then open the call to questions, we ask that each person limit themselves to out to two questions.
That's the we'll be referring to is available on our website.
On page you event section.
Before we get started.
I would like to draw your attention.
Slide to.
For our forward looking statements disclosure.
Our remarks and answers to questions today may contain and likely will contain forward looking information about future events affecting the company.
Please refer to slide two as well to forward looking information section of our most recent management discussion and analysis stated make that 2020 for more information.
Also during today's call will be making reference to non I have for us performance measures.
A reconciliation of these measures is available and and our most recent mdna.
Finally, I'll point out that all figures today.
When you S. dollars unless otherwise stated.
With that.
Paul and Tony Macoutes, President and CEO of Kirker Michael.
Okay. Thanks, Mark and thanks, everybody for being on the call I know a you know where we're not as a as organizer maybe out of sexy or sometimes you see somebody said conference calls and video calls have to going on on TV.
So we know what they think the speakers here again, we're all on a it really working from the home office. So as I'm sure other media and everybody attending this call is is on their home office. So thank you for calling in you know I don't know how comfortable you get your home office, maybe you've gotten comfortable more organized overtime and I know I have but I'd at the same time, I think I'm getting tired of.
I have come to my home office would be nice to get out of open see people. So anyway. Thanks for being on the call and that you know the other partners. A you know I think there you know with knowledge keep people PERC and my goal, we had to definitely I I didn't pretty solid quarter in in Q1, 2020 and lot of in her city, but you can see where quality people rights to the occasion and that's what we saw and that's.
Are we seeing kirchen, Michael and the company in it and the communities around this and a lot of our suppliers and and third party contractors as well you see there's a lot of quality people in this industry.
Yeah, you know do be other things I'd really happened in instead, our people get an excellent job protecting themselves and each other and also turned in a very solid quarter of performance in quarter. So anyway. Thanks for like for the efforts and thanks for the attention to detail.
Getting into some of the Oh operating results for the quarter production was 330000 ounces cash costs were for 40 announce an all in sustaining costs averaged 770 announce excluding Dieter these numbers averaged 319 and $690.
Now, it's respectively as a very strong unit cost numbers given the high unusual circumstances in Q1.
Turning to earnings.
We reported net earnings of 79 cents per share and 70 cents per share and on and on an adjusted basis that was a 30% increase from Q1 2019.
It is cash footwear business really showed strength in Q1 2020.
Excluding nonrecurring transaction in restructuring costs, we generated free cash flow over $190 million, which was a quarterly record.
Feature Lake made a significant contribution to free cash flow during the quarter, adding $78 million and that's an only two months of operations with currently overall core quarter highlighted our ability to generate significant cash flow.
Looking at a cash position as shown on slide four we ended the quarter at $530 million and no debt and no I think that has a company we're probably the only gold company wouldn't with no debt on the balance sheet at all maintaining and if you know demonstrates our industry leading strength in terms of.
Financial performance and financial capabilities.
We returned capital to shareholders, we use written $30 million in the quarter to buy back almost 10 million shares and doubled our dividend.
We gained about 180 million of cash from deeper.
But I want to emphasize that we use much more than that by paying back features that close another textbook, making change of control and other payments and incurring transaction fees related to the deal.
We had total capital expenditures of about $110 million a lot of that was sustaining capital.
In terms of growth capital, we continue to invest in our projects specifically the number Porsche <unk> Kassa, we did spend sinking up the shaft at the end of March due to the cold 19 issue. The suspension lasted about a month with Sachin shaft sinking resuming near the end of April.
<unk> excuse me the shaft project is going very well very well when in fact actually with no change to scope schedule for that for the shaft. The bit had been tell Jay will get on to detail a little bit more later in the presentation. We now expect to complete the shaft in one case by late 2022 that is over a year earlier than initially planned and had a lower cost.
Turning to slide five.
Clearly covert 19 was a key developments impacting our business in Q1 2020.
We had a call in early April to discuss the details of our covert 19 response, including our extensive health and safety protocols.
We'll go through and again I will provide you with an update.
Part of our covert 19 response, including going to reduce operations at detour Lincoln Macassa and care temporary suspending operations at the whole conquest.
We also suspended all non essential activities across the company, which you know basically any capital project and or any any exploration project that was not critical to the production into into current here.
[noise] reduce operations impacted our production costs in Q1, I will do so again in a second quarter and we don't know what's going to happen in third fourth quarter, depending on how this progressive.
It also we led to the suspension of key projects as I mentioned earlier, such as a shaft.
Surface ramp up Macassa and the ventilation project at Costco. We also stopped most exploration work not required for this year's production.
We have now return we doing work on these projects as well as others and <unk>, but we will be ramping up.
Paid phases, we've started to recall, where Chris I teach weekend Macassa and we expect it could be a slow so process that may extend over the year.
Turning to slide six the measures we have taken obviously have an impact on our results.
April April 1st 2020 were through a company guidance for 2020, we will issue guidance for years, we make progress towards moving.
Feature Lake and Mckasson towards more predictable levels of production.
These mines clearly were not produce what was in the original guidance. We will continue to assess how quickly they can ramp up which will determine the guidance. We eventually provide and you got to understand it also a <unk> impact side, both capital costs operating costs and exploration cost that was in our original guidance.
We've also withdrawn our three year production guidance, while we assess the long term impact of Copel 19 pandemic on our business and as we work to incorporate feature like into our long term business plan.
When we discuss kogan, 19th we don't talk about returning to normal because we're not sure what normal will be in the future. There a lot of moving parts there and so there is no question that there will be some impact and Howard business has done. This is a key reason why we have suspended or through your guidance world is going to be in different places because of Copel 19, particularly if there are dish.
On a waves of virus that occur you're not going to take some were born takes some time to consider what worked with Viking it's going to look like in the future what impact will have on our operations, but our priorities is to look after people in the communities and the sustainability of our business and beyond this period of time this pandemic.
[noise] slightly slide seven looks at another key.
Very important developments currently culture in Q1 2020, the acquisition of beat their Lake Gold.
We have talked about the deal at length, and so I won't get into the terms and rationale behind the transaction you.
We see a lot of upside to de to lake and plan to invest aggressively to achieve it we actually have not disappointed at all in terms of what we what we see what we see as a potential here and the quality of the people that are at the tour and the ability for us to put this project forward to get to a whole new level.
I will highlight a few things about the quarter given that we own vitro lake for two months and it was on reduce operations for part of that time.
You can get a sense of had very very good operating performance producing 92000 ounces in two months ending March 31st cash costs of 696, and all in sustaining costs up 11 weight per ounce were in line with expected levels for the quarter for the part for the period during the quarter. We saw the tremendous lever teacher Lake has something that a gold price.
I already mentioned, a $78 million of free cash flow.
Generated in two months and that was about 40% of a toll free cash flow for the quarter, excluding nonrecurring items for the company.
The last key development I mentioned for the quarter involves a noncore assets I'm on slide eight.
On February 20, if we designated a whole complex analysis and the non territory Northern territory, sorry as noncore.
The whole complex includes our Taylor Holt Hollaway mine and mill in North American light in March we placed the hollaway mine and care and maintenance. We also suspended all test mining and processing at the Cosmo mine and Union reached mill in the Northern territory of Australia, and also sees all exploration drilling here.
The only results we were getting for both Hall, we mine and India and he did not just by continuing on with our operating activities, particularly when you consider potential we have at our three cornerstone assets Macaos, a deeper lake and foster Bill.
At the beginning in May we transitioned the remainder of the whole complex and temporary camp care and maintenance. The move was done as part of our covert 19 protocols and also reflected the fact that were new made some strategic view of the operations.
We decided that while we perform that review in light of nickel 19 pandemic pandemic sorry, it makes sense to continued to suspend the operations here.
When you originally indicated that the temporary suspension will last until April thirtyth that has now been extended and we have not determined the timeline for presumptions of operation at this time.
Excuse me turning to slide nine.
Mentioned that met the tremendous growth in exploration potential of our three cornerstone assets.
We plan to embed invest aggressively to realize all the upside we see.
Even with Cobot 19, we had exploration expenditures of 36 million in Q1 2020.
We did largely suspend drilling late in the quarter, but are starting to redeploy drills now.
I have already announced some encouraging drill results identifying a new large corridor of high grade mineralization at Macassa, along the main breaks at that debt. They were calling it will tell you more but these exploration results shortly but.
And when you go through the expiration.
Part of this presentation and if we give you a sense I mean expiration as one of the most exciting parts of this company not just that Mccafs, but also at foster Bill.
A lot it possible and naturally as Eric I'll show you overtime, a lot of detour Lake anyway, right now I'd like to call and David So ours, our CFO to review, our Q1 2020 financial results in more detail.
Thank you Tony and good afternoon, everyone.
I will be starting on slide 10.
As Tony mentioned, we had strong earnings in commented on 20 to 20.
Net earnings totaled 202.9 million or 79 Chin since a share adjusted net earnings were 179.2 million or 70 cents per share.
A difference between adjusted net earnings and net earnings related mainly to a 52.5, new dollar after tax and foreign exchange gains due to the strengthening of the U.S. dollar in the quarter.
Impact was partially offset.
By the exclusion from adjusted net earnings of 24.9 million after tax related to transaction.
Uh huh.
Related to the detour gold acquisition.
In terms of key drivers of adjusted net earnings it largely came down to strong revenue growth driven by both higher sales volumes and increased school crisis in the quarter.
The change in earnings per share from both Q1, 2019 and last quarter Q4 of the we're short Q1 of 2020.
Was impacted by higher average shares outstanding in Q1 2020.
They totaled.
257.4 million this quarter versus about 210 million in both prior periods. The increase related to the 77 million shares we issued for the detour transaction on January 31st partially offset by the 9.7 million shares we repurchased in Q1.
Slide 11 looks at our revenue in more detail.
Revenue in Q1, 2020 totaled 554.7 million, 82% higher than Q1 2019.
And the 35% increase from the previous quarter on the year over year basis, both higher gold sales and an increase in gold price contributed to the strong revenue growth.
Gold sales increased 48% to 344.
Thousand ounces.
And had.
146 million dollar favorable impact on revenue.
The average gold price increased.
To $1586 per ounce from $1307 per ounce a year earlier.
The increase in price increased revenue by $96 million in the quarter.
Quarter over quarter gold fields were 24% higher which increased revenue by $98 million.
The Q1, 2020 gold price compared to 14.
$181 per ounce in Q4 2019.
The increase in price had a 36% 36 million dollar favorable impact on revenue this quarter.
Detour Lake has a significant impact on revenue in Q1, 2020, contributing 179.4 million of the 554.7 million of total revenue.
Gold fields that detour Lake were just over 110000 ounces, excluding detour Lake revenue totaled 375.3 million compared to 304.9 million a year earlier and 412.4 million in Q4 2019.
You may recall that in Q4, we had record sales driven by foster Bill, which had a great of almost 50 grams per tonne for the quarter.
Looking ahead at EBITDA as shown on Slide 12, Q1, 2020, EBITDA was a record 391.5 million, 94% increase from 201.6 million in Q1 2019.
And 37% higher than 285.6 million in the previous quarter. The increase from both prior periods was driven by net earnings growth as well as the impact of higher depletion depreciation costs and current income tax expense.
Turning to slide 13, it looks at our cash and cash flows.
On the slide you will see that we have adjusted opening cash flow to net out.
60.5 million of nonrecurring items. These are mainly related to the detour gold acquisition and include transaction fees change of control payments and other termination related costs and some restructuring expenses.
We also have about $3 million of restructuring costs at the tail level and incurred some severance expense at our noncore assets, mainly in the northern territory.
Excluding the nonrecurring costs, our cash from operations totaled $302 million.
Looking at investing activities, we had a source of cash of 60.7 million.
Which mainly reflected cash received from detour gold offset by capital expenditures as Tony indicated earlier the cash we received from detour was more than offset by use of cash relating to the transaction or the acquired company.
Turning to finance activities, the larger ships cash related to a few things the largest being the share repurchases in the quarter.
Moving onto slide 14, where we look at the change in cash in that in a slightly differently.
You can see that the largest contributor to growth in cash was from our operations, which generated about 282 million.
This before interest.
Income tax paid an impact of changes in working capital.
The other large source of cash was 173.9 million of cash.
Came from detour gold.
We have already discussed it in in this slight and dislike gives the details around the offsetting use of cash relating to detour.
We used 98 million to repay detours debt.
30 million to close out of hedge positions and also had 54 million of transaction and restructuring related costs paid in cash in the quarter.
The chart on Slide 14 also highlights the significance of the 330 million used for share repurchases during the quarter on our cash balance other significant use of cash in the quarter included about 110 million of capital expenditures about 90 million of which was sustaining.
We also had higher cash income tax payments and we paid 12.5 million in dividend payments based on the Q4 2019 dividend of six cents per share.
As you heard we've doubled our dividend in Q1 to 12.5 cents per share so going forward that cash commitment for dividends will be higher.
With that I'll turn the call over to Dunkin' King Vice President of Australian operations.
Turning to slide 15, good afternoon.
Tony mentioned earlier Foster real had a strong quarter in Q1 2020.
Weve produced 160000 ounces production increased 24% from Q1 2019 with the increase resulting from a 46% improvement at the average for in the average grade to 42.4 grams to the to.
The higher average grade resulted from increased mining of this one zone compared to the prior year.
Production in Q1 compared to record production in Q4 2019 of 192000 ounces when the mine achieved a record grew to 49.3 grams a tonne.
To bridge in Q4 reflected sequencing in the flood zone as well as some great outperformance during the quarter.
Cash costs in Q1, 2020 were $126 per hour, 13% better than $144 per ounce in Q1 2090.
Q1 cash cost compared to a record $106 per ounce in Q4, 2019, again, largely reflecting the average grade in the previous quarter.
All in sustaining cost averaged $313 and also Q1 2020 versus $315 in Q1, 20 night team and $258 the previous quarter.
It is worth noting that a new royalty introduced by the Victorian government.
Active January 1st Twentytwenty accounted for $7.2 million or $47, an out of all in sustaining cost or Q1 twentytwenty.
Excluding the new royalty these costs were largely unchanged quarter over quarter.
Looking at our project well Foster role has continued to operate through the Pope with 19 crisis. We did have some projects impacted when we suspended all non essential work.
Work on our new ventilation system was interrupted as where a number of surface infrastructure projects. We continue to target commissioning of the new ventilation system beginning in the second quarter and our project is starting to come back online.
I'll now turn the call over the Evan Pelted General manager Kirkland Lake Operation.
Thanks Duncan.
Starting on slide 16.
Because I had a solid quarter in Q1 2020, we produced 51000 ounces, which compares to record quarterly production of 73000 in Q1, 2019, and 56000 ounces in previous quarter.
The quarter over quarter change largely related to lower tonnages, which was due in large part of disruptions caused by quarter 19.
Operating cash costs averaged 536 per ounce in Q1 2020 versus 332 in Q1 2019 at 471 for also the previous quarter.
The increase from both prior periods largely reflected lower sales volumes as well as higher levels and operating development and other mining cost in Q1 2020.
All in sustaining cost per ounce averaged 850 versus 602 in Q1, 2019 and 721 in the previous quarter.
Year over year change was mainly due to lower sale volumes.
The change from Q4, 2019 was due to lower sales volumes as well as higher operating costs, an increase sustaining capital expenditure sustaining capital of 15.1 million was higher than 10.8 million in Q4, 2019, which was lowest quarterly total we had last year.
It was largely timing related in terms of schedule and capital development and equipment procurement.
Before I get four shaft, I'll first address or plans around corporate 19th.
We are resuming work on key projects and starting to ramp up production.
Resumed shaft sinking at the end of April and have also commenced work on the new surface rap.
Increasing productive activities will be grads gradual process, we are maintaining all of our key health and safety protocols, including limited people onsite and social distancing.
This will continue to impact our operations for sometime.
Turning to slide 17, we have made a great deal of progress at four shaft project and now have made changes to the project scope schedule.
First during Q1, we think the shaft to 760 feet.
To the 1960 level at quarter end.
And this is fully equipped with steel and concrete we also excavated and equipped to 15 40 level station.
At the end of March we stop thinking as part of over 19 protocol to suspend non essential work that lasted about a month and we started thinking again in late April.
Based on the progress we have achieved we have made changes to the scope and scheduled to shaft project. We're now planning to complete the shaft and one phase to a total depth of 6400 feet with target completion for late 2022.
The changes to the shaft scope benefit a number of ways. This allows us to increase gifting capacity sooner improves ventilation and working conditions de risk the mining advances the timing for future exploration development of the shaft and support to future drilling.
By reducing the development period by over a year, we will be able to use the shaft sooner and have created a potential for cost savings and the capital budget. At this time, however, our budget remains at 321 million.
I'll now turn call over to David Lindahl General manager of before like.
Our pet care about and good afternoon, everyone.
I would it be talking to slide 18.
People make produced 91000 ounces from January 1st can be Ana the first quarter.
We have progress pay point Sevenmillion talks at an average of financing program spectrum.
The average grade was down from the previous quarter, mainly due to processing higher volumes of stock buyback area, which is typically lower grade on my production or direct payment.
Operating cash costs, our fresh takes 96000, kuwam turning to any wide audience sustaining costs averaged 11 oil per ounce.
For Fannie copied I've talked about $48.3 billion.
Hi, Graham Ehm greatly automatic totally scopic values are forecasting sustaining so our AC cost base oil 11, or eight it's really all in sustaining costs all in costs.
In our confidence calling in April I spoke at length about the helped our safety protocols reprint place in response to perfect. Thank game.
Today I'll provide an update we have Americas ramping up our mining production.
Starting with three lump last I am going moving on Florida Hall, Amtech mining fixed to the crusher.
Forebears ramp up we are requiring masking our box are coming from month to call Craig.
Performing temperature checks prior to our employees, leading caltrain bye bye.
On the others, arriving by truck brick house.
Perfect checks out also being performance copy for spectral shares.
Part of body. His comments were recently purchased Ari installing strategic locations I think all criminalist bus terming out both camps out at the Gate House. So body temperature is Matt is now a check that putting time our work at positive reviews locations.
I'm wondering about feeling well or shows any of the coffee 19 symptoms that assessed by domestic and then set off side for professional your measures.
But container and also we face account with these pumps in our comp on the buckfast, we doubled the number of buffers and light vehicles meeting wrongs and ADVATE dining rooms, we'd also have removed strung chairs that keeps us have be establishing the masks and if we have block some of the areas that puts on Saturday nights et cetera.
With that I've talked a kilometer attic kaleo as senior Vice president of exploration.
Thanks, David and ended up good afternoon, everyone I'll, just starting with slide 19, which has a plan from the cost of mine, which is the main focus for Q1 exploration on where we recently announced more exciting news from drilling.
As indicated in the plan drilling was focused in east part of the mine and on testing SMC, but also included new work on the main break for the SNC that 18 uses it continued to team very positive results with a number of new high grade intercepts and another 75 meters a strike length added to the structure.
This now we're bringing the total thinks that structure.
SNC to over two kilometers and still open from our extension.
And then in terms of the money and break we had one where new hole and 15, others that were not previously reported that we now interpret as part of the new high grade corridor.
As indicated in the release.
The quarter extends between our new number four shaft and Kirkland minerals and currently measures 700 meters long by 300 meters hurry.
The importance for future development. The quarters also located very close to a new drift planned on 57 level.
And in terms of the new whole intercepts east part of the corridor 300 meters below the deepest levels currently minerals and 50 meters east of the closest previous hold in this area. It also has the highest creates to date from the zone little to no drilling to the east So again opens for extension.
Turning now to slide 20.
We can see a cross section through the east part of the area drilled it further illustrating the new results.
As indicated the SMC is located on the left hand side.
And just below the deal platform on 5300 and has a number of good holes to both confirm and extends the zone and the main breaks is on the right hand side and host a continuous string of values extending downward from the historic workings Kirkland minerals.
Additional to this the section also provides another view of the new high grade intercepts and hold number 40, 52, which is located near the Sixsix hundred 6800 level or 300 meters below the deepest level Kirkland minerals.
Now turning on to slide 21.
We see here along section for the mean break and high grade corridor, which has indicated contains a number very good intercepts altogether.
And all of them located between the new number four shaft and crippling minerals.
Although the number of holes drilled still quite low at this point.
We're very encouraged by the overall continuity and number of high grades that we see in this area to date also very encouraged by the fact, our new high grade intercepts is at the East limited drilling with little to no testing beyond this and from what we know.
The structure in this area is still likely open for testing all the way it let shore mine, which is at least another clock or to the east.
So considering all the above I think it's fair to say, we continue to feel strongly about the potential to mine and looking forward.
Doing more exploration here very soon.
With that I'll now pass the call back to Tony.
Okay. Thanks, Eric.
For the exciting in terms of some developments are at Macassa.
Anyway, maybe and just to find the slide 22.
Ill give you some highlights here are some summary highlights.
I guess, you can sense, we get a sense.
Despite a challenging environment in Q1 2020, Kirkland Lake continued to turned in a strong quarter, we had solid earnings generated substantial free cash flow in the quarter.
We maintained our industry, leading financial Straights, we also returned capital to shareholders, probably the highest level cap returned to shareholders in a quarter and anyone in our industry and two rigs and we did this too expensive share buybacks and by doubling our quarterly dividend.
Excuse me, we had a very strong first two months from Detroit Lake and we're very pleased with the progress we see in terms of improved productivity and really in terms of the upside of this operation.
We also took steps during the quarter to streamline our portfolio to focus more fully on our three cornerstone assets, despite turning or making a big both the.
Northern territory in Australia, Entercom north assets as noncore at this point in time.
We continue to invest aggressively in exploration and leave with that that with Macassa peak to lake impossible. We have three of the most exciting exploration projects in the industry analysts I had somebody at one time talking to and say rating own really in 30 Kirchen my goals as an exploration company. This happens that combine mine and generate free cash flow.
Finally, I'd say, we're cautiously optimistic that conditions are improving in terms of cobot 19, and we're starting to were resumed work in key areas. This will be a gradual process excuse me extending throughout the year. We also recognized that some changes may become a new normal and everything we do the health and wellbeing of our workers their families.
And our communities will remain our top priority. Thanks, everyone for listening on this call. Thank you for staying home staying safe looking after your families and and fundamentally if we all look after ourselves and our families were all looking after each of the do so thank you for what you've done anyway, we'll be happy to take your questions at this point.
I remind us to ask a question you Wouldnt surprise, Paul one on your telephone. So we try to your question. Please press the pound Oh Husky. Please standby why we compared to Q on Erosnow.
Your first question comes from the line of Uh-huh Tariq of Credit Suisse. Please go ahead your line.
Hi, Thanks for taking my questions under three year production guidance that was withdrawn can you give some more color on the long term impact that you're seeing from kogut.
19, as it is it on productivity supply chain.
Just trying to get a sense of what what is causing you to.
I guess.
You bet that the longer term guidance as a result to covert.
Well I think getting all that would mean, there's lot of moving parts. We don't know where things are going to happen. We don't know whats in Alaska government is going to lift restrictions. We don't we don't know what's coming on and we decided prudent to sit there and say you know what.
We know there's no you said trying to commit to things and year end 2021, and 2000 going to be silverware, where this is what's going on we definitely see that there will be differences in and out and our operating practices and use of PPD and work schedules et cetera at some of it is.
We see as being create maybe becoming some of the new norm in terms of how people will work so to where we got to consider that and really get an understanding of where where things are going to go over next few next few years. So that's that's all it just give yourself, sometimes to really understand and reposition the operations. We've also has as.
They haven't mentioned with the number number four shaft I mean, it also gives you a time when we looked at things we're doing and we say like for example, with number four schaeffler instead of saying, it's going to be done at the end to 2023 into 2022, who have had some time to rethink thing. So gives us some time to rethink all all of our business model et cetera, and incorporate what's going.
In line with detour, what we really want to do with scale North at this point in time. So that's that's what we decided to do in supposed to coming up with a variety of changes over the next three months or six months that we didn't quite we might not be predict.
Okay, and just as a follow up on the Macassa shops for now that the depth has been revised what's that mean I know you can you could probably can't give specifics, but what does that mean just in terms of the production relative to what it was than previously expected to be like how does that change in the depth to the scope.
Work impact production and the fact that that's coming back a year.
It doesn't necessarily mean, it doesn't necessarily change macshane on production and as it brings a little bit more production is that essentially 2022 than than than we had enough plan I think it really it does it does help us in terms of folks down on on costs and.
Productivity improvement.
Operational improvements and were conditions that previously written maybe not be there so.
At this point in time, we're not necessarily saying, it's it's going to help us at into we're going to increase production because of it but we see it is definitely is going to de risk production's going de risk. The operation is going to provide a better safer workplace quicker and we're going to do it at least at less capital costs. It would not really ready to create when it is but.
There will definitely be no cost overrun on online chat.
Is that a good answer your question.
That's very helpful. Thank you.
Thanks.
Your next question comes from the line of Cosmos Chiu <unk>.
Please go ahead your line.
Hi, Thanks, Tony Antimicrobial conference call. Your it all its great to see that you've talked about it all ramping up that mikasa and detour starting in early may.
If I remember back a pro during the conference call.
You had talked about detour the ramp up could take a month or a month and a half I think David mentioned, the and haven't had mentioned that macassa could be three to four weeks, but in today's conversation. It seems like it could take longer to get all Tony in your opening remarks, you talked about.
To be a year has that changed or or could you help me sort of reconcile.
Excuse me I don't.
Nothing's really changed I guess, we just try and thing.
The only thing that's changed from up from say a month ago versus now. It's you know the when you're reading about about what's happening and getting a sense, I'm, where where government nothing is going as well as well as understanding.
You know the practices and how the being adopted in the workplace and what might be to be norm, we're starting to be realistic and saying Hey, you know what some of their stock may at down to take take a little bit longer and or have a longer term impact you know.
I would sit there and say you know I'm not sure that I'm going to be going to a two to two a hockey game and shit necrotic 20000 people them at that it's Scotiabank Center and TC drama play.
No offense, but you know I'm not going am I going to do that in September. So there's a lot of things that are starting to happen. Then we just trying to gauge that we don't it's just us taking us longer longer term view and looking at risk, so cetera must potentially might happen.
So I guess you know again as a follow on the last conference call. You again, I mentioned detour was running at about 75 per our 35% of that all your normal sort of workforce.
Macassa was running about 65%.
Where are you out right now and then you know.
I guess, where you already know.
I'll, let David loan Battle, he can speak for detour lift up until she speaks for Mckesson How's that go David you want to brokers.
Hi, buffer, so it might or might not be mom and wait up about 50% up in mind and 75% of the mail app by fed the 18 of May more or less we're going to be 85% at the mine and then we've got to be for production or the meal I get Astani mansion.
The clammy Nonpaying, social defense I bought a am asphalt and and so going to 100% has got to be more difficult at this time. So at would see how these paint progressive Baghdad PA through at least go 85% at the mine.
Mhm.
Your next question.
Mm.
For me because I know a basically just not about 80, 85% now so we're up from 65%, but we're still seeing some.
Some absenteeism due to Goldman <unk>.
Pusher [noise].
And part of it well on Cosmo is pretty much the come back to where they.
For sure and then just a quick follow up if I may get all the I got a three year guidance to be honest will also be surprised that it was little withdrawn, but no I think Tony you explained at well in terms of it all sort of what's happening, but if I went to look at your three year guidance that was put out at the end of 2019.
It was focused on Fosterville mikasa [noise].
But also today you also mentioned need tour and how that fits into the longer term mine plan.
I'm, just wondering the impact or from Coven 19, and get all the decision to to withdraw their three year guidance was there based on more on what's happening at foster will and mikasa or is it overall.
I think it's what's already and I don't think its overall cosmo on it I mean part of our when we give up production guidance.
Part of buildings, all tied into I know, where we see capital programs farm, where we see exploration programs going et cetera, and you know there. So so lot of inputs that come into it. We just we basically decided that we need spend a little bit of time, reviewing things and really understand what's going to happen. We don't know what's going to have to September October of this year, we don't know how things.
Those are going to progress and we're just trying to to ER.
Ill provide some some guidance in that sense I mean, we said what we were doing this year. We you indicated you know you can see what we did in Q1 compared to plan will continue to report on a quarter by quarter basis and in terms of.
How we did compared to.
You compare plan for that for the year. We just we just don't know if something is going to come out at us and that's what we're just trying to not sit there and say we're going to do this and in three months later have to say we're going to do this we think once we get to think more to more predictable levels as well as you don't get some of this stuff behind us as well as I understand the impact of lot of new protocols.
In that process is we're running and the potential impact on on on any.
Potential capital programs, we might want to implement or our exploration programs.
Side, what to do we just give ourselves a few months figure that out.
Your next question comes from the line those fees how people Cotempla. Please go ahead your line.
Hi, everyone just a couple of questions from me.
Tony just starting off with the against one off on a causes question on on the guidance wise.
Is there anything specific you are looking for before you get comfortable in providing 2020 guidance. I mean, you were talking about you know macassa and kind of detour moving closer that anywhere from 60% to 85% Mark I mean, it there is there something more of our sustainability side that you are waiting for before you can.
Move forward with the just to keep the specific 2020 guidance.
I think it's yes, I mean, we're recalling people were moving back up people, but somewhere our suppliers and so our so are the communities. So it's it's also the fitting into to try to get some percent sense on on how things are progressing over the next few months and ensuring that the you know nothing changes in terms of.
Government protocol Satcom honest I know.
We have we're not we don't want to work without a plan. We don't want to work positive diesel so were that we got Atlanta, we got the ideas what we're doing them as soon as we feel pretty comfortable as as we said earlier some sort of predictable levels kick in 2020, we'll we'll be able to certain.
Nothing changes from what we see progressing over the next while we definitely feel bites.
Right by the end of Q2 will be able to us over 2020, it's gonna look like.
Got it mean part of our 2020 Guidances and just production. That's also costs assessed are too right.
And just I mean in terms of possible then I mean, you know in terms of.
Operations continued and continue through Q1 and continued unaffected maybe you know you you pulled back little bit on development and exploration.
But is that do feel that's impacting maybe the two or three your guidance that you have provided previously.
Oh fossil bill performed extremely well in Q1 and predictions for Q2, there being a things seem to continue to go like that could be very well I mean, we are assessing foster bill in terms of.
What's what's going on just like we do the other mines were kinda angelenos take the ticket take the ticket position on what we see and where what did the work we're doing and what do we see is a long term sustainable future. There what we have and definitely exploration success as a key driver too to what's going to happen if possible.
Got it and just just one quick question just in terms of percentage coming from Swann.
In in Q1.
If you just remind us what that was in is that percentage expecting you change over the next couple of quarters.
Or significant.
Dunkin Donuts Dick I don't have those numbers I had those numbers I don't remember what they what they are Duncan do you have the in terms of percentage on swaps and tenant in terms of going forward for the year and rates, it's pretty much consistent but you know if Duncan has the answer for that I can you haven't thought I can get you offline terms what percentage was from too.
Okay.
Probably 75% comes along.
I think it was 80% from swap.
Yes.
It's expected to be consistent the remainder of there.
Got it so that's it for me. Thank you so much guys.
Okay.
Next question comes on the line of touch well some of RBC capital market. Please go ahead your line.
Thank you very much a first question relates to catch that I assume there would have been a pretty reasonable sort of study that was down a shop expansion what the long term cost projections are for the mine beyond just what the production volumes are which happened guided.
You provide some additional detail on what you expect the steady state sustaining capital and unit cost expectations to be once the project is ramped up I and based on the Ole study and.
What's the opportunity could be from from would be discussion was earlier this call about potential improvements.
That's a.
In terms of that for this call I didn't know if we have that those answers available, but we're happy to share them with yet and give you some sort of guidelines I mean, you know I don't think that that you know it's much anything different than what we've been sort of achieving or we had guided to previously.
We all issue with the shaft and part of the by partner changes in the shaft by the way. We originally started the shaft development, using a contractor and and and convenient contracted item and back in September of last year, we took over from the contractor ourselves started developing ourselves and with that.
We started to rethink that spoke of the project and the timing of the project that the costs of the project.
And that's pretty much what what's happening there how it affects the mine plan and that was or those are moving parts.
And part of you know part of it is getting that shaft a lot earlier, it's really going to help in terms of de risking that operation and prove working conditions in the mine.
But you know trades are those numbers I can get done Natasha.
Speak to after there's a lot more numbers and we have sitting Ingram appreciate we're all in a different different home offices and scattered across the province of Ontario.
Great I appreciate that and then second question is back to the common theme here on the guidance.
It sounds like over the next quarter there'll be some more information in terms of what the 2020 expectations will be a reasonably with a three year guide there is.
Reasonable man of more work required for the detour plan.
As well as what the foster go into cash the sort of outlook it could it be.
When do you think will have enough information to actually formerly provide for your guide as they could it be realistically not too early 2021 or will we have some kind of major update we're the clarity can be better understood.
But I think there with the with the with the detour.
Jay meter in the trying to get a handle on that on the planet that at each or we were looking at trying to have something out by by Q2 into Q3 of this year.
You know that that some which is part of that was pretty China to really do that right. We want to be able to incorporate some new drilling results and reinterpretation of geology into resource there and a few other things from a permitting perspective that we that we read.
Applied for some of it recognizes been delayed now I'd say in lawn parts of about that work has been delayed because of Goldman 19, but I would say and say that we're really working towards probably do by Q4 of this year to really have that something so all that out there, but if we get it sooner. We were we will we will get it out sooner.
There are no questions at this time I turn the call, but tomorrow thing.
Thank you operator, and thanks, everyone for participating in our call today as you heard despite the coven 19 endemic responses. We've had we had a solid quarter in Q1 with a very solid operating results earnings.
And very solid cash flow.
We have some exciting things going on with their projects were advancing the number four shop in the castle very well and we're realizing some of the exploration upside we talked about listened very encouraging results.
In the past so this quarter.
We.
We will continue to update the market as as developments occur and as we continue to to progress our operations and ramp up and we look forward to a two our next conference call. When you can we can talk again about our ongoing solid results. Thanks very much.
Ladies and gentlemen, this concludes today's conference call. Thank you for participating you may now disconnect.
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