Q2 2020 Eldorado Gold Corp Earnings Call
Thank you for standing by this is the conference operator.
Welcome to the Eldorado Gold Corp. second quarter 2020 conference call.
As a reminder, all participants are in listen only mode and the conference is being recorded.
After the presentation, there will be an opportunity to ask questions.
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I would now like to turn the conference over to Peter Luggage manager Investor Relations. Please go ahead.
Thank you operator, and thank you, ladies and gentlemen for taking the time to dial into our conference call today.
On the line day, or George Burns, President and CEO.
<unk> executive Vice President and CFO.
<unk> Executive Vice President and COO, and Jason Show Executive Vice President and Chief Strategy Officer.
Released yesterday details, our 2022nd quarter financial operating results.
There should be read in conjunction with our second quarter financial statements and management's discussion and analysis both of which are available on our website. They also been filed on SEDAR and Edgar.
Dollar figures discussed today or in U.S. dollar unless otherwise stated we always speaking the slides that accompany this webcast you can download a copy of these slides from our website.
Before we begin I'd like to remind you that any projections included in our discussion today are likely to involve risks, which are detailed in our 2019 <unk>.
And the cautionary note on slide one I'll now turn the call over to George.
Thanks, Peter and good morning, everyone.
Here's the outline for today's call.
I'll give an overview of Q2, along with some comments.
I'll pass it to fill the go through the financials.
Joe will follow by reviewing operational performance.
And then we'll open it up for questions.
I'm excited to be reporting an outstanding second quarter, both operationally and financially.
We continue to make progress and delivering value for our stakeholders as demonstrated by our strong quarterly production and maintaining guidance. Despite coping 19 operational challenges.
The operational the operations performed exceptionally and I'm proud of the agility of our teams to adapt to our new normal.
I'm, especially pleased to report we delivered a significant increase in cash flow this quarter and improved our financial position.
We've elected to issue a redemption notice a $58.6 million under the equity Clawback provision of our senior secured notes.
Repayment of these notes will help lower interest expense and average cost of capital.
Another highlight this quarter includes beginning construction of the decline that will mark.
As a reminder, this will connect the triangle underground mine to the Sigma mill, the a three kilometer tunnel.
This gives us a number of benefits including.
Eliminating surface or haulage reduce road traffic and lower carbon footprint.
Enabling lower cost underground exploration for or Mark plug for Unparallel deposits.
And increase safety by providing a secondary means a vigorous.
Board agrees, where we resumed negotiations with the Greek government on an update on investment agreement.
As mentioned last quarter, Kobin 19 had diverted both our own and the Greek <unk> governments attention.
However, we are back now in discussion.
Perhaps a little background may be helpful. Here.
Other autos existing agreement is nearly 15 years old and there's no longer fit for purpose.
It was negotiated back in 2006 by a previous owner under vastly different economic and technological conditions.
Modernized investment agreement with appropriate Investor productions will offer significant economic and environmental benefits degrees.
Our investment in Greece, well, not only benefit Eldorado shareholders, but also the Greek state and local communities through.
Providing jobs in construction and operations.
Increasing foreign direct investment in Greece.
Using best available technologies like dry stack tailings.
And other CSR projects.
Research prosperity was once built on mining.
Mining could again become a key sustainable industry and source of wealth for Greece, well using best available technologies to protect the environment.
We remain committed to acting in good faith in discussions with the Greek government to find a mutually agreeable path forward.
[noise] also in Greece, we saw a movement on drilling permits for mabus Petrus during the quarter, which we see as another positive indicator.
And lastly, we completed the purchase a 5% of Hell US gold shares that were owned by a locked or.
Eldorado is now 100% shareholder of pellets goal.
This gives us full ownership of the Cassandra assets and more flexibility for joint venture partnerships.
Greece continues to represent a fantastic growth opportunity for Eldorado. The we believe is not currently reflected in our valuation.
Skouries and Perama Hill, our world class assets that will add significant value for investors local communities and the Greek state.
I'll stop there or do you feel.
Thank you George good morning, everyone.
On slide five we provide an overview of Eldorado's financial results for the second quarter 2020.
As George stated earlier, we're very pleased with our financial results for the quarter.
The headline for this quarter is our strong free cash flow generation of 63 point Fourmillion in Q2 of 2020.
Versus 4.8 million in Q2, 2019, and 7.2 million in Q1 of 2020.
This increase is due to increased production higher say higher sales and higher gold prices.
Eldorado generated 255.9 million total metal revenue in the quarter.
This includes 232.9 million in gold revenue and represents an increase of 55% over the comparative quarter in 2019.
The increase revenue resulted from higher gold sales volumes of 134960 ounces compared to 113685 ounces in the second quarter of 2019.
And 116219 ounces into first quarter 2020.
The increase was also the result of higher average realized gold price.
1700, $26, an ounce and the second quarter 2020, compared to 13 21 crowns to the comparative quarter in 2019.
The company reported net earnings to shareholders in the second quarter of 45.6 million were 27 cents per share.
After adjustments primarily to remove the noncash revaluation of a derivative related to our debt.
And the noncash loss on foreign exchange due to translation of deferred tax balances.
Adjusted net earnings for the second quarter were 43.8 million or 26 cents earnings per share.
This was a significant improvement over the second quarter of 2009 teens adjusted net loss of 3.5 million or two cents loss per share and over the first quarter of 20 Twentys adjusted net earnings of 12.5 million or eight cents earnings per share.
Like a lot of our metrics this quarter the increase net earnings on adjusted net earnings reflect higher gold prices and higher gold sales relative to Q2 2019.
EBITDA for the quarter was 131.8 million.
And after removing certain noncash items adjusted EBITDA was 135.8 million.
This was a material improvement.
Over EBITDA of 74.5 million and adjusted EBITDA of 66.8 million in the second quarter of 2019.
Depreciation and amortization increased to 58.3 million in the second quarter from 41.2 million in the comparative quarter in 2019, again, reflecting higher production and higher sales volumes in Q2 2020.
Finance costs were 6.5 million in the second quarter 2020, compared to 16.8 million for the comparative quarter. In 2019. The decrease was due to lower interest and financing costs in Q2 of 20 to 20 at a noncash gain on the revaluation of the derivative related to our debt.
Income tax expense for Q2, 2020 amounted to 23.7 million for the quarter compared to 8 million in the comparative period of 2019.
The significant increase was a result, a higher sales volumes in Q2 2020, leading to higher income tax on operations in Turkey, and higher prevention mining duties for our lock operation in Quebec.
We finished the quarter with approximately 440 million in cash cash equivalents and turn deposits.
And approximately 35 million available under the revolving credit facility.
Our liquidity position is very strong and we have been a clear that paying down debt is a priority for the company.
As George mentioned, we have elected to partially redeem the 9.5% secured notes under the equity Clawback provision in the bond indenture. This allows us to using that cash proceeds from equity raised in the past 120 days to redeem 58.6 million of senior secured notes in late August.
These notes carry a 9.5% coupon. So this reduction will lower interest expense going forward.
Under the terms of the indenture redemption price.
The redemption price the medium notes is 109.5% of the aggregate principal amount plus accrued and unpaid interest up to the redemption date. These costs will be incurred in Q3 of 2020.
It is also worth noting that we expect Q3 2020 free cash flow to be impacted by the premium and interest paid on the redemption.
As well as a timing of certain cash tax payments and the timing of capital expenditures.
Moving on to slide six.
We have provided for graphs that I think really capture the turnaround that we're seeing in our financial performance over the past year.
You will recall in April of last year, Lamont commence commercial commercial operations.
In June 2019, we completed the refinancing of the outstanding debt.
Earlier this year, we announced the mine life extension at just today to 15 years and.
We have steadily increased production that lumpiness over the past few quarters.
All of these factors have contributed to the strong performance were reflected in these graphs.
Adjusted EBITDA as shown on the top left graph as increased quarter over quarter in the past year. This is reflective of our operational improvements and supported by a high gold price.
In Q2, 2020, Eldorado reported 99.6 million in net cash generated from operating activities.
63 point, Fourmillion and free cash flow and 43.8 million and adjusted net earnings.
All three of these metrics reflect significant increases over the previous four quarters and were driven by strong production and a higher realized gold price in Q2 2020.
Thank you, everyone I'll conclude or not positive note and well now turn it over to Jill.
Thanks, Phil and good morning, everyone.
Here's a quick summary of our quarterly operating results.
We produced 137000.
782 ounces of gold in the quarter at cash operating costs of $550 per ounce sold and all in sustaining costs of $859 per ounce sold.
So a great quarter and in line with our expectations.
Looking forward, we are maintaining our 2020 guidance as a reminder, this is 520 to 550000 ounces of gold at all in sustaining costs of 800.
And 50 to $950 per ounce.
Last quarter, we talked a bit about a reduced workforce due to some workers being considered high risk for cobot 19.
We're now back to normal workforce levels as we found ways for them to work safely.
We continue to monitor our safety protocols and find new and innovative ways innovative ways to keep people healthy.
That's good segue to the next slide.
Here I want to highlight at contact tracing and tracking system Weve implemented at the Mark and will be implementing and Greece, and Turkey as well.
Contact tracing has become an essential tool to identify and isolate people may have been exposed to the comp grown a virus and mitigating potential impacts quickly for the benefit of our people and our business.
Our solution builds on existing hardware and software systems at sites using I'd cards.
Lamar each employee and contractor wears silicone bracelet as you can see in the picture that they used to tap in and out at various entry points in the mail and surface buildings.
The card reader reports their employee or contractor number which allows us to identify anyone who may have been exposed to a potential positive case and complete the investigative process within a couple of hours.
The solution as cost effective.
Easy to implement.
Protects the privacy.
And was quickly deployed at the Mark.
The system is unique to our knowledge and we will continue to work closely with public health authorities as we look to improve and build on this innovative approach.
Yes here on slide nine we have some further color on the quarter at each of our assets.
At Kisladag production was 20% higher than Q1 due to increased tons of stacked or at higher grade during the quarter.
Solution inventories began to reduce with the drier weather during the latter half of the quarter.
We expect these factors to continue to support higher production levels over the remainder of the year.
Work is continuing on the installation of the HPG, our with delivery scheduled for the first half of 2021, we expect this to be online in the second half of 2021 and and as a reminder for everyone. This will improve heap leach recovery.
At the Mark Gold production met expectations for the quarter, despite a temporary suspension of operations in.
Late March to mid April to comply with Qubec government mandated restrictions to address the cobot 19 pandemic in the process.
The Big news this quarter was the commencement of the decline at Lamar.
As we've mentioned previously we're currently evaluating and underground crushing and conveying system as well as a mill expansion and update outlined the path forward as a mock is expected in Q4 of this year along with our updated reserves.
As we've always said our long term goal in the markets to increase production at the Sigma mill to its ultimate nameplate capacity upsides and 5000 tonnes per day, we will continue to evaluate other deposits in our land package such as Mormeck in pursuit of this goal.
Yes, I am true group continues to be a consistent performer the column flotation project remains on scheduled for later this year.
And will result in improved concentrate grade and quality.
To lower transportation costs and concentrate treatment charges.
Moving over to Greece.
At Olympias I'm pleased to report another quarter of improved production.
In fact, we saw 2700 ounces increase over Q1, 2020, and our highest ever quarterly gold production.
So as a result of ongoing underground development.
Improvements to the paste backfill system.
And greater collaboration among our employees, resulting in improved productivity.
This quarter marks the third consecutive period of DC decreasing all in sustaining cost settle MPS.
Base metal prices remain low and treatment charges, hi, however, improved efficiencies are leading to lower costs and we will continue to drive operational improvement at olympias.
Just a quick note on scores as the as does the asset protection works continue the picture here shows concrete being placed in June.
We had planned to install the mill building and will review that work as we continue to monitor the cope with 19 situation.
With that I'll turn it over to George for closing remarks.
Thanks, Joe.
Before wrapping up I want to welcome Judith Mosley to our board of directors.
Judith will join Us effective September onest.
Per skills and metals and mining banking sector are complimentary to those of our existing board members and we look forward to her insights.
This timing is consistent with our ongoing board succession plan.
I also wish to welcome Sam Houston, as RVP capital projects and engineering.
Sam joined US in Q1, 2020 is responsible for strategic oversight of our capital projects.
Sam has extensive experience in global global Mega projects from across diverse sectors, including mining oil and gas and infrastructure.
In conclusion, I want to emphasize the turnaround that Phil mentioned earlier.
I believe that the groundwork blade throughout 2019 continues to pay off.
I guess Saddam was back on track Olympias is showing signs of consistent improvement.
Mark is firing on all cylinders.
And if im Chew grew continues with reliable steady performance.
This is reflected in our strong share price appreciation over the past 12 months.
With our solid operating performance several potential catalysts in Greece and come back.
The balance sheet that supports near term growth.
Our energy and drive to execute.
We are well positioned for a period of sustained value creation.
And combined with record gold prices.
Although eldorado offers a compelling value proposition.
Thank you everyone.
I will now I'll turn it over the operator for questions.
Thank you we will now begin the question and answer session to join the question Q You May Press Star then one on your telephone keypad.
You will hear a tone acknowledging your request if you are using a speakerphone. Please pick up your handset before pressing any keys to withdraw. Your question. Please press Star then too we will pause for a moment as colors join the queue.
Our first question comes from Cosmos Chiu of CBC. Please go ahead.
Hi, Thanks, George Phil and Joe first off congratulations on a very strong Q2.
Maybe my first question I was on Mack good to see that you're ramping out well after the qubec and mandate a shutdown.
As Joe as you mentioned, the Oklahoma capacities 5000 tonnes per day potentially.
Could you remind us like you if I look back historically that the mill ever do 5000 tonnes per day with the old timers, and what do they need like what would you need to do to that mill.
Got it up to that name plate capacity, because if I remember correctly. When I was on site. There were some idle leach tanks, you know certainly there was some rod mill.
Idle as well would you need to bring those backend and there is that what you need to get it up to 5000 tonnes per day potentially.
Well I'll I'll answer and then maybe ask.
George further will help I think I think the first thing we need is.
The resource on which to to build that and that is ongoing through exploration as I mentioned both.
Within the land package.
And this decline figures.
Considerably into that.
Predominantly I think it would be grind addition would be number one and then certainly downstream.
We wouldn't be additional.
Attention at those at those rates, but.
George do you have a better flavor for the requirements in the middle of 5000, Yeah. I mean, the plant did historically do 5000 tonnes a day that was back in the or where there was an open pit to supplement.
Underground or.
And it had a sag mill in the circuit at that time.
Prior operator sold that Sag mill, so as Joe said, we need additional grinding capacity to push the plan to that level and that's part of the engineering work that's happening this year, we completed in second half.
And then I think Joe hit the nail them. They had the big issue is really not the plant its get the grinding in there and then and then retrofit more of the tanks more the leach tank so.
And we've we've guided an estimate of around $50 million to be able to do the the upgrades to the plan to get to that 5000 ton of day level and we're looking at alternatives to scale it up incrementally rather than in one.
One one push so.
That works ongoing and then in terms of where the feed would come from that's that's really the strategic work that continues with Peter and our exploration group.
For triangle itself, we've got a permit now to 26 50 tons per day, and we're already executing a ramp up in development and production from underground and that's going to support ramping the production up from the original.
Maiden Reserve and mine plan of 130000 tons, a day up to 150000 tons a day over the next couple of years.
And beyond that as we continue to convert resources to reserves at depth.
We will continue to assess what the ultimate potential is for triangle itself.
Then in parallel with that we're continue to explore on or Mark we've got parallel and plug for all offering opportunities for additional feed to the plant.
And then.
If you think about this property package.
Nearly 10 million ounces produced with two underground mines, one of which is.
Triangles lookalike to those two historic mines.
So when you think about after decades of mining.
New discovery of lookalike deposit occurred so we think that potential still exist on the property we have some.
Very good exploration targets that were working on and so that offers the opportunity we continue to look around.
Brought our existing property for other opportunities that could be used to.
To wrap up production to that potential 5000 today.
<unk>.
And.
Well very thorough answer here and then on that.
I talked about studies coming go in Q4.
You know underground crushing potential conveyor system potential.
Along with resources and mill expansion.
Sure, we'd expect how does for Mac kind of fit and because I think you mentioned that as well and that's that's one of your new targets that you've targeted high grade how does that finished so we could we expect a resource coming out with a lot will that Q4 study and then could you remind me and in terms of historically what was the code.
Version rate.
From say resources into reserves.
Tonight I'll start with that first the inferred resource to reserve conversion spend around 80, 85%.
So a pretty good rate and we think that that's sort of conversion rate will continue as we continue to drill deeper.
Okay.
And then in terms of our market so.
We're still in sort of trying to define the limits of this new exploration discovery. So it step out drilling primarily.
And I'd say the risk resource modeling our geologist continue to to look at it.
It's a bit different than most of the mining that's happened in the district gets of these are flatter flying veins and they're fairly high grade relative to the current reserve.
So I can't give you a clear indication and when will have the first resource yet.
In terms of the way this will unfold hopefully this year, what kind of define the overall size of the deposit.
And begin to do some some more detailed drilling to support the modeling efforts and then the decline really factors into this once once we get this decline done.
And we'll be able to do drilling from underground to kind of accelerate our understanding of the deposit and.
Eventually hopefully converted to reserves. So we're optimistic about all that and maybe one more key thing as I mentioned this is a flatter lying ore body, maybe Joe can talk a little bit about the test mining that's underway that potentially could be deployed in this type of deposit.
Thanks George.
I think we mentioned it before we do have a mineral tests going on at landmark that.
We kind of did the investigative work and.
Movement up the equipment to two of them off late in 2019, and then Twentytwenty.
Began to set up of it.
So we have.
Installed men rail we have driven.
Okay 50 plus meters.
Using the equipment and have kind of set it up nicely for a test it works well and that.
Those flatter lying.
Okay.
Or veins roughly in that.
20% to 40% or 20 to 40 degree dip angles.
It's it's a bit like a horizontal or semi horizontal Alan Mac and with attachments that work off the front for drilling.
Scraping.
Or slashing type.
Or recovery.
And so we'll we'll be providing more information as Q3 goes on and we kind of test the economics of it and.
What kind of.
Resource will need to make an economic.
So far though I can say that from very favorable point of view.
The safety aspects of the men rail or are quite good and keeps us from.
Exposing ourselves state any AD supported grounded.
So we're optimistic and more information to come as the quarter moves along.
Of course, I know it just to confirm I guess.
George I'll, maybe Joe you don't really need a resource on going back to make a decision on this underground crushing conveyor system or mill expansion do you.
No I mean, our studies this year are really based on triangle, and obviously anything we add to that will be a supplementary benefit.
One last question, if I may turning to kill stood out quickly here.
I think in a previous conference call, we talked about the fact that you know I think stripping at that point in time was a bit slower and if it continues to be slow into the summer months. It could have longer term impact in terms of the 15 year sort of mine plan or the near term.
The 15 year mine plan is what I know you know you did about $7 million and stripping in Q2 is the mining rate and stripping at Kisladag, where you wanted to be to prepare you for that 15 year mine plan.
So so presently we are back to very close to budget levels for stripping.
And we'll close that gap completely.
In Q3.
As we as we've looked at.
The different pit options going forward.
We don't see that.
Short term stripping deficit in Q2 is going to impact us this year or in the five year plan and then for that matter even life of mine.
It's slightly different scheduling but.
We see no impacts at this point.
Great. That's a that's great to hear congrats again on a very good Q2 and have a good long weekend everyone.
Okay. Thanks Cosmos.
Our next question comes from Kerry Smith of Haywood Securities. Please go ahead.
Thanks, operator.
George Great quarter, I think that you guys are definitely well in this company in the right direction. So congratulations so just a couple of things one the the mill upgrade study that you're doing in Q4 that will be for 5000 tonnes a day rate correct.
Yes, it's 5000, what we're looking at other incremental opportunity. So it's it potentially is a staged approach as we continue to expand reserves and and find additional feed for the plant.
Okay got you and then second question on the Perama Hill.
Study that you're working on that you talk about releasing Q is that timing Q4 as well.
Yes, it's also tracking for the fourth quarter.
And what are you doing there just updating the old engineering or you're not getting the mine plan or it's just really trying to wrap some new economics are on that project.
It is a bit of a redesign happening so the pit looks to be a bit bigger the.
We've kind of.
We optimize the location of the plant infrastructure. So some I'd say, some modest improvements and basically updating it for now.
Current environmental standards being prepared than that.
To submit the revised EA.
Okay got you and then just maybe the last question if I could what what are your sort of what is your current sankey cheese.
Are you thinking to maybe update the economics that you did in the feasibility obviously the economics.
Today versus.
Back when.
Did that study.
Okay.
I mean this study is pretty fresh so really it is higher metal prices and FX rate changes that that impact valuation and obviously those are numbers, we haven't and articulating with prospective.
Acquirers.
Okay. How are you still thinking to try and sell that property.
Plan.
Well I the way I'd characterize it is both our remaining in Brazilian assets are viewed to be noncore and if we found the.
A reasonable offer.
That's in line was strengthening our balance sheet and supportive of our focus on growth elsewhere.
Okay got it that's great. Thanks, very much and congratulations again.
Thanks, Eric.
Our next question comes from Tanya Jakusconek of Scotia Bank. Please go ahead.
Hi, Good morning, gentlemen, can you hear me.
You can.
Okay Brian.
Morning.
Three questions.
I guess two I can get to fell and then the last one for you Chuck.
So maybe can we start my note that we have reconfirmed.
The guidance have production.
All in sustaining costs and cash cost can we talk about a capital.
You did mention that capital is going to be higher in Q3, I'm can you me kind of review what the capital spending this year and.
How it goes into Q3 Q4.
Sure Tanya.
So I think the the capital in Q2 was just slightly.
Lower than what we spent in Q1.
And I think in terms of overall.
Below the rate.
If you if you spread it over the whole year, but I think we're still we're still on schedule for our guidance for the year, which would indicate.
Higher higher higher rate of capital spending in the second half.
It all comes on the timing as well.
Comms, there's certain projects that have perhaps been slightly impacted bye bye.
By.
For example, Covance Mark with the with this with the three week shutdown in in March and April, but we continue to move ahead and I think we're confident that are our guidance on the capital will remain for for this year.
Okay can you remind me your capital guidance for this year on sustaining and development.
Thanks.
Okay.
Okay.
Sorry, I'm, just I'm, just trying to pull up the number here. So one SEC here so.
Okay.
Guidance for.
Sustaining capex.
So it was in Tokyo.
I have the number maybe you can help yes sure sure. Thanks, Jeff So.
On its 101 to 145 on.
Okay.
On the development capital and one on one of five to 125 on.
Right.
Growth.
Of course, expanding excuse me.
Okay. So I got these correctly did you say 105 to 125 for sustaining capital.
Correct.
And then for development capital did you say why now one to 145.
Correct.
Okay, and then just the key item.
Development capital just remind me.
That makes the MCE then there.
I am access in there.
Kisladag.
And.
Those are the two primary markets.
Okay, well live and that hasn't changed from the beginning of the yellow check on the press release, just make sure what going with that and maybe what I can then lead onto that lets just talk a little bit about your.
Capital allocation and maybe I'm charge on for John Pam noticed that you use that proceeds time, yet ATM to buyback your senior secured note how should we think about all of that free cash flow and other sites up cash that you dining in terms that allocation to you know the pipeline probably.
All righty and are there other than.
That.
I I am when you stand on a dividend maybe would be another question.
Sure I think overall.
Our capital requirements.
For the year and going forward are averaging about it.
I think as Joe mentioned, just brought 100 million for sustaining and our growth capital requirements limited to pre stripping at.
At Kisladag, which is around 260 million over five years.
The HPG our project at Kisladag, which is about 30 36 million, which.
Is manageable and then we have the decline project that Lamar.
That was recently announced.
That's about 27 20.
25 million most of that will be funded through flow through financing so that won't impact our liquidity.
As much so I think a lot of our capital moving forward Tonya is quite manageable.
Focused still.
It's still focused on delevering the balance sheet is.
In terms of what makes sense, we do in terms of the equity Clawbacks on a senior notes that is our highest cost debt and as a 9.5% coupon. So the focus the opportunity with the with the the provision and the indenture and the proceeds from the ATM allowed us to do that.
So and I think going forward, we know we still have uncertainty in terms of future potential impacts of coal bed. So we want to maintain strong liquidity on our balance sheet in light of that so.
And.
If commodity prices continue to be high we will generate significant additional free cash flow and we will.
We will assess our our use of those funds at that time.
Okay.
Specifically on your question on perhaps a dividend.
I think.
I think we're focused on getting our debt.
Dealt with first and we also have opportunities internally to to grow our portfolio. So that all is taken into consideration.
We will continue to look at that as we move forward.
Okay. Thanks.
Hi, <unk>, what I decide that the ATM and how you see anything that we should kind of think about it and that way in terms of helping you with your that it's not a good way to think of that.
Well I think to the way the.
The way the equity Clawback provision for the indentures worked as the window is only 120 days, leading up to the redemption date.
So.
We.
We we managed to raise.
Sizable portion on the ATM in Q2, it fit that 120 day window.
So thats how that fit together okay.
Okay. So it's all like we can just.
Take take additional ATM and increased that amount. It's it is limited to 120.
And then capped at 105 million. So we can retire a little over a third of the entire original high yield debt and.
Obviously, we made one big step Q2 that down that direction.
Okay, and just said that I I understand all of your big capital needs and maybe George that's.
It to you and your conversations that you're having with that the great given that that's just the that I have that the capital correct. I think we had talked lastly that scoring is like require another 700 million to tweak or thereabouts and I think Perama Hill away, then that 200 250 million area.
And then it appears like Mackie and now we've got Tom.
The 25 million for the decline, which is being down the 50 million in terms that you know increasing need.
To 5000 times that though and then we've got the underground you know I'm crushing and conveyor et cetera should I look at that like in the hundred 150 million total.
Yeah ill, excluding add about him capital is that fair way of looking at that one.
It is I mean, the way we look at Lamar we're committed to the decline it brings the benefits advantages we discussed on this call.
[music].
You've got the 50 million to get to 5000 tonnes, a day, but to be.
Realistic, it's probably going to be a staged approach to further expansion that will unfold as we.
Successful in exploration, so that timing I think's going to be spread out a bit.
The underground crusher and conveyors, a round another 25 million.
And I think we'll have some clear insight by end of this year when's, the right time to make that investment and that might come sooner rather than later and then the last opportunity is around tailings. We're we're a company that deploys dry stack tailings pretty universally with excess.
Just in a lock and we've been working on permitting and engineering studies on how to bring that asset inline with the rest of our assets and and the big paste backfill plant is.
Is.
The likely scenario, where we put much of the tailings underground as backfill that'll help us as we get deeper with higher quality backfill and then any excess potentially would be put as is cemented backfill in the old Cigna pit. So both studies are continuing.
That one's not urgent we have.
Plenty of capacity in the existing down which has been buttressed with an enormous amount of waste rock.
But.
It's probably.
An opportunity down the road away a ways and it's it's also in that.
The million dollar range. So if you add all that up.
No, it's not going to come as one bullet, it's going to be spread over say the next five years.
But but thats strategically what we're thinking at this point now so that comes about 150, alright. So we've got scoring is about 700, and then Perama Hill at 200, and then that's one spread over five years at about 150 would that be fair on the capital capital for these projects.
That's correct, but but again.
We're focused on.
Bringing in joint venture partner partners to fund the Skouries and Olympias expansion. So.
Won't need to necessarily come off our balance sheet, and having a strong balance sheet positions us well for those negotiations and making the right strategic decisions for our investors and I think that at the Olympics expansion was under 50 million right.
Yes, we're estimating 50 million on that that engineering works ongoing this year as well, okay. So maybe that everything.
Just if I could my final question was really about where are we now we've come back to the table wet the great. Kevin that meant it maybe just said that a flavor of in at Wailea.
On these conversations and what are the focus.
Well again, I'd say, there's good alignment obviously for us getting these high quality assets built and generating enormous free cash flow is strategically important to us.
I'd say for Greece.
Given every.
Every country around the world is dealing with economic impacts from Covidien.
There is no end in sight from from that being eliminated so.
I think the opportunity is ripe for for both the government on us to hammer out a.
We are beneficial agreement and to get these investments moving so I. Just described we've got good progress going on the permitting back at the table and I think it's a good environment to get it done.
Yes, it looks like the permitting at Yale you got those additional permit drilling how is the investment.
Hi, guys coming I know we had top.
Originally about Tom you got the updating that that portion and having an arbitration clause in there and how that affects that you've talked about on conference calls how are we proceeding on that well.
Is it slow I mean, I don't want to given.
Yeah, I don't want to get any details that obviously there was a bit of a slowdown during during Q2, we were.
Heavily focused on protecting our people in the health of our business and the Greek state like every jurisdiction was focused on.
Ensuring they could control would spread as best they could so.
No.
We didn't get a lot done in Q2, but we I can tell you is we're back at the table and I think both sides are committed to get this done.
Okay, all right well good luck with that Ken Thanks, a lot everyone.
Thank you.
Our next question comes from Josh Wilson of RBC capital markets. Please go ahead.
Thanks a.
A quick sort of single one for me I was looking back at the notes from the site shore last year and I guess there was a couple of interim resource update you are expecting furlough Mac mid year later in the year and and obviously there has been successful exploration front I would come back and then also.
The impact from from at the.
Drilling just given given given coated.
In terms of I guess, which components of the resource are going to be included in the next resource update just to clarify that wide could you review what should that the veins sets are going to be incorporated.
And.
I guess whats the timeline for that are.
Sure. So I mean, we're in the middle of updating resource models.
And moving that through engineering and design. So we're expecting this to be another good year in and.
Conversion of inferred resources to reserves.
And that work.
With our annual planning cycle, we get that done.
Late in the years to support our budgeting process. So that we're right in the middle of all that work now anticipated to be a solid year and that will offer additional reserves to support the expansion.
Scenarios that were looking at so and then in terms of where where's are good progress going to be well, it's the deeper parts of triangle, So for C and see five.
We've been doing.
Phil drilling to be able to do conversion.
And expect to have a.
A nice bump up this year to support the studies that are underway.
Okay and again.
We're still in trying to define the size of the resource so.
We're not at the state, where we have a model that we're confident about to.
And I don't think that will happen this year, it's likely next year.
Okay and then.
I guess.
The seven some of the deeper flats.
See Canada is there any chance so we'll see those maybe edited FERC category there.
Yes, I mean are our exploration focuses on c. six and see seven so.
We're drilling as we speak and yet we'll see.
We're definitely seeing an increase in inferred resources on that that area.
Okay, great. Thank you.
Thank you Josh.
This concludes the question and answer session I would like to turn the conference back over to Mr. Burns for any closing remarks.
Well a big thanks to our entire team there was a solid quarter, we continue to build on our success from last year and.
And we're optimistic that we have a number catalysts in front of us and.
Look forward to updating everybody next call. Thank you.
This concludes today's conference call you may disconnect. Your lines. Thank you for participating and have a pleasant day.
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