Q2 2020 Ero Copper Corp Earnings Call
After the presentation, there will be an opportunity to ask questions. He joined the question Q you May Press Star then one.
Keith.
She's you need assistance during the conference call you may see <unk>, operator can we start and.
I would now like to turn the conference over to Mr., no well done.
Got it chairman Aero copper. Please go ahead Sir.
Thank you and good morning, everyone.
The news release announcing euro second quarter results is available.
On our web sites and on seed.
I was out financial statements and Mdna <unk> three and six month ended June Thirtyth 2020.
[music], making forward looking statements when it's cold and involve risks and uncertainties, considering the businesses operations or financial performance for the company.
You should refer you to our most recent yeah Youre also won't see dot for discussion of the risks factors about business.
Yep, essentially gossip future performance.
Unless otherwise noted on our U.S. dollar.
Joining me on the call today, David Stride euros co founder Chief Executive.
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When dryer euros, Chief financial officer, not could flip out Vice President corporate development.
Before we dive into the results of second quarter.
Lights up knowledge.
While the recently increased with section rates up coded likely in Brazil have increased the risk of outbreak.
Did you see operations.
Country teams have continued to take extraordinary proportions.
Our employees contractors.
Ladies and local to go to say.
To date.
A detailed litigation that could have taken throughout organization has done the lucky that.
During the second quarter alone.
Patients contributed.
So the $1 million towards commensurately.
Onsite so they like to litigation.
I was result of these ongoing efforts and our commitments or any country.
Our country I'm kind of Intellitrail country colleagues.
We continue to experience no disruption to all operations supply chains.
Both sales travel.
During the first six months and this year, our core assets within the QSR performed well.
Well, so saying increased production at the mechanics go buy as flat, which they will elaborate on southern.
Well make financial liquidity perspective remains in excellent shape.
Okay, as well, but that is true other being to go chase navigate.
Seven times.
We ended the second quarter to approximately $52 million in cash.
I was reminded you of the numbers about credit facilities, Germany. So of course that we'd have limits your upfront payments.
Until you until March of 2000 tried and true.
As evidence from a record quarterly cash cost of 65 cents the pound a couple of the Jesus.
On $437 per ounce of gold produced an extremely second quarter operating profit operating business. That's can change significantly benefit from the currency tailwinds associated with a weakening of the Brazilian real best U.S. dollar.
The continued volatility in the underlying currencies impacted I've got thing.
A working capital during the period due to the noncash accounting treatment to buy you asked about the less dollar denominated debt.
Hi forward, David FX option contracts, which are designed to protect the business in the event of a rapidly strength Brazilian real against the U.S. dollar.
It is worth noting that we achieved the strongest quarterly cash from operations this year the comfortable.
40, Jim <unk> million dollars, despite 4.4 million since I started lots of derivative contracts during the second quarter.
Now looking into the future.
On the onetime if it continues to see if the seasonally weak Brazilian reallocate U.S. dollar underlying underlying business would benefit although we'll continue to make modest payments on the settlement of existing contracts I was with demonstrate during the second quarter.
On the other half.
As we will inevitably.
The global recovery from the Cobot pandemic at some point.
Next we'll give them because then I call me is likely to do well in a relative basis, and we have protected our business against the strengthening of the condensate.
Hi, I will not pass the call it's David to provide a brief review.
An update of all operations and well provide a view of the Companys financial performance.
Our team will be available for questions. Let me sneak following the call.
Thank you know.
Just to briefly touch on wouldn't know mentioned across our operations on throughout the organization. We continue to prudently manage up business. So that we are as well positioned as possible to withstand any unforeseen challenges.
Mayor rise as a result of covert 19.
Our commitment as an organization to the health and wellbeing about local communities employees remains a paramount importance to our leadership team both in Brazil, and North America.
Our Brazilian colleagues have continued to demonstrate the result to keep operations safely running well managing and mitigating impact of cope with my team.
And the recent recognition we have given as a company with respect to <unk> ongoing U.S.G. initiatives is a testament to their hard work and commitment to those principles.
In terms of production during the quarter.
Our results continue to reflect underlying operations solid underlying operational performance.
We produced 11178 tons of copper in concentrate Mcf sake.
And 8739 ounces of gold annex gold during the period.
Focusing first on out and see a safe operations in the Chris I'll probably.
We made 627071 tons of ore grading, 1.98% copper and achieved average metallurgical recoveries of 90% during the quarter.
Across the board improvements were driven in large part by contributions from the mass Mike with 253349 times grading, 3.26% copper mine during the period I.
A significant 56% increase and contained copper coming from to mass when compared to the first quarter.
<unk> 371794 tons grading, 1.4% copper mine during the period.
Century inline with the first quarter, albeit with a modest increase in tons mined.
As Neal mentioned, we achieved a new quarterly record with respect to see one cash costs of 65 cents per pounds of copper produce.
Reflecting strong operational performance.
Continued currency tailwinds and improve byproduct gold and silver prices during the second quarter.
During the first <unk> half of 2020 see one cash costs averaged 68 cents per pound of copper produced.
We are maintaining up 2020 production guidance for a Chris so badly operations and previously revised see one cash cost guidance up 70 to 85 cents per pounds of copper produced.
Similarly, we are maintaining a previously revised capital expenditure guidance range $56 million to $68 million and $20 million to $25 million an exploration expenditures through September of this year.
As in prior years, we will aim to update the full year exploration spend guidance to include plan drilling during the fourth quarter.
When we release of third quarter results.
Although all about capital programs have and continue to run normally through the first half the year.
Failure excuse me our full year guidance is subject to an elevated degree of uncertainty as a result of the cope with my team and dynamic.
We continue to execute on an advance several key growth projects.
Despite significant challenges associated with cope with my team a project team was able to deliver fully installed a new high intensity Regrowing mill in early July on the a week or two behind schedule.
Instrumentation and control system integration are on track for completion. This week and commissioning is under way through a creative efforts that involves both onsite teams who underwent strict quarantine measures working alongside the virtual multinational commissioning support team.
We expect full commissioning and handover to operations by the end of August.
This is an incredible the conditional with significant contribution with significant contributions from our I'm type projects team globally.
I would like certainly.
I would like to congratulate them all on this call.
Looking into the second part for the year on the back of commissioning, we expect to see a significant improvement and overall stabilization of metallurgical recoveries in the middle.
I also think testing campaign, which has been running at a commercial scale. Since January is substantially complete and we have now tested eight different discrete ore bodies throughout the course, so probably out of our right to upgrade.
The results are highly encouraging.
We will continue to upgrade the test program through the third quarter.
On the last plant ore body, well data analysis process integration and operational optimization work.
The news to fully quantify the benefits of pre concentration.
Based on work today, we believe the or sorting will be an integral component to further optimization to further optimize the production portfolio for the various operations over the course of valley as well as new discoveries in the future.
Additional detail on the work performed and the results of the test campaign I expected during the third quarter.
In addition to all sorting I'm very excited about the completion of I Love Archery upgrade project that will allow us to do multi element analysis in house, specifically platinum group metals.
This project was completed at the end of the quota and we're ramping up daily sample volumes over the next several weeks as scheduled work.
Integrated we expect this addition to live Barbara treat to significantly reduce cost.
But more importantly turnaround time for platinum group metal essay results.
Which will be a welcome addition to the ongoing work about exploration Department.
On exploration in the crew So valley, we currently have 28 drill rigs operating.
Our in a near mine exploration programs remain focused on the deepening extension of the pull our mine.
Where we have continued to conserve intercept very high grade superpower mineralization that debt, including the recently announced intercept of 96.4 meters grading approximately 3.97% <unk>.
That's all we have ever drilled in the Chris about.
Additionally, I'd from elsewhere, then some drilling bolthole m. work looking for dumbed down plunge extensions of the Syria and my message. So if I can do it and continue to execute Sandro program designed to test for continuity of mineralization between the main tremendous ore bodies.
With a substantial portion or in your mind programs completed we have been aggressively advancing our regional exploration efforts on for recently interpreted.
Mineral systems.
Well preliminary results from these systems continues to be encouraging.
Additional detail on these ongoing exploration programs remain planned for the second also <unk>.
Consistent with how scheduled quarterly updates results from our ongoing exploration programs will be further detailed in the upcoming exploration update.
Which we typically release four to six weeks falling out financial results.
I'd say Nx gold mine production during the quarter totaled 8779 ounces of gold and 5327 ounces of silver.
Total mill feed or 39108 tons grading 7.75 grams per tonne gold.
After metallurgical.
Average metallurgical recoveries of 89.6%.
Gold production mill throughput and recoveries improved quarter on quarter, reflecting the anticipated wrap up.
Lining up with sent him Tony I'm thing.
Operational performances remains.
Gains contributed to record to see one cash costs of $437 per ounce gold produced during the second quarter.
Improvement of $157 per ounce as compared to the first quarter.
During the first off of 2020, she want cash costs averaged $511 per ounce of gold produced <unk>.
As previously noted we continue to expect full year production to be weighted towards the second Austria.
Our annual production guidance for the Nx Goldmine remains at 38000 to 40000 ounces of gold I previously revise see one cash costs of 425 to $525 per ounce of gold produced.
And your capital expenditure guidance for the Nx Gold My remains unchanged from previously revised guidance of $7 million to $9 million with an additional $2 million to $3 million to from its ongoing exploration programs.
[noise], while not part about current operating portfolio.
Initial review of out by our team to evaluate the bow Esperanza project has resulted in some fairly compelling opportunities.
Recall that we effectively inherited the existing design of the project following our acquisition of Mcs sake and for the first time.
I've taken a very hard and close look at the project without engineering.
Well, we had initially planned a fairly routine desktop uptick several aspects of pointing us to a rework couple the entirety of the project from the ground up and we continue to make progress on that front.
With that I will now crossover to wane who'll provide an overview of a financial performance.
Thank you David and good morning, everyone.
During the quarter at the company sold 10586 tons of copper in concentrate and 8700 and city nine ounces of gold <unk> consolidated revenues of $70.8 million.
Well copper sales volumes were in line with the prior period gold sales volumes continued to improve and were 11% higher than the pet prior period due to the ramp up in production from the San Antonio vein.
As David mentioned.
Achieved record see one cash costs at both Mcs and Nx gold during the quota of 65 cents per pound and $437 bounce respectively.
The first six months of 22, Angie see one cash costs averaged any price of 68 cents per pound of copper and $511 per ounce of gold produced.
These results are underpinned by strong operating performance from both of operations.
Really exchange rates and the case of M.. She has a high a byproduct gold and silver prices.
These factors collectively contributed to a 42.5 million in cash flow from operations, a record quarter for the company and a 13% improvement from the prior period.
Adjusted EBITDA was $42.4 million, reflecting a 27% increase over the prior quarter.
During the first six months of 2020, adjusted EBITDA totaled $75.9 million, which was in line with the first six months of 29 team. Despite a 17% decrease in the average prevailing copper price over the same time period.
Which frankly speaks to the strength and profitability of our operations.
Well the weakening of the Brazilian real against the U.S. dollar has clearly benefited operations and headline financial performance.
We continue to see the impact of foreign exchange volatility flow throughout second quarter results total foreign exchange losses. During the period was comprised of cash settlements on out of the money call as totaling $4.4 million.
Unrealized foreign exchange derivative losses of 8.5 million based on the fair market value of these contracts at June Thirtyth faces March 31st.
An additional 3 million related to the translation about U.S. dollar denominated debt in Brazil, being the result of <unk> functional currency being the reality.
Well I'll hit like net income for the quarter was $7.5 million or eight cents per share after adjusting for the unrealized components of these foreign exchange losses. Our adjusted net income was $20.3 million or 22 cents per share fully diluted which far better reflects the performance of the underlying operations.
Our total cash position at quarter end was $52.3 million, including restricted cash.
Compared to $45.5 million at the end of the first quarter.
The increase is primarily due to strong operational performance contributed to record cash from operations during the period.
Our working capital position at the end of the paired was adversely impacted by the current portion of the fair market value assessment of outstanding Foreign exchange contracts, the timing of some payments related to the HIG mill as David but as David did spoke about associated consumables and critical spares and the current liability associated with the show.
Tim lines of credit withdrawn during the first quota as a proactive measure against covet 19.
We're very comfortable with ability to repay or roll the short term lines, given the robust nature of our balance sheet.
As evidenced in our results during the first six months of 2020 business continues to run extremely well and generate significant free cash flow, particularly at today's metal prices and foreign exchange rates.
On that note I'll hand, the call back over to know.
Thank you Wayne.
Outperformance during the second quarter can be summarized as follows one.
Yeah, and ongoing efforts to mitigate the impact of covered 19, our operation.
I've been running safely pad with extraordinary support of our local community response.
Q continued advancement of key growth project.
Despite challenging conditions.
Three.
Exceptional operating at the national performance across our core business.
Adjusted by the ongoing currency Tailwinds.
Thank you very much for joining the call we will turn it back to the operator lets open the line of question.
Thank you.
We will now be.
Thank you so.
We will now begin to question answer session.
Turning to question Q, you May Press Star then one.
One keypad.
Well hear a tolling acknowledging our request.
If you're using a speakerphone please pick up your heads up before passing any key.
I would call. Your question. Please press Star then cheap.
Well pause for a moment colleagues trying to keep.
First question comes from Orest Wowkodaw from Scotiabank.
Go ahead.
Hi, Good morning, I'm, just curious you left your operating guidance unchanged and the first half the year, though to throughput spend a lot higher than expected, whereas the great. Then I guess a lot lower than expected relative to your guidance just wondering how to think about that second half the year whether week.
Expect that to normalize in terms of throughput coming coming down significantly in the great going up or whether we should just focus on the you know the copper production guidance and kind of not I'm not the details around it.
Yeah artists thing so I feel great question.
With respect to the second off the year, we're very focused on copper production and so as you as you can well imagine a with an operation like I always with a high grade nature of the various ore bodies and the heterogeneous nature of mineralization, we do see Vicki.
In terms of great as well as respect to sequence.
So we're maintaining guidance as we've highlighted with regards to copper production. Then I think you want to just a round that with respect to your grades and.
And or your production in terms of all being mined and it's just it's just related to sequencing off Stokes.
And so.
As you can see you would you anticipate in second half the year in order to maintain that kind of production level copper that you'll see a decrease in ore throughput, but a subsequent increase being.
Great along with adding an anticipated increase in recovery relates to the commissioning <unk>.
Okay. Thank you and can you maybe give us a better color or why the throughput why you would anticipate throughput to go down is that just a are you mining constrained or or what's driving that we're pleased with where where were.
Constrained with respect to.
Stope availability.
So that's the constraint that we have in terms of design of what we're trying to do on a month by month basis and so for instance, you would see.
In terms of perhaps what we'll see if somebody else is some rockville, Oh, we have to do with respect to replacement.
As we know we've done a peaceful phoned up there. So we use rockville and so it's a timing with regards to being up to fill stopes was with rupture et cetera in terms of that throughput, we're always always going to try to.
Uh huh.
Produce more.
When we can.
With respect to a throughput through the mill, but that's not it's not a perfect science on the month by month basis with regards to that so that's why we're maintaining our guidance in terms of copper production that way.
Okay Perfect and then just finally from me can you just remind us how much of an improvement in copper recoveries, you're expecting from the heck no.
We have guided to the marketplace somewhere in the order at 2% to 4%.
Okay and that would take how long to realize is that sort of exiting the year.
I would I I would hope that we'd start seeing those improvements given that were slightly delayed or with regard to the covance issue and commissioning a I would if you're looking to update your models I wouldn't do anything before October.
Thanks very much.
Thank you.
Your next question touched on Becky Blocky from BMO capital markets. Please go ahead.
Thanks, So much I just follow up on a on the line of questioning that or is this has been on I know you guys had talked before about a second mill and I know, it's still very early you haven't fully commissioned the first half mill, yet can you give us a maybe a little bit more color or an update in terms of what you're thinking now.
Bode installation of a of vertical Miller, a second mill and maybe what the the timing would be all night, if it's still kind of consistent in a couple of years or if that's changed at all.
Yeah, Jackie Thanks, with respect to the going and you're talking about continued to increasing in the capacity of the mill.
I think what we wanted to what we want to do now is we want to get the signal settled then we want to be able to operate it fluctuate to test, it's a capabilities above and beyond the metallurgical improvement is there potential to allow it to help us increase oh capacity from out.
Compared to about 3.2 million tons and we've guided that we think that could go to 3.7, I'd like and I think all of us we'd like to see that mill operating a the great thing about that mill is we've got a variable gearing on it so the way that we can manage it and operate it gives us massive flexibility.
To be able to test.
Up it reaches in terms of it performance.
Once we get that comfortable then we can look down the road with regards to how we want to continue to look at expansion. However.
Our continuous expansion beyond that is related to exploration success, certainly what we are starting to see now in terms of our operations.
With installation of the Hicksville now with the work that we're doing all sorted.
And the opportunities that we're seeing without or sorting and terms about longer term opportunities to.
Bring on our the projects and in the district in the way that will continue to support.
I'll work towards operating at a dollar a time or better.
We're quite excited about that.
So we wanted to just kind of just settling we've got a couple of big projects or the said Big Mill and then all sorting and then we can say look down the road and see where we go mixed up in terms of the plot. So that's sort of where I was thinking is right. Now are we don't get ahead of ourselves with regards to looking down the road.
I think what we want to do listen bed Big mill, let's see what our performances.
See if if where we're able to do above and beyond 3.7 million tons of capacity, a with the or sorting. It gives a massive flexibility to upgrade or potentially and allow us to even produce more copper.
Than anticipated what's that.
Capacity of the mill and so there's a lot of variables right now we want to work through over the course next couple of years before we get too far down the road and going all right, where it going to 5.5 million times.
And on that or starting can you give us a bit of an update I'd and again I know, it's probably unfair question.
Because you're not finished the studies yet, but you you've already done work on a lot of different ore types are you seeing consistent.
Benefit from or sorting or is there some or types of that behave better than others going through the the horse order and I would like early I guess early impressions is like how how.
Do you see is going to be able to incorporate this is your plan going forward well I think we got to be kept for about a selective disclosure with certain people versus the market in general I think the best thing for me to say, it's due to look up.
As we are putting this all together that's a to look out for a news release I think we will put out are discussing a this initial around the testing a as I said in in my notes, we're very happy.
With what happened with it.
I'll consultants that we have now brought in to help us understand how we moved from a testing situation to your full integration.
Our have been very impressed with the result, a that we've got.
But to be honest, Jackie I don't think it's fair and and I don't want to get to for overall skews getting.
Getting far but beyond that we will make sure that we will give the market.
As for understanding of the results this weekend or other in a timely manner.
I look forward to thanks, Thanks, David.
Thank you.
Our next question comes from Dalton Barretto from Canaccord Genuity. Please go ahead.
Hi, Thanks, operator, good morning, everyone.
I think VCR starting questions I've got a pivot now that I've got a couple more here.
So just putting this all together, Dave and looking forward to the tech apart in November.
You can you give us a sense of.
What your tardy <unk> targeting to get in there in terms of the drilling in terms. That's got a mine plan from a mind my perspective acetate perspective.
By the United or something so exciting stuff will get captured in that.
Great good to hear from Middleton and Jack Good question with regards to that so obviously the most important thing that we want to exclude and the 43 one to one is gonna be the deepening project.
And that project is now coming together really really well and we anticipate a obviously that that will form the cornerstone of anything that we do in the technical report.
With regards to all sorting a we would like to be able to integrate that into.
43, one on one with respect to where we see opportunity to use it.
But it's too early to say with regards to whether I can confirm that that's going to form the basis of the 43, well be including the 43, one to one we're working with the Suncoke right now are with regards to how we go about integrating a the projects the various projects with the use of.
Or sorting into the mine plan, then if they Paul so hurdle and they they debt.
And the return metrics are such that they meet all metrics with regards to return then we will include them, but I can't I I don't want to be joining thing that's absolutely going to be included or not yet.
But we are encouraged.
That's fair.
Okay and then.
You've got the lab onsite now kitted out to asset CGS.
Is the benefit there actually is a faster turnaround or are you expecting pivot and the exploration strategy around Syria.
[laughter].
Well the.
The first and foremost reason why we put a full IC Pete Sweet analyzer in the lab.
Was to provide the exploration team with the ability to look at old minerals with regards to magnetic sulfide exploration efforts are one of the things and all the consultants that we've we've oh used and come on the project I really detailed that and your ability to be able do look.
Are you all samples and not necessarily the minerals, you're looking to mine, but other minerals can it be great identifies with.
With respect to helping you.
Collagen and move towards.
Certain types of ore bodies.
With regards to the Pgms and why we've highlighted pgms is as as you've seen in the pause in a exploration updates we released PGM result.
However, the problem that we have an have had historically with pgms, because we're not able to do.
Every hole and test every home.
And so we've had to be selective with regards to the sampling that were sent out to south Africa to be able to test that bring that back.
What we're seeing.
With respect to.
Pgms and <unk>.
The tests that we sent out to South Africa has suggested that this is a part of our exploration exploration program that has been.
Well, so wouldn't want to use under.
Under looked out for lack of a better terminology and so we want to be able to spend a lot more time, oh, the ability to do full suite I've seen the ability to look at all the holes for Pete I Pgms looking at their distribution within our ore bodies are they it at levels of course.
Contraction that suggest that we should be looking at this differently that so early stage, but certainly.
What we wanted to be able to do is as opposed to be able to look at.
You know 50 samples we want now want to be other we'll have the ability to look at that every sample but we.
We put through the lab for Pgms.
Does that help.
No I know that don't definitely how far ahead of ourselves yet.
We are.
Pgms the PJM work.
That has happened today is is interesting. It's it's encouraging it was unexpected or but a lot more work has to be done because we don't know enough with regards to distribution.
Pgms and how they how they existing though in the curve So valley.
And then I was actually surprised to hear all got some airtime today.
Yeah, well, what's what's prompting the overall we work on what do you guys. Thank you then well, let's just the overall thinking on that project anathema strategic perspective.
The the addition to a team of a gentleman named Ricotta right. Ricardo is a resource that came in as as a two cents, Mike can Pablo with regards to resource.
And and helping out team in Brazil upgrade and be able to do it.
Are there more robust 43, one the one level recalled agenda team earlier this year and it's part of one of the projects. He was looking at you want to Relook at Oh. It you started relooking at Bowie had previous experience with Boa.
And a few things he had said too I was prompted US to then go back to the.
Outside.
Engineering firm, who had done.
The feasibility study full glencore and in those conversations with them I, along with what Ricardo had done in terms of his understanding of the resource cause those.
Due to kinda have a very significant pause.
So we've got a re look at this from the very very beginning a there.
Early days, but there was significant things that we had seen that were head scratching with regards to why.
Linco I'd gone in a certain way.
When they are there things with him.
The deposit the existing deposits known that would suggest is.
A more optimal way off of approaching the project.
In addition.
Through Kratos work there is certainly.
Significant opportunities.
To potentially expand the resource, which now turned out.
A lot of the majority of the drilling was drilling to meet rich.
As opposed to drilling geologically.
And they're a significant number of holds an area that ended in some cases high grade mineralization.
So Nolan I had Oh, Mike to put a program together are within <unk>, regardless to some geological an exploration work next year.
To start looking at it from from that's it.
I mean, we've always known.
Well I had a very good I or our strong return potential Ah, but now that we're looking at relooking at from <unk>.
From a sort of first principles basis.
We're now seeing that potentially.
There's more to both <unk> and we have a thought before which is pretty exciting for the team.
But it's early days.
I Love work has to be done.
Got it Okay and then just maybe one last one for me latter day last year, an acute you Paul you were kind enough to get us.
The in China plant in terms of an aggressive ramp up I'm wondering if you want to do that again process here [laughter]. Thanks Dalton no.
No I think I'm sorry.
43, one of went out.
All of you later this year.
Thanks, guys itself.
Thanks, guys I'll take that.
Thanks.
Thank you.
The next question comes and stuff.
From Cormark Securities. Please go ahead.
Great. Thanks, guys, yeah, great to see the quarter and maybe just to sort of fall outside Jackie starting question and again I don't want us, but had a nice I read provided a lot. It'll just just curious you mentioned that there were eight I sort of batches are there are big sort of test run through the Arsforty plant. So if I could you maybe like without saying too much maybe just give us an idea was it all sort of lower grade open.
Type or did you actually look at some sort of moderate grade stuff that maybe coming from underground that you know could travel with where shorting.
Thanks, Stephanie Great question, Yes, we are when we looked at.
The eight different or type.
They include both underground and open pit.
They included both high grade and lower grade So we tried to do.
As we've tried to do as why the variety of ore bodies throughout the valley along with in specific areas. The mass for instance, a pull our and some couple other ore bodies, where we we looked at large the ability to look at lunchtime each high grade and watch tonnage love Greg So we've looked.
We've tried to be a comprehensive as we can with regards to we've run.
I think just over 100000 tons or through the plant.
And so it's it's fairly comprehensive we're we're very very happy with the amount of work that's being done.
Okay, great great and it just doesn't just switching gears over to Nx School I know in the past registered had mentioned that there is you know in addition to drilling on the San Antonio then there is gonna be some complementary regional exploration to but the first time in a long time is that is that still happening or is that sort of yeah. Just focus back on the main itself.
Well, we're where we have we been continually working on the vein itself.
And we've also been working on some other areas.
And we started our regional program.
Probably think couple of months ago.
In terms of doing the work there so yes, they will start to expand the program.
As I said, we've got four to five rigs there right now and I think.
As we continue here I think we'd like to see the program expand more but that is gonna be I'm. Mike. My can publishes a efforts with regards to availability of rigs cruise et cetera covert 19.
Is a one which.
No as much as you want to expand as quickly as you can you've got to be very careful with regards to a number one bringing a obviously teams into your environment, having operated in the past and so finding rigs funding availability of people.
Because that's what might come public doing right now, but we are long answer to show question, we are stepping out into the region.
Okay. Okay, great. That's that's offered me thanks very much guys.
Thank you.
Once again, if you have a question. Please press Star then one.
Your next question comes off layouts Souza <unk>. Please go ahead.
Hi, Good morning, most of my questions have already been answered, but just one last one guy so with a gold and silver prices are worth.
That being so high right now any changes any changes to the way you're thinking about annex go than that potential divestment.
No I think right now we're very very happy with an ex where it stands is obviously, we've still got to a lot more work to do and we're really excited with regards to the exploration program and you certainly hope when you come out with a new 43, one to one at end of year, we'll be able to show a more extension <unk> mine life.
Like anything else, though we are constantly are evaluating opportunities.
With regards to how do we.
At the highest value out of our assets and with regards to Nx right now.
Where value I think Rochelle wonder just leave it we're evaluating a number of different opportunities with regards to how to extract more value out of it but there's nothing.
Turning to concrete, but I would say that we're willing to talk about at the stage.
You know I think everybody has a gold assets.
Should be doing what we're doing and I think we're no different than any other company out they evaluate what's the best way to extract the most value for our shareholders in terms of its operation.
Thank you and just one more quick question on and at school. So in order to get to your I think it's nine grams per tonne guidance grades have to pick up quite significantly into second half a year. So what's sort of great should should we expect <unk>.
For for this coming quarter.
<unk>.
[laughter] that's.
I want to get drawn they said that one WRECO with regards to that but I you know I'm I'll pass it over I'm not I want to drop the bucket <unk> also though tobacco Mac that spends a lot spends a lot of his time, a working with them, it's going be above and beyond me and so I can do you have anything to add with respect to that.
Yeah, I look I'd say you know, we obviously maintained our our guidance for next fiscal year.
We've always a indicated that production was going to your weighted towards the second half of the here.
I think as we've developed a in the sense in Sarnia, we've obviously.
Can you to increase production volumes both yeah. If you look at through what are you, having quite a bit higher than the first half.
And so I think you can look at our guidance for the full year and and work backwards on kind of where we'll be any do you look at a the range. There in terms of you know production values the ex <unk>.
You can you as that you get back calculate what what the great data ought to be for the second half.
Working you know that the team and in and everyone's working.
<unk> to produce that.
Okay. Thank you guys.
[laughter].
Thank you.
The next question comes from Jackie Laski from BMO capital markets. Please go ahead.
Thanks, Thanks, again, I'm, sorry, I'm, probably going to ask you a more questions. They you don't want to answer but I just wanted to circle back on your regional drill program. <unk>. You just mentioned I guess that you were hoping to deploy more rigs there depending on availability. It. So my first question is is that availability on rigs from.
Oh from your existing Sir your line programs or is that new rigs a in addition to the 28 that you have.
And then maybe just on top of that maybe if you can give some color are you are you using our she or diamonds drills are both and and then maybe if you could just talk a little bit about how you're you're you're doing the drilling is that focused on.
I think targets or are you all over all over the the different for systems that you've identified or whatever color you can give them and that kind of I guess, if you really helpful. Thank you.
[laughter], Jackie or when we talk about a rig availability is primarily from a internal.
Supply of rigs a we did add one rig as you can see from the beginning of the year were 28.
Possible, we may add another one a for a specific purpose that we're looking to do but right now around you know 27 to 29 rigs is probably where we're gonna be.
All but one.
Is a core.
We have the one big cost Oh see SRAM rig that we use as al Scouting rig throughout the valley and it goes and looks at certain areas.
As we've been pivoting to the regional.
I think some of the continued exploration success that we've seen particularly around the deepening project is probably.
We haven't put as many rigs on the reason was we anticipated.
At this particular time, but we will be as we go forward in the second half the year.
We are targeting certain specific areas.
Right now are with regard to the program.
Primarily in and around to the Serbian district or in terms with our first Pos and some of the things that we seem to.
In terms of the complete Greenfields work.
And.
Yeah, well, we'll see how we go.
Oh, I guess I guess, that's the Gist of my question is like will you have enough information from the regional program you can start.
Some of that into a inferred or <unk> or some kind of restarted category. This year yeah. This year.
It's a jackie that's a it's a good question, but it's hard to provide a reasonable onset or you know with regards to anything that we do certainly once we are into a new discovery and if you look at Siri and my last year in and using that as an example, there's certainly it's the possibility that.
Could occur.
But generally you.
You know we want to before we even announce a a new discovery as you know we want to make sure that that resource has the ability to come into.
The 40 311.
So that's typically if you take three month as an example that was 19 holds before we even announced it I think by the time, we did the 43, one a one last year were probably into it for 25 to 30 holes. So.
If you see as announce.
A new discovery.
It will be on the basis that there's a high probability that that a portion of that discovery will come into the 43, one or one.
We're not announcing a new discovery, it's not that we haven't necessarily discovered anything that's just merely that we're continuing to do the work to pull the resource together into a to be able to announce it.
So as you know as a company we're not a company releases single exploration drill results.
Are we don't think that's appropriate.
For what are the type of company, we are and so while we may have.
Intercepted.
Mineralization.
We won't we weren't necessarily announce those those results until such time as we're comfortable that resource can be built around.
Right I got it that makes sense. Thanks, Thanks, David.
Thank you asked a question of no. Please [noise].
[laughter].
There.
Yeah, I know my questions at this time Sir.
It's hard to classless back over T. management for any closing remarks.
No I do want to give some closing remarks yep.
Look thank you everybody as David said, we have a lot of moving parts business, both the IDEXX at an Mcf per day.
And we're having to deal with the <unk> Global crisis at the same time I think the companies doing exceptionally well in terms of its operations. We continue to be well just absolutely total appraised of all a management team and employees and building our incredible job in very trying circumstances.
And now we haven't tremendous opportunity in front of US we have a lot of things to do it difficult time, but I think the team and the company's performing its best if it can be generating such tremendous returns and profitability our cash costs being so so low on a on a global basis that.
Youre a company is in great shape, and I will look for with U.S. beat you're getting future. Thank you.
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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Mm Hmm.
[noise] Oh.
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Mm.
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