Q2 2020 Alacer Gold Corp Earnings Call
Thank you for standing by this is the conference operator, welcome to the Alister Gold second quarter 2020, operating and financial results 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 to join the question to you May Press Star then one on your telephone keypad should you need assistance during the conference call you may signal that operator by pressing star and zero.
I would now like to turn the conference overdone, Mrs. At least some messed up the director of Investor Relations abolished circled for opening remarks. Please go ahead.
Thank you on stage.
Welcome everyone and thank you for joining us today, So last fiscal second quarter 2020 operating financial results Conference call.
Turning on the Colorado until our President and Chief Executive Officer, Stuart Beckman, Our Chief operating officer, and Mark Murchison, Our Chief Financial Officer.
Well last year gold is listed on the trying to stock exchanges <unk> SAR and on the Australian stocking change as eight too cheap.
This conference call is available via webcast and the link and slides to accompany our remarks can be found on our website at a lesser called Dot com.
Additionally, all documents released today can also be found on SEDAR dot com and they have sex dot com back to you.
This presentation includes no schools coal will also include forward looking information.
Please refer to the forward looking language Mplxs included you end up our presentation.
Additionally, all dollar amounts you much presentation or expressed in U.S. dollars and on 100% basis, unless otherwise noted.
That's going to take on upstairs and noted that after the call. We'll open it up for Q1 exception and effect now I'll turn the call over to wrap bought and Paul and ask you to please turn to slide show.
Well, thanks, Lisa and thanks, all for joining us today.
Before we discuss.
<unk> results.
To provide an update on the status of the pending merger of equals would this is Tom on it.
As many of you are aware were received overwhelming approval for the transaction bought by said to shareholders and I've also I received the final court order approving the transaction.
Additionally, the I say says granted it's this morning conditional listing approval.
Because the transaction, we're waiting on Turkish regulatory approvals and expect to receive they within the coming weeks.
Your turn your attention to slots Ray for another view of the mid year.
Right.
You can say from is smaller than we've had a successful first off.
We had another solid quarter up working over 300 days without a lost time injury.
Our operations continue uninterrupted despite the many challenges kind of it is throwing at us.
Well, we do have to make some adjustments for car that we have delivered a solid Chris caso with production of 167000 ounces and I live in free cash flow <unk> hundred $39 million.
Our balance sheet has become one it's got great strengths and we've made an impressive progress over the past 18 months to achieve a net cash position of $34 million at the end of June.
So I'm going to hand, the call either but Bakken stoop to provide more details around the house, starting with Mark on slide number four.
Thanks, Rob.
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I'll focus my comments on the hockey numbers.
166000 ounces of gold was sold generating $274 million he probably sage.
Operating cash flows of $148 million Virgin to ride it doesn't look like you done the cashless society.
Attributable net profit or earnings for the first six months were $57 million or 19 cents per share.
On the right hand side of the slide.
Reconciled coffee or distributable earnings per share to a normalized adjusted earnings per share.
If we chose not to 10 cents per share.
The adjusted items recorded incentive tax credits generated in Jackie.
Unrealized non cash losses arising from the devaluation of the Turkish lira share based compensation.
It's it's a transaction costs and carbon or 10 costs.
Well actually the tax.
Thank you tax credits continued to be generalized eligible spend.
And at the end of June there were $210 million incentive tax credits recognized in the deferred tax assets that are available to reduce current and future use corporate tax payable.
With the benefit of incentive tax credits, we forecast the cooperation affected cash tax rice will be less than 5% in future years.
Nice one cost metrics.
The consolidated all in sustaining cost in Q2 is hotter than normal due to the impact in the quarter following austin's.
Hard royalty expense due to the high Goldrush.
Remembering that Turkey has a progressive royalty rights.
Well the royalty rights increases the Gulf crossing crisis.
Additional costs incurred in the strategic merger with emphasis on Bonnie.
Hi share based compensation expense choosing the cooperation tall shaft boots.
In kind of ignored same costing production impact.
Adjusting for these auctions results in a consolidated all in sustaining costs for the quarter that would be within a full year guidance range of $735 to $795 stretch.
We remain committed to delivering a full year consolidated all in sustaining cost within our guidance range.
Finally, and most importantly cash.
The operation will be delivering strong cash flow, resulting in an unlevered free cash flow to the desktop.
I didn't say $10 million.38 per share.
Strong cash generation has transitioned the cooperation into a net cash position at the end of Q2, we've consolidated cash at quarter end of $279 million outstanding bank debt $245 million, resulting in the net cash position $34 million.
The strong cash generation that I build the project company to like distributions of $130 million into first half of which approximately $25 million was tied to our long term joint venture partner.
We expect distributions from the project company will continue to be tied in future years, a strong cash flow generation continues.
And then now hand, the call either this year for an overview of the operations.
Thanks very much much.
As always I'll kick off with HSBC.
Protecting it up communities up people at long term business through the pandemic is paramount.
The team has done a great schober, this well keeping them on producing and still managing to push for would have very tangible book value accretive growth plans.
However, the distraction of leadership, if it restrictions on travel and other kind of it impacts having some impact on the business for example, the delay of continuous improvement would.
The Turkish government and obtain I've done a fantastic job managing kind of it and I think it unlikely that the current situation will significantly deteriorated.
Conversely, I'd expect that things will slightly improved and out processes to manage the pandemic are becoming embedded and it just caught the why we do at work.
I'm sure if a at three is above where we want to today and is improving as we refocused leadership at the.
Hi, meeting and community consultation that impacted by the pandemic have been progressing as well.
Now if you could tend to slot Harbin I'll give you a uptake on our operations and great science.
Then my commentary last quarter the worked under prepared for a managed kind of it has paid dividends and we remain committed to delivering on our 2020 gardens promise.
As planned the defined.
<unk> oxide resources I being exhausted.
Considerable work continues as tried to sustain the production weve oxide ore from outside the desire to find resources and reserves evidenced by the 15 drill rigs that we currently have in the district.
The performance of the Salt bought plant continues to impress throughput of about 115% on an annualized basis was it shaped recovery of the sulfide plant.
In the sulfide plant remains in the liabilities, which is lower than design, but some improvement work, which was delayed thought coverage.
It was implemented late in the caught up and we're seeing some improvement from this.
I'll expect that we will slightly colder recoveries up.
We had a short shutdown of the order Clive.
The whole plant in July and took the opportunity to inspect the entitle sort of type one and replace a couple of critical consumables. The inspection of the order Clive one concerns that it was in excellent condition and side Weve delight any further my just shutdown work out of this year.
We expect to see the grades fading was sulfide plant improve later in the a as we regained access to all from different the manganese pit and the mining area and the main pit opens up to.
The revised mine schedule that I talked about last quota is ensuring that the mine development rights.
At the right point and that we gained access to the or the bottom of.
Thank you nice paid.
Our gross clients our growth plans.
Development continued the technical report will come out in the last quarter and is on track. This will include the initial development plan for outage, which is the exciting prospect adjacent to the operating satellite pit at Chuck TEP high.
Drilling continues in Anniston outage. So the new 2020 technical report should be considered as an interim technical report as we will need to updated I've a time as the expiration of the area and the resource definition develops.
Exploration, which seems to be confirming our hub offices, all the link between checkmark typically an outage.
Work continues on the flotation plant detailed engineering will be completed saying, we have committed to the longer lead equipment purchases to make a few 120 21 target Tom on.
Permitting for the plant is in progress.
The closed out the business remains well positioned to weather. The storm. The 2020 is turned out to be.
And we remain on track to deliver on air Gardens for the year.
Thank you I'll hand back to rock to wrap up the presentation.
Thanks, Sue on thanks Mark.
As I mentioned before we had a good first top despite the headwinds caused by carpet.
In anticipation of the merger closing would they saw we've also been working studiously on the integration efforts to ensure we move rapidly to bring the two entities together Apone clause and in this regard we're in good shape.
I know that the team is extremely motivated to get going into stock diluting the excellent potential with a larger a stronger company we will create.
With the merger close this might be a last quarterly review as Alexa parts. So.
It would be remiss in not to recognize and think that many people contributed to ask success over the years.
Thank you very much.
So with that I'd like now to wiping out the coal for any questions. Thank you Anastasia.
Thank you.
We'll now begin the question and answer session to join the question Q You May Press Star then one on your telephone keypad, you will share a tone acknowledging your request. If you are using a speakerphone. Please pick up your handset before pressing Keith.
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The first question comes from Nick Herbert with Credit Suisse. Please go ahead.
Okay, Good hi, Rob Jade.
Well Scott.
On a on the sulfide plant.
Going forward, obviously to that they try to come up the technical report, but just wondering.
As it stands today, how youre thinking has evolved in terms of walk that sort of optimized lights might look like offensive and sort of approximate time in around a chicken.
Oh lets you to answer that one Mick.
Yes, I think.
I think we've been increasing the right through the order cloud you know the instantaneous instantaneous writes a sort of 125 to say at the moment.
The flotation plant will sort of completely chimes. The why we look at the at the plant going forward, where we will have the ability to adjust the self taught gripe.
And essentially increase and increase the self taught a concentration feeding the autoclaves. So that we can fully utilized the oxygen that so it'll be a function you know the optimize right will be a function of the grade coming in.
The grade recovery trade off and what the sulfide Grites up when you see the technical report when it comes out.
You know you'll see that the the tonnage will vary depending on on walk. The order is that we're scratching ups from them on.
Yeah, Okay, and I expect to talk shows I would cover a lot.
Loss.
The increase Turkey.
Yeah, we'll see we'll see a small loss because recoveries the recovery for the tile from the cost from the constant try to will be louder and louder than the haldol guidance for the water caught.
So we will see a small loss that's more than might up full bore you know very large increase.
Throughput of the plant.
Got it and then sort of just.
Well trained to fall figures, but when you said very large throughput increase the play I don't sort of give us some rough guidelines on what that scale might look like.
We haven't we haven't given a those numbers yet because I don't want to I don't want to get people thinking.
Now that we got to be operating now we have the capacity top right. The order closed at 150% is on that's what we've told people that that is onto do we've gone back and how to look at the design with and performance is the all the cycle and we've got capacity there for three new.
Sometimes so I knew that the than mine capital intensity the audience in the plant, but a guide what the throughput will they will be a function all all of the self driving particularly coming into the into the plant as well as the carbon I cried of course.
And we'll be playing that tried also you know what are people, who got why and assume that we just gonna be pumping it up to 3 million tons, because that's what I can get through the mill, but clearly clearly our job is to optimize and and de bottleneck the plant progressively.
Okay. That's very helpful. Thank you and and then just generally is just on the timing around.
And that's sort of different has gone to the gold and satellite nottage.
I think pretty she mentioned is pretty limited capex.
To access studies and so the surmont it roughly on that and.
Tailings capacity in any sort of upcoming Nijat capital works needed there.
Yes, so the the capital works for the the tiling says I currently exist views in a lot with walks in the technical report so when we've gone back and reviewed does so if you're looking for absolute numbers and gotten dig values that have a little and the tailings. The tiling says a currently census.
Good for the whole all the current reserves.
We did and as I say last time during the original feasibility study Velocys ability study. It was contemplated the second tiling, Stan and that second tailings dam. He's passionately committed and we have started the engineering work on that and we are also I looking at subsequent tiling stands to that as well.
And whether we'll pull buys into the into the fall as technical report.
The other thing that I had mentioned on the law school as well was weak we see quite a substantial compaction increase when we get the cost of material reporting to through to the tile.
Coming out of the flight plan and internal abroad trade that was quite positive. So we will see an increase in what we can fit into the existing tailings dam side.
Have a little bit that just assume that that's a minimum.
And currently outage will be a function of committing more than anything else you.
If it wasn't depending on what could Oh gigamon that in a couple of months.
It's not a technical challenge at all meets its very close to check my peptides, just a matter of opening it up but.
We have all the novel pivoting I'd say at the moment pivoting looks like 2022.
Okay.
That's why we think about it.
This activity.
Yep Yep could you guys. Thank you very much and.
Maybe just walk from not just a comment.
Regarding distributions for the project company can you just explained that taking off and so that the mechanism of policies around that.
Just so I'm not familiar with how they exclude that then.
That's true yeah, Nick so so out of that one I mean.
We I, 80% of the shares net joint venture partner I, just 20%, so any distribution or dividends out of that company. The project company guys 80 20.
We Oh, we haven't paid distribution or dividend out of there for a number of used with the construction of the plot. So we're in a strong position now too and I believe the the stocks of paying.
Dividends out of the company. So that's been a positive in terms of the guy for <unk>.
It it will depend on you already capital requirements within the project company as we go through some of the development of based projects. So we don't have a set policy parasite paying dividends out of that company, but we certainly expect that we will be paying them here on you Guy forward.
Maybe a couple of years, just really depends on the probably fall.
Okay, great. Thank you.
And then let me just sort of.
Just a couple of the help solve them because they saw just modeling upcoming news flow.
We got the providing subset of perform accounts when can that deal sizes and then just a reminder, which was an update played on what sort of they knew they came east like sort of Q out for the rest of the yet and that sort of combined portfolios. So long as they go well you guys have been assay that.
The technical report coming up but is there any sort of where the <unk> Jude from the itself.
Got it and mine plan up that simply can sort of be mindful of.
Uh huh.
Yeah I'm need good first.
See that will come the so I guess, but what you're looking for easier list of.
Autumns thatll come into the combined entities the.
Full cost for the reminder of the year on a combined basis grew up in phase I was a questions around the impacts around kind of it has an impact before you production gardens et cetera et cetera. So that'll be the first point of order for us to get that that new guidance, yeah, I'm there'll be some regular expert.
Hi, Snottites coming out of the exploration programs for me exercise sought in particular around Tritan Kenyan.
But if you listen to the the results coal prices up there was some some information.
Rely to the up to the market last week. So that'll give you an update and then and then obviously we'll have out take report.
I'm coming out a lighter in the U.S sorry, so they probably the mine things as we as we as we move forward. The other thing is as agreed that operate talking about that we will do is.
Start to put together the the I've a longer term sort of growth profile of the portfolio what does that look like.
What are the other capital requirements around them Holistically. So from a boards perspective, we can sit down and not having discussions around about capital allocation policies as well, so and want to have that try and get it will that dump bought into the.
Hi, Thanks very much.
[noise] [noise]. This concludes today's conference call you may disconnect. Your lines. Thank you for participating and have a pleasant day.
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