Q3 2020 Centerra Gold Inc Earnings Call
A question. Please press the one followed by the four on your telephone if at any time during the conference you need to reach an operator, Please press star zero.
As a reminder, this conference is being recorded Wednesday November 4th 2020, I would now like to turn the conference over to John Pearson, Vice President Investor Relations. Please go ahead.
Thank you operator.
Welcome everyone to Centerra Gold's third quarter results conference call.
Summary slides are available on some terrible website to accompany each of the speakers remarks.
Today's call is open to all members of the investment community.
And maybe a in listen only mode. Following the formal remarks, the operator will give the instructions for asking a question and then we will open the phone line to questions.
Please note that all figures are in us dollars unless otherwise noted.
As we continue to work remotely joining me on the call today is Scott Perry, President and Chief Executive Officer, Gary <unk>, Chief Financial Officer, Dan DHR, Dan Chief operating officer, and use of Raymond Our General Counsel.
I would also like to caution everyone that certain statements made today, maybe forward looking statements and as such are subject to known and unknown risks, which may cause <unk> actual results.
To differ from those expressed or implied also.
Also certain of these measures we will discuss today are non-GAAP measures. Please.
Please refer to this trick descriptions of non-GAAP measures in our news release the name DNA issued this morning.
For a more detailed discussion of the material assumptions risks and uncertainties. Please refer to our news release and Mdna, along with the financial statements and notes and our other filings all of which can be found on SEDAR and the company's website, that's a terrible dot com and that will occur.
The call over to Scott.
Thanks, John and good day, everyone and I Trust, everyone is safe and well.
As John mentioned is going to be referencing accompanying summary slides, which are available on our website and just starting off on slide number five I.
Just in regards to each of the bullet points first bullet point yeah.
The quarter throughout the year to date period, obviously, a primary focus has been on that Worksite sales safety leadership program. One of the key highlights during the quarter, which Dan will mention is that oxide out newest operating mine, we actually achieved a key milestone led by now achieved a $3 million of consecutive lost time incidents.
Operations. It was a fantastic milestone so I just want to commend the the management operating team that likewise with regard to the COVID-19 pandemic.
The primary focus as well just in terms of the well being of all of that plays they put in place a number of preventative measures and protocols as well you know it's following the various public health measures and to the best of that knowledge. Each about properties continues to be bars tree and we haven't seen any meaningful impact in terms of though production old productivity levels.
In terms of the second bullet point, a key focus for US is a social license you can see we've now achieved a consecutive period of 87 months without interruption.
In terms of environmental they've never environmental incidents during the quarter that we did have a bio diversity a incident that Alex mess property in British Columbia, which was associated with the mortality of some migratory birds. The Canadian Wildlife services investigation concluded that same took all the appropriate actions.
Leading immediately notifying the parties and implementing a corrective action policy.
Fourth bullet point that diversity and inclusion is a big focus throughout the company I hear it's not terribly, but a number of the initiatives underway at a number of goals and objectives and we are continuing to advance on those.
Next bullet point here Likewise, just in terms of climate change initiatives that submitted our latest climate change reporting and you'll see that being disclosed publicly shortly likewise.
Likewise during the quarter, we published our 2020 tailings storage facility disclosure as well and just lastly left when they're in the bottom left some terrible we are a signatory to the world Gold Council is responsible gold mining principles. That's actually 51 of these principles that we're rolling out that.
At all of the operations were making really good progress as we continue to advance on these will increasingly be looking to a test to compliance needs. These principles.
Using a third party service provider.
Yeah. The next slide on slide six just to put a delved into the the quarterly operational and financial highlights again see the first bullet point just in terms of the COVID-19 pandemic as I mentioned, we didn't see any meaningful impact at either the operations and again to the best of our knowledge, we think of properties.
Our streets I spoke to the the key safety milestone at all said again, that's a very commendable achievement.
Fulfil that point, a very strong quarter in terms of the gold output. We produced just over 240000 ounces of gold and just under 23 million pounds of copper across the company.
I mean, you could be a the second last bullet points that that high level of gold output correspondingly, you're seeing a very low competitive all in sustaining cost on a company wide basis, we achieved.
And all in sustaining cost of $528 per ounce, which is a fantastic result, I think notably if you look in a parenthesis. That's you can see the individual all in sustaining cost results at each of the operations and I think the key takeaway. There is all of them aren't all right clearly operating in the low cost quartile.
Obviously positions us really well when it comes to profitability. So we transition to the next slide on slide seven.
Let's say just that strong level of metal production at very low costs in terms of Outstandings result can't assess bullet point, we actually recorded net earnings of some $205.7 million all.
Correspondingly 70 cents a share.
The third bullet point, you know obviously, the strong earnings and strong profitability. That's also resonating in terms of our companywide free cash flow generation during the quarter, we generated $281 million positive free cash flow and you can see in parenthesis each of our operations on a standalone basis, and generating very meaningful positive free cash flow.
I mean, just given that strong free cash flow our balance sheet continues to grow we finished the quarter with a.
A cash balance of $484 million, we do not have any corporate debt outstanding on the balance sheet. So that is our net cash balance.
And see together without revolving line of credit facility, we had a total treasury liquidity portfolio, some 984 million barrels.
Fifth bullet point, just with regard to our guidance, we haven't made any change to our production outlook. So the yes, we continue to maintain a originally guided guided levels at the beginning of this year I think thats, a conservatively sort of balanced approach that were taking just given some of the uncertainty with regards to the global pandemic having said.
That went very well position and most certainly targeting.
Upper end of that production guidance at each of the individual operations, where we did make a change was on our all in sustaining cost profile favorably reduced our guidance there to the new targeted range of 740 to $790 per ounce.
Then last bullet point again, so the quarterly with the board did declare a quarterly dividend of Canadian five cents per share.
I just want to talk to each of the chart at the bottom here on slide seven I think.
It really does illustrate a fantastic profile.
You can see at each of our operation.
Generally speaking quarter over quarter. This is the year to date period.
We have been demonstrating growing levels of profitability and growing levels of positive free cash flow, but I think what's really impressive is the third job, which is then offset mine in Turkey. So again, the newest operating mines in our portfolio last year were exclusively focused on construction here, we poured first gold in January declare commercial production in Q2.
And you can see here in Q3 generating $74 million and positive free cash flow at the mine is ramping up very very well and you know we've been very pleased obviously to see this level of performance and I think it's exciting.
But it was really well for us in tears going forward fundamentals.
Our ability to showcase a a port folio of three low cost profitable operations I think positions. The company really well then you can obviously see that in the chart in the bottom right hand corner, where again.
Companywide free cash flow has been growing quarter over quarter, we have been increasing our level of metal production.
Well. This is obviously, a solidly coinciding with a growing gold price environment as well.
Next slide on slide eight.
You can see the chart in the top left.
As you probably expect quite.
Quite a strong gold price environment and.
Correspondingly, our all in sustaining costs portfolios in managing our business really well during Q3. It was our lowest all in sustaining cost of the year to date period. So as you would expect in terms of our margin over and above Allen sustaining cost profile. We are seeing a record module at the moment so yeah Ben.
Benefiting from high gold prices, but also you know we do have favorable tailwinds or they have been benefiting from currency devaluation in each of the jurisdictions, where we operate so being the Canadian dollar the Turkish lira Kogi, some but also favorable diesel fuel price environment and again, just reminding everyone. All of our operations our open pit mining operations and.
Diesel fuel tends to be one of the larger commodity cost inputs.
The chart in the bottom left that I spoke about earlier.
Growing levels of positive free cash flow and you can see has been the red line shot prevailing gold price.
This is the elevated gold prices, certainly, resulting in growing levels of profitability and free cash flow generation and then lost jobs in the bottom right. There that balance sheet profile you can see in terms of our treasury position.
Continues to strengthen and finishing the quarter with $484 million in cash.
Corporate debt outstanding So I think in terms of our business model.
Has been going from strength to strengthen obviously when you look at our total liquidity position I think in terms of Centera and moving forward.
Certainly well positioned to be a a internally funded business model.
With that I'd now like to pass the call I've got to deleverage iden churn.
Chief operating officer, Dan Please.
Thanks, Scott Good morning, everybody. Please please move to slide 10.
In Q3, we had good safety and operational performance of note, our new operation knock suit.
One and a half years or 3 million man hours LPI free and then Daqo had a milestone of seven years.
Great.
So derik continues to prioritize the health safety and well being of our employees contractors communities and other stakeholders. During this current outbreak of gold at 19.
And to take steps to minimize the effect of the pandemic on our business.
We have established strict COVID-19 protocols at our mine sites to help prevent infection and reduce the potential transmission of the virus. In addition, the operating mine sales continue to assess our resilience.
Of our supply chain, we increase our inventories.
All of our key materials and develop and implement contingency plans to allow for continued operations.
On the production front, we had another strong quarter, producing the 241448 ounces of gold and to 23.3 million pounds of copper at an all in sustaining costs of $528 per ounce sold.
John Milligan are running steadily but notable was the 51412 ounces produced at auction in the quarter.
At a world class operation, whom door the plant operated uninterrupted for the quarter and continues to produce windoor feed from the stockpile.
Q3 production was 140000 ounces poured at an all in sustaining cost of $639 an ounce.
Mine operations was affected by community spread call good and there was a significant shortage of operators for our mobile equipment in the quarter.
Mine waste tonnage was also lower due to the longer hauls to central Valley waste down.
And of course, the driver availability.
But the lisi waste dump permit was approved in received in late July and construction and prepared portion of the whole road was completed in the quarter. We started dumping waste rock at the bottom of the lease the valley. So tonnage has improved by the end of the quarter. The mining activities, we're back to full planned levels.
We continued to advance that come to our technical report, which is taking slightly longer than we expected to finalize at.
Additional technical work is being incorporated into the new life of mine plan with respect to the mining cost recoveries and the waste rock dump stability assessments.
Come to our generated 157 million free cash flow in the quarter, bringing year to date cash flow to $410 million.
The Mt. Milligan, there was little effect of Cove it in the quarter as we continue our hygiene distancing and can't protocols.
We had a large build.
Storage process water to run at full capacity and our water level inventory is pete going into the winter.
Mine activities were in phase four five and eight of the open pit total tons mined were 11.3 million tons and a mining cost was a respectable.
Dollar 65, as compared to $2.03 per ton in the third quarter of last year the.
The decrease was due to the reduction in contract service costs associated with open pit drilling lower diesel fuel costs, lower labor costs and higher tonnage due to the improved mining efficiencies.
Total mill throughput and Milligan was a record of 5.3 million tons in the quarter, averaging 57800 tons per calendar day, the processing costs were $5.11 as compared to 568 the year before.
The decrease in this cost was due to water sourcing.
Lower electrical prices.
Decreased labor costs and higher throughput.
In the quarter, we did produce 49854 ounces of gold at an all in sustaining cost of $165 per ounce. The copper production was 23.3 million pounds.
All in sustaining cost was very low preliminary due to low mining and plant costs decreased water sourcing costs, the increased copper credit and a favorable foreign exchange rate.
Milligan generated 63 million free cash flow in the quarter and has generated a 119 million so far this year.
At Oxford mine construction was substantially complete the remaining items to complete is the heap Leach phase one C, which is expected to be completed by the end of the year.
Unexpected additional 5 million is to be spent in the fourth quarter to complete construction, which would bring the total spend to approximately 17% lower than the 220 million construction cost that was disclosed in the technical report.
During the third quarter, the Oxford mine obtained an amended amendment to the environmental impact assessment certificate from the Ministry of environment and never let a number that position. The amendment is to accommodate changes to the Oxford mine open pit design and pit optimization because of the delay in receiving the amendment of the.
And further expected delays to obtain our related forestry permit the Oxford mine and design is currently being revised with the exception that.
Got the high grade ore going in Tempe deposit will not be accessed in until later 2021.
So new construction has commenced which includes an overflow upon crusher modifications work are anticipated to be done by the end of the year and the heap Leach phase two extension has started and we expected to have that by the end of 2021.
During the third quarter of 2020, OCC suit operation continued normally while maintaining active measures to prevent coded.
Great Good site.
Gold production was the 51000, we'd spoken about and all in sustaining costs of $416 an ounce for the full quarter of commercial production Q4 as expected we're expected to place lower grade material on the pad, hence lower level production.
Overall, OXXO generated 74 million of free cash flow in the quarter.
Please go to slide 11 for overall operational key focuses.
For 2020, we continue to focus on improving our safety performance with a large focus on critical risks and fatal mitigation management as well as Vfl and overwriting work safe home safe program at.
At our Twod, we continue to ramp up and are continuing to phase as we indicated one c. diff.
Heap Leach pad.
Well ahead of time, where we need it by May of 2021 and finished the modifications and overflow upon before the end of the year.
By the end of Q3, we had 2.8 million tons.
Tons stacked in our heap Leach irrigation, we have 300000 tons crushed inventory and we have over 1 million ton stockpile waiting for crushing and placement at.
That Oxford.
No Milligan with Erie, both robust spring melt, we have accumulated seven and a half million cubes of water in our TSS.
For 2020 Mt. Milligans team is focusing on achieving consistent improved mill throughput and recovery and getting a strong handle on our mechanical availability.
The operational team has been successful improving our cost performance throughout the company. We are taking advantage of the lower commodity prices to build inventories at Mount Milligan, specifically, we have flattened the organizational structure scrutinized rentals and old contracts as well as improving our mine productivity.
Indoor is continuing to advance is 43 101, as we indicated that is carrying our.
Further technical work on the come to our life of mine plan.
Including with respect to the mining cost recoveries and waste some stability in view of the fatal incident that we that had occurred in the lisi waste in December of 2019.
Finally, we continue our brownfields exploration plan of $32 million companywide, and specifically at Coombe tore $20 million for 2020, which is slightly delayed due to co bid, causing manpower shortages.
Move over to slide 12, that's a simple graph of the Mt Milligan.
Water inventories and with a with a robust spring note. We had we pumped over 7 million cubic meters of water into the TSS.
Finally on our last slide 13. These are photos of the OCC suit mine.
Please facilities.
In the summer.
Now I'll turn the call over to Darren Thank you.
Wonderful Thanks, Dan.
For those following on the slide deck on.
Slide 15.
Centera recorded 515 million in revenue during the quarter. This consisted of 430 million and gold sales.
$53 million in carpet sales and 32 million from the molybdenum business unit.
During the quarter, the company's average gold price realized 1800, $6 per ounce and $2 and 43 per pound of copper.
In the quarter, we sold 238000 ounces of gold 142000 ounces attribute to come to our 45000 ounces from Mount Milligan.
At 51 thousands of gold.
From the New Oxford mine.
We saw a 21.7 million pounds of copper a slight decrease compared to the prior year quarter.
Now on slide 16.
Net earnings of $205.7 million was recorded in this quarter. This included 169 million contribute from the commercial operations, a 41% increase compared to the prior year quarter.
48.2 million contributed from me, Matt really good operations, and 83% increase compared to the prior year quarter and importantly.
71.2 million contribute from Oxford had new operations.
The earnings per share for the quarter was 70 cents.
From a consolidated cost perspective, centera in the quarter recorded production costs of $386 per ounce and an all in sustaining cost of $528 per ounce.
At an asset level contour recorded an all in sustaining cost of $630 per ounce or whilst at Mount Milligan recording at all in sustaining cost of $165 asps for the quarter.
I would highlight at Mount Milligan mining and milling costs decreased by 19% and 10% respectively compared to the prior year quarter.
For its first full quarter of commercial production Oxy recorded an all in sustaining cost of $416 per ounce.
At all operations, we have recorded a significant betterment and cash provided by operations.
Consol reported 200, I mean and cash from operations $194 million increase.
Matt Milligan recorded 70 me and 82% increase from cash from operations.
ALKS suit now demonstrating a key source of cash flow generations, contributing 85 million in the quarter.
This translated to $281 million in consolidated free cash flow for the quarter.
As highlighted by Scott 150, being free cash flow from contour.
63, being from Mount Milligan, and with Oxy delivering its first full quarter of commercial production generated 74 million of free cash flow.
As noted total year to date the company has generated 527 be free cash flow.
As you will note in the bottom left hand table on the slide Centera finished with 484 million in cash with no debt.
Also on Slide 16, I was also refer you to the bottom right hand chart.
To date the company has produced 651000 ounces of gold tracking to the higher end of guidance.
Costs year to date have recorded all in sustaining cost of $665 per ounce.
And the night you noted we have reduced our all in sustaining cost per ounce guidance at Mount Milligan and oxy.
At Mount Milligan, we set a new range of 750 to $800 per ounce previously guiding to 885 to $935 per ounce all in sustaining cost perspective.
Dick did decrease attributable to buy from mining and milling costs.
At OCC suit, we are now targeting a new range of 500 to $550 per ounce previously guiding to 650 to 700 per ounce from an all in sustaining cost perspective.
Decrease coming from a combination of both positive grade and tons reconciliation and effective cost control. During this initial year production.
The full year gold production guidance for 2020 is being maintained at between 740 to.
820000 ounces of gold.
In the fourth quarter of 2020, the company expects higher all in sustaining cost per ounce as a result of lower production levels that by contour Oxted minds.
At comp so if the company is planning to process lower grade stockpiles and has it scheduled five type yield maintenance plant in December 2020.
The Allstate model is expecting to have low levels production in the fourth quarter of 2020 as mentioned by Dan compared to the prior to the third quarter due to placement of lower grade of ore on the heap Leach.
We have also reduced our capital spending guidance, reducing come talk capital stripping to two to 193 million previously guiding to $223 million a.
A combination of longer waste haulage distances and temporary reduction in workforce skewed the COVID-19 endemic.
Finally, the Centerra Gold's declared a quarterly dividend of Canadian five cents per share for the quarter with that I'll now pass back to Scott.
Thanks Darren.
Just to wrap up the prepared remarks, just on slide 19.
Just in terms of the the top left section here just some of the key bullet points I just want to reiterate so again you can say in terms of our gold production guidance. We continue to guide up to 820000 ounces of gold. This year as I mentioned earlier I think this is that considerably.
Balanced.
Level of guidance that we havent made any change to that guidance since we first put it at the beginning of this year again, just being cognizant of the heightened uncertainty in the global perspective with regard to the COVID-19 pandemic then as Weve spoken to we have reduced all in sustaining cost just just reflecting the strong year to date physician and just in terms of that production levels I think we certainly target.
The the up a level of that guidance that that each of our operations as well second.
Second bullet point you've seen.
Continued run of strong operating momentum is carried over from quarter to quarter and it continued in Q3.
Okay White gold output being in excess of 240.
Thousand ounces of gold and again that high level of gold output.
The corresponding all in sustaining cost result.
Quarterly result in $528 per ounce was the lowest of the year to date periods, obviously that makes for a significant margins just given the elevated gold price that we're in and you can see that in full bullet point again, a record quarter in terms of our company wide free cash flow of $281 million.
The balance sheet is is growing and is strong again, finishing the quarter with $484 million and Thats a net cash position just given that we don't have any corporate debt outstanding and again just in terms of shareholder friendly initiatives as I indicated spoke to the board did again declared a quarterly dividend of Canadian five cents per share and then just lastly, you look at the.
On the bottom I spoke to these now opening remarks, but I look at sintering business fundamentals.
I think the very well positioned growing as you can see here over the year to date period that all of our operations, we continue to generate meaningful levels of positive free cash flow, but hopefully the key takeaway here.
What.
What certainly excites myself is the offset a job the interest.
As mine I think certainly positioned to be an important.
Good source of high quality low cost production and that's going to bode really well in terms of some terrorists go forward fundamentals.
With that I, thank everyone for their for joining us in their attention I'd now like to pass the call over to Dana operator, and Dana will move us into a Q and a session.
Please.
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Okay.
[music].
And our first question comes from the line of Mark from the holiday with RBC. Please go ahead.
Hey, Thanks, Good morning, guys excellent quarter cash flow here.
Hey, guys.
Third off with whom to or I guess, you mentioned mining rates have been impacted by the longer haul than our workforce availability can you just give us a sense of how we should be eight thinking about that.
The medium term and then to kind of at what point do you need to.
Would that start impacting the production outlook, obviously pad.
You've got pretty big stockpiles there for now in the 2020 output is pretty pretty locked in but kind of when you think into 21 kind of at what point do you really need to start getting.
Direct for either the pits to keep the production profile up.
Yes, Thanks, Mark Dan would you like to respond to that please.
They certainly can Scott thanks, very good question.
Obviously, we've reset ourselves to make sure that.
That said, we have the proper ore feed to the mill.
We've been working on our life of mine update which is not quite ready to release. So we're looking at for next year is production numbers very similar to our our previous life of mine uptake.
[music].
What.
What we've done is obviously, we've reset will we are now mining at at or above.
Updated forecasts internal forecasts, but I, we're not I don't think we're prepared to put out guidance for next year yet but.
We are looking at similar to to the old 43 101.
I think with the longer holes that we will have.
Our mining costs would have been.
Little bit higher than historic but with the lower fuel cost and countering that and the favorable exchange rate. We are seeing costs are approximately about the same per tonne.
Going forward.
Okay, My kind of thing.
Good good just from.
Just from my perspective, I, just want to add as you probably know and I think it was implied in your question all of this year gold production is already sitting on surface and.
Stockpile.
As well as the first nine months of next year, it's pretty much all stockpile inventory.
So as Dan already mentioned when we look at next year gold production profile Marina budget cycle as we speak.
With thing a level of gold production is very similar to what was in the 2021 year and the old 43, 101, which from memory. It was around 517000 ounces.
It's not going to be too dissimilar to what we were previously forecasting for the 2021 year.
Hi, good perfect Thats helpful. There.
I guess, continuing with whom door, obviously, a lot of changes in the country over the past.
The two month period.
Can you kind of give us an update on how you're thinking about it.
Investments in the country during the uncertain transition period that year that we're kind of in right now and also can just.
Quick one give us the cash balance in country in Kurdistan.
Yes, so in terms of.
And in terms of the situation in Kyrgyzstan, right now I think in all honesty muck, we're just doing what we do best which is putting our heads down and just focusing on optimizing the operations at the mine focusing on maximizing production.
You probably heard me speak to this before we just want to make sure that we're always being a good steward of the asset.
We don't pay income taxes country repay gross revenue tax act when maximizing our production levels that means that maximizing our tax contributions to the government.
I think more than ever that said that the sensitivity that we have in the country because not too dissimilar to other jurisdictions around the world They have.
Taken an economic hit sometimes they are calling the contracting so just putting a head down and just staying below the radar screen and not looking to be a part of the political narrative if anything I think the country in terms of the country's leadership.
One big sensitivity is obviously the continued operation that come to mind, just given that we are the largest.
Text contributor in country.
With regard to investment in country I mentioned earlier in your previous question, we're in a budget cycle right now.
We've had a lot of success with that.
Exploration program, we've reported on that previously.
Tender that go forward exploration budget Roy's success, driven so we were actually discussing the board yesterday.
Contemplating a similar size.
Operation program next year in country, and I think thats likely to be approved for me go Corral budget cycle in December so.
Give me a long answer mark with the.
In terms of the business environment, and we continue very comfortable investing in the asset and obviously continuing to enjoy the economic benefit.
Sorry, it's Darren here just just on the final point you had on the cash balance in country. So the set up we have is at all.
Cash receipts from our goal.
Gold sales of deposit into a New York Bank account, so it actually doesnt flyer into country and we this simply disburse.
Our local requirement needs.
Equally so that range is 15% to 20 made at any one time, so some minimal cash is in.
In that the subsidiary.
Okay perfect Thats helpful clarification.
And then I guess.
Finally from me, obviously kind of Q1 free cash flow in the quarter.
You did kind of sound a little more cautious in the dividend press release.
Just given obviously cobot uncertainties.
Dialing in your life of mine updates and budgeting so.
Should we kind of expect an update on on.
Okay.
Additional capital allocation update or potential more capital returns with full year results or do you think it'll take a little longer just to get that confidence and clarity before you make another decision.
I think that's fair.
Lymphoma, if I have to say, it's a board decision when it comes to our level of dividend distributions, we had a lot of discussion around that yesterday.
Automating and I think we'll be discussing and again at our next board meeting, which is in December which is again to approve our budget for next year. So I think it's going to be a.
Ending that gender item at each of our upcoming board meetings here in the short term, it's probably as much as I can say much because I just I just don't want to get ahead of the board, but as you saw in our press release that has been heightened uncertainty this year because of the pandemic and then more recently with regard to.
The the political sort of change over and leadership in country in Kurdistan, but I think as soon as we have good visibility and a good line of sight.
On the guidance and I think that will be an ongoing discussion with the board.
Okay perfect. That's it for me I'll jump back in the queue. Thanks.
Okay.
And our next question comes from the line of Mike Parkin with National Bank. Please go ahead.
Thanks, guys congrats on a really strong quarter.
A few questions here one you mentioned the life of mine update on tour is tracking a little bit behind what you're originally planning should we still expect that to come out in the fourth quarter or four about maybe roll into 2021.
Yes, Mike it's Scott.
Hi, it's hard for me to gauge that there is some follow up technical work that Dan and his his engineering team working on and.
In terms of timeline I would say the latest I would expect that we'd be in a position to hopefully publish it before the end of February.
The reason being Thats when we typically always report our year end reserves and resources for.
For all of our operations, so I think in terms of Val.
At the latest that would be.
Good.
Publishing data.
Okay.
It doesn't seem like it's the case, but has there been any discussion with the interim occurred geese pm.
Census.
Im taking power.
No as of today that has not been any direct discussions with the interim Prime minister on the interim president.
They havent reached out to us.
Likewise, we haven't reached out to them as I mentioned when I was.
Responding to Mark's question, we're just not just focusing on what we do best.
Okay what about.
So some of the or kind.
Kind of like SG initiatives in terms of support with local People's.
With respect to COVID-19 is there any heightened increased to.
Communicate that work that you've been doing in country as a good Stewart.
Yes, I mean.
Do you want to speak for that just because I know you.
Personally leading some of those initiatives are getting.
Well certainly.
I think it was it's very telling to the the the proof of the pudding is in the eating and there was a lot of people in the country.
Lastly, at our local or regional or local.
People that we deal with certainly.
Did not.
Take any aggressive stance against against whom tour, we have a lot of programs, especially lately, we modified them because of coated so.
So we've done.
We've done some very local donations and contributing to the medical supplies in the immediate region and we also contributed a large fund to the to the central government. So that they can be more prepared but we we've had robust.
Community initiatives.
And we've really focused on our environmental stewardship and transparency for years and it really came.
Came to rest.
During this upheaval because we were seeing really almost as the only mining company that was not affected by the political turmoil.
Right Okay.
And just switching over to oxide, it's always had a brilliant ramp up the mining costs are looking quite impressive there relative to what was technical study should we read into that is that sustainable.
Lastly, on lower fuel and favorable FX rates, there as well or is it more just you're on the upper portions of the mine and maybe it's a little easier mining.
To start with how should we kind of think about the performance.
Andrew arms funds. Please yes.
Yes again.
We have a long term contract with our mining contractor.
As indicated.
In our life of mine plans.
There is no reason to think nor guarded this isn't typical ligand, whom toward deep open pit, we're more on the edge of the valley.
So our rates should stay similar and you hit the two key things.
Fuel and FX and just depending on what happens with those but this time it is reflecting very rude slung to money John.
Okay on that is it.
You purchase and supply the fuel or is that through the contractor as well is that where the benefit kind of close for us.
Yeah. Its contractual he manages his own fuel that.
We have benefited with new within the pricing the contract bidding on.
Hi, Brian.
All right great.
[music].
And then with oxide great expectations for Q4 should we expect something similar to Q3 or starting to move into lower grade as early as this quarter.
I think what I'd guide you towards Mike is.
Targeting the top end of guidance at offset on the obviously, we saw it we've done year to date.
67000 ounces.
I'm just kind of back calculate from there in terms of modeling.
Okay.
And then with Mt Milligan to you've got impressive costs.
Benefiting from ample water supply turning off some of the pumping.
Clients can we read into any reserve upside, thereby potentially lowering cut off grade and bringing in some.
Lower grade tons.
Thank you and our sponsor.
Certainly.
As you know we did we did.
Update our life of mine plan only when the year ago. We're obviously looking at that carefully and anytime you have.
Robust costs or get a more consistent higher throughput in the mill. It will have a positive effect. We are studying that along with a few other initiatives that we have.
This time, we're we're not prepared to go forward with a longer life of mine, but certainly that would that is one of our our key goals is to run as efficiently as possible on the cost side and on the production side.
With the goal of that.
It's a large.
Our resource there and and also Dennis and his team continue to explore in the area to to get better definition, an understanding of what is available but at this time, we're not we're not updating our life of mine.
Okay, maybe another way also to look at it too is as you've come across lower grade material that in that life of mine plan is modeled as a waste block, but given superior metal prices.
Vishal cost structure does that.
Yet brought into the mill plan on.
Ever week by week month by month basis.
Given that it's there and you can take advantage of it or do you stick to.
More conservative budget scenario, and then put it to a waste file.
Yes the.
The set up at Mount Milligan is.
Is a much of our waste goes to building the.
The tailings dam, if it is mineralized waste put central asset generating than it has to go within.
Within the tailings pond.
We only have limited ability to stockpile, but right now we're just working on.
The best way to look as a smaller footprint so.
Our strip ratio is still about the same and.
There wouldn't be that much or that or potential subgrade subgrade or at this time, but.
As we see our efficiencies in our cost structure change you would have a bigger footprint and that's that's where you would come across greater.
Okay, Great. That's it for me guys. Thanks, so much.
Thanks.
Our next question comes from the line of Fahad Tariq with Credit Suisse. Please go ahead.
Hi, Good morning, Thanks for taking my two questions first on the production guidance. So you maintained it for the year, which suggests lower production in Q4, but just following up on Mike's question on great maybe talk little bit about what grades you're seeing that come car and Oxford.
Tobar Im just trying to get a sense of how to bridge it because it.
Even the high end of the full year guidance would suggest quite a substantial drop quarter over quarter on production. Thanks.
Then how should we respond to that I mean, we're targeting the upper ends of the gold production guidance at cone taller and.
Then in terms of throughput rates et cetera, I think we are seeing.
Continued level quarter over quarter, I think really we just guiding you to kind of back calculate from there Greg would be I mean, Dan anything that you'd want to add to that.
Right and we were feeding from stockpile. So we do have some flexibility but.
I don't think we can look that specific on forward guidance.
Zero number.
Okay No problem no problem.
My only other question was on the balance sheet, obviously very strong almost 500 million of cash now is there a minimum cash balance that you are targeting before you would feel more comfortable on.
The dividend or anything else in terms of capital allocation.
Darrin I think that really is.
Okay.
When we look at our profile moving forward, we had a strategy session. The board back in September.
Let me just see year over year, we're going to be generating meaningful free cash flow. So it's not like there is a minimum cash balance that we require went up we're not building anything thats great perfect. Moving ahead, we're really just focusing on.
Maximizing existing operation Darrin, if anything that you want to add to that.
No I think I said, we're going to be budgeting cycle, I think that will give us that medium term feature that once again, we will have a lot more thinking and thought around that and to your question, but yes right now the board has got to.
The mid or number but.
Okay. Thank you that's it from me.
Thanks.
Our next question comes from the line of Anita Soni with IVC World markets. Please go ahead.
Hi, Good morning, Scott down and Darren.
Just a question with regards to the capital that.
Was not center contour this quarter is it safe to assume that will get pushed into next year.
Then two months later.
Yes, again again.
Majority of that is deferred mining tons.
We have a limit on how much we can mine in terms of chablis shovel equipment, we have 13 shovels so.
Those tons will be into next year, but we only have the ability to move between about 180, and 200 million tons per year. So.
There won't be an access more next year, it's more a shifting of the access to the ore and we were updating our plans to rate to reflect that.
Going into stockpile.
Okay, and then in terms of the actual stockpile level of Oxys can you tell me how many tons are not great.
Right now.
Yes, we do we have that in one of our write ups for that.
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I don't know specific we in terms of ore stockpile, we have approximately a million tons.
In stockpile and we have about 300000 tons crushed.
It's all in that average.
Good good grade, but we don't really give that specific guidance in terms of the.
Exact grading of that and when we would place.
Okay, and then just looking at the capital expenditures for next year.
So far you are tracking pretty well on the come toward technical report.
You had put out previously for 2020.
Right.
You mentioned that the production will be similar.
Neal Technical report for 2021.
The capital. Similarly, we also have a drop off.
That's from the prior technical front or would that be revised within the technical part that's coming out.
I think yes.
Sorry go ahead.
No I was going to say that there will be some changes.
Versus that segment, where we are it is quite old so.
Go ahead Scott.
Bob you can say that I think the nadir.
In the 2021 year and the drop technical report when most likely envisioning. Some addition to our mining equipment fleet.
Given that the mine life is expanding meaningfully.
You think about the useful life of the composition of our existing fleet.
The current trucks et cetera, they want by weight loss the entire mine life, just given the meaningful increase so putting any taking advantage of.
Upgrading some of those trucks, so that will be a capital item, but the quantum of that capital item I think is insignificant relative to the level of cash flow at the mine produced.
On a per year basis.
Okay. Thank you Thats my question.
Yes.
And we have no further questions at this time.
Okay.
Revenue.
Very good I just caught me they'll have mute. Thank you everyone for for joining our call today.
And.
If there are further questions please reach out to us.
That point in time, we'll end the call. Thank you.
That does conclude the conference call for today, we thank you for your participation and ask that you. Please disconnect your lines.
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