Q3 2020 Eldorado Gold Corp Earnings Call

[music].

Thank you for standing by this is the car shopping malls.

Welcome to the Eldorado Gold Corporation third quarter 2000, she tried she'd conference call.

All participants are in listen only mode and the conference just being recorded.

After the presentation, there will be an opportunity to ask questions.

During the question queue. You May Press Star then one telephone keypad should you need assistance during the conference call you may signal, an operator by pressing star and zero.

I would now like to turn the conference over to Peter like Etch manager Investor Relations. Please go ahead Mr. package.

Thank you operator, and thank you, ladies and gentlemen for taking the time to dial in to our conference call today.

On the line today are George Burns President and CEO.

<unk> Executive Vice President and CFO, Joe Dick Executive Vice President and COO, and Jason Show Executive Vice President and Chief strategy Officer.

Our release yesterday details, our Twentytwenty third quarter financial and operating results. This.

They should be read in conjunction with our third quarter financial statements and management's discussion and analysis of.

Which are available on our website at <unk>.

Also been filed on SEDAR and Edgar all dollar figures discussed today are in us dollars unless otherwise stated there.

We will be speaking to the slides that accompany this webcast you can download a copy of these slides from our website <unk>.

Well, we begin I would like to remind you that any projections concluded included in our discussion today are likely to involve risks, which are detailed in our 2019 AI up and in the cautionary note on slide one.

I will now turn the call over to George.

Thanks, Peter and good morning, everyone before I get started I'd like to give you a brief update on the earthquakes that hit Western Turkey, just a few hours ago.

Our operations are Unimpacted at this point and our employees at the sites are safe.

Early indications there has been some significant damage to buildings in the Turkish province of his marriage, and so well continue to monitor the situation.

It was the outline for today's call.

I'll give an overview of Q3, along with some comments then I'll pass it to fill to go through the financials.

Joe will follow by reviewing operational performance and then we'll open it up for questions.

I'm excited to be reporting another outstanding quarter.

We delivered across all metrics, both operationally and financially.

Production increased by 35% year over year, and we had another significant quarter of free cash flow.

I'm also pleased to report, we completed 58.6 million in debt reduction announced in Q2, and our balance sheet is in great shape with over 500 million in cash and equivalents.

We continue to make progress in delivering value for our shareholders across our portfolio.

Joe will speak more to kiss, a dog, including H.P.J.R. and the Mark So I won't get into detail here, but.

But I want to highlight a few key developments in Greece during the quarter that demonstrate the progress of ongoing engagement with the government.

We see these incremental steps as positive indication that the sentiment in Greece is becoming more supportive of our projects.

At Skouries work advanced on relocation of an ancient mining furnace from the open pit area as you can see in the picture.

We intend on moving this artifact to a prominent area near our site office, where it can be displayed for visitors to see.

This is a great reminder, that help could DKI isn't historic mining area that is supported mining activity all the way back to the era of Alexander the great.

Also during the quarter, we receive renewal of the operating permit for Olympias with an annual production limit raised to 470000 tons per year.

I'm also happy to report we received surface drilling permits at Stratoni in the quarter.

These will allow us to complete step out drilling we potentially expand the mabus petrus ore body.

Before I hand, it over to Phil perhaps a few words on how things are advancing injuries.

The transfer agreement negotiations are progressing.

And support from senior government officials was evident during the quarter with the minister of energy and environment visiting our Skouries site.

Greece continues to represent a fantastic growth opportunity for Eldorado and we believe it's not currently reflected in our valuation.

Skouries and Perama Hill, our world class assets that will add significant value for our investors local communities and the Greek state.

I'll stop there over to you Phil.

Thank you George good morning, everyone.

Starting on slide four we provide an overview of El Dorados financial results for the third quarter of 2020.

Once again, we had a very strong quarter.

We delivered on our key metrics and the headline is strong free cash flow generation.

$117.2 million in the quarter, a significant increase from 16.7 million in Q3 of 2019.

Year to date free cash flow totaled 187.7 million in the first nine months of 2020.

[laughter] Eldorado generated 287.6 million and total metal revenues in the quarter. This.

This includes $264.3 million in gold revenue, an increase of 70% to 76% over the comparative quarter in 2019.

The increase was a result of higher gold sales volumes.

Of 137007, no four ounces in Q3 2020 compared to 99241 ounces in the third quarter of the prior year.

The increase in revenue also reflected a higher average realized gold price of 1900 and.

$19, an ounce in the third quarter of 2020 compared to 1500 $13 an ounce in the comparative quarter in 2019.

The company reported net earnings to shareholders in the third quarter of 41 million or 24 cents earnings per share.

After adjustments to remove foreign exchange losses finance costs related to the redemption of senior notes and the gain on the sale of Villanovan the quarter adjusted net earnings for the third quarter amounted to 56.7 million or 33 cents earnings per share.

This was a significant improvement over both the third quarter of 2019, which reported adjusted net earnings of $7.6 million or five cents earnings per share.

And the second quarter of 2020, which reported adjusted net earnings of 43.8 million or 26 cents earnings per share.

The increased adjusted net earnings and entered its per share in Q3, 2020 reflect higher gold prices and higher gold sales relative to previous quarters.

EBITDA for the quarter was 162.5 million.

After removing certain noncash items adjusted EBITDA amounted to $163.9 million. This.

This was a material increase over EBITDA of 73.2 million and adjusted EBITDA of $75.9 million in the third quarter of 2019.

Depreciation and amortization charges increased to $65.5 million in the third quarter of 2020.

An increase from 40 million in the in the comparative quarter in 2019, reflecting higher production and higher sales volumes.

A significant portion of our property plant and equipment depreciates over the mine life of our producing assets on a on a unit of production basis.

Calculated based on mineral reserves this results in higher depreciation higher depreciation charges as production increases.

Finance costs were $19.9 million in the third quarter of 2020 compared to $13.2 million for the comparative quarter in 2019. The increase was due to the premium paid on the partial redemption of our senior secured notes combined with deferred transaction costs.

Income tax for Q3, 2020 amounted to $38.7 million for the quarter compared to $15.9 million in the comparative period of 2019.

The increase was primarily the result of significantly higher net income before taxes in Q3 of 2020.

As a result of higher sales and a higher gold price.

We finished the quarter with $504 million in cash cash equivalents and term deposits and approximately 32 million available under the revolving credit facility.

Our liquidity remains very strong and provides optionality to support development of growth opportunities in our portfolio.

El Dorado continues to reduce debt and completed the 58.6 million equity claw back redemption on the senior notes in August sooner.

Senior notes outstanding are now at 241.4 million as of September Thirtyth.

And we'll be reduced a further $7.5 million in December.

Net debt is at 0.15 times EBITDA at the at the end of Q3 2020.

This is a significant reduction from net debt at 2.2 times EBITDA at the end of Q3 2019 and reflects a much stronger balance sheet compared to year ago. The company also expects to be in a net cash position by the end of the year as we continue to generate strong cash flow and reduce debt.

We also expect Q4 free cash flow generation to be impacted by the timing of capital spending as we look to complete our capital projects for the year.

Moving on to slide five.

El Dorado continues it continues to show solid improving performance quarter over quarter and continued delivery of strong financial results. These graphs demonstrate the impressive turnaround in financial performance over the past 18 months.

Adjusted EBITDA and adjusted earnings have increased significantly significantly in each of the past two quarters and cash generated from operating activities and free cash flow have established significant highs of 165.4 million and $117.2 million, respectively. In Q3 of 2020.

Overall at the end of Q3 2020, the company's balance sheet is solid with a strong cash position.

Reduction as a demonstrated priority.

Free cash flow generation is sustained and the company is reporting higher earnings.

I'll conclude on that positive note and we'll now turn it over to Joe to go through the operational highlights.

Thanks, Phil and good morning, everyone.

Q3 was consistent with Q2 from an operational standpoint, as well as with our expectation.

Good.

We produced 136922 ounces of gold in the quarter.

Cash operating cost of $537 per ounce sold and all in sustaining costs.

$818 per ounce so.

It's worth noting that in the market had a record quarter as the ramp development reached the top of the higher grade C zone.

Looking forward, we are maintaining our 2020 guidance, but expect to be at the lower end of the production range a significant accomplishment given the 2020 operating environment.

We continue to operate efficiently.

Rick Health and safety protocols and tracking systems in place in order to manage the risk recruitment 19.

We have activated our cobot protocols and site, including the management positive case at Olympias in September. These protocols were as expected and were able to resume normal operations in short order.

I'm proud of the agility of our teams as they continue to effectively adapt as we form new.

Operating.

Here on slide seven.

We have some further color on developments at our operations during the quarter.

The flotation columns, one installed at Duke.

And commissioning is underway.

As a reminder, this increase the quality of our concentrates reducing shipping costs.

We expect to begin realizing value during Q4 as commissioning.

And so on.

Jason begin.

Mhm underground development has reached the top C zone.

Great. So that as you can see from the picture is larger than C and C too.

We'll take our first stope from see forward in the fourth quarter.

This production comes a bit when we planned and it's helping boost the production gap created by the mandatory provincial Qubits extension.

During Q2.

Our underground crews are currently advancing the decline from triangle toward the Sigma Mill Weve completed 200 meters to the end of September.

Additionally, the contractor has mobilized and completed the necessary prep work at surface and started advancing from taking the mill toward.

Brian will deposit as of this week.

[noise] overdue olympias.

Where we recently renewed our operating profit, allowing production levels of up to 470000 tons per annum.

Underground development, along with continued operational efficiency improvements we remain focused element.

As we continue to ramp up the mine.

[noise] over to Kisladag I'd like to mention that we are in the process of updating our technical report for Perama Hill.

And have them off the engineering work will complete this year.

I'll be available to assist you.

Work the updated capital through our investment framework in concert with the 2021.

Process.

[music].

I'd just add production was consistent with Q2.

Reis continued to be as expected.

Our solution volumes and AD inventories remain higher than anticipated.

Okay.

What we are doing I, just would add I'll give.

A quick recap of 2020 to date.

In Q1, we experienced higher than normal precipitation in Pakistan.

Based on the pad.

During Q2, we began to recover the place tons deficit, we lost the bid round on pad maintenance and operations due to reduced staffing, resulting from our early stage with actions.

During Q3, we cool the tons placed gap and started to return to normal pad operations.

We also began to advance the word we had planned as we.

After the new mine plan early this year.

To provide a bit of background on line three projects that we have underway.

A new process.

So were more pregnant solution, eliminating the need to reach circulation. Please circulate solutions.

As has been the standard this year.

The project will be completed by year end.

Ross we have against the installation on going for two additional see I see great increasing our solution capacity processing capacity by 40%. This.

This project will be completed during Q1 2021.

Also replacing the carpet cone region.

Regeneration kiln.

We increased and as a result, our activated carbon capacity. This project is scheduled for completion during Q2 2021.

I mean, all these projects complements the HPG our project, which is scheduled to come online in Q3 of 2021.

Before I wrap up I would also like to add that are ongoing composite sampling and column test.

In Q3 from our recovery.

As for our mine plan with that I will turn it over to George for closing remarks.

Thanks Joel.

So wrapping up I want to thank Mike price, who stepped down from our board of directors at the end of September.

Served on the board for 10 years, and we wish him well in his future endeavors.

As a reminder, we welcome Judas, mostly to our board effective September one.

Your disappointment transgender priority for our board.

And exceeds our goal of having 30% representation of women by 2022.

I'm also very pleased to add that Lisa or has been promoted to executive Vice President people on external affairs. This is a testament to the great work that Lisa has done and strengthening our corporate culture people practices over the past two years.

In conclusion I want to emphasize the continued positive results, we again delivered this quarter.

The groundwork laid throughout 2019 continues to pay off and as reflected in the upward trajectory of our share price.

Which we expect to continue as we unlock value in our Greek assets.

Our solid operating performance combined with a balance sheet that supports near term growth and our energy and drive to execute positions us well for sustained value creation.

When combined with record gold prices and several potential catalysts in Greece and come back.

El Dorado offers a compelling value proposition.

Thank you everyone I'll now turn it over to the operator for questions.

Thanks.

We will now begin the question and answer session.

Our next question.

All right.

Hello.

Sure Tony.

If you are using a speakerphone please pick up your handset.

Yes.

Given to try the question. Please press star two.

Hello.

Joining me Sir.

Our first question comes from Mike Parkin.

Please go ahead.

Hi, guys. Thanks for taking my questions.

Congrats on a good quarter.

First on reserves and resources, we should be getting that update in a couple of weeks correct.

Yeah, we do our reserve and resource update in the fourth quarter and last year, we put it out in November expect to do it again this year.

On that.

Is there anything you can share with us like a max out with season, having some really good exploration.

Success can you just give us a bit of a recap here you're doing some internal work and some of the deeper lenses. So we should expect more than reserve replacement I think is a fair assumption to assume a Mac for this update.

Yeah, Hi, Lamar specifically Weve had a good year of exploration really two focal points infill drilling to convert inferred resource to reserves in the top five veins the deposit so expecting some good results there and as you stated expecting to replace the reserves and.

So some.

And then in the deeper part of triangle.

Continuing to drill to expand those inferred resources and and again expecting to have some good results in our in our release next month.

I went about or Mac is there I guess, it's a bit early to the discovery holes were encouraging but are you looking to get into a better position to drill it off with the.

The ramp that you're putting in or are you doing you're looking to do.

Yeah, our target like.

A bigger resorts from surface drilling.

So this year our focus has been on our mock has been the continued drilling from surface to either.

Turning to the full potential of that new discovery and so we've had success.

And we'll be updating the market with with a drill results in the fourth quarter and our geologists and engineers continue to assess that new discovery in and we'll look to update the market on that regard as well.

Okay, and then switching over to <unk>.

Sorry.

Hi, I was just going to add up to your point about the decline.

I mean, one of the side benefits of the decline is the ability to drill some.

Some of the satellite deposits outside the triangle and definitely our mock is well positioned for drilling once that declines in the position where weve got drill stations.

Super.

Switching over to the the noncore asset sales.

Great update there on Villanova being sold you mentioned that.

Others, Yes, some form of process, taking place Atoka answer Ted can you give us a bit of color there is that right.

Are you getting inbound interest more.

More just initiating the process with advisors.

Testing the waters for interest any color would be appreciated.

Sure, Mike, It's Jason and so.

What we're doing is evaluating.

It's probably the way to characterize it like.

Valuating strategic alternatives as it relates to those assets and you know what we are seeing obviously as a more supportive and constructive environment for for gold.

And market just generally speaking so.

So it's just an initiation of evaluating the different alternatives for today's Ed and bulk answer Tesh is probably the way I'd characterize it.

Okay.

All right Super.

That's it for me thanks, guys.

Thanks, Mike.

The next question comes from Tanya.

Thanks.

Hi, Good morning, everyone can you hear me.

Yes good.

Good morning, Good morning, Hi, yes, I have a bit of that.

Fourth quality the event now and for me. So I may have missed some of the information that you mentioned, but I wanted to just circle back on a couple of technical things. The first one is just on the reserve is then.

That Mike was talking about in terms of that upside at Mack Cali.

Do we how do we see Kisladag and just the recipe assets looking because we were impacted with coal that over there in terms of you know people on site can stop or for drilling.

Well in terms of Canada, there's been no drilling at Kisladag, we've we've drilled that deposit out at least the open pit potential the deposit. So there is no no drill result, as always we'll be updating engineering analysis.

Metallurgical work and and and checking the optimization of the pit so that that's underway.

Fmbs you grew real we've been fairly successful at extending mine life through.

Reis inferred resource conversion, so thats continuing to be a focus.

So there will be an update there.

In Greece, we've got multi decade mine life and those assets. So nothing significant there with this with the exception of Mabus Petrus there we've done some drilling from underground that helps us.

[music].

Designed in the surface drilling that we're we're we're embarking on as we speak so.

I'd say the highlight definitely will be a mock again, we're we've got great potential to extend mine life, there and it's a significant part of our our exploration budget.

And then an update on this that as well.

Just to make sure will you be using the same reserve and resource pricing as you use last year.

Yeah were you isn't 1300 dollar gold price.

So the remaining conserve.

For reserves yet.

And if I could ask him Joe just on the on Kisladag and let Mac this session.

If we just on Kisladag and I know you talked a little bit about it I had to add clarity. She was my follow on I just wanted to understand the.

You have more than you know you have more gold and evolution and you expect that my understanding is that you really January didnt have time to profit or on the Pat you've got there as you put it in and ask sorry in Q1, you put it in on on the pad in Q2, and so are you, saying that just Q2 in Q.

Three which as you know 60 days.

Switching gears wasn't enough to it to get it out and we're expecting a I think a bump up in Q4 for production.

Well I think you've got it.

Generally correct. So in Q1 it was the the heavy rains that kept us from.

Stacking.

Everything to plan on pad, we began to close that gap in in Q2, and then kind of got there in Q3, but we were complicated a bit in Q2.

It is.

Cool bid and lower man power, So we got a bit behind on on patent maintenance ripping schedule change so all of that so weve.

Retention.

That.

We will be looking to get a little bit higher salute solution flow rate during Q4 were.

Looking to get more meters under irrigation, but.

Expect us to be relatively consistent with.

Last couple of quarters.

Okay helpful.

And so thats why we are going to be towards the lower end of the guidance is really because okay with that.

That's that's correct, Okay, and then if we can move to let Mac.

You talked a a and in your release about amend rail and some of the.

Application, having Mac with that equipment can you walk us through what exactly is happening now.

So we have the mineral equipment in a test so and we have been.

Monitoring data or working to get it into a.

Productive mode over most of towards the tail end of Q2 and into Q3.

Yeah, and I would say that the the results or mixed we're finding that the method.

The method shows promise.

And and were working through issues in kind of getting the equipment adapted to newmont.

I think probably our biggest focus is determining I'm.

I'm going to how much inventory.

Is adaptable to the to the method and it gets to determine how much continued energy we wish to put in so.

So we're still in process.

When you say the equipment to get adapted to let Mac what exactly.

What's the Adaptational what seems to be this year.

It's not a dynamite.

What I think is we put the equipment into the mine.

The.

Better.

Medals around.

Mucking device, so that's given us a little bit of a little bit.

I'm trying to make sure that we keep.

Availability right.

Equipment.

Just generally kind of commissioning and working.

What is really.

Pilot.

R&D so.

We've made progress there, but we did achieve the crane they look at that.

No.

Foretells.

Consistent production levels, but we are making progress.

Okay, I guess, we'll continue to monitor it quarter over quarter.

And then maybe if I could you know George can circle back with you on Gleason Congrats on the progress being made Darin you mentioned the minister of mines in environments like Oh, My kids to scoring.

Are there plans for the person to go to Perama Hill and Atlanta. So it's added are they doing due diligence on these assets I'm just trying to understand.

How you know that the site visits Jose just part of the plan of moving this into the framework just trying to understand what.

You know how we're progressing there.

Sure I mean, the reason for the ministers will visit to the Skouries is that's really we believe the first catalyst in the pipeline.

For for a couple of reasons its a.

Yes.

On our schedule or anticipated schedule skouries.

We believe will be delivered faster than let's see us perama.

Okay.

So is it safe to assume they're going asset by asset that's it so where we stand story than now and working on the framework that once we get at.

Second and third the site visit another is that a good way to think about it.

Yes, I mean, essentially I'd say, the permitting requirements and timelines are driving.

The fact, the minister went to Skouries first though.

For Skouries.

We have an EA that needs to be modified to deal with dry stack tailings.

As you know is a massive improvement in risk mitigation. It's also.

Reduces the footprint of the site increases water recycle. So it's a it's it's a really good improvement to the design of the operation. So it's it's a simpler permitting process to get that EA modified.

In the case of Olympias, we plan to expand the throughput through that plant by about 50%.

And as such will be moving more out of the underground more ways.

We'll be processing more.

We'll increase our rates of disposal in our state of the art Kokan all because.

Lying tailings disposal facility and so all that requires the appropriate regulatory reviews in terms of impacts on on air noise water.

And our designs are silent again this is a dry stack cemented paste backfill disposal system.

And the the filter dry stack tailings is going into a state of the art line facility.

So im very confident we will get the permit.

It takes time to work through that process and that process will require public consultation at olympias, because there are environmental impacts that have to be considered.

And then Perama. We don't currently have any idea. So we're in the process of re optimizing the project with with current European in Greek regulatory requirements, and so that that will need to go through public consultation and it's a bit further behind.

Skouries and probably olympias so.

The reason for the attention on the Skouries from the Minnesota Minister is that that one is likely going to move faster and we were happy to have the minister at sites and and again, we're making progress and I remain confident that we're going to deliver value. In these these assets and I think that positions Eldorado very well.

Against our peers.

No I appreciate I Didnt appreciate George that the Olympics, but I just thought it would be an amendment to your current permit to increase your throughput I didn't realize that with the amendment came public consultation.

Oh, I didn't realize that and maybe just on the airframe work you know how.

How are we progressing on the financial aspects of the framework.

And we're progressing well there I'd say the.

We lost some momentum like during during the cold weather.

Crisis, So both El Dorado and the Greek state did what we neither do we focused on safety and health of our people and.

And so we didnt have a lot of progress in discussions but.

Thats changed I mean, both the government and Eldorado, we're committed to negotiating a fair deal to get these investments.

In the production and deliver value for.

For the for the Greek state for the local communities and for Eldorado and our shareholders and I'd say the most important factor for Eldorado discussions is that we have a bankable deal. This.

Takes into account the store suits.

We've had a piece and confident that we'll deliver that.

And do you feel you have moved up in probably already.

And thereafter in terms of about you know their priorities.

Well I mean.

Hi, Minister Mitsotakis in his campaign so.

Cited the Eldorado investments is one of the top two priorities for Greece, and so we remain at the top of that list and and again I'm confident we will be successful.

Okay. Thank you so much.

Thank you.

The next question comes from Kerry Mary.

Pardon me Mccleary with Canaccord Genuity. Please.

Gotcha.

Hi, Good morning, maybe just another question on Greece, I mean, presumably you can get the Green light. There can you just talk a little bit about your thinking on how that project moves forward from here.

That's correct specifically.

Sure I mean the.

I believe there's there's really three catalyst.

That we need to deliver an order for the executive in the board to.

To approve restart of Skouries construction.

The first is the this bankable agreement that we're negotiating.

The second is the modification for dry stack tailings.

And both of those are advancing well.

When we have both of those in hand, it sets up well.

The financing will need to put in place to to move forward with the construction.

So once we have those then then we're in a position as an executive team and our board to approve restart a construction just a reminder.

We spent nearly half a billion in construction of the operations roughly 50% constructed we.

We have about $700 million in capital remaining.

A lot of work to be done on the underground in terms of development and test stoping.

The tailings.

Area will have a an erosion control them downstream and that needs to be constructed.

The primary crusher needs to be constructed the main body of the plant is pretty well in place so theres lots of piping and electrical work.

And we think it's about a two two and a half year construction period.

So again.

My view is these catalysts are moving wall will.

We will be in a position next year to restart construction is my belief.

And maybe just two more questions is the plan still that bring in a partner at Skouries or would you go it alone and then secondly.

How is the relationship with the community level.

So on the first question our primary strategy still remains to enter into a joint venture structure likely at the Helos level.

We think we think that is.

The optimum solution, but that would be candid. Once these cat catalysts are delivered we will be able to further the discussions with the current interested parties.

I think there's enough well I don't think there has been increased interest in the opportunity with the uptick in gold price and as you know as we are moving forward with with the opportunity in Greece. So we'll be looking at every alternative but at this point management and the board. Thank you.

A joint venture structure is as likely preferred outcome.

On the second question the local communities.

I think theres, a perception of wrong perception that we don't have strong community support.

The villages around our operations and healthy DKI.

Our historic mining communities and we have strong support out of those villages like everywhere around the world. There are individuals and groups that that are concerned about the impacts for mining.

I firmly believe being a veteran in this industry for for multi decades that that our operation designs in Greece are best in class.

We're deploying dry stack tailings, we've got monitoring systems that are publicly.

Favorable 24 seven.

We're very transparent in how we operate and we're meeting our regulatory requirements in Europe in Greece. So.

We've got strong local support and and.

Confident that we're going to get the permits we need in the agreement we need to be able to move forward.

Great. That's helpful. Thank you.

The next question comes from partners.

Please.

Hi, Thanks, Thanks, George fill Joe and Jason.

Maybe my first question is on Turkey here, you know clearly the Turkish lira has been depreciating.

I guess from that perspective, as we've talked about in your end DNA, it's actually been positive in terms of the cost impact your cost has come down for Us D.

However, I guess my question is number one how much you know of your costs in Turkey or didn't actually denominated in the lira and number two you know any comments on how you concern of any kind of risk that could be brought about by the depreciating Turkish lira.

So George all maybe answer as a high level and Phil can supplement.

So I mean for sure we've seen a positive impact on our cost given.

The impact of the lira exchange rate.

I would say to be further historically when this has happened in the past and I expect it will happen again this time as inflation kicks in.

To your question roughly half of our cost or turkeys denominated and largely that's labor labor on our workforce and contractors and.

And so.

So.

We will see an inflationary impact in our cost that will erode at least some of that Turkish benefits. So no.

Moving forward you can't bake in the benefits that we will see an impact an.

An inflationary impact on our cost structure.

So.

Anything you'd add to that sure George Hi, Cosmos so.

I think overall to answer your question where.

We are well aware of the.

The escalating headlines in Turkey.

And the.

The currency risk. They just went through a bit of a currency crisis with.

With depleting their currency reserves.

From a from an El Dorado perspective, I mean, we've we've we're taking appropriate measures to ensure that our occur.

Currencies are.

Not.

Significantly at risk in terms of being in country, we we manage our funds.

Good day to day.

And any funds that we deem to be surplus not required for payroll are paying taxes or operating costs any surplus funds. We we moved those funds off shore.

And so I think from that perspective.

Thats.

I think thats pretty consistent with other companies that are operating in Turkey, as well, we keeping in regular communication.

And we we talk about the any developments that are happening within country, but I think at this point.

Just from talking to the teams that are on the ground in Turkey.

Those those.

Yep appear at this point to be to be adequate.

We do have.

In terms of managing our current requirements.

We do have two different.

Two different operations in one traditionally provides.

Proceeds sales proceeds in lira and one traditionally provide sale proceeds in us dollars. So we can.

We can effectively manage the balance.

And that that definitely.

We don't have to do any unnecessary currency transactions.

So I think from that perspective, I think we're in a pretty good spot.

Of course.

And then as a follow up then.

With the HPG Kisladag.

I guess number one how are you managing that currency is there any kind of currency risk or is it all on U.S.D. and then number two as you talked about I think Joe I caught you and you said you know it's scheduled to be completed sometimes Q3 2021 have you factored in any allowances.

Or COVID-19 as Youve seen any have you seen any delays in terms of you know.

Potential delays based on KOVA 19, and any risk in terms of delivery on the HPG.

So maybe I can address the currency risk question first and then Joe can can talk with HPG are so you know in terms of the the the cost of the equipment and so forth if the contracts or new SD, we do have sufficient USBC.

Within a within our holdings.

And as I mentioned earlier, Kosmos, we do have lira generated as well so we can manage that.

Quite effectively so theres really not not much currency risk when it comes to the project.

Joe.

Hi Cosmos.

Hi, Joe.

How you doing.

We are still on schedule for equipment.

Livery. It was targeted at about 11, which that's still remains the schedule. We did have we did have some issues earlier.

Early on through engineering, and information back and forth between.

We're in sight.

Largely in and.

We are still scheduling to get concrete.

This year.

So I think we're we're sitting reasonably reasonably good.

We don't have we haven't put a lot of contingency in schedule for <unk>.

Co bid.

Although.

A bit on so we're attempting to manage schedule on ongoing basis as we look forward in the quarter.

Early chunks based on what's going on.

So the risk is there, but it's pretty hard to quantify you know, it's a moving target and we've kind of kept ourselves.

A bunch of contingency pushed project alone per schedule and.

Yeah.

With the adjustments as necessary we we.

Communication with we're on delivery.

And.

Actually look to get a representative into Amsterdam facility to see projects progress for sand.

Mhm pusher.

Maybe one last question on the Mac here.

No of course, good to see that you now have received the permit for 26 50 tons per day, that's been a while back.

My question is on throughput here and I want to fight divide.

Quarterly tonnage at all by the 90 days or plus or minus I get to about 1921 tons per day can you remind me in terms of you know your throughput.

And how are you expecting it to ramp up to 26, 50, and one is that going to happen.

You know, we're still we're still in the.

And as the business planning process, but generally we're we're a couple of years.

Into the late.

Hey, 2022, early 2023, where were hitting 25 range roughly.

Okay. So is it is it kind of like a straight line or is it more slowly going to stick around the 2000 tonne per day level for now and then there's a quantum leap how should we how should we model.

It's a bit of a ramp up so you know it's.

Pretty close to straight line.

Got it cool.

Thanks, everyone.

Sorry.

Excuse me.

Thanks, those are all the questions I have anyway, so thanks, George and team and have a good weekend.

Thanks Cosmos.

The next question comes from Kerry Smith.

Sharon.

Thanks, operator, good morning, everybody.

I don't think the Joe or or.

Thats flowing through as well.

Hi, Alan.

Cause will continue that you're doing for perama.

Yes.

Yeah, I mean, Mike we're working on it as we speak.

So the the Perama timeline really factors around the strategic investment law that was passed in Greece, the fourth quarter of last year.

And and our anticipation for that is second half of next year. So we're we're working on the technical documents to support that.

Yes.

And I don't have a definitive time for you, but it's obviously well ahead of of getting approval in the second half so.

No I guess I'd characterize that you can expect an update on that.

Some update perhaps with the mineral reserves mineral reserve update this quarter and then further updates in the new year.

Okay. So just to be clear you are expecting to file.

Second half of next year is that correct George.

No, we're expecting to be able to get an approval on.

The strategic EA in the second half of next year.

Okay.

And what does that mean exactly.

Well it means we re submitting it either fourth quarter or first quarter of next year, probably first quarter of next year.

Okay got you.

Okay.

And Phil can you quantify in dollars per month per quarter or dollars per year. What it is costing you for only the all of your coal that.

Cost, whether its testing and then pp et cetera et cetera, like I'm just trying to most people are most companies are getting that number I'm just curious what your number is.

Hi, Gary.

Don't really have a definitive number to give you at this point, but I can tell you it's not a.

Got a signal costs.

We've entered into some new programs and.

Put in some.

We got a new tracking system for example.

That tracks our employees on site.

Which has been very effective we've got other programs you put in place to ensure proper proper protocols.

Workovers, but overall its a.

I wouldn't say, it's a significant number but you know I can.

I can take a look and get get back to Kerry with an estimate.

Okay, but I don't have anything off.

Yeah, I might just supplement that answer I think Amy if you really look at the impacts we've had so far.

You talked PE or some of these systems, we develop there they're not material.

I think if you want to talk about the most significant impact it was really when we reduced our total manpower by about 25% in the early days the poll that and if you recall, we did that when we made the decision to protect our people and then our business so any of our employees or.

Any of our employees that had family members that were in the high risk category.

For coal that we asked to stay home and that manpower by about 25%.

Obviously those people weren't at work getting work done and we paid them. So that's been a really only significant impact and I don't have a number for you, but Phil can can get that.

Right. Okay. Okay, Great and then maybe just one last question you talked about adding the new.

New lines of carbon columns at Kisladag, which is going to improve your capacity by 40% does that mean that the extra golding in inventory that you've guided is.

Going to come out in Q1, when you bring those online or will you have been able to drive down that inventory between now and then and it really won't have a material impact on on your gold production over and above what you normally would have produced in Q1.

Joe maybe I'll take that question I know you are aligned seems to breaking up a bit.

Hi, good inquiries.

And if.

If I Miss anything you can jump in.

So yeah I mean.

Maybe kisladag in general.

The way I would look at it at a high level.

We were a little bit slower, placing the tons and recoverable ounces on the year, but as Joe stated, we and that was due to the wet Q1, and we've made that up in Q2 in Q3, So first point as the ounces or on the pad.

The second point, Joe made is that all of our test ongoing test work on the actual material place continues to indicate our recovery assumptions are solid and balanced.

So thats an important point.

Where we are we have.

They made the statement that kiss at August.

Trending low on the production relative to our expectations for the year.

And it's really all about rinsing those ounces out of the pad.

So.

The impact from coal when when we have that lower manpower number we didnt have we had to decide what wasn't going to get done and one of the things that slipped was our ability to rip and refresh the emitters that deliver the solution to the top of the pad.

And as a result, we haven't got the volumes of water through the crushed material and as a result were little slower pouring the goal than we expected, but the ounces are there.

And were our manpower levers are back to normal. The crews are are catching up and it's just a matter of time to get those ounces through so that's kind of a summary of the year again now to your question on the Hbr plant expansion.

We process about 78000 cubic meters of water a day through that existing HDR plant in.

And as Joe said, we're going to expand that by about 40%.

And the reason is that.

We have roughly that 40% solution is coming out of the bottom of the pad and we can't process at all.

So the 78000 to go through the plant, but the balance up to about 92000 cubes.

As being researched related I.

I think the tail out say on the plants around a 0.4 gram per tonne.

And the solution, we pump back to the pads like Oh wait.

So I think that by itself tells you that not only did we have higher volumes in the pawn from a wet winter that.

Largely in.

Back into Q2, and early Q3, those that solution inventory dropped we have this re circulating load of gold going back to the pad because we can't process at all so once beam.

Team gets that Aer plant expansion, we should be able to process.

All the water that comes out of the pad.

And in produce but the goal more timely basis, particularly during the wetter season. So.

I think this is a really good move.

I think the other point is we did expand or we're in the process of expanding our pawn capacity levels in that I think is also supportive to me.

Managing this inventory better going forward.

Okay.

Okay Thats helpful. Thanks Serge.

Oh.

George only thing I would add is.

Just remembering it's a long lead cycle that kisladag.

150 days Leach cycle. So it's.

Things take time to react.

Yeah good point.

Great. Thank you.

This concludes the question and answer session I would like to turn the conference back over to Mr., George Burns for any closing remarks.

Thank you operator, and thank you everybody for tuning into our Q3 results look.

Look forward to a.

Further updates as we continue to add value and deliver value to our shareholders have a great weekend.

This concludes todays conference call you may disconnect your lines. Thank you for participating.

Okay.

[music].