Q3 2020 Hycroft Mining Holding Corporation Earnings Call
At this time all participants are in a listen only mode.
After the speaker's presentation, there will be a question and answer session.
That's good question during the session you will need to press star one on your telephone.
Please be advised that todays conference is being recorded.
If you require any further assistance please press star zero.
I would now like to hand, the conference over to your Speaker today Tracy Tom. Thank you. Please go ahead.
Thank you Lindsey good morning, everyone. Good afternoon, depending on where you are.
Thank you for joining us today, we will be discussing our third quarter 2020 results for which we filed our form 10-Q with the Securities and Exchange Commission and issued a press release. This morning. The press release can be found on our website at www Dot Hycroft mining dot com.
Please read the press release and listen to this call in conjunction with reviewing the form 10-Q, which contains additional disclosures also please note that some information provided during this call may include forward looking statements that involve risks uncertainties and assumptions, even if the risks or uncertainties have been materialized or the assumptions prove incorrect. These results may differ materially from.
<unk> those expressed or implied by such forward looking statements also.
All statements other than statements of historical facts or statements that could be deemed forward looking a discussion of some of the risks uncertainties and assumptions are set forth in more detail in our press releases and SEC filings, including the most recently filed form 10-Q, we assume no obligation and do not intend to update such forward looking statements I'll now turn the call over to Dianne Garrett President.
And CEO.
Thank you very much Tracy and I'd like to welcome everybody to the high Cross mining third quarter conference call I am dying parent <unk>, President and CEO Hycroft mining as of September Eightth well.
With me today, and what am I Gonna, Nevada is stand right out who is our executive Vice President and Chief Financial Officer, Our recently appointed New Vice President and General manager, Mike Ais a line and Tracy Tom could you just heard from Vice President Investor Relations and corporate communications and on by telephone at our Denver Office is just steeper.
As our senior Vice President Finance and Treasurer.
I'm happy to see all of the many callers on our line. This morning. So we welcome all of you and thank you for being with US as we lay out the details of our third quarter and what her observations are in here, where we're moving forward with the project.
My first address to all of you in the market as the new President CEO of Hycroft and I'm really excited about talking to you today I know I've spoken a lot with many of you on the phone already and certainly welcome all the calls I think a lot of people have my contact details and feel free to reach out anytime are always available to our shareholders and certainly interested parties.
Oh, but today I'm gonna be communicating with you my views of the projects since coming on board. Some of the changes that we've made actions that we've taken on and our plans going forward at the 2021 and beyond.
The way my opening comments I've got it then I'll step right out to review the highlights of our third quarter financials, followed by my eyes, Allied who will report on the operations update and then well open the call up for questions from the audience.
So first and foremost let me just say that I'm very excited to be part of this project is a world class asset our gold and silver mineral reserves and resources place Hycroft among the larger scale mines in the world at a place of jurisdictional safety, which is becoming more and more important everyday in our industry.
Our current life of mine reserves are estimated at just over a billion tonnes grading 0.011 ounces per ton gold.
0.425 ounces per ton silver and that generates a current mine life of approximately 34 years. If you will have noted from our technical studies.
Our total resources, which are exclusive of the reserves currently stand at around 393 million tonnes grading 0.009 ounces per ton gold and 0.277 ounces per ton silver.
And in addition, there are numerous opportunities for increasing and expanding these resources and reserves and while the focus primarily is on the continuing and continuing improvements of our proprietary Tuesday sulfide oxidation heap leach process.
We think there there will be some attention spent on expanding our reserves and resources throughout our district as well, but our first focus is the continued start up and subsequent ramp up our operations.
In my first two months of leading this team I spent a lot of time at the mine site. In fact, all of my time at the mine site and for the foreseeable future I anticipate continuing to reside in one of my guess.
I've been working from the ground up to fully understand our project our processes our strengths our challenges and also the opportunities that we have before us with Hycroft mine.
In addition to strengthening the team we've identified a number of areas for cost savings such as being more operationally efficient improving the reliability of the infrastructure and the equipment that we have on site better management and oversight of our contractors, improving maintenance, which were is resulting in less downtime.
And that leads to more efficient productivity and we're also looking at self performing some of those maintenance items where appropriate so.
Our attention to controlling cost has been a very big high priority for us and that's going to be a primary focus of ours continuing as we go forward.
There has been a lot of transition with Hycroft as you have noted since the beginning of the year, including a number of management changes. In addition to going public just five months ago.
And since joining high crop, we focused on building a very strong and experienced team and we've been fortunate to attract some very highly experienced individuals who have proven track records in their respective disciplines and I'm also pleased to note that we had been receiving an overwhelming number of inbound calls from very seasoned technical minor.
Individuals across all departments.
And they are wanting to be part of the high Cross story. So this is really good news for us and that's a very big guys out of confidence for the project and the efforts that we're taking in the direction that we're heading with the project.
As we announced in October stand right out who I've worked with in the past joint Hycroft is our executive Vice President Chief Financial Officer, and he's got a very diverse background in project financing I'm piece. That's over 20 years at Phelps Dodge had in many years that remark of minerals and was responsible for leading and executing the project financing.
Oh, we also promoted my guys Allied to Vice President General manager, Mike actually join Hycroft in August of 2020, and he quickly made the necessary changes to the process structure and certainly to the crushing circuit, where we were having some operating challenges.
As well as the sulfide oxidation and heap leach process.
My Ah, that's some knowledge and experience with the sulfide deposits and process improvements and optimization programs are perfectly suited for high dropped right now at this time in our development and I was very quickly switched onto his very strong leadership skills and that's something that's very important.
To us as we move forward and I'm very happy to have him in this role.
The changes that we've made a within the company certainly from a management perspective, and some of the others and I'll be touching on those in just a few minutes. They just they help to better align the goals of the company with.
With the execution of our plans so stand coming out like coming down in a number of other additions that we made to the process came our very important for us as we go forward and the development of this project.
We are continuing to build new and improved culture at site a culture that involves ownership and excellence in our operating performance as well as.
Hi, priority and focus on safety, which is always and will always continue to be our number one priority.
Didn't they had a lot of attention a witness team came out and we're making positive strides in this area and we will never stop.
Working to improve our safety performance, because the well being of all of our employees is very important to us.
We will continue to realign and strengthen the leadership team to make sure. We have the right people in the right positions and to ensure success for our shareholders as we develop this project.
And to support those efforts we have recently established a technical team as you will have seen in our recent disclosure.
And they consist of the Keysight technical employees from the process departments.
Also we brought on board John Larson is a world renowned metallurgical and processing consultants with specific expertise in gold and silver extraction. In fact wrote the book the chemistry of gold extraction. So just about every metal or just a in the industry houses book on their shelves. So we're very happy to have him working on this with us.
We've also engaged hasten research they are a research and development laboratory. So many of you are in the industry are familiar with them and for take dynamics, which is a multifaceted engineering and consulting firm and open pit heap leach processes and they have a industry leading X.
Parties on heap Leach stacking and modeling and that's going to be very important to us as we move beyond these preproduction pads and get into a commercial size per.
Production on the new Leach pad that we're currently building.
Now for the benefit of our existing shareholders and new shareholders and also for those who were just following but doctors. The Hycroft story I want to take just a few minutes and recap what has transpired since the technical report was completed by him three engineering in the summer.
2019, I feel going back to the history is important so that we can understand where we are today and what our plans are going forward and the company having been private until just five months ago. There's a lot of information Thats transpired. So I just thought would connect the dots together and I would just walk you through.
<unk> said of that history briefly before moving onto what our plans are going forward.
So sulfide oxidation chemistry is very well understood in the industry. It utilized in many mines with respect to roasting and pressure oxidation plants that are currently operating throughout this region.
But what makes it you need to our project is that we are performing sulfide oxidation under atmospheric heap leach conditions.
This is due to the low grade nature of our or.
Capital and operating costs are much lower for heap leaching, then they would be for say roasting and autos lighting.
And research done a lot of work for Hycroft on the alkaline oxidation process. When the predecessor company was looking at the A.O. process for ambient alkaline oxidation.
Following that work in three engineering was engaged and they completed the technical report for the current two stage oxidation and heap Leach Tech Nate.
And that was completed as I mentioned in July 2019, and is available on our website.
From a chemistry standpoint, we know sulfides can be oxidize and an alkaline environment.
Hi crop is pioneering the ability to do this utilizing heap leach process and also on a very large commercial scale.
For our particular process modeling the oxidation to gold recovery relationships and larger scale operational environments is very very important and that work is ongoing as we continue to gather data from our current pre commercial pads.
Our process. It does require careful management of multiple factors, including out the letter D. P H moisture oxygen and iron levels and a whole host of other things.
Subsequent to the technical report being filed and during the second well technical the subsequent to the technical report being filed in the summer of 2019.
And throughout the second half of 2019 and into the first couple of quarters of 2020 prior.
Prior management conducted 250000 ton each pre commercial.
Pads of sulfide material.
And those results are referenced on our web site.
After stacking those first two sulfide commercial pads that gets the company then began stacking multiple 50000 ton tests pads.
Dominantly transition material and the reason that the test pads that are undergoing various stages of oxidation and rensing and leaching today our transition material.
Is simply a function that we have a lot of transition and oxide material that has to be plow through to gain access to sulfides sense. The original first to test pads, which were sulfide material, we have predominantly been putting transition material onto the pre commercial pads.
As you will have noted from our first two quarters on the operating and financial results and also reflected in our current quarterly results that we disclosed this morning.
There's a number of factors that resulted in lower gold equivalent production and sales volumes and high operating cost, which is why we've not been able to generate positive net income to date.
In the past operationally the challenges were many so for example, the crushing facility needed major maintenance and it wasn't able to consistently deliver the appropriate size crushed material to the past.
There was mismanagement of the process solutions control systems, which was a very significant items.
We had an under sizing reagent distribution systems that negatively impacted the quantities of soda ash that were delivered to the past.
And we also have some aging equipment on side and it was requiring frequent and planned repairs and subsequent downtime. So all of these factors that were going on in the first half of the year were.
Contributing to write down the inventory write offs of the inventory and certainly were impacting our production volumes as well as our revenues.
Since that time however, their members were added to the process came and Thats, including my guys. The line and another process manager. We have Kent you May know and they were brought at a fairly early in the third quarter and many of these operational issues that the project was impacted by in the first two quarters of the year.
Have been addressed.
Mike is solely responsible for fixing our crushing circuit and did in record time. So we certainly owe him for that and really appreciate all of his attention to that matter and we're continuing to make additional improvements throughout the operation and on site and because of the improvements that we've seen because of the.
Team that we have in place and because of the focus on increasing our productivity.
We are very very confident that the results that have been put out to date are not representative of our plans going forward.
We are still however in the preproduction phase.
And we do need to be moving larger volumes of material and we have plans to be ramping that up through 2021, we're actually working on a lot of those plans now but.
But we're very very confident very happy with the results that we've seen and the improvements that we've made from some of these operational problems and challenges that have plagued us in the first two quarters of the year.
The company is continuing to mine through transitional and oxide material in order to expose the sulfides youll recall that the predominance of our reserves and resources Arsenal Sadek in nature.
But we will throughout the life of the mine and counter transition material and oxide material periodically and we are at this moment continuing to mine through some of that for the oxide material. We send that directly run of mine to the leach pad for the transition material, we have been placing it on pre commercial pads and many of you are well.
Where is that these are our current pads that we have in various stages of the oxidation rinsing and leaching stages.
What we've been observing through our continued sampling of these pads and also the column testing that we're doing in our labs on the site materials.
That there may not be any additional recovery benefit from oxidizing materials and this is important for a couple of reasons.
We are observing consistent gold and silver recoveries on transition material whether or not.
We are putting it under oxidation.
And although our test work is ongoing.
And we haven't made a final determination about the transition material. We are believing now that the cost savings and the time savings of not crushing.
Not really handling that material at the crusher, not applying soda ash and the time involved with oxidizing rinsing and subsequent leaching.
Will yield a net savings to the project so in other words if.
We put the transition material directly under Leach, we're seeing similar type recoveries that we are.
On the oxidation pads now again, just caution you that a reminder, that we're continuing to analyze this data but at this time, we do believe the transition material can be sent directly run of mine to the leach pad and we're going to have better clarity on that over the coming months.
So while we continue to act counter transition and oxide material throughout the mine life, it's important to understand how each of these various.
Various material behaves and our processing environment and again, just a reminder, that the future and the goal of high crop to sell Bentek.
Sulfide oxidation this'll citic material. So we will be in transition and oxide will treat that accordingly, and whatever we get the best results from.
And then the sulfide oxidation certainly.
Certainly that work will be ongoing and we will be entering into some sulfide material. This month and I'm going to touch on that in just a few minutes here.
From our announcement today you will also noted that our 4 million square foot Leach pad for the commercial scale operations will now be conditioned towards the end of the first quarter of 2021.
This was due primarily to aspects associated with the sulfide oxidation itself, including some recent design changes that we made on the solutions management infrastructure, which we think are more appropriate.
We've also been made aware that there are some delays associated with the electrical and mechanical equipment packages. So we do however anticipate that this pad will be.
Able to accommodate stacking oxide and run of mine material by year end. It's just the external infrastructure that is important for the sulfide oxidation of the sulphide material is.
Who will be delayed and not be fully commissioned till the end of the first quarter. So we do expect to be moving run of mine material to that pad and we can coordinate often area of that pad and hit it with directly until we until its completed four sulfide material and that timing works fine for us just because of the mine plan.
That we're working on right now in being able to expose and open the sulphide areas.
So for the remainder of 2020, we expect to continue to mine, primarily oxide and transition material. It's just the nature of the areas that were in that we've got to plow through that in order to expose the sulphide material.
And so we would anticipate placing that on either existing precommercial pads and then once the new Leach pad is completed we can put it on the new Leach pad at the end of the year, while we're waiting for the additional components for the sulphide process.
Sarah This month. However in November we are beginning to access approximately two houses to 100000 tons of sulfide material in each of the central and Brimstone pets.
Hello.
And this sulfide material will be placed on several pre commercial pads.
Anywhere from two to four pads and that's just a function of real estate. So it's where we have.
Location in space to accommodate that 200000 tons. So it could be 200000 tons has it could be for 50000 ton pads.
And we don't want to delay getting into the cell sites and starting to treat them with our process. So since the new commercial path will not be complete for sulfide oxidation purposes until the end of the first quarter.
We're going and we're in the sulphide material. This month, we're going to go ahead and places on these precommercial pads that we've designated space for on site that we can get that process underway.
We've made a lot of significant improvements in our process operations during the third quarter that put us in a much better position to be able to manage the sulphide materials and some of those items include the upgrading and improvement of the reagent Island.
Adding an agitator mixing system to allow for better and higher soda ash concentration solution and that also helps us with increasing our application rates. We've made a lot of additions to the process team and as I mentioned earlier also.
Of consultants that we brought on we have a lot of work to do.
And gearing us up for commercial scale production. So we've got some of the best and brightest minds around the table as we start planning forward, we've improved our leach pad operations, our data gathering and all of our reporting protocols as I mentioned earlier, we're very focused on safety and we're starting to move those in a much more positive direction and.
Weve reduced a lot of the downtime on our equipment.
Maintenance and that.
That that effort will be ongoing.
At the moment and we will be doing this between now and the end of the year. We're currently working on our mine plans are mine sequencing and our optimization work for 2021 and beyond and that's going to be based on the results in our knowledge today, certainly observing what were observed with the transition material would be a key component of that.
The ongoing test work on sulfide material.
And again the transition material.
Taking into consideration the construction timeframe of the new Leach pad.
And the scheduling of mining as activities for accessing the large tonnage sulfides for the commercial scale.
Noting that we do have a lot of transition and oxide material to plow through to gain access to those sulfides and we're working on that plan right now and optimizing that for 2021 and beyond.
The mine plan and the budgeting process, although it is underway at the moment, we do look forward to communicating all of that to the market in early 2021, and we will do that in the form of.
Our mine planning and guidance and expectations for the year. So we will be forecasting what we anticipate to produce.
For 2021, and the years beyond our goal as we look at this mine plan and we optimize it is to maximize our gold recovery, while perfecting the sulfide oxidation.
Process and also scaling up to commercial status. So lot of work to do on that budgeting and planning and optimizing and we look forward to sharing that with you very early in 2021.
So before we address some key highlights for the quarter.
I'd like to thank all of our existing shareholders and our new shareholders for their overwhelming support during our recent very successful financing.
We raised net proceeds of approximately $83 million and we welcomed 13, new institutional shareholders further to the registry so.
For those of you who have worked with some of our members of management in the past you know we worked very hard for our shareholders.
Take your investment very seriously and we are going to make sure that we missed this project forward and and the right way and we're all very very excited to be part of it and we look forward to communicating with you our new plans in 2021 for the years beyond.
So at this point I will turn it over to stand right now who will walk you through the details of the financial quarterly information.
Thank you Diane.
I'm also excited to be a part of this team and a part of this great project like Diane I'm spending a lot of my time and efforts its flights and I'm planning to maintain.
My presence with flight.
Mobile future.
As explained by Diane high.
Hi crops has continued to work at a pre commercial scale in developing the oxidation leaching process.
That combined with the extensive operational challenges has resulted in low gold equivalent production and sales volumes.
And high operating cost, which is why high crop has not been able to generate positive income were positive cash flow before financing activity.
For.
For the third quarter and nine months ended September high Carl reported a net loss of $29.1 million were 58 cents a share.
Net loss of $113.5 million or $4 or 92 cents per share respectively.
The nine months ended September 30.
Net cash used in operations was $85.2 million.
Net cash used in investing activities was $19.2 million of which $15.4 million was for the leach pad.
The good news was net financing activities provided $106.6 million.
At September 30, we had unrestricted cash of $11.5 million.
Shortly after quarter end, we closed the public offering for net proceeds of approximately $83 million.
We are keenly focused on our cash position and managing cash and as Mike will highlight in the mountains. We believe there are opportunities to generate through operations cash while developing the oxidation and leaching process.
Diane said Unfortunately, we're early in our planning process for next year. So we're not in a position to provide guidance.
Guidance for ranges of guidance for expected performance, what I can share is that we're intent on putting together a thoughtful and disciplined plan for successfully transitioning to commercial scale. We're planning to start can lead to war and some transition stock and reach oxide ore and some transition or.
When sections of the new Leach pad without.
The cost such as crushing soda ash and Rehandling as we advance the profit.
We've identified opportunities to produce gold equivalent ounces reduce cost and improve operating performance. The provide very attractive cash benefits and I expect the team will continue to be creative and resourceful with more opportunities as we get deeper into the planning process.
Mike.
Thanks.
So the.
Let everybody know some exciting things we have going at the site.
I mentioned.
Builds a strong core group of individuals with some of the most experienced the Nols will operations.
Thats in support folks you know in northern Nevada.
You indicated it was really cool.
We continue to get a lot of inquiries from some of the best and brightest.
You want me to be potentially part of this.
Recons fields.
Game changer for the industry.
The truck for ammonia. So that's a that's a good thing we can build upon it will continue to build upon.
Operating crews is.
Schools.
Was as mentioned previously as well we want to transition this operation from tore.
Towards a world class producer and away from kind of this preproduction to operation minds.
[music].
Consequently, the message I'm, sending to the groups.
The.
We need to sort of speaking with producer.
And because of that we're going to start assessing some messages.
And that's kind of a continuous improvement mines.
Since.
Or is it.
As to the ultimate goal.
This will.
Pretty quickly.
So primarily on the safety and health front.
No even prior to my arrival, there was a great deal of effort.
In resources being applied to the changing safety culture, and really that needs to continue.
As a result, we've seen a significant decline in or.
Portable incident frequency rate.
So the 2.4 days.
We don't report versus previous quarters.
The good news is we had zero lost time incidents or medical reportable incidents in Q3.
However, regrettably we did.
Sure.
So it is an October one.
Crew.
The particle of soda.
Okay.
So we clearly have our work cut out in front of us and we don't have.
Any jones more important.
You too.
Sure.
Hi.
Clearly we have been.
And we have a full week.
Safety Department.
Hello.
Before that group.
Excuse me is really become creative in how we engage our leadership and employees.
Moving this safety culture for.
Most of us would come from.
Safety cultures in the mining industry already so we have a great opportunity to take that.
Yeah.
Learned.
So amounts of these programs and then implement growth.
And really my goal is to make the leader.
No.
Yes.
Some of the competitors over the hill, so that will be our initiatives into their mission going forward.
On the coated front you know, it's obviously a concern continues to be concerned with the industry in the nation.
The upticks in exposure and infection rates.
Rule was so we've redoubled our efforts on Cobi controls, we have implemented some rapid testing and.
Returns.
Yes.
[music].
Quickly.
As.
No exposure that may occur within within our group.
This day, we haven't been significantly impacted by the.
A lot of abundance of caution we had some short quarantines of a couple operations cruise.
When it became evident that exposure has occurred and with our emphasis and return protocols were able to get people quickly.
We are.
Negative.
Thats all important for both.
Additionally, in the safety in the peace peace of mind for employees and so we.
We continue that.
So on the mining.
On the execution group from June we see continue to see lots of improvements in both mining and processing.
As I indicated or friction facility has seen tremendous improvements and uptime and reliability, we've got a core group of.
The maintenance individuals and operations.
There.
Well really helped drive.
We're going to continue to implement.
I couldn't operate from a reliability centered maintenance approach in both maintenance and operations.
So we're going to continue to reinforce those principles and operation.
And really its.
Expand the reliability of routes to the mine as well we've recruited some local reliability.
Yes.
So.
Also we continue to emphasize.
And look at the oxidation lease performance.
Across the board specifically in relation to our transition orders.
We're working with us.
Forward, you know really the the most economical.
Positive approach of treating.
Routing.
In addition, and also tours as we kind of fill the gap or bridge the gap to the bulk of our sole flows.
Sulfide resource we have a tremendous amount of these transitions.
But.
I think as those plans develop.
Who look forward to share those with you.
[music].
Future calls, but right now.
We're seeing some pretty positive results.
Really working out.
Solid plans on routing.
I think you'll see sort of a more positions heap leach operation.
Growth as we can.
So.
Well, we like I said, we can to sample and to US you know.
Im really looking at ways to optimize the process and really see with us it is across the board for the.
Domains that we have in front of us and just making sure that we're well positioned as well.
In these principles are well understood as we scale up to commercial production. So.
With that I'll turn it over to Diane.
Okay.
Okay. Thanks, Mike So I think as everybody can tell this team while some of us are relatively new.
We're very very engaged and up to speed on this project and the processes and we've been working diligently round the clock.
On everything to make sure we have the right plan going forward based on all the work that we're doing we're all very excited I think you can see in our and our communications with you our enthusiasm.
You know, it's not only being part of a project like Hycroft, which is.
Truly world class status. When you just look at it in terms of its mineral endowment that also the opportunity to be at the forefront of demonstrating a process that truly is going to be a game changer for the industry going forward. So.
We're all very excited about it we're happy to be here. We thank you so much for your investment in the company and your confidence in this team we will deliver for our shareholders and our history of all of US even in various companies, we will take our work very seriously and we stop at nothing to deliver success.
In a safe environment and the right environment for our shareholders.
With that I will turn it back over to the operator, and we can open it up to Q1 day, if anybody has any questions.
At this time, if youd like to ask a question. Please press star one on your telephone keypad.
Our first question comes from the line of Vincent Anderson with Stifel.
Your line is now open.
Yes, thanks, and good morning, everyone.
I was hoping you could just maybe quickly walk us through the remaining symbols on add one day in terms of how much.
As what to do with the technical design versus just getting the equipment delivered and do you have a relatively firm delivery dates for that equipment.
Well the the technical design hub I'd love to do so.
Pricing arrangements.
Integration of the different ponds for different cycles of the observation.
Process.
It appeared that we need to do some refinement of that I think we're we're probably about 80% through the us it hasn't really.
No impact is a few months other than we want to make sure.
We're not overspending on the typing arrangements for that one is.
Not necessarily so.
It's actually costing project.
Well.
Yes.
Equipment deliveries.
Kind of seeing a I think a lot of that might be.
Kogut impact.
Budgeting interruptions.
The board, so or or electrical are you hope.
Right systems for the pumps and then the pump so soon.
Ladies and we're working pretty hard with the supply push them back on that.
We're going to be still.
So looking at the end of Q1.
Liver install window.
We're fighting that one for you are so at this point.
We don't think it will push any further but we're always have you.
Alright.
All right. Thanks, and then the SEC.
A lot more gold on pads this quarter, a nice nice job there.
For your production guidance before June by interpreted correctly isn't indicating a lot of sequential improvement and gold production.
You've also.
Gone down your post sleek inventories, particularly the carbon column.
This guidance based on expected recovery rates on the older pads.
Or just timing or am I missing something.
We have a lot of static on your line. So I think what you're asking is out forecast for the fourth quarter would we be expecting something similar to the third quarter.
Hi, this any better.
Now, let's try it again [laughter] okay.
Hi, guys, you guys sound great but.
No so versus the amount of gold you put on pads this quarter.
Production guidance for the fourth quarter doesn't seem to be as much of the sequential improvement. So ill just walk me through is it is it the expected recovery rate on the older pads that youre still using is it just a timing factor what what am I looking at there.
Yes, that's a timing factor and getting that bounces off at yes.
We're.
Or this was you know optimizing no as we saw the performance of the transition orders, though and.
Not really Super response to the oxidation process, we took some of those off early and put up.
That might be the case going forward.
As always were.
It just depends on the timing materials coming out of the pit sequencing.
Because under lease.
Okay, all right that's helpful.
And then.
For the sulphide ore you're planning to put on pre commercial pad the 200000 tons.
Are you able to stack. These on on the first two pre oxidation kind of pets have for you where you really were able to manage the process to some fairly favorable results and then just kind of as an aside do you have any pets left where you're still piloting the pre oxidation technology on a on an outdoor leach.
So the only thing we.
Under kind of the oxidation well, we're just wrapping up flat bill.
And it's been a transition or on its way.
You have.
Space available.
These myriad of different.
So on the old rooms.
So.
We can segregate.
Due to segregate the sulphide ore and independent we.
Operate them, it's just good data on it that's that's our intent.
We'll move.
Either run a mine or crush transition and oxide or around those.
[music].
All of the data.
Okay.
Okay.
All right and if I could sneak in one one more.
What what is your visibility on the cyanide soluble content of the transition or you are still working through and then just kind of given the near term delay in pad one a.
How much flexibility do you have right now to prioritize maybe some of the higher cyanide soluble gold to support production over the next two quarters.
That is our goal absolutely I mean, that's.
Yes.
What drove that.
But different for operational approach.
Again, we want to kind of transition away from that.
Actual.
Operational mentality to gold producer of maximizing.
Now I'll.
Okay.
And Thats our intent.
But going forward.
All right excellent. Thanks, Thanks, a lot.
Great. Thank you.
Our next question comes from Terence Ortslan with T cells. Your line is now open.
Good good afternoon from eastern system.
Cluster.
Just a quick question actually my associate just noticed to me that.
There was maybe you can explain there was 12 point 4.9 million shares of decided purchase.
Is that because of the changes in management award to or was it to genuine searches. Thank you.
[noise] we're not.
On an insider and on an insider report I mean, we do have existing shareholders, who participated in the financing that.
We've been in blackout, and so there's not been any insider purchases and there won't be until 48 hours after today with our quarterly financials.
For the upside. This is the reported insider purchase 12.9 million shares equivalent to $89 million.
Yes, let us look let us look into that I'm not familiar with that disclosure that you're referring to so let us look into that it will we'll get back to you. We've got your name and contact details. Okay. Thanks, very much I think you had what I am thinking floors.
Our next question comes from grants Miller with East Bridge. Your line is now open.
Hey, guys. This is Dan Heim that got first want to commend you for the team that you built that in such a such a quick quick.
Quick couple of months since taking over so so congrats.
Diane and the rest of the team.
I had a couple of questions. The first question I wanted to ask was on kind of qualifying days and seeing how the.
Seeing how the different pads right now are doing if you guys are successfully getting qualifying days.
Throughout the last couple of months.
Yes, so thanks, Dan and good to hear from you and appreciate the.
The comment on building of the team, but we are seeing good qualifying days, but what we're finding on this transition material that even though we have qualifying days, where all of the factors and the buckets that we measure it in terms of alkalinity ph and all of those things that that go into a qualifying day, we're finding that.
Irrespective of that that the material is linking with very similar recoveries. If we just send it directly to leach. So we are continuing to see those as qualifying days.
And can I guess, what what percentage are you getting.
When you're saying on the transitional material.
So we actually started out at 8%.
Okay entity or soda ash to the oxide pads and we ran it up as high as 15%.
Which was not ever achieved as the site.
Just testing different conditions and results and.
Like I say, we're just wrapping up or less so so that was under oxidation that we actually pushed up some of these.
Soda ash alkalinity levels and.
And we are sampling now and will swell renal we'll have some test results available.
Near future.
Perhaps we can look back on but like Dan said for the most part we've not seen.
You know, even the higher alkalinity application rates move the needle on these transition or as much as anything so that obviously drove our decision to go in more roads lead to season.
Saving that offer.
Soda.
Mhm.
And then can I ask on Dan you mentioned that you think you've got about 200000 tons a straight sulfide for for November.
Will those be put on quick clean pads and really run through the full process.
Absolutely. So there are size as Mike mentioned in response to an earlier question just a few minutes ago.
There are some existing pads that we can put liner down on and that and put more material on top and there are some clean areas, where we can start fresh so.
We will be running through the entire process sulfide oxidation just like we will when we get into commercial scale operations and like we were doing on test pads, one and two.
With all the knowledge that we've gained from all the test work so yes, it will be.
It will be.
The sulfide oxidation process for those sulfides you know if we if we have the leach pad already built they would be going onto the leach pad, but we don't so we're going to put you know we don't want to hold off mining them because thats. Good information and we want to start getting underway on that and we want to get into those sulfide. So given.
Given the timing of the completion of the pad, we're going to put them on these other location areas and so that 200000 pounds will be mined throughout November and December of this year and placed on those pads.
So while we'll be testing them and getting you know periodic you know well we test these things and pulling data from these pads every 48 hours.
And if they go according to a normal type process of the timeline for oxidation and renting and leaching and we'd probably have those ultimate.
Recovery numbers out you know May June timeframe of 2021.
Okay and then just one last question regarding the new pad. So as soon as you put material on the new pad if.
You put it on the beginning of end of Q4 beginning of Q1.
How much will the process be delayed that they run through their full process.
It's actually understand what the results are going to be because of the delay in developing the.
The outside circuitry of the pad.
Okay. So just to be clear when you talk about the new pads are you talking about the pre commercial pad or the new talking about the commercial but I'm talking about the new commercial leach pad. It's.
It's been delivered prior to Q1.
Right. So so the new commercial pad at the end of Q1 is.
For putting sulfide material onto that pad. So it's it's the delayed for that extra quarter or that extra 90 days. If you will has to do with external components related to the sulfide oxidation process. So that pad until we get to the end of Q1, which is what we're currently expecting based on the information were getting.
From suppliers.
We will not be able to treat sulfide material on the commercial pad.
It until after the end of the first quarter. However.
We will be encountering and continuing to encounter oxide and transition material and with the new pads being effectively completed from a traditional heap leaching standpoint without the plumbing associated with sulfide oxidation. We are going to go ahead and put material on to that path of oxide and trends.
And in an area that pad, where we can just directly heap leach. It in other words, there's no sense to put it on these precommercial pads, we've got that pad ready to go.
For that type of material and that's the plan. So so I guess your question was what do we expect in terms of delay.
The PADD originally was supposed to be completed by the end of this year. So we would have already been ended a sulfide material beginning this month anyway, and we had been contemplating putting it on these precommercial pads.
But.
It's not you know, we're talking probably 90 days.
Delay from a sulfide oxidation processing standpoint on that pad.
That helps answer your question.
Yep. Thank you guys. Thank you.
Thank you.
As a reminder, ladies and gentlemen, please press star one on your telephone to ask a question.
Our next question comes from Andrew Lester with <unk> Capital. Your line is now open.
Hi, Thank you for taking the question and good and great to have you here in your team.
I just wanted to sort of understand things better I don't want to be at.
Well I'm sure you've come in and you've been sort of a lot of issues to tackle and addressed all at once.
And.
I'm certain that the party management team Didnt, let's say fully have their arms around it will be shoes. They confronted of course have you been here long enough, where you have sufficient time to evaluate the situation to make sure a good doing no additional operational or personnel type of issues.
That need to be addressed so that there isn't some you.
No other problem that might surface within a quarter or so.
Well, that's a great question and thank you for answering that so before I.
My first day of September Eightth I was under in da with Hycroft for.
I don't know six or eight weeks prior to that.
So I was aware and ER and the loop on on a lot of things going on at sites. So I did have the benefit of that time frame to wrap my arms around that.
Many of the operational issues and challenges.
Certainly.
Insulted with.
He group.
People, who are experts in this field.
On some of these things so when I came out it wasn't completely fresh I will say that putting my feet on the ground day, one there were no.
Surprises in a negative way I was eyes wide open coming in I I was aware of the operational challenges and some of the things that needed to be fixed and quite frankly sort of some self inflicted wounds that.
We we have sense a draft and remedied I think you will continue to see some bench strength and adding to the team.
That's one of the things in my history of running companies that is very very important is all about the people at the end of the day and we want the best and brightest and that.
Money comes back to our shareholders multifold, because it helps you mitigate any potential start up risk and you get a team and they're the brainstorms everything together and we're bringing in people with a lot of experience in these types of.
Systems and this type of a project if you will so I'm very very confident that there that the recent addition of some of the people plus some others that we have in the queue. A that we have the knowledge and understanding of this process and being able to take this project forward on a commercial basis and on a very successful.
We'll basis.
So with that.
You know as far as good for you.
Correct that's correct.
If I could just ask a follow up to that is is well you fire ice to promote some of the more technical advances you gave some of the early quick answers on some of the other questioners in March two and this is due if I understand correctly.
Q2, 2021, you will be the normalized production rates is that correct.
We're working on that budget and that planning right now so we're optimizing it based on the mine plan.
The transitional material the oxide material accessing the sulphide material that is going to come we certainly are in the process of ramping up our throughput and the tons that we mine absolutely that's something that we're going to be doing we're going to be increasing a lot of the run of mine material and oxides.
You are going to see a ramp up in tonnage, but as far as the specifics of that mine plan. We we are working on our budgets right now and that's going to be unfolded and presented to the market very soon after the year.
Thank you so much of course.
There are no further questions in queue at this time I will now turn the call for two Diane Garrett for closing comments, alright, well I just want to thank everybody for taking the time and being on this call and it was great to address you and please reach out to US anytime if you have any questions and on behalf of the entire.
Cross team I just want to thank you for your continued support for this project and.
Thank you for the questions you've asked and everybody have a safe day and a good day and look forward to speaking to you in the near future.
This concludes today's conference call you may now disconnect.
[music].