Q4 2020 Yamana Gold Inc Earnings Call
All participants please standby your conference is ready to begin.
Thank you all for joining us this morning before I turn the call over I need to advise that certain statements made during this call today may contain forward looking information and actual results could differ from the conclusions or projections in that forward looking information, which include but are not limited to statements with respect to the estimation of mineral reserves and resources.
The timing and amount of estimated future production cost of production capital expenditures future metal prices and the cost and timing of the development of new projects.
For a complete discussion of the risks uncertainties and factors, which may lead to the actual financial results and performance being different from the estimates contained in the forward looking statements. Please refer to Yamana press release issued yesterday announcing fourth quarter 2020 results as well as the management's discussion and analysis for the same period and other regulatory filings.
In Canada, and the United States.
I would like to remind everyone that this conference call is being recorded and will be available for replay today at 12 o'clock P. M Eastern time replay.
The replay information and the presentation slides accompanying this conference call and webcast are available on your mind as website at Yamana Dot Com I will now turn the call over to Mr. Daniel Racine, President and CEO.
Thank you operator, thank you all for joining us and welcome to what the fourth quarter and year end conference call.
Presenting with me today are Jason of along our senior VP of Finance and Chief Financial Officer, You'll ended up at all the senior VP of operation and there are other Fernandez, our senior VP corporate development.
For the Q&A portion of entry Marsden, our senior VP of exploration and Craig for our senior VP of safety and sustainability of oven will also be available.
Starting as all the ways with the health safety environment and community of relation our recordable injury injury rate was <unk> 49 in 2020.
That's the represent the decline of more than 215 per cent since 2012.
The newest to refine and improve our protocol to combat COVID-19.
Can you Didnt all of Arctic we have installed of third party of testing that at all.
The size of tests employees and contractor before the entered the mine the lab the stuff by trained technician in the operate seven days of week.
Also continue to engage closely with our host communities to support them in the fight against COVID-19, providing the nation and critical the equipment and supplies.
We achieved some notable milestone and recognition in 2020 as you can see on the slide.
Yeah.
So you will have seen in our announcement yesterday, we have formally.
Adopted the climate strategy further underscoring our commitment of transitioning to a low carbon futures.
Our strategy is underpinned by the adoption of two targets of two.
Degrees Celsius science based target.
And then that's the pressure on all net zero target by 2050.
The dart the targets are supported by the fundamental work to be performed in 2021.
The evolution of multi depth of scenario, because I met the working group and debt or mine, our emission baseline as part of the our effort to achieve our target.
These actions will help ensure that our long range greenhouse gas emission reduction efforts are supported by practical and up operationally focused short medium and long term actions to achieve these targets.
There's a long history of prioritizing the health and safety of its people sustainability of up and.
Mental protection wherever it operates our of climate strategy is a natural extension of this business approach.
Turning now to our.
The 2020 I like we showed great resilience in the most of the challenging and unprecedented.
Of years, we continue with the deliberate I E S cheaper from its why the moving quickly to ensure the health and safety of our people and the community where we defend them at it.
We delivered strong operational performance with Jacobina Canadian Mill Artic L of opinion, and Minerva fluffy, the all producing above plan.
And that translated into strong financial performance and increased free cash flow. In fact, we achieved our objective of net debt to EBITDA ratio of below one when the assuming of bottom of cycle of gold price of $13 50.
This further increase our financial flexibility, allowing us to raise our dividend by an additional 50 per cent to 10 five per share.
On the per Geo basis, our dividend flow is now $100 per geo.
We completed our exploration program and delivered significant update supporting mine life extension.
We continued to optimize our portfolio of monetizing certain assets such as our put our royalty portfolio and the core.
The monarch gold, which either the ones that Mac project from our pipeline and increase our price it presents in Quebec.
The prolific Abitibi district.
We completed an option agreement on our <unk> Gold project in Argentina, which we believe is an important step towards bringing this outstanding project of development.
We also completed the integration of Agua Rica with Minera on umbrella.
The important milestone that the rest of what is known as the matter of project.
Why don't we highlighted the significant net asset.
The value as opposed to three of sensibilities towards the project, we know what that net asset value of what the term mine metal prices well below current level.
That's correct level, the net asset value of doubles, the $4 billion. We are not suggesting that this is what should be in models. We are saying that this is an unimpressive low capital intensity of low cost projects with large copper and gold inventory.
Robust production profile long life and extra that the returns.
The next several quarters, we will begin to outline all we intend to improve and realize more value from this project.
Have received the permit to advance the project yesterday, which is the positive news.
And finally, we completed our listing on the London stock exchange.
Which provided us with exposure to investor in the U K Europe, the middle East and Asia that we didn't we didn't have before.
Raising our profile of the while offering these investor exposure to our portfolio of high quality assets in the Americas.
Turning to our fourth quarter result.
We produced 221659 ounces of gold, which stand out production from Jacoby the admin thereafter of either.
Silver production was 259 million ounces.
It was above plan underpinned by exceptionally strong performance from El opinion on <unk>.
Gold production for the quarter was 255 361.
1000 ounces.
Cash cost of 675 per Gilles and on the all in sustaining cost of 1076 per Geo were modestly above forecast due to the tightening of the national safety measure in Argentina, and the last production being classified as commercial production from Barnett that Kenny day Marty.
Isn't it will discuss cost in more detail during his remarks.
Net earnings during the quarter was 103 million or 11 cents per share with.
The adjusted net coming at the $107 7 million or 12 cents per share.
Cash flow from operating activities were of hardwood and $81 5 million in cash flow from operating activities before net change in working capital.
$207 4 million.
Free cash flow from before dividend and debt repayment was 61.7 minions.
We replaced gold mineral reserve depletion on the consolidated basis for our operation.
And we delivered significant increase in mineral resources, including 184 million ounces of inferred mineral resources at the school of D. On the 50 per cent basis.
Gold is part of the Odyssey Underground project can you Didnt mother's day, which as you have seen in our announcement yesterday is proceeding for the development, which we could not be more excited about.
You're one of the we'll talk more about the project in the moment, but as a reminder of capital cost doesn't include the benefit that we will get revenue from from 932000 ounces coming from underground during the construction phase.
The addition of wasn't of Mac project also increase our mineral inventory at the favorable purchase price.
Taking a closer look at our result for the full year, we reported Geo production of 900 and the one 901.
All of US in 155000 loans of five ounces, including 779810 ounces of gold and $10 36 million ounces of silver gold.
The year of production exceeding our original guidance for the year of 890000 on G O and the was within the mine at the by this 3% minus.
Net plus three per cent of the variance range of the revised guidance.
It could be not continues to be a standout producing 44165 ounces of gold in the quarter on all the time and then the all time record of 170 577830 ounces for the year. It was the seven straight years of increasing production for jacobina.
Trend that we believe is going to continue.
Opinion produced 55529, <unk> in Q4, including 43512 ounces of gold and 932954 ounces of silver.
Q4 production of that Canadian Mill Arctic was 86370 571 answers on the 50 per cent basis, the transition from Guinea of them all of Arctic bit the Barnett bid is going very well with Barnett non commercial production.
74 per cent of the total of ton mined in 2021 are expected to come from Barnett.
I mean, the Russell Doggy day continued to perform exceptionally well, but it was seeing of 26352 ounces of gold during the quarter. This is the highest production level since 2010, and the second highest since of the mines enter into production in the 1986, excluding gold production from the reclamation of exterior painting.
Cost of Minera, Florida are expected to continue declining in 2021.
So one of my hope would use 42943 G O in Q4, including 21259 ounces of gold in the $1 67 million ounces of silver.
Full year of Geo production was 132415 ounces, including 66 point.
The 90 95 ounces of gold and four of four 5 million ounces of silver was several mobile operated continuously during Q4 travel protocols, where Tyson and roaster of significantly reduced to protect the health and safety of employees and communities.
Restriction or particularly stringent during December despite the impact of this restriction production in Q4 was the highest of the year.
Operations challenges related to COVID-19 are expected to continue in the first half of 2021, but the.
Company expect the situation to normalize as the vaccination program ramps up in Argentina.
The transition to more of meal sales coming from underground ore at the higher grade than the open pit ore continue within the quarter and will continue into 1000 on 'twenty, one with most of the or to plan to the.
The plan coming from Escondida far West So we ask on Ddos on trial, and it's funded out west of underground mines.
We expect the return to production of 1 million G O per year this year and the retained at the production level for the next two years. The following two years 53 per cent of our production in 2021 is expected to a pure in the second half of the year with the production trending higher each quarter.
This year, we expect production of each other than 62000 ounces of gold and 10 million ounces of silver.
In 2022 over forecasting 870000 ounces of gold and $9 4 million ounces of silver and in 2023, 889000 ounces of gold and 8 million ounces of silver.
As you may have noticed we disclose of three year mine by mine guidance of decision that underscore our confidence in forecast.
Without that we see the three year period of steady state on production and cash flow.
We laid the groundwork for significant growth beyond that period as we advance our project pipeline.
We see cash cost ranging from 60 65 to $6 95 per deal this year with the all in sustaining cost between 980 to 1020.
Our all in sustaining cost in 2020, where mud was modestly above forecast due to the aforementioned net national safety measure in Argentina, and also less production being classified as commercial production from the Barnett is getting even more of the thick.
That's the result of the mothers of the higher cost and lower expansionary capital of the Barnett was neutral.
There was little impact the overall general cash flow.
Turning now to of our updated reserve and resources overall it was another successful year for our mineral reserve and the resources.
With the replacement of reserve depletion at our operating mines.
<unk> increased the $313 8 million ounces of gold of harder than 13 million ounces of silver and $6 7 billion pounds of copper.
Of note here is the addition of our newly acquired it wasn't back project with which added one 8 million ounces of reserves to our pipeline.
And that's more of the adjustment really given to recently announce integration the agreement between the Agua Rica and the Edinburgh. We have included 56% of our share of the MRO of project as part of our company. So total.
Also successfully increased measured and indicated resources of 14 6 million ounces of gold.
In the interest category gold resource of crime to $15 7 million ounces and the.
With that I will now turn the call over to you want to provide some more detail on the our reserve resources and the project pipeline.
Very good thank you Danielle.
How is the government channel we replaced the placement of our five operating mine and added ounces.
Neither we are reporting our reserves using the gold price assumption of $1250 per ounce.
Which have not changed some part of the year. So all of the increases that you see here reflect the success with exploration.
We also increased the measurement of indicated the throes of about 162000 ounces of gold and we increased and per bit sources by almost $2 2 million ounces.
We will now have a closer look on a reserve in the sorts of on a mine by mine basis parting with kidney the market.
Well keep the.
On the basis depletion from mining was 325000 ounces in 2020. This was partially upset by the Barnett pit optimization, which added 150000 ounces of gold the.
The net of the placement of can you just on Arctic was on Ehow best 75000 ounces in 2020, the other shallow open pits resort on the bottom of the Barnett pit is equivalent to increasing open pit mine life by about six months. This will improve the production profile during the transition from the open pit to underground mine.
And the acute and the optimized to the line is offering of Thunderbolt.
Geotechnical stability.
We are proceeding with the the block on the the Odyssey Underground project and I will talk more about this exciting all parts of your teams in a moment.
I will also talking in detail a volatile the thing on insight behind the moment, but note here that the time the.
The continued to be stand out of operation with Chuck will be not extending mine life. Despite the increasing throughput and the thing on increase in the reserve from a third straight year as well as average reserve grade.
Myra is not included in our reserves and resources total with the completion of the integration. There is now a clear path to unlock value from the significant mineral resource base, which includes $6 7 billion pounds of copper such as mentioned by Daniel earlier.
The disruption due to COVID-19 prevented settle modal from adding new zones on the high grade inferred resources during 2020, but some promising and per section at depth in the way and this is Tom <unk> will be investigated further with diamond drilling in 2021.
And that's true.
In addition for the first time lower grade E police and per resources has been the included in the mine in the minds of resources statement.
These answers all supported by the positive methodical testing.
Result, our Titan contacted the earlier this year and the positive concept study completed in 2020 and summary of the country's urban neutral based per line of solid foundations for 10 year outlook and the pipeline for extension of the existing operations and to sort of lumpy on the whole project.
I will now move move on with the quick update on the recent announced 10 years production outlook on several of the Markman book you are in the in the interim.
On the base. The base case is the pressure to sustain the kind of form of at least 1 billion deal through 2030.
The base was announced we issue of positive construction decision for the Odyssey Underground project.
We have also updates on mineral reserve plenty of 'twenty disclosing on increase in reserves at the Chuck will be not and another successful year of reserve replacement assets to hang on.
And now that said a moment ago, our pipeline is non including was the mark on the.
Mara giving us confidence that we can exceed the 1 million Teu basis.
Okay.
Oh I'm sorry, the increase reserve by three on the rest of 14000 ounces of gold of 13% to a total of $2 8 million ounces. This is the fourth consecutive year that Chuck will be not as interest reserve with an average reserve.
Replacement rate of 240%.
Average reserve grade as reduced slightly as the result of adding lower grade reef in parallel to the great Elm, new reef at kind of that.
We also increased mineral.
Research says that Jack will be non us here, the combined reserve and resources increase by.
Based on that 26000 ounces compared to 2019.
This growth on lockup.
T T for further expansion beyond our plan of phase two of 8000 final read the tons per day, and 230000 ounces per year, specifically with novel the weighting of part of the expansion things that would increase throughput to 10000 tons per day.
By 2027 to 29 with a production potential of 270000 ounces per year.
So in <unk> 'twenty 'twenty, one drilling will continue to convert inferred resources to reserves, while adding new loans of inferred resources such has drawn Belo zone.
I was taking all of that was another successful year, replacing the place on a reserve for the for the third straight year.
The year end 'twenty 'twenty reserves stood at 920000 ounces compared from 764000 ounces at the end of 2017.
The new lines added to reserves of high quality of key resulting in the slight increase to the average of river right.
Well Gordon silver measure in the indicated resources increased by 16% and 17%, respectively and gold inferred to the sources increased 16% from 2019.
Subset of these and per gets works of our inclusion of 10 years of production output.
Although the average with towards the Gregory lowered in the reserve grade the subset of the midstream sales included in our mine plan is similar to the reserve grade.
The sales supported by the the year round numbers, whereas the resources that were converted to reserves throughout 2020 on higher than average reserve grade.
The positive exploration results at the Ping all support our 10 years of production outlook, which rely on the exploration success to maintain of Rolling 10 year mine life.
This is something that we need the remarkable that this operation has been able to achieve four to one to one and one year from accounting and bill and ongoing success as the per ton sold to unlock opportunities the rent pulp production by leveraging the existing processing capacity.
Now of taking a closer look at the oddity underground project.
All of these sources have now increased to more than 14 million ounces on the 100% basis over a period of six years.
In the last year alone, we had of close to 4 million ounces of gold.
As mentioned on mine life is the estimate until 2039 with significant potential to extend beyond that.
<unk> is expected to ramp up to 500 to 600000 ounces of gold per year from 2029 through 2013 on.
This is higher than the original estimate of 450000 ounces per year and the project as a robust economics as you can see from the sensitivity table below.
And the sort of expansion capital of 114 billion in the expected to be spent over a period of each year on 100% basis with capital requirement.
On that using cash on hand, and free cash flow generation other growth capital expenditure and modest sustaining capex during the construction period of our estimated at 191 $4 million.
Gold production during the construction period is expected to be 900.
32000 ounces out of cash cost of about $800 per ounce, which will significantly reduce external cash requirements.
Sustaining capex from 2029 through 2000 per denied is forecast at $55 8 million dollar per years. It is important to note that the only $7 3 million ounces.
All of them or about 50% of the project to the role of the choices have been included in the technical report completed this month so in line.
Great potential for future upside.
On the smaller resources at depth and Odyssey and terminal zone per zone two of these opportunities and of course, the equaled the zone continues to expand.
Inferred resources that go the.
The increased by 134% in 2020 264 million ounces on the 100% basis with the NAV as great of 317 grams per tonne.
In 2021, very comfortable Inc. To drill on aggressively is the will be to test the extension of the zone along strike and at the.
We will also drill Odyssey south.
For Q2 of mining.
We look forward to updating you as the transition to underground on the project is advancing.
Well in our long term outlook profiles of the onetime actual inject providing opportunities for production growth to exceed the 1 million Geo base case target as a quick on the Ruby compete.
As a quick summary, we did complete dosing of <unk> 20 per sub this year the.
<unk> transitioned with monarch gold team has been excellent and Yamana on already at the Lee is already heavily involved in kind of the key thing with local stakeholders about the future plan for this operation we expect to open everybody's on the office in the upcoming months to support the community engagements.
Or was the lack of the woodlands project on monarch monarch complete the current study in 2000 and the team that show a very good economics.
We have begun the update on that study unexpected completed by the FERC quarter of this year.
On the updates, we'll evaluate the opportunities to achieve the following objectives.
Minimize potential impact on the environment on community minimized Max of sorry, maximized throughput kind of optimized flow sheet and the Goldman Calgary and the we also kind of a point in the.
Geology block model at least.
So then I called the look at we're looking I think our price mining technology to establish what the knock on the low cost underground operations.
Volume was that I will not read over to go to the south of the megawatt project.
Thank you Johan and good morning, everyone.
In December last year, we completed another key milestone for the might of project with the finding of the joint venture agreement between Yamana and our partner of Glencore.
One.
It's important if this is the last of the series of key development, which have taken the integration of Agua Rica and umbrella from a concept two of mature high quality on unique development project.
The first steps included among other the creation of the joint team to advance the project not only on explaining the plastics, but also to a bunch of the permitting on the relationships with February and stakeholders in the region and in the.
The country.
Such Martin now as the old agreement in place with the local stakeholders on the JV partners two of the project to continue to advance through the Nic the stages of development on value creation.
On the clinical front, we have completed the leadership of studies to optimize the project and mitigate risk as part of the ongoing dispute the study demonstrating significant improvements in English.
In relation to the 2000 1970 per state.
For the next two years, our focus is to continue improving the project advancing the feasibility study and the environmental impact assessment. We also continued strengthening of total license through the execution of our CSR programs on our open communication and cooperation with the local communities and stakeholders.
On the front now we have received all the administrative and you do feel approve us needed to start up of drilling campaign to support the PCB. The study and we're currently working on the procurement aspect from the amortization of the personnel to cite what sort of been the provincia unintended of could be material regulations.
Modest of significant high quality assets.
Target production of over 450 million pumps of corporate equivalent per year, or 200000 tonnes of copper equivalent per year on a 100% basis.
Also of the 100% basis, we've proven our program of servers book.
Seven 8 billion pounds of copper seven 4 million ounces of gold.
On over the handling of Illinois, silver support of long mine life.
The all sustaining cost of the project are expected to be in the second quartile of the global cost curve on it seems the project requires a relatively low capital in relation to the scale might of capital intensity ranked amongst the lowest of the wharf, which stimulate development projects.
By that shows robust financial results and the strong leverage of the corporate price.
As we have shown in the past what are the strong rate of 8%. The project has an NPV of $1 $9 billion using $3 per pump of corporate on 30 times. There was on a product per Boe for weapons you'd be considered the current spot prices for both metals.
We can see on NPV at 8% discount rate, which in the $4 billion.
We can see on internal rate of per tonne of over 30%, which underpins the high quality and value of this project.
Especially in a strong copper market.
For more information on the amount of project. Please please see the website.
I think consider these projects represent a significant value opportunity with other bodies through the minus the development of the project or the.
Development of strategic partnerships of corporate happened within the public vehicle for now the best way forward ask the maximizing value with the advanced Sip.
Project Repeatability pardon me.
I mean jade.
The development cycle.
And with that I would hand, it over now to Jason to discuss the financials.
Thank you Fernando and good morning, everyone.
Turning now to our financial performance for Q4 revenue in the quarter with $461 $8 million compared to $383 8 million from the same period of 2019 of 20% increase.
Gross margin, excluding DD&A and rose, 38% to $295 million from $214 4 million in the year earlier period.
Earnings during the quarter were $103 million of 11 cents per share compared with $14 5 million or <unk> per share of your earlier.
On an adjusted basis earnings were also of 11 cents per share versus <unk> <unk> per share last year.
Our capital spend during Q4 was similar to last year, but higher than the recent Q3 as anticipated because of the timing of our ability to spend during COVID-19.
Sustaining expansionary and exploration spending increased 25%, 260% and 56% respectively compared to Q3 just passed.
Turning now to cash flows.
Cash flow from operating activities was $181 $5 million, while cash flow from operating activities before net change in working capital were $207 $4 million.
Cash flow generation is at multiyear highs.
Note that this comparison includes periods with considerably higher production from mindset of since been divested.
Despite the strong cash flow there was there were several timing items in Q4 that impacted the cash flow generation.
I already mentioned the higher quarter over quarter Capex.
Also the timing of interest payments, which are paid in Q2, and Q4 working capital movements quarter to quarter and the impact of production exceeding sales in Q4, which will normalize during this year.
During Q4, we saw our cash balances increased by $53 million from Q3 after the repayment of the $100 million outstanding balance on our revolving credit facility, which was drawn early in COVID-19, although unused during the year.
With the growing cash we achieved our objective of a leverage ratio of net debt to EBITDA below one turn when assuming a bottom of cycle gold price of $13 50 per ounce, which underscores our significant and growing financial flexibility.
With our current and expected growth in cash balances, we have the financial flexibility to continue supporting our three capital allocation objectives. So.
So it would include maintaining a conservative leverage policy.
Operating our capital investment needs, including our targeted growth opportunities that meet the Arctic and Jack Kadena, and lastly, maintaining sustainable dividend, which will increase with growing cash balances and cash flows.
Turning to a few other Q4 financial highlights.
These charts show our total cash flow profile for the year with operating cash flows in 2020 totaling $618 million.
And free cash flow before dividends and debt repayments of $295 million more than 200% higher than 2019.
Cash and equivalents at year end were $651 2 million.
This includes cash acquired on the integration of the aggregate with Alan Brera Nomura in Q4 with the balance of $223 $1 million at year end as cash is available for utilization by the matter of project.
On the integration Yamana at $56, two 5% controlling shareholder will now consolidate 100% of the accounts of Mara in our financial results and prospectively will show the $43 seven 5% interest of our joint venture partners has the minority interest.
For the quarter cash cost and all in sustaining cost were modestly higher than forecast due to production and cost impacts at Cerro Moro following the re imposition of national safety measures in Argentina in December had.
At Cerro Moro not had this impact and performed as anticipated our consolidated of cost would've been within our prior plans.
In addition, we had anticipated that more production from Barnett I can't hear him of Arctic would be classified as commercial production and with a positively impacted cost. However, the margin generated from higher than expected pre commercial production or not was treated as a reduction to the expansionary capital.
The significant cash flow benefit reduced expansionary capital by a further $14 million in 2020 compared with plan. The net result was that there was no impact on cash flows.
As we updated in our January 25th preliminary results announcement, we were expecting of net impairment reversal related to your opinion on Cerro Moro with our Q4 results that.
That ended up being of pretax net impairment reversal of $191 million represented by a $550 million impairment reversal of that opinion, and the 360 might say $369 million impairment that Cerro Moro.
I don't think of you on the strong recent mine performance across production cost and exploration success resulted in the reversal of Cerro Moro. It was challenges in these factors from the opposite perspective compared to the prior expectations, but also quite significantly the impact of export taxes on cash flow.
Despite this result, we still believe strongly in the long term value opportunity at Cerro Moro, especially from exploration. Although the shorter term result was the impairment of the assets.
Taking a look at capital spending guidance for 2021, we are forecasting expansionary capital spend of $132 million. This year sustaining capital spend of $183 million and total exploration spending of the $110 million.
The expansionary number is higher than what we initially guided for 'twenty one back in January as we hadn't approved the construction of the Odyssey project then, but the capital is now included.
Of note in exploration $18 million will be directed towards our generative program, which includes both early stage and advanced exploration projects, such as monument Bay and Laura there.
We are confident we will advance at least one of these projects to our longer term goal of of mineral inventory.
Sure enough to support of mine with an annual gold production rate of 150000 ounces for at least eight years.
Our exploration budget also allocated $18 million per Cerro Moro underscoring our commitment to the operation and confidence in our ability to expand the mineral resource at this operation and the extended mine life.
And with that I will turn the call back over to Daniel for some final remarks.
Thank you, Jason and closing I would like to once again highlight the resilience of our people perform exceptionally well under challenging because of success.
<unk> to drive strong results.
We believe we've positioned ourselves extremely well for the near term and the long term with the Jack will be enough as expansion exploration upside of that our existing mine coupled with the initiative like Odyssey was the imac and meera debt will sector, our longtime growth for decades.
And those are cash flow on cash balances continued to rise on our financial flexibility of rise with it allowing us to advance these projects, while the continuing to increase return and invest in our future and with debt will be happy to take your questions operator.
Thank you we will now take questions from the telephone lines.
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The first question is from Ralph the city of <unk> Capital. Please go ahead. Your line is now open.
Good morning, everyone. Thanks for taking my questions.
Daniel the MD&A talks about <unk>.
<unk> III expansion potential at Jacobina.
I'm, just wondering sort of high level thoughts I know, it's early but would you see this as sort of very dependent on finding some of those near mine ore sources like kind of unit ocean from affordable dental and particularly.
How do you think of both the strategic reserve life.
Up until now it's been about 20 years do you think you can maintain debt in the 10000 ton per day per day scenario in the context of the tailings capacity.
Good morning, Ralph Thank you for your question Yeah, we are.
We have done for phase two expansion you know we wanted to make sure that the our reserve and resources were not impacted by the increase in tonnage and then that's what we will do for phase III UN mentioned debt. We're aiming for 2027, so still six years of way of doing that the expansion to 10000.
On <unk>. So in three years, we'll be at 85 will continue to do like we did with phase one optimize the mill and then flow badly so slowly with time increase production is basically almost no.
Work or capital needed for that phase III dose on increase in development and production of underground, but with the new meal of the update for phase two.
We'll be able to reach the tonnage with the the do the new of meals. So our target is always to maintain that reserve life. So that's why we will continue to drill we have a very good budget on exploration in the coming years of bit higher than what we had in the past you exactly for that debt, we want to maintain the the reserve level to the.
The actual with an increase of production regarding the tailings you know with the.
Would that phase two now we will do a backfill system and the backfill system is exactly of 2000 tonnes per day, so any new tons that we will put to the meal. We don't want to reduce the mine life of the the tailings that is extremely long right now we want to maintain debt than anything.
Any production above the 6500 tonnes per day at the mill will go back as backfill of underground to maintain our teams. We have many other areas that we already know that we can net tailings in the future, but that's important for us to maintain the actual mine life of the <unk>.
Even if we increase the production so youre right and all of that what you said our target is all the ways to maintain or you know 20 years mine life, even if we increase.
The production by being successful on on on exploration and then we have many target all of these are.
All of the extending at debt.
Finding new one integrated is getting better. So so we don't see any issue to go in debt production in the future.
Yep got it that's that's quite clear on things.
At a high level on the Wassa mine property now that youre seeing much clearer economics and robust economics.
Canadian melodic has this changed your thinking at all on Standalone versus integration with Canadian Mill Arctic.
No not really we're studying the bolt, but you know our our of priority number one is really doing stand alone we have the the room to put the mail.
The main reason why we want the stand alone is four of backfill system also Russia. The advantage of having backfill that site and even though we're going to recover of 95 to 100 per cent of the ore underground. If we have the actual if we leave open stope, then that will be reduced significantly so youre developing all of these zones, but you have to the.
A lot the pillars. When you have of backfill system, you can't fill of the stope and recover most of the all of our of your reserve and then we have a reserve we know what is the resource and reserve will increase with the startup of drilling this year so of me.
All of that site makes a lot more sense for us and then taking of custom meeting and then you have to also assumed debt.
It's a long distance of travel.
On a big production the each day, you know and Defensibility study.
It was of 6500 tonnes per day on the underground operation, we're thinking a lot higher than debt right now and the revised study we're doing.
I got it I see that now thank you Daniel.
Thank you.
The next question is from Don Maclean of paradigm capital. Your line is now open. Please go ahead.
Good morning, guys.
Congratulations on the melodic underground.
That's a tremendous value creation on a lot of good done for that.
Area of of.
Of Canada.
I just wanted to maybe I'll start with.
If henry's on the line of maybe Yohan talk about the fact that it only uses half of the resources and the projected life of 2039.
Could we talk a bit of both the other half of the resources that have been left behind.
Why and the what.
What might happen with those if one considers on 1800 dollar gold world instead of I think of.
1500, maybe it was 12 50 for the cut off.
But what what can we expect to happen with the existing resource on them.
We continue to work on East school, the exploration and what's the outlook for that.
Because my sense is this is the multi.
Decade mine not purchased the 11 years.
Thank you Duncan the good morning, good good question.
What to do to start the study we had to use of what we have you can assume for sure that the other 7 million ounces, we got the drill them and that's the as we build the mine, we all know what debt the production.
And the life will increase of at might uptick right now were focusing on debt for 7 million ounces. That's more defined on the rest, but we have of LT exploration budget. This.
This year of two or two and you know to more of the fine.
The east gold the mine on as we know of driving the ramp down by the end of this year are we going to be in good position to drill from underground and you know Titan drilling on the Odyssey.
Salto will be the first is on to B mind that might uptick underground, but also to better define you know E school at the.
With time, so you know even if we it's the P. E. And then we use the resources. We had we wanted to use the best or quality.
Quality of not the best quality, but the resources that was.
The drill tighter than the rest so I think we timed it will only increase in the future.
This is why the study right now is on the including these are.
As of the resources actually and then you know what we have also a lot of resources.
East of metastatic and then we have included on the east Med uptick down to 600 meters. So this huge potential in the future to increase more debt. That's 11 years, we we all know of debt with towards the multi decades like Youll see.
So as <unk>.
The school of the case of lack of drill density.
Or is it.
It wasn't an economic cut off.
And then they put out of the dawn is basically of drilling.
Okay, but so was the east melodic though more of an economic cutoff.
Just the depth with the ramp because of the shaft with access first day.
<unk>. So you know the east might uptick is quite deep to and then does the.
Our sort of depth you can mind eastmet uptake.
All the C a debt, but as we go down with debt wrap in the we'd go down with the shopping and the access more level. Then eventually will increase also the ounces of eastmet uptick of deeper but E School of these open on all direction too so and that's the better grade of the trees to treat zone. So I'm sure you understand that.
That's the priority number one but.
We're seven years of we have.
Seven eight years of way of being fully in production of might uptick so.
Lot of things will change during these years as we going to drill them more but they are not the cutoff.
Cutoff for the agent there basically.
And the drilled enough or not in the position with the the mine planning right now to put them into the the production.
Great. Okay. Thanks, Daniela My other question that maybe you might be Peter is about the mayor of project.
We've been watching this for years and it's great that it has the integration that's taking place and it's progressed.
But your decision do we integrated the enter your reserves of resources and.
Financials is a significant step.
There's always been multiple auctions for the project.
Hub of your plans for it though.
Within the amount on both.
How it is going to fit into the amana of those plans changed more narrowed at all as as time has progressed.
And are you seeing interested buyers I guess that might be the.
The important question.
I'll start to answer it and then maybe are there Ken can add on it but you know are the <unk> made it clear in this part of the presentation. There's many auction for Meera.
Right now of whom we have to state of course, we have to continue to do the fish.
The study complete that study by the end of this year on the next year, but most importantly, you know the permitting phase now we have the permit the permit to get access to the site that was a key permit to get because we have to go do some kind of designation of drilling to complete the feasibility study, but we have to keep all of our.
<unk> open you know it is clear that we can bring we can we can do it but it will change the.
The company will look like with more of copper production still significant goals. If we maintain a 56% if we bring a financial partner then we'll reduce our stake and then it will still be involved we can sell all of it but we don't think it will be an option in the latest auction is why don't we we fall.
From a corporate company that we have is on management and it's also an option where not finalize the which one we will use or what's the best one for now because like I said.
The meeting and completing the feasibility study is our priority number one right now.
Okay great.
Thank you maybe I don't want to occupy this for too long, but one last question I think everybody is wondering about the melodic underground in the 900, some odd thousand ounces of pre production.
Jason can just tell us is melodic the underground is that going to be self funded.
We keep these kind of gold prices.
Would it be self funded if we include the cash flow from the open pit.
Yeah, John I, absolutely have not thought about $50 50 gold price that you mentioned that that's the case it would be.
Of a multiple cover on.
On kind of the integrated the cash flow generation compared to the underground capex, but when you're you know if you have.
Toggle over to spot and it's going to be.
Further further multiples of the needs there. So I think it's a unique attribute of the of the project, having all of that production over the construction period to subsidized.
Subsidize the ultimate construction there so.
So from a from a net free cash flow from the mall Arctic project well it still continue to contribute net free cash flow to Yamana. If we stay at these kind of prices, yes, very much so Don and I would say, it's pretty pretty robust of these prices you can kind of do both youre going to have.
How of that contribution from the open pit and net of all of the construction cost on the underground. So that's the way as I said that the the study cost of the $15 50, but even more so at the.
On the prices we sit here today.
Okay, great. Okay. Thank you.
You very much guys.
Yeah.
Okay.
Thank you.
The next question is from Mike Parkin of National Bank. Please go ahead. Your line is now open.
Hi, guys just wanted to confirm the 10 year plan doesn't include the the newest numbers on the Odyssey underground or is it.
Still assuming the smaller scale that was kind of previously communicated.
Good morning, Mike, it's including the new the new of numbers, you'll see you saw yesterday.
The presentation today.
But does it all of them and they'll just doesn't include other potential upside on top of debt like low grade stockpiled ore.
Between now and the end of construction a lot of things will happen it might not thinking that might that might change, but when we we.
We said, we presented our 10 years its the.
The new numbers.
Okay that was actually my next question about the stockpiles that was factored in there.
Okay, and do you have a sense of what gold price you.
The the joint venture partnership would want to see to the factor in that low grade stockpile.
But the actual gold price. We can include it in there now, but we've decided not for this.
At this time of the the study it might be included in the future.
What's unit.
Yeah at $15 50, yeah, Okay.
Alright, that's it from me guys. Thanks, very much thank you Mike.
Thank you.
The next question is from Jackie principal Lawsky of BMO capital markets. Please go ahead. Your line is now open.
Thanks, very much on most of my questions have been answered I guess, one would be helpful to get some clarification with the melodic onto the ground.
True exploration program for 2021 can you give us a sense of are you prioritizing from Phil.
Drilling to move more of what you already have delineated into into <unk>.
<unk>.
Category or are you still testing the boundaries.
Of the ore bodies of work.
The step out drilling the a higher priority at this point.
Good morning, Jackie Good question on the reason why don't you answer that one.
Sure Yeah. Thanks Jackie.
There's about a $30 million of budgets.
Poor exploration the majority of that is infill on the east Colby, we'll be looking to take it to about 80 meter centers and the.
And then indicated category.
But there is $4 million that we'll be looking at extensions of the.
The zone. So the zone remains wide open down plunge of especially.
To the east and somewhat up plunge of off to the east as well. So there's there is a significant component of <unk>.
Both aspects, but the main push is definitely going to get the stuff to indicated category.
Okay. That's it from me thanks very much thank.
Thank you.
Yes.
Thank you.
Once again, please press star one at this time, if you have a question.
The following question is from John Tumazos of John Tumazos very independent research. Please go ahead. Your line is now open.
<unk>.
Sometimes the best acquisitions are the ones you already have I'm thinking of the marrow project.
Now the copper and gold.
Prices have rebounded.
Is it likely that you're going to keep a bigger part of it.
Or.
Instead of selling of gold stream to do of financing.
Is there a structure where you sell.
Part of your copper stake.
Glencore of your partner life's copper.
Royal Gold has the copper stream, where you keep the entire gold purchase of patient.
And reduce the copper participation to fund the Capex.
Good morning, John the good good question, it's you know.
Like I mentioned earlier of this a lot of option on on Myra and then Youre right with copper going up and gold going about that project is becoming more and more important for the company and then we own it at $56 25 per cent. So that's that's the important of dust is why we're not in a rush to do.
<unk>.
We will continue the defensibility study the permitting and evaluate all of the option and then we will do what's the best for the for the company.
On the future, but right now all of these option you mentioned plus the one we have are of good option, we have to see what will happen, but right now we state of course on on what needs to be done to complete the fee study and the permitting and it's going it's going well right now.
Thank you.
John if I may add if we sit out of I think.
You also have to consider that of course it like this most likely would have project debt.
Production in the range of 50 up to 70% so the amount that needs to be financed by the partner, it's not 100% of the type of.
Thank you.
Thank you.
The next question is from Tim Huff of Peel Hunt. Please go ahead. Your line is now open.
Yes. Thank you.
I know you've been focusing a lot on melodic in check.
Check of being up but just from a from an ex exploration perspective of I mean, you're obviously allocating.
The good deal of a good deal of exploration spend towards sort of more of an opinion on the syrup, which you've also got a life of mine extension.
I'm not sure that you're aiming for Minera, Florida, Florida, eventually how would you rank of those three in terms of.
Your 21 exploration folks I mean, a lot of it depends on what you find I know, but if you. If you were to prioritize those three in order of how how would it sort of worked for the coming year.
Good afternoon, Tim.
Good question you know.
They're all important <unk> for us for sure you know might uptick as the big Big mine Big projects. So.
Of the more we can we can convert into you know the confidence into the resources. That's unimportant on jacobina is already many years of.
Of production. So it is maybe less important but if we want to increase throughput in the future.
That's also important I think was on Mac as of Q1 two.
Because we we want to build at the mine and we want to update offers the ability study. This year and then we know there's huge potential of an extension. So we don't really put the.
Priority when we do our exploration budget of Andrew.
And we and the team did come with with the idea us and along the years, we see with the success. We have in exploration and then very often in the past few years, even in 90 day lag.
Last year with COVID-19, we you know we have extended the exploration budget, that's helping you on.
And that a Canadian mill the Artic L opinion on you asked the question is of Great question of opinion after 21 years you're on.
On said, we already care of already carry of above 10 years in our in our.
Our strategic mine life of the mine and its important that opinion on this for the build is fully paid for so each ounces were finding there. It's in the LTE budget, but any ounces. We find there are there at low cost and then there are a lot of free cash flow generated from that mine. So we don't really go by priority when it comes to the time for.
Exploration that we spend the money that needs to be spent at each of our mines and also on our of generative exploration program and that's all we we define the we have a budget for total exploration, but it's not really really a priority for any of them, they're all of the importance of enormous.
Line.
Yeah, that's fair enough.
And just one last one you mentioned that you've established.
The new climate action initiative of us.
Pushing the two degree of SPT.
You've mentioned the baseline in the greenhouse gas gas pathways that you wanted to establish but he's the ultimate <unk>.
Aim of what you are trying to do in 'twenty. One is it more of debt establishing operations specific abatement projects.
And do you expect to have those.
Schedules in the initial sort of idea is done by the end of this year.
Yes, that's our target we like I mentioned, we're going to put that a group of working group together, that's our target to have for each mine.
The specific target.
Defined this year, so I don't know Craig if you want to have more on this but that's our target.
Hi, Tim and thanks, Danielle Yeah, Tim just to build on what Daniel said that is the plan.
'twenty one is really as of planning year of foundational year to have all of the work in place so that by the end of the year, we can head of those preliminary operations centric.
Emissions abatement pathways.
Okay. That's great. That's it from me thanks, very much on well done thank you Tim.
Thank you.
There are no further questions registered at this time I will turn the meeting back over to the interest.
Well. Thank you operator, thank you everyone for joining US today, we look forward to updating you on our first quarter and April lease take care of and stay safe Bye bye.
Thank you the come from.
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Good thanks, everyone.
Thanks, Danielle well done thank you.
Thanks.
Yeah.
Okay.
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