Q4 2020 Yamana Gold Inc Earnings Call
[music].
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 and 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 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 of 2020 results as well as the management's discussion and analysis for the same period and other regulatory filings and.
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 them towards the fourth quarter and year end conference call.
Presenting with me today are Jay summed up the long our senior VP of finance and Chief Financial Officer, you'll ended up and I'm senior VP of operation and there are others and then there's our senior VP corporate development.
For the Q&A portion and the remarks, then our senior VP of exploration and Craig fourth our senior VP of safety and sustainability of up and well.
And also be available.
Starting as always 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% since 2012.
We continue to refine and improve our protocol to combat COVID-19.
And you Didnt all of Arctic and we have installed the third party testing of that allowing site to test until we use and contractor before the entered the mine the law.
All of this stuff by trained technician and the operate seven days of week.
We also continue to engage closely with our host communities to support them and the fight against Covid, 19, and providing the nation and critical equipment and supplies.
We achieved some notable milestones and recognition in 2020 as you can see on the slide.
And so you'll have seen and our announcement yesterday, we have formally adopt.
[noise] adopted the climate strategy further underscoring yamana is commitment to transitioning to a low carbon futures.
Our strategy is underpinned by the adoption of two targets of two <unk>.
Degrees Celsius Science based target and then that's the pressure on all of net zero target by 2050.
The dart the targets are supported by a fundamental work to be performed in 2021 to establish a multidisciplinary and met the working group and that are mined 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 a portion of your focused short medium and the long term action to achieve these targets.
Yeah, and I know as the longest theory of prioritizing the health and safety of its people.
And of both of them up and and environmental protection wherever it operates our climate strategy is a natural extension of this business the approach.
Turning now to our.
The 2020, I like we showed great resilience and the most of the challenging and unprecedented and.
The years, we continue with the deliberate I E S cheaper from and it's why the moving quickly to ensure the health and safety of our people and the community, where we defend them and it.
And we delivered strong operational performance with Jacobina and Canadian mill of Artic L opinion, and many of them 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 and when 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 floor is now a $100 per Gilles.
We completed our exploration program and delivered significant update supporting mine life extension.
We continued to optimize our portfolio monetizing certain assets such as all of our royalty portfolio and of course.
One of our gold, which added the wasn't Mac project from our pipeline and increase our price and presence in Quebec.
The prolific Abitibi district.
We completed and option agreement on our <unk> Gold project in Argentina, which we believe is an important step towards bringing this outstanding project and development.
We also completed the integration of Agua Rica, with Minerva and umbrella and.
And the important milestone that the rest of what is known as the matter of project.
Why don't we highlighted the significant net asset.
As both pre accessibility. So the project we note that net asset value of what's the term mine metal prices well below current level.
At current level, the net asset value of doubles to $4 billion. We are not suggesting that this is what should be and models. We are saying that this is an unimpressive low capital intensity low cost project with large copper and gold inventory.
The robust production profile long life and extra that the returns.
And the next several quarters, we will begin to outline all we intend to improve and realize more value from this project.
We have received the permit to advance the project yesterday, which is a positive news.
And finally, we completed our listing on the London stock exchange.
Which provided us with exposure to investor and the U K Europe, the middle East and Asia.
And we didn't have before raising our profile of the while offering these investor exposure to our portfolio of high quality assets and the Americas.
Turning to our fourth quarter Reis.
The result.
We produced 221659 ounces of gold with standout production from <unk> will be the and many of them off of either.
Silver production was $2 59 million ounces.
The above plan underpinned by exceptionally strong performance from our opinion.
Geo production for the quarter was 255 361.
1000 ounces.
Cash costs of 675 per Gilles and and the all in sustaining costs of 1076 per Geo were modestly above forecast due to the tightening of the national safety measure and Argentina, and less production being classified as commercial production from Barnett that can eat and Marty.
And we'll discuss costs and more detail during his remarks.
Net earnings during the quarter was $103 million or <unk> 11 per share with adjusted net coming at the $107 7 million or <unk> 12 per share.
Cash flow from operating activities were $181 5 million and cash flow from operating activities before net change in working capital were $207 4 million free.
Free cash flow from before dividend and debt repayment and was 61.7 million.
The replay of gold mineral reserve depletion on the consolidated basis for our operations.
And we delivered significant increase and mineral resources, including 184 million ounces of inferred mineral resources at the school of D on the 50% basis.
<unk> is part of the Odyssey underground project, the Canadian Mill, RT, which as you've seen and our announcement yesterday is proceeding for development.
We could not be more excited about.
One of the we'll talk more about the project and the moment, but as a reminder, capital cost doesn't include the benefit that we will get revenue from from 932000 and ounces coming from underground during the construction phase.
The addition of <unk> project also increase our mineral inventory at the fed.
Five of them are both purchase price.
Taking a closer look at our result for the full year, we reported Geo production of 900 and the one 901.
And 155000 on five ounces, including 779810 ounces of gold and 10 36 million ounces of silver.
Full year of production exceeding our original guidance for the year of 890000 of Geo and the was within the mind that by this 3%.
My net plus 3% of the variance range of the revised guidance.
Jacobina continues to be a standout producing 44165 ounces of gold and the quarter and all the time and then the all time record of 175 to 77830 ounces for the year. It was the seven straight years of increasing production and project will be in the.
Trend that we believe is going to continue.
Opinion produced 55529, <unk> and Q4, including 43512 ounces of gold and 932954 ounces of silver.
Q4 production and that can you did and while Arctic was 86370 571 answers on the 50% basis. The transition from Guinea of them all of Arctic bit to Barnett bid is going very well with Barnett non commercial production.
70% 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 as we're seeing in 2000 and 6352 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 and 1986, excluding gold production from the reclamation of the exterior paint.
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Cost of Minera, Florida are expected to continue declining in 2021.
Several of my Hope would you of 42940, <unk> and Q4, including 21269 ounces of gold and the $1 67 million ounces of silver.
Full year Geo production was 132000, and 415 ounces, including 66 point.
The 90 95 ounces of gold and of four 5 million ounces of silver largest several mobile operated continuously during Q4 travel protocols, where Titan and roaster of significantly reduced to protect the health and safety of employees and communities.
Friction, where particularly stringent during December.
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 mill sales coming from underground ore at the higher grades and the open pit ore continued in the quarter and and will continue and to 1021 with most of the or the plan to the.
The plan coming from Escondida far West Zoe is from Ddos Central and standard out West underground mines.
We expect the return to production of 1 million Geo per year. This year and the retained at the production level for the next two years the following two years.
The 3% of our production in 2021 and is expected to a pure and the second half of the year with production trending higher each quarter.
This year, we expect production of 862000 ounces of gold and 10 million ounces of silver.
In 2022 of our 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 and forecasts.
Without that we see the three year period of steady state on production and cash flow, while we laid the groundwork for significant growth beyond that period as we advance our project pipeline.
Cash cost ranging from $60 65 to $6 95 per day of this year with and the all in sustaining costs between 980 to 1020.
Our all in sustaining cost in 2020.
It was modestly above forecast and due to the aforementioned net national safety measure and Argentina, and also less production being classified as commercial production from the Barnett of Canadian Mara.
The net result of the mothers of the higher costs and lower expansionary capital of Barnett was neutral.
There was little impact the overall general and 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 reserved the increased to $313 8 million ounces of gold of 113 million ounces of silver and $6 7 billion pounds of copper.
Of note here is the addition of our newly acquired it wasn't of Mac project, which added one 8 million ounces of reserves to our pipeline and.
And that's more of the adjustment really given to recently announced integration the agreement between the Agua Rica and the railroad. We have included 56% of our share of the MRO of project as part of our company sort of total.
We also successfully increased measured and indicated resources to $14 6 million ounces of gold.
And the inferred category gold resource of trying to $15 7 million ounces and with that I will now turn the call over to <unk> to provide some more detail on our reserve resources and project pipeline.
Very good thank you Danielle well how's the amendments and the we replaced the placement of our five operating mine and added ounces.
As a reminder, we are reporting a reserved using a gold price assumption of $1250 per ounce.
And which have not changed from prior year. So all of the increases that you see here reflect the success with exploration.
We also increased the merger and indicated to be throws of about 162000 ounces of gold and we increase and perhaps the <unk> by almost $2 2 million ounces.
We will now have the tools, you'll look at the reserve and the sources on a mine by mine basis parting with kidneys and market.
Well keep the same basis depletion from mining was 325000 ounces in 2020. This was partially upset by the Barnett optimization, which added 150000 ounces of gold. The net the placement of can you just and Arctic was the only 175000 ounces in 2020.
The additional open pit reserve of the bottom of the Barnett pit is equivalent to increasing open pit mine life by about six months. This will improve the production profile. The read the transition from the open pit to underground mining and the upcoming and the optimized the line is offering affordable.
Geotechnical stability.
We are proceeding with the blocking of the Odyssey underground chosen and I will talk more about this exciting opportunities in a moment.
And we'll also talk and that.
And in detail about the <unk> items that go behind the moment, but now with here about the time.
And the continued to be panned out of operation with Chuck will be not extending mine life. Despite the increasing throughput and the thing on increasing 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 reserve base, which includes six 7 billion pounds of copper such as mentioned by Danielle the earlier.
Disruption due to COVID-19 prevented settle modal from adding new zones of high grade inferred resources during 2020, but some promising and sort of section of the depth and Louis and Tom will be and investigate it further with diamond drilling and 2021.
And that and.
At the show for the first time lower grade E police and per resources has been included in the mine and the minds of resources.
These answers are supported by the positive methodical testing.
And I look.
The result.
The contract earlier this year and the positive concept study completed in 2020 and.
In summary of significant reserve and newsroom based per mine, a solid foundation for 10 year outlook and the pipeline and extension of the existing operation and.
And to sort of lump and the.
Well, it's the project.
I will now move move on with the quick update on our recently announced 10 years production outlook.
All of the Markman outlook here and the in the interim.
On the base the base case is to sustain the console and mobile at least 1 billion deal through 2000 and.
The base was announced we have an issue of positive construction decision for the audience the underground project.
<unk> also update our mineral reserve <unk>, 'twenty and 'twenty disclosing in the increase in reserves will.
Moving now and another successful year of reserve replacement and that goes to hang on and.
And as I said, a moment ago, our pipeline is molecule didn't want the Mac and on.
And the morale, giving us confidence that we can exceed the one youll get to you. Please the clarity.
Outlook.
And secondly, we increased the reserve by three and about 14000 ounces of gold at 13% to a total of $2 8 million ounces.
Is the fourth consecutive year that <unk> will be not as the increased reserves with an average reserve.
Placement rate of 240%.
The average reserve grade as reduced slightly as a result of adding lower grade reef and parallel to the high grade <unk> kind of have yet.
We also increased mineral resources and that cycle would be non up here.
Combined the reserve and the youth sports increase by.
<unk> hundred 26000 ounces compared to 2019.
Good growth unlock opportunities for further expansion beyond our plan of phase two of 8000 and final read tons per day, and 230000 ounces per year.
Typically we are now and the weighting of part expenses that would increase of throughput to 10000 tonnes per day.
By 2027 to.
The 29 with the production potential of 270000 ounces per.
For the year.
So in 2021 drilling will continue to convert inferred resources to reserves, while adding new loans of inferred resources.
John and Bill.
Everything else has another successful year, replacing depletion of the reserve for the for the third straight year.
At the yearend 2020 results stood at 920000 ounces compared from 764000 ounces at the end of 2017 and the new lines added to reserves are high quality of key resulting and a slight increase to the average reserve grade.
Gordon and Phil Byrd measure and the indicated resources increased by 16% and 17%, respectively and gold inferred resources increased 16% from 2019.
And a subset of these and per good sorts of Orange <unk> and up 10 years of production outlook.
Though the average was towards the Gregory lowered and Brazil.
Some of these services included in our mine plan is similar to the reserve grade.
The sales supported by the the year end numbers, where the resources that were converted to reserves throughout 2020 higher than average reserve grade.
The positive exploration results at the Ping all support our 10 years of production outlook, which rely on exploration success and to maintain of Rolling 10 year mine life. The.
Is this something you would even remarkable that this operation has been able to achieve puts one to one and one year from accounting and go and ongoing success as the potential to unlock opportunities to ramp up production by leveraging the existing processing capacity.
Now of taking a closer look at the oddity underground project.
And all resources now and <unk>.
<unk> to more than 14 million ounces and 100% basis over a period of only six years.
In the last year alone and we had the close to 4 million ounces of gold as mentioned and mine life is the estimate until 2039 with significant potential to extend beyond that.
Products and is expected to.
The ramp up to 500 to 600000 ounces of gold per year from 2029 through 2039.
This is higher than our original estimate of 450000 ounces per year and the project as our notebook and Ken.
And on mix as you can see from the sensitivity table below.
And then sort of expansion capital of 114 billion and is expected to be spent over a period of each year on 100% basis.
Capital requirements, who he founded using cash on hand, and free cash flow generation.
Other growth capital expenditure and modest sustaining capex and during the construction period of our estimated at 191 $4 million the.
The production during the construction period is expected to be 902.
32000 ounces out of cash cost of about $800 per ounce.
Which will significantly reduce external cash requirement.
Sustaining capex from 2029 from 2039 is forecast at $55 8 million two years.
It is important to note that the only seven 3 million ounces.
And we're about 50% of the projects of the royalty the choices have been included and the technical report completed this month.
And I have great potential for future upside.
On the smaller resources and depth and Odyssey and terminal zone per zone. Two of these of boats and of course, the equaled the zone continues to expand.
And third resources is the gold increased by 134% and 2020 264 million ounces and 100% basis with an average rate of 317 grams per tonne.
And 2021 very constantly to drill and aggressively.
And it will be to test the extension of the zone, along strike and at depth.
We will also drill Odyssey south.
For Q2 and mining.
We look forward to updating you as the transition to underground on the project is advancing.
And our long term outlook profiles, the wassa and actual inject provide and opportunities for products from growth to exceed the 1 million CEO of base case target as a quick from a really complete.
As a quick summary, we did complete our solution and <unk> 20 per sub this year the.
<unk> transitioned with monarch gold team has been excellent and Yamana and already at the Lee is already heavily involved in kind of the key thing with local stakeholders about the future plans for this operation we expect to open everybody's in the office and the upcoming months to support the community engagements.
What im asking the woodlands project and monarch monarch complete the curve the study and 2000 and the team that show a very good economics.
We have begun and update on that study and expect to be completed by the per quarter of this year.
And the updates will evaluate the <unk> to achieve the following the objective.
And then potential impact from the environment and communities minimized and <unk>.
The clarity maximize throughput pent up demand flow sheet, and the Goldman Calgary and the we also kind of a point.
Geology block model and please.
We also then I call and look at and we're looking I think gold mining technology to establish what the knock on the low cost underground operation.
And with that I will not for the over to available to the south of the Mira from them.
Thank you Johan and good morning, everyone.
In December last year, we completed another key milestone for the amount of project with the finding of the joint venture and agreement between Yamana and our partner of Glencore and <unk>.
This important step is the last of the series of key development, which have taken the integration of fiber Rica and umbrella from a concept to a mature high quality and unique development projects.
These steps included among others the creation of the joint team to advance the project not only on the clinical aspects, but also to advance the permitting and the relationships with February and stakeholders and the region and in the country.
Such Martin now as all of the agreement in place with the local stakeholders and the JV partners two of the project to continue to advance through the next the stages of development and.
And value creation.
On the clinical front, we have completed a series of the studies to optimize the project and mitigate risk as part of the ongoing distribute the study demonstrated significant improvements and the.
In relation to the 2019, 2%.
For the next two years, our focus is to continue improving the project advancing the feasibility study and the environmental impact assessment relative to continue strengthening our total license through the execution of our CFO of program and our op and communication and cooperation with the local communities and stakeholders.
On this front and now we have received all the administrative and judicial approvals needed to start of drilling campaign to support the PCB. The study and we're currently working on the procurement aspect from funding the amortization of pushing up the site, let's sort of in the provincial unintended could be making regulations.
Modest of significant high quality assets.
Production of over 450 million pumps of corporate and equivalent per year or 200000 tonnes of copper equivalent per year at a 100% basis.
Also of the 100% basis, we've proven and probable of servers.
Seven 8 billion pounds of copper and seven 4 million ounces of gold.
And over the 100 million of consumer support a long mine life.
We're also standing close of the project are expected to be and the second quartile of the global cost curve and it seems the project required from anything.
Relatively low capital in relation to the scale might of capital intensity.
Amongst the lowest of the work with similar development projects.
The <unk> robust financial results and our strong leverage of the corporate price.
And so we have shown in the past quarter. The strong rate of 8%. The project has an NPV of one $9 billion using $3 per pound for corporate and <unk>.
$300 per month per BOE for reference if we consider the equivalent of pork prices for both made of.
And we can see and NPV at 8% discount rate, which and the $4 billion.
You can see and internal rate of per tonne of over 30%, which underpins the high quality and value of this project.
Basically and a strong corporate market.
For more information on the matter of project. Please visit our web site.
I would think consider before you could represent a significant value opportunity with and that is through the amount of development of the project or the <unk>.
Development of strategic partnerships or perhaps within the public vehicle for now the best way forward estimates you might have value if the advanced the project with the ability permitting and agenda through the development cycle.
And with that I would hand, it over now to Jason to discuss the financials.
And thank you Fernando and good morning, everyone.
Turning now to our financial performance for Q4 revenue and the quarter with $461 8 million compared to $383 8 million from the same period of 2019 and 20% increase.
Gross margins, excluding DD&A and rose, 38% to $295 million from $214 4 million.
And the year earlier period.
Earnings during the quarter were $103 million of 11 per share compared with $14 5 million or <unk> <unk> per share of your earlier.
On an adjusted basis earnings were also of 11 cents per share versus the <unk> per share last year.
Our capital spend during Q4 with similar to last year, but higher than the recent Q3 as anticipated because of the timing of our ability to spend during COVID-19.
Staining 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 flows from operating activities before net change and working capital were $207 4 million.
Cash flow generation is at multi year highs and I would note that this comparison includes periods with considerably higher production from mindset of since been divested.
Despite the strong cash flow there and there were several timing items in Q4 that impacted the cash flow generation.
And I already mentioned the higher quarter over quarter Capex.
But 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 and 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 cyclical of price of $13 50 per ounce, which underscores our significant and growing financial flexibility.
With our current and expected growth and cash balances, we have the financial flexibility to continue supporting our three capital allocation objectives.
Those include maintaining a conservative leverage policy.
Operating our capital investment needs, including our targeted growth opportunities and while 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 flow in 2020 totaling $618 million and.
And free cash flow before dividends and debt repayments of $295 million.
And then 200% higher than 2019.
Cash and equivalents at year end were $651 2 million.
This includes cash acquired on the integration of aggregate cash.
Alan bearer, now Mara and Q4 with the balance of $223 $1 million at year end as cash is available for utilization by the matter of project.
Upon the integration Yamana at $56, two 5% controlling shareholder will now consolidate 100% of the accounts of Mara and our financial results and prospectively, We will show the $43 seven 5% interest of our joint venture partners as the minority interest.
For the quarter cash costs and all in sustaining costs were modestly higher than forecast due to production and cost impacts at Cerro Moro following the re imposition of national safety measures and Argentina in December.
<unk>, Cerro Moro and not have this impact and performed as anticipated our consolidated costs would have been within our prior plans.
In addition, we had anticipated that more production from Barnett Canadian market will be classified as commercial production and we are positively impacted costs. However, the margin generated from higher than expected pre commercial production of burnout was treated as a reduction to the expansionary capital.
The significant cash flow benefit reduced expansionary capital by a further $14 million and 2020 compared with the plan. The net result was that there was no impact on cash flows.
As we updated and our January 25th preliminary results announcement, and we were expecting and net impairment reversal related to your opinion and Cerro Moro with our Q4 results.
I ended up being of pretax net impairment reversal of $191 million represented by a $560 million impairment reversal of <unk> opinion, and the 360 <unk> three.
And $369 million impairment that Cerro Moro.
I don't think of you on the strong recent mine performance across production costs and exploration success resulted and the reversal of Cerro Moro. It was challenges and 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 and 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 $110 million.
And 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 and exploration $18 million will be directed towards our generative program, which includes both early stage and and advanced exploration projects, such as monument Bay and lot of Rivera.
We are confident we will advance at least one of these projects to our longer term goal of of mineral inventory large enough to support of mine with an annual gold production rate of 150000 ounces for at least eight years.
Our exploration budget also allocate the $18 million per Cerro Moro underscoring our commitment to the operations and confidence and 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 <unk>.
Fences to drive strong results.
We believe we've positioned ourselves extremely well for the near term and the long term with the check will be enough as expansion exploration upside of that our existing mine. The couple with the initiative like Odyssey was imac and mirror that will secure our longtime growth for decades.
And those are cash flow and cash balances continue to rise of our financial flexibility of rise with it and allowing us to advance these projects, while continuing to increase return and invest in our future and with that we'll 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>.
Phase III expansion potential at Jacobina.
And just wondering sort of high level thoughts I know, it's early but would you see this as sort.
The very dependent on.
Finding some of those near mine ore sources like kind of year at oceans, and multiple dental and.
And particularly.
How do you think about the strategic reserve life.
Up until now has been about 20 years do you think you can maintain that and the 10000 ton per day per day scenario in the context of the tailings capacity.
Good morning, Ross. Thank you for your question yes.
As we have done for phase two expansion you know, we wanted to make sure that our reserves and resources, where and not impacted by the increase and tonnage and and that's what we will do for phase III and mentioned that we're aiming for 2027, and so still six years of way of doing that the expansion to 10000.
Don for diesel and three years will be at 85 will continue to do like we did with phase one and optimize the mill and then full of Abbvie. So slowly with time increase production and this basically almost no.
Work or capital needed for that phase III dose and the increase in development and production underground, but with the new mill the update for phase two.
We'll be able to reach the tonnage with the the deal the new mill. 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 the exploration in the coming years of bit higher than what we had in the past you exactly for that that we want to maintain the the reserve level to the.
The actual within the increased production regarding the tailings.
Would that phase two now we will do the backfill system and the vaginal 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 that and anything.
Any production above the 6500 tonnes per day at the mill, we will go back and backfill of underground to maintain our team. We have many other areas that we already know that we can net hearings and the future, but that's important for us to maintain the actual mine life of the tuning.
Sure.
Even if we increase the production. So you are right and all of that what you said our target is always to maintain our 20 years mine life, even if we increase.
And no production by being successful on exploration and then we have many target all of these recent alright, all of extending it that we're finding new one integrated and getting better. So so we don't see any issue to go and that production in the future.
Got it that's quite clear now.
Yeah.
At a high level on the Watson the property now that youre seeing much clearer economics and whole bunch of economics and Canadian melodic has this changed your thinking at all on Standalone versus integration with Canadian melodic.
No not really we're studying both but.
Of our priority number one is really to understand alone we have the the room to put the Mayo.
And then the main reason why we want the stand alone is four of backfill system, all suraj the advantage of having backfill that site.
We're going to recover and 95% to 100% of the ore underground and if we have actually if we leave open stopped and that will be reduced significantly. So youre developing all of these zones, but you have to live a lot and pillars. When you have of backfill of system, you can't fill of the stope and recover and mostly all of our of your reserve.
And we have a reserve we know what is the resource and reserve will increase with the startup of drilling this year. So EMEA that site makes a lot more sense for us and then taking of custom meeting and then you have to also assume that it's at.
It's a long distance of travel.
A big production, the HD and the <unk> study.
Was the 6500 tonnes per day on the underground operation and we're thinking a lot higher than that right now and the revised study and we're doing.
Got it and 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 and.
Congratulations on the melodic underground.
That's a tremendous value creation on the.
Lot of good for that.
Area of.
And of Canada.
And just wanted maybe I'll start with.
If henry's on the line of maybe Johan talked about the fact that it only uses half of the resources and the projected life of 2039.
Could we talk a bit of boat the other half of the resources that have been left behind.
Why and the what.
What might happen with those if one considers the 18th $100 gold world and instead of I think of.
1500, maybe it was $12 50 for the cut off.
The what.
What can we expect to happen with the existing resource from them.
Continue to work on East school of the exploration well.
What's the outlook for that.
Because my sense is this is the multi.
Decade mine month.
Just the 11 years.
Thank you Dawn and good morning, good question.
And 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 going to drill them and thats. The as we build the mine, we all know that the production.
And the life will increase of at might not sick right and our.
Focusing on debt $4 7 million ounces thats more defined and diverse but when we have of LT exploration budget.
This year of two or two and you know to more of define.
And the east of the mine and as we know of driving the ramp down by the end of this year, we got and be in good position to drill from underground and Titan drilling on the Odyssey.
Salto will be the <unk> zone to be mined that might uptick underground, but also to better define the east school at the.
With time so.
And even if we it's a <unk> and then we use the resources we have we wanted to use the best.
Quality and not the best quality, but the resources that was.
The drill tighter than the rest so I think we timed it will on the increase and in the future and.
And this is why the study right now is on the including these.
As of the resources actually and then we have also a lot of resources.
Eastern Med uptick and then we have included only the eastbound uptick down to 600 meters. So this huge potential in the future to increase more than 11 years of weak. We all know what the estimate toward the multi decades like youll see.
So and so as east Google of the case of lack of drill density.
Or is it.
It wasn't and economic cut off.
And then they put out of Dod.
And it's basically drilling.
Okay.
So was the east melodic though more of an economic cutoff.
Just depth of with the ramp because of the shaft with access first day.
And <unk>.
The east might uptick is quite deep two and and does the.
Sort of depth, you can mine east med uptake and all.
The C at that but as we go down with the ramp and we go down with the shaft and and access more level and eventually will increase also the.
Ounces of Eastmet uptick deeper, but the school of these open on all direction too so and its the better grade of the trees to treat zone. So I'm sure you understand.
That's the priority number one but.
We are seven years of we have.
Seven eight years of way of being fully and production that might uptick. So a lot of things will change during these years as we going to drill them more but they are not the cutoff.
Cutoff related there basically.
<unk> drilled enough.
And the position with the mine planning right now to put them into the the production.
Great. Okay. Thanks, Daniela and my other question.
Maybe you might be Peter is about the mirror of project.
We've been watching this for years and it's great that it has the integration of that's taken place and Thats progressed.
And your decision do we integrated the enter your reserves and resources and.
And financials.
And if we can step.
There's always been multiple auctions for the project.
And of your plans for it though.
Within the amount of about how it's going to fit into Yamana of those plans changed where narrowed at all as as time has progressed.
And are you seeing interested buyers I guess that might be the best.
The important question I'll start to answer it and then maybe are there Ken can add on it but you know are.
<unk> made it clear and as part of the presentation, there's many auction form meera.
Right now we have to state of course, we have to continue to do.
As I read the study complete desk that study by the end of this year or in the next year, but most importantly, the permitting phase and 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 destination and drilling to complete the feasibility study, but we have to keep all of our.
Option open you know it is clear that we can bring we can we can do it but it will change the what the company will look like with more of copper production is still significant goals. If we maintain our 56% if we bring a financial partner and we'll reduce our stake and then it will still be involved we can sell all of it.
We don't think it will be an option and the latest auction is why don't we we.
And we form of copper company that we have its own management and it's also an option where not finalize of which one we will use.
And what's the best one for now because like I said permitting and completing the feasibility study is our priority number one right now.
Okay great.
Thank you and maybe I don't want to occupy this for too long, but one last question and I think everybody is wondering about the mall Arctic underground and the 900, some odd thousand ounce of the preproduction.
And maybe Jason can just tell us.
Is melodic the underground is that going to be self funded.
And we keep these kind of gold prices.
And would it be self funded if we include the cash flow from the open pit.
Yes, absolutely.
Absolutely and that got fixed.
The dollars 50 gold price that you mentioned that that's the case it would be kind of of multiple cover on kind of the integrated the cash flow generation compared to the underground capex and <unk>.
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 project, having all of that production over the construction period to subsidize.
Subsidize the ultimate construction there so.
So from a from a net free cash flow from the mill Arctic project well it still continued to contribute net free cash flow to Yamana. If we stay at these kind of prices and very much. So dominated the it's pretty pretty robust to the prices you can kind of do both youre going to have.
All of the contribution from the open pit and net of all of the construction costs on the underground.
As I said that the study cost of the $15 50, but even more so at the.
And at the prices, we sit here today.
Okay great.
Great. Okay. Thank you. Thank you very much guys. Thank you.
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.
It 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 numbers, you'll see you saw yesterday.
The presentation today.
But all of it doesn't include other potential and upside on top of that like low grade stockpiled ore and.
Between now and the end of construction a lot of things will happen and that might not take and that might that might change, but when we.
We said, we presented our 10 years its the.
With the new numbers.
Okay that was actually my next question about the stockpiles that was factored in there.
And then.
Okay, and do you have a sense of what gold price.
The joint venture partnership would want to see to factor in that low grade stockpile.
But the actual gold price. We can include it in there and now, but we've decided and not for this.
This time of the the study it might be included in the future.
But that's the.
The <unk> medicine.
And yet at $50 <unk>.
Super Alright, that's it from me guys. Thanks, very much thank you and Mike.
Thank you the.
Our next question is from Jackie principle of Lawsky of BMO capital markets. Please go ahead. Your line is now open.
And thanks, very much and most of my questions have been answered I guess, one what would be helpful. With the just some clarification with the <unk>.
The logic on the ground.
True exploration program for 2021 can.
Can you give us a sense of are you prioritizing and Phil.
Total drilling.
And more of what you already have delineated into into them and I.
Category or are you still testing the boundaries of.
Of the ore bodies and would sort of step out drilling the a higher priority at this point.
Good morning, Jackie and good question and the reason why don't you answer that one.
Sure Yeah. Thanks Jackie.
And there is about a $30 million budget for.
Core exploration and the majority of that is infill on the east Goldie will be looking to take it to about 80 meter centers and.
And an indicated category.
But there is $4 million that we will be looking at extensions of the.
And the zone. So the zone remains wide open down plunge and especially.
To the east and somewhat up plunge of up to the east as well. So there is there is a significant component of <unk>.
Both aspects, but the main push is definitely to get the stuff to indicated category.
Okay the quicker.
Thanks very much thank.
Thank you.
Okay.
Thank you.
Once again, please press star one at this time, if you have a question.
And the following question is from John Tumazos of John Tumazos very independent research. Please go ahead. Your line is now open.
Sometimes the best acquisitions are the ones you already have I'm thinking of the marrow of project.
Now the copper and gold.
Prices have rebounded.
Is it likely that youre 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 comp per stake.
Glencore of your partner life's copper.
Royal Gold has a copper stream, where you keep the entire gold purchase of patient.
And reduce the copper participation and to fund the Capex.
Good morning, John the good good question.
And all that Ken mentioned earlier, there's a lot of option on Myra and and Youre right with copper going up and gold going about that project is becoming more and more important for the company and and we own. It at 50, 625%. So that's that's important and the dust is why were not in neuro.
And to do.
And it will come and continue the feasibility study the permitting and evaluate all of the option and then we will do what's the best for the for the company and.
And the future, but right now all of the.
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 what needs to be done to complete the fee study and the permitting and its growth.
And it's going well and 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 might be most likely would have project debt.
Perhaps and the range of the up to 70% so the amount that needs to be financed by the partner.
The 100% of the capital.
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.
The I know you've been focusing a lot on.
Arctic and true.
But just from a from an exploration perspective, I mean, you're obviously allocating.
The good deal of a good deal of exploration spend towards the or more of an opinion on the syrup, which have 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 were to prioritize those three and order how would it sort of work for the coming year.
Good afternoon and Tim.
Good question.
They're all important for us for sure and might uptick as the big Big mind Big projects. So.
And the more we can we can convert into the <unk>.
Confidence into the resources and Thats an important one jacobina is already many years of.
Of production. So it is maybe less important but if we want to increase throughput and the future.
And that's also important and I think it wasn't Mac as of Q1 two.
Because we we want to build that in mind and we want to update offers the ability study.
This year and and we know there's huge potential of and extension. So we don't really put through price.
Priority when we do our exploration budget.
And we ended team did come with us.
And along the years, we see with the success, we have in exploration and and very often in the past few years, even and 90 last year with COVID-19, we were having extended the exploration budget and that opinion.
And that our Canadian mill Arctic, helping you and you asked the question is so great question of opinion. After 21 years Jan said, we already care of already carry above 10 years and our.
And our strategic mine life of the mine and.
It is important and helping you on is 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 and there are 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 and we spend the money that needs to be spent at each of our mines and also on our generative exploration program and Thats. All we we defined and we have like a <unk>.
Budget for total exploration, but it's not really really a priority for any of them. They are all important in our mind.
Yes, Thats fair enough.
And just one last one you mentioned that you've established.
The new climate action initiative of Istar.
Pushing the two degree SPT.
You've mentioned the baseline and the greenhouse gas gas pathways that you want to establish but is the ultimate aim of whats you are trying to do and 21 is it more of that establishing operations specific abatement projects.
And do you expect to have those cost schedules and the initial sort of idea is done by the end of this year.
And that's our target we like I mentioned, and we're going to put the group working group together and.
And that's our target to have for each mine.
The specific target.
Define this year, so I don't know Craig if you want to add 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.
2021 of the really is of planning year of foundational year to have all of the work and play so that by the end of the year. We can have those preliminary operations centric.
Emissions abatement pathways.
Okay. That's great. That's it from me, thanks, very much and well done thank you Tim.
Thank you.
No further questions registered at this time I will turn the meeting back over to Mike.
Thank you operator, thank you everyone for joining us today, we look forward to updating you on our first quarter and April please take care and stay safe Bye bye.
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