Q4 2020 B2Gold Corp Earnings Call
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Ladies and gentlemen, this is the operator your conference is scheduled to begin momentarily until that time your lines will once again be placed on hold thank you for your patience.
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Good afternoon, My name is Jason and I will be your conference operator today at this time I would like to welcome everyone to the beach gold fourth quarter and full year 2020 financial results Conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks.
There will be a question and answer session, but you would like to ask a question. During this time simply press Star then the number one on your telephone keypad. If you would like to withdraw your question. Please press the pound teams I would now like to turn the call over to Clive Johnson, President and Chief Executive Officer and director. Thank you Mr. Johnson.
Can you conference.
Thanks, Jason and thanks for joining us everyone.
Welcome to our conference call to discuss our.
Q4 and year on financial results from 2000 and the <unk>.
'twenty.
We had a session that we put on the production numbers this year, which I think was very useful for everyone on this.
Essentially we're welcoming shareholders are solid production.
Party zone.
The net loss if you have detailed modeling questions on when we open up for Q&A I would ask you cannot do that in this forum, we're happy to discuss the strip ratio on that.
Its body in 2030 or whatever.
On a separate call with TB. We continue we will continue to be transparent and help you get your models right, but not we don't want to have those kind of detailed questions. On this call you can follow up with him and he'll put you in touch with the right person to ask those detailed modeling questions.
In terms of what would you obviously you had a remarkable year in 2020 by any measure.
In terms of operating and financial results as you're going to hear.
From Mike.
We think it's we've talked about it before but I think we're very proud of what we've been able to accomplish particularly.
This time of Covid.
We did a lot of things well this year and I think we were having a COVID-19 with our employees all of our stakeholders.
I'd like to think it was very successful.
All of these countries have been get some challenges on all these projects during COVID-19.
I think it's a testament to our culture.
Our trusted relationship we have with all of our stakeholders.
So the governments in these countries that we're in and our employees.
On the local people and it can be from rent on the company all have one thing in common which was we wanted to keep mining.
Keep employment up per taxes, and do all the other great things, we do drink Covid, if we could do it simple.
It's been a great results and I just want to shout out to all of our tremendous ships that can achieve months. It seems that the monitoring all of our employees who in your route them together.
All of those are part of the beach ball family to do on.
Excellent job during this challenging time.
So you'll hear about the results from a year on our leases on a tremendous position to.
To continue to optimize production on September <unk>.
Existing mines.
Continuing on to be the rate of stroke credential position going forward and also of course continued on our dividend paying the dividend.
On a strategy, but on can also although each utilized cash from operations to further grow the company.
In terms of looking a little bit forward now there's a lot of things can happen to share the well laid out on the Benicia list, but we have the.
Grammar Lockheed feasibility study results should be on in April.
That's what we're hoping a positive study them, we would be calling vertical development plan on very shortly thereafter, each day had on Investor day yesterday on apparently they were very optimistic we are about the project.
I think that's an important part from printing what they've said for there.
Is there a future in Columbia are running pretty much to be a good strong partner and we have worked very well together.
And things are going very well on site in terms of.
The location on some of the other.
Requirements, we have to try and get boots on the ground in September if we have a pause on the feasibility study in.
Washington to government decision for the partnership at this time and for some time, it's been pretty much on the same page.
Coming up the shields detailed on the Asia chocolate, where we are.
Were cautiously optimistic at this point I guess about Chiacchia, we'll see by the middle of the year, we'll have the results from an updated feasibility study, but the reasons. We're encouraged on not just goldfish, which really.
Some of the things that happened we haven't we did some more drilling and have a better resource model for each one.
Other things are the potential for potentially should you can changes in terms of power.
Power fuel on Pollo cost et cetera, looking at job liquid natural gas.
On the hybrid policy buying solar and dual fuel haul trucks.
So it's.
That gives us reasons to hope our internal non suggested the economics should cash it could be quite attractive. So we'll know a lot more about that by June. So those are the two key development projects. The other the other thing I think you're going to talk a little bit about them.
Congrats on your questions Chris.
Question on shift here, but just to touch on exploration, obviously, a very important part of our history on our success both in terms of brownfields and Greenfields.
Over a long long period of time.
We do have a budget of $66 million fluctuation this year.
And when you touch on questions about that but I would just say that if we look back historically, we should probably run the numbers one day, but if you look at the money spent on exploration.
The resulting ounces just Philadelphia on brownfields or Greenfields, we've always had a track record of.
English successful in utilizing this large exploration budget.
From <unk> to payback tremendously in terms of the auctions generated from it.
So on issue a lot of it there's a lot of it for brownfields or something up to $25 million of exploration budget.
It could.
Could be on the cubic for Greenfields, but theres a number of things we're excited about it and I just want to point out debt.
This is a medical on for us from a long term on exploration overtime. It's just been a very important part of our of our ability to grow the company and continue to extend our on my lunch and we will continue to be driven by <unk>.
<unk> not geography, as we happened around the world and Demoed from each of growth. So some of the things. We're now getting to look at we've been pursuing for awhile respective standard we actually started pursuing that in 2007, when the pizza day, that's a great opportunity for world class deposits from them.
So we have a joint venture they are excited about the targets we're seeing growth.
In addition of course, we have.
Which for both to be drilling on a very exciting zone, there, which has significant potential obviously and then there is a number of other things. We're working on of course, you'll be on the call.
On the area for potential major additions to our.
Reserves or another potential discovery.
But do you feel that on a niche which is well known the Cardinal zone, which could add potentially in the near term some additional.
For the so called the mill so there's under all participation opportunities. We're working on debt that's part of the potential to wake up with total budget would be for other opportunities elsewhere in the world.
Which will be up to detail most people on through the year.
So I just wanted to point out on to talk a little bit about that on the importance of ongoing importance of exploration on.
In our world.
So with that I think I will just pass it over to Mike citizens, our CFO who's going to walk you through the financial.
And then also I think we can open it up to questions after that.
Thanks Klaus.
I'll talk about the quarter fairly briefly and then just comment on a year to date. The overall results given that that's our year end reporting.
And also discuss a few things on the cash flow as well.
So firstly on the quarter, we had revenues of $490 million so that was.
Based on the sale of 257000 ounces at an average price of $18 68 per ounce. So good gold prices that we saw on Q4, the actually the highest SKU that we saw given what went on the gold during the year was Q3 for gold prices.
That $80 68 for Q4 is a little bit higher than we're seeing now in Q1 as we move into the new year.
We pretty much sold what we produced in the period, so no significant timing changes there.
On the production sites.
Good production quarter right on budget basically so the total total production, including our share of calibre.
Attributable ounces was 270000 ounces, so pretty much right on right on budget and the total from our three operating volume was 256000 ounces again pretty much right on budget. So.
Really nothing nothing to comment on the individual site.
Site production other than they basically had budget for call of 159000 ounces.
MS Patti 58000 ounces and old Chicago 40000 ounces.
So when you take a look at a bunch of production and then look at how it is.
It flowed into cash cost and this is kind of.
How we guided I think in Q3, so on the cash cost on on on a total from all apps, including caliber cash cost were $473 per ounce produced.
That's about 50 bucks higher than budget and and those hired on budget cash cost really mainly come from coal aware, which because of some mining sequence changes during the year and also.
Some higher cost there, especially on the HFF side and on the labor side related to like dealing with Covid.
We will take sort of personnel cost there.
Total total cost per ounce at for Cola were 397 Bucks, an ounce, which is 90, just over 90 bucks higher than budget.
Miss body was $5 85, which is actually 47 under budget and MS body continued.
To benefit I think from lower fuel prices at site and lower haulage and stripping cost just to remind you as well the reason for coal fuel costs were actually over budget on both sides of about 11% over budget was because the fuel cost in West Africa, if they don't flow just from the general market.
The government sets of fuel price. It includes a bunch of cost per ticket cross border from the ports right into the country on some taxes. So the government sets the price and we haven't seen them.
Follow.
The underlying market price in doing so during the year.
Finally, <unk> 520 Bucks an ounce that was just slightly over a bunch of $14 an ounce, mainly just due to mining sequence changes because overall <unk> did also see lower fuel costs.
They also balance that did from a weaker Namibian dollar during the year.
Yes.
And then moving to all in sustaining cost for the quarter total, including our share of caliber $926 an ounce.
Which is 190 bucks.
Per per ounce higher than budget in the games pretty much as we guided we thought was going to happen on it.
At the end of Q3, so that's true.
That's a combination of the higher cash cost of about 50 Bucks an ounce and then also higher than budgeted sustaining capital in the period and most of that was timing.
And a lot of it was fleet cost so in the period, we had about $19 million overall higher sustaining capex and we'd originally budgeted a lot of that just rolled in from earlier quarters and most of it relates to our significant portion of it related to fleet fleet cost either.
Fleet purchases or maintenance debt that had been deferred or delayed from earlier quarters from the year.
And then just going to comment now on on.
On the year's results so.
Firstly on the revenue side, just under $1 8 billion in sales.
Annual record for Beecher gold sales of just over 1 million ounces at an average price per the Europe.
$877 per ounce.
So excellent excellent year on the sales side.
On the production side total, including our share of caliber a $1 million or 41000 ounces produced.
From our three mines 995000 ounces.
And you know so if you look at our consolidated production number the one on 41 1000 from 41000 ounces 1.041 million ounces, that's right at the upper end of our guidance range of $1 million to $1 55 for the year and you got to look at that context is while we dealt with COVID-19 through the year at all sites, we dealt with it.
Very effectively based on the production results Youre seeing and also caliber for a period of time it shut down their operations as they dealt with Covid, Nicaragua, but we never changed our guidance on Indiana, We still came in at the upper end of our consolidated production range.
On the individual components of that from our side. So call. It 623000 ounces that that's above the high end of its guidance range of $5 90, 620, Ms body was 205000 ounces right in the middle of its range of 200 to 210, I know, what you're coda was 168000 ounces.
In the range of $1 65 per 175 <unk>.
Can you comment as well on this body and not only did they deal with Covid.
And some of the transportation challenges that were experienced earlier in the year when when Covid first hit the Philippines, but they also had an earthquake and the super Typhoon and they still have their range right on the middle So very impressive performance at all sites.
Commenting on now on on cash cost on all in sustaining cost for the year. So on a consolidated basis, so I'm not sure of caliber $423 an ounce.
Overall, that's $11 an ounce.
Under budget. So we did see some higher input cost for coal, but then that was offset.
By cost savings in both on the Saudi I know in Chicago.
So individually ethical was $320 per ounce produced which is just just that that was pretty much at the upper end of its guidance range of $2 85 to $3 25 per ounce.
MS <unk> 620.
$9 per ounce well below budget by $57, an ounce and like you say they benefited from Sig.
Significantly lower fuel cost and also college and stripping cost were lower than we anticipated.
And then O J code over $453, an ounce that's $46 an ounce under budget.
They said they benefited from lower input cost and a weaker Namibian dollar.
And then when you translate that all into.
Consolidated.
Cost 788.
Dollars per ounce sold.
Including our share of caliber and against the budget of 794. So just just on under budget and it was at the low end of the Companys guidance range of 780 day 20 per ounce.
Nicole It came in at 599, just under 600, so that.
That was just slightly above its guidance range of $5 55 per flight 95, as a result of slightly higher input cost.
And also remember when we do the budgets, we're basing it on a certain oil price or the royalties that flow into this all in sustaining cost Calgary or based on a much lower gold price then we actually saw on the year.
And as Bobby $985, an ounce, so pretty much on budget and at the low and within its guidance range of 965 to one 005 per ounce and I know what your code on $920, an ounce sold which is well below the low end of its guidance range of a.
Thousands tens of thousands 50 bucks per ounce.
So excellent excellent year operations wise from all sites and like I said, I think pretty much where we came out as we guided in Q3 and when we put on production released earlier.
In January a.
A couple of comments on some of the significant stuff going on on site. So.
And for call it the expansion our debt.
Of the <unk> mill and the fleet.
Completed by Q3 2020 came on line in the quarter and are operating very effectively and I'm sure Bill is going to comment a little bit about how we see from colon.
Operating as we go forward it.
It did come in slightly over budget and below 14 million that was mainly due to COVID-19 related delays.
Higher labor cost, but but overall it ran smoothly.
Solar plant the new solar plant at XO Cola. It was originally forecasted and budgeted to be completed in 2020, but we actually suspended that for a while to give us more room on the camp to.
To complete our labor rotations for the regular operations. So that did recommence later in 2020 and is now scheduled to come on line and its installments through 2021.
The first the first part of it turned on in this first quarter of 2021, and then it should be fully complete by the third quarter and we did have a fire.
At the site, which destroy some of the solar panels. So we're just in the process of replacing those so that pushed out the completion date slightly to vote on the third quarter of 2021.
What your Kodo will show you on underground.
Development of that debt.
<unk> is underway a portal development started basically near the end of the third quarter.
We are about $11 million on your budget for the full year 2020, those cost will just be pushed into 2021, and we're still on target to have the underground development completed and bring it into the production schedule in early 2022 as originally forecast.
And we're also under on them.
There's a power line connection that Oh, Jakarta, where we're going to connect our solar plant to the national grid.
Again, because COVID-19 delays that we've pushed out into this year. So that will get from this year. We were about 6 million on the budget as a result from that.
That much body that is basically a machine just ran smoothly there's no significant.
<unk> or Capex variances that MS Studies, we went through the year and in fact, what we did was we even accelerated a little bit on the Capex. There from 2021 some of the fleet that we were going to by early 2021 were actually completed in late 'twenty.
<unk> I think we were about 7 million under our share of the budget for the year, mainly due to COVID-19 delays, but we still got our exploration program completed and we're still on track to have the feasibility study completed.
In early April so although were under budget on on.
The cost side it did delay the key activities that we're pursuing there and then as Clark mentioned, we are still.
We're revisiting jackup.
We looked at that through the course of 2020, yet and we're still on track to have an updated study for that by the end of the second quarter 2021.
Couple of comments, maybe on on on fuel a key component of our costs are we have still maintained our hedging program, where we had jumped to 50 per cent of the next years, you'll need from 25 per cent of the subsequent years, John Lisa and we did catch up with that through the course of 2020 and that's the position we were in by the end of the year.
Year and that is that is benefiting us now in terms of mark to markets as we go through the first quarter as we've seen fuel cost rise.
One of the things that came up I think when we did our production releases as well for 2021 was there are some slightly higher customs and duties cost in Mali as we come out of our generation phase we had a three year exoneration post startup of the mine activities there and we.
We've now we've now reached up phases.
Of course, we have to pay some more customs and duties on imports and there was a question about what impact per ounce that was for color. So we quantified that for you in the MD&A, it's approximately $15 an ounce for those of you that want to plug that into your models.
A few comments now on the on the on the income statement side, we talked about revenues and cost on the G&A side, we were about 10 million under where we were last year a lot of that has to do with just a lot less travel and less consulting cost in the current year again as COVID-19.
Certainly restricted a lot of what we would normally do.
Ms battery impairment reversals or as a significant item on the P&L, they're $174 million that we reported earlier in the year, but just to remind you that's in there for the full year.
And that's that.
That's perhaps the reversal of any remaining impairment that we've historically taken on this body.
We've got.
We're equity accounting our share of caliber results. So we had to pick up during the year.
Approximately $22 million.
Related to that and we do have a significant investment caliber shows we took caliber shares as part of the deal. So they've currently got on market volume somewhere around 140 million Bucks.
On the tax side I know that.
Quite a few of the ounces you definitely had questions on taxes. So the total income tax charge.
Recorded an accrual basis for the year was $310 million.
We're taxable at all sites now and we don't have accelerated write offs of any costs at any sites anymore. We're just paying taxes as we go on to remind you that that also those that tax charge also includes the priority dividend up from Cola.
It was quite this the whole tax situation volume and how it's reported in booked and paid for it is it is a little complicated. So we've tried to lay it out for you in a bit more detail. It's on the news release on page seven just explaining the cash taxes on how we pay them and we've also put some guidance in the MD&A for your on income taxes on page eight and then on for Cola dividends hold out.
That all works on page 13 so.
Hopefully that will help clarify for any of you that.
All of our well confused by that and we're also happy to answer any questions.
Separate policy, if you want a follow up.
So just to remind you on the tax side 310 million charge for the year that that that includes about $140 million.
That hasn't been pages will be paid in 2021.
On the main components of that 140, or 75 million of remaining for coli income tax liabilities and $50 million per payment of the.
2020 for Colo priority dividend. So again, we laid that out in the MD&A. So hopefully it's clear for you now.
For the total year well for the quarter actually we had net income was $174 million or 16 cents per share attributable to share our shareholders and adjusted net income was 146 million or <unk> 14.
Per share adjusted.
Year to date.
And cause net income was 672 million or 60.
Per share and year to date adjusted after we take out a significant non cash items. The main ones being Adam is body impairment reversal and for tax adjustments year to date adjusted EPS was <unk> 49 per share.
Just a couple of comments on on the cash flow statement. So first one is on the operating cash flow of $197 million for the quarter or <unk> 19 cents.
Cash flow per share and for the year $950 million, that's a record for.
<unk> Big number and to remind you guys that did it that that's after we prepaid $50 million per Molly and taxes. We ended up with 950 for the year, which approximately 90 91 per share.
The only other a couple of comments on the cash flow statement.
Kind of alluded to some of the capex or in total our Capex, we were about $40 million less than budget for the full year, which is a bit light.
We're slightly further on their budget and then we thought at the end of Q3, the main components of that on Richard R. R.
We had less deferred stripping at both for colon.
And on Chicago totaled $28 million.
We will check on underground has imagined 11 million under an <unk>.
Check par line 7 million under and that was offset by some of the overruns from your expansion.
As I discussed and and some lower exploration cost we were approximately $7 million undrawn on exploration.
A lot of that was greenfield that we didn't get to this year because of some of the restrictions that we face.
We're hoping to get through it next year as Clive alluded to in his opening remarks.
So for the year, we ended the year 480 million in cash and a full we have the full amount of our 600 million revolving credit facility available at our disposal.
And that is I think that's the summary of the highlights of the financial highlights that I wanted to touch on thank you.
<unk>.
Thanks, Mike.
So I'm just wondering I neglected to mention in my opening remarks was just on strategy I think it's pretty clear from the new solution from the recent calls from Pal, but our strategy remains the same which is obviously the 10 or so on financial solutions, we said on the ability to pay the dividend and advanced our growth projects.
On the growth projects to potentially we have but I'm going on.
Hmm.
Thiago.
The Anaconda area at Suntrust on all of the exploration funding, where we're doing for.
With brownfields and Greenfields, we're pretty close on that ability to grow shareholder value in this company.
Over the year without having to question pursue M&A. So obviously, we'll look at M&A I mean, you all have a big haircut from the highs that we were at some other companies have as well, but gross could do M&A at this point with everything we've got going on that we think potentially could add a lot of shorter value would happen between shooting compelling.
Even though the realistic expectations on certain companies have tried to come down because of where some opportunities because of the gold price.
We will see we're always looking but to be honest.
Day.
We're quite comfortable on to this point about M&A, which is a good place to be and keep them on being able to play. It if something comes along that makes sense from you think adds value from shareholders of course.
You know what's going on.
Background will will definitely have a hard look on it so.
I think with that we'll move to open it up to two questions.
Certainly at this time, if you would like to ask a question. Please press Star then one up from one on your telephone keypad to withdraw your question press the pound key.
We'll pause for just a moment to compile the Q&A roster.
Your first question comes from the line of Tyler Langton from Jpmorgan. Your line is open.
Thanks for taking my questions just on <unk>.
Yep.
On Cardinal I guess in terms of I know you mentioned be sending.
Material to get processed at the mill.
In Q2, I mean, I guess do you have a sense is it you know after you come out with the resource you know sort of when you know what cardinal could contribute.
This year to production at the caller.
Well.
Yeah sure sure. Good question and maybe we should talk about a little bit just just to remind everybody what why we're discussing cardinal at all at this stage because there is a chance really to create quite a significant resource there, but it was it was basically a.
Discovered when we were doing condemnation drilling so there is a surface.
Very close to surface exposure of the.
Ore body are upbeat vein and I think everyone's aware that the expansion, which we completed in September of 2020.
Has gone off.
Probably even better than we had hoped and we've done some throughput trials and showed that while our budgeted 775 million tonnes per annum, we have the ability to at a minimum run at 8 million tonnes per annum in 2021 based on the competition that we're seeing so we have this extra capacity and so as opposed to running low.
Material campaigning low grade material through the mill in 2021 on top of that $7 75 million tons per annum. We looked at alternative sources and of course the closest source is the cardinal.
Resource the card on resources Theyre going to continue to drill on it and they the resource which is coming out isn't really focused on near surface exposure. So what we've done is we've taken what what the what the inferred resource the geologist have created and we've now put a great control pattern across that.
And created our own kind of mini resource for kind of near term open pit success in 2021 as part of that we've approached the government and ask for the ability to bulk sample it and that obviously does a couple of things for us obviously it increases the great.
Its profile from the mill and so the question you asked was how much.
We think with the kind of like low grade. If we were just putting low grade through that additional 250000 tons were probably like 10000 ounces.
But.
With the with the Cardinal resource near surface exposure, we think that we're going to be somewhere in that 20 to 25000 ounce range minimum.
It will be add on will be able to add onto that and remember that's just at adding 250000 tonnes. Certainly we think that that's the that's the bottom case now because there is more we know where we're going to run at $8 million plus it looks like and so now. The question is what do you do with the rest of that so we've got additional capacity, there which could come from Cardinal.
Additionally, we've got the the men in Kodo area are the Anaconda area, which is.
Which is.
Also got some saprolite surface exposure and so we're looking at some high grade pockets, there and potentially in 2021.
Bulk processing some of that as well so you could see some additional ounces from there as well in 2021 and so all of these things were kind of working through but the short answer to your question on Cardinal is it looks like 2000 25000 ounces.
But with significant upside on top of that.
And sorry, just to correct and that would largely come I'm guessing in the second half of the year.
Well that's the that's the funny thing right. So we don't necessarily think it's going to come in the second half of the year, we are pushing very hard actually Randy Reichert, our VP of operations is that for Cola right now.
Kind of laying out mine plans and what does that look like I mean, certainly when we did our optimization on the mining side, we optimized on on basically hauling from the KOL event. So we've got the issue of.
Do you know.
How do we how do we track this stuff, it's only 500 meters, but how do we trucked to the mill and so we're in the process of trying to set up maybe a small contract miner service for 'twenty and 'twenty, one until we get our head around it. So ideally we would actually see it in Q2.
Got it Okay and then just.
Obviously, we've seen a lot of inflation and.
Sort of oil diesel steel freight and I guess when you come out with the the studies for Grandma day in CAC, a little bit later.
Should we assume that they'll kind of reflect this current level of cost just kind of wanted to I guess get a bit of a better understanding around that.
When you when you say reflect this level of cost I don't know I don't understand what you are kind of like I guess.
Prices for oil diesel you know steel will these studies kind of have can be based on more of these current prices that we're seeing now or would they be a little bit in the past as unit you get a sense for that.
No I mean, I think you are aware, we updated that day.
Anglo Anglogold did a P. A R. Sorry, PFS in 2017, which we updated into a PPA and thats because of the inferred to indicated question in 2020 right. So we certainly updated at least at least at a very high level in 2020 and as part of the feasibility I mean, these will have full feasibility cost on it so.
We've gone out for quotes for sure.
Okay. Thanks, so much.
Thanks.
Your next question comes from the line of obese Habib from Scotiabank. Your line is open.
Thanks, Operator, Hi, Clive.
Two P M Ram.
That's on a good quarter and thanks for taking my questions.
That's a good one.
On Cardinal.
Kind of I think bill gave a good overview of I mean.
I'm guessing the debt.
Near term the reason why it's brought into the near term where it was previously expected to come in around the Q4 time period was based on the fact that now you're just doing that great control drilling and that's giving you confidence to bring it into production earlier is that Uh huh.
Would be thinking about this.
It really well.
You could say, yes, but the real answer if I'm being completely honest as we have this extra capacity, where we know that we're shutting low grade in right now right. So we're just doing whatever we can to bring higher grade material into the mill and so yeah. It could be Q4, originally we'd talk about potentially.
Swapping Anaconda bulk sample and cardinal bulk sample, but because the grade control drilling is being done and everything we feel pretty good about bringing it didn't even sooner and I know conservatively I should say that's going to happen in the second half of the year, but yeah, when I'm being honest with you.
Our out there great controlling it right now.
Perfect.
It just.
Just in terms of metallurgy, and just having that kind of information in your hand, all that have been done previously already.
Yeah, well I'll, let John answer that but the answer the short answer is yes, we feel very confident about about what we've got there and then just remember. This also we think there is a much larger resource there and maybe Tom can comment on that with which will.
Eventually come out, but certainly doing this bulk sample, which is one of the key things for doing this bulk sample will give us a real good handle on how this material interacts with what we've already got there.
And how it works its way through the mill.
Alright, thanks for that day.
John do you want to comment at all on the metallurgy for Cardinal.
Yeah sure Bill.
On the metallurgy is very similar to to call on we've done testing on a representative samples and it responds very similarly to.
On the Cola or so where.
We're confident that we'll get similar recoveries as for color on Cardinal.
Got it thanks, John and I and my next question is for Tom in regards to the exploration budget spin.
Specifically for Greenfield exploration is that on one specific project or region that you're particularly excited about or how would you how should we be looking at where you guys are going to be focusing on with this exploration budget.
Yes.
Well I'll just make a comment and clients client has said this and I'll say this ah repeat it is it's a pretty big budget, but its a culmination of many many years of of project generation and talking to juniors and talking to governments and going out and looking at things and slowly with accumulated these early stage.
Thanks.
If I had to say there was one area was more excited than the other it's kind of a difficult question, but.
I'm very encouraged by what we're doing it and it's not just on right now.
That's been a project Dear to my heart.
Our hearts because we've worked on it for so many years to generate this.
If we look at what we're doing in San Linda We're drilling next to.
A new discovery by Rupert and we're excited what we see on their own property.
On the other ones right now I'd, just rather simple.
Those two myself without because we were still generating things that are and we plan on drilling later this year.
Okay. Thanks, Tom.
For me guys.
Thanks Louise.
Your next question comes from the line of Josh Wolfson from RBC capital markets. Your line is open.
Thanks.
First a question on the tax side of things. Thank you for the additional disclosure.
Yes, I noticed that the commentary on the call information that the priority dividend will be paid as attacks.
On the cash flow statement this quarter.
There were still a distribution to non controlling interests I guess on of $9 million.
What would that be related to a day is that expected going forward.
Yeah.
Well the priority interests that we have we do we do have.
And trust and.
Namibia right, we have a 10% holder.
Boulder, and like owner and I know with Dakota. So there are some payments made to them.
Okay.
Safe to assume that the.
I guess, the full 20% share whatever you want to call. It the free carried and the equity interest for calls that will be captured in the in the in the taxes line not the disc.
Distribution take non controlling interest line no no. It's split so the first 10% it from Cola.
On the priority dividend will always be reflected in operating activities.
It's recorded as a tax charge and paid within operating cash flows.
And then the second 10% is just an ordinary dividend and it will be reflected.
As a payment.
Okay. Thanks for clarifying and then on on grammar low say I guess two questions. So with some of the commentary from net Anglo earlier. This week is it safe to assume that the ownership is unlikely to change at this point and then a follow up on this sort of opened grand claim that Sunday.
Review Bob Day.
There are.
What does that mean for the outlook of the asset and timelines.
Yeah, I'll answer the first part of that.
Everything's a J as such wasn't they reiterated again yesterday on their investor call as a day.
They are keen on growth a lot today is the project. We also think it's very important for them.
Keep it on a project and other things that are they.
We want to do in Colombia.
We're a bit behind grumble on timing so.
She was very important to be involved on the successful joint venture with US who is the operator.
Show the government of Colombia, what the first.
Potentially first significant Goldman with country looks like on how well we're going to do it from a big part of the country to be in <unk>. So I think I think I would be at this point in time I would be quite surprised if you're.
If there was any ownership change as you know we've talked about it before but based on our agreement with Pega. Besides after we submit a development plan you don't want to fund and we have the opportunity to.
To purchase or could you see on interest on the <unk>.
Fair market terms based on the on the feasibility study economics. They also have the option to go down 30%.
Within the agreement as well.
But also of course, we would have the opportunity to bring another harder than if we so desired from there I think could be a long list of companies you see economics or work from hoping to see that we'd like to partner up with gold and.
The Columbia of having our team build the mine. So so I'd be surprise at this point in time things can change, but our agents who are committed to Colombia on from what they are saying they want to be part of this reported.
Part of this projects on the feasibility of a development decision.
Second part of the question, who wants to handle that.
If you want I can do it.
I assume youre talking to the are you talking about this that they claim.
Yes, Okay, yes, so I don't know if you know the background of it but basically the way. It works in Colombia is when they did their cadastral lay out originally it was all done in paper copy and then they switched over to an electronic copy and during that during that some of the some of the claims didn't.
Lineup.
When they put them in the computer is on.
They kind of jumped in there and said that they would lay claim to a small portion of that the government has rejected that outright alright, they've said that that's not the case and there's really not an open area and even if there was an open area that small area you can never develop in any way. So they don't think that it's a real thing.
<unk> has filed a suit against the government of Colombia thing that fit that they don't agree with that.
Hum.
The government themselves states without merit.
We've asked to join that we've asked to join that case as Grandma low day.
As an interested party, obviously and once again I think our internal view is that if there is no merit to this case at all.
Or did you just got to play itself out.
And in the absence of this being resolved.
If you're a wave of cost you can sort of just.
Continue with construction advanced standard and this will have to be.
Soft first.
Well I'll answer it from a non legal perspective, and then they then they can correct me, but my understanding of the government wants the project to go forward expeditiously right Theyre, pushing us even harder and we're trying to go so I don't see any way, where the government tries to stop us from developing this project.
Legally what that means I guess, that's a question for Roger and Orlando.
Great. Thank you very much.
Hey, Josh.
To follow up on your first question. So I was just trying to remember the timing of the cost that we did make a very the very first ever dividend ordinary dividend payment for the Malian government.
We actually made it just before the end of the year, so part of that $9 million, you're referring to there's about half of that is the very first.
Government share under those ordinary dividends.
Some reason that I had on my mind. It was early January but we actually did it just before year end.
Okay. Thanks for clarifying that is great.
Thanks.
Your next question comes from the line of Don Demarco from National Bank Financial Your line is open.
Oh, Hi, <unk>, thanks for taking my call.
First question for Bill.
Phil.
At the call you mentioned before you were testing higher throughput rates in December I was wondering if you could give us something how thats going I heard you say earlier it looks like maybe you can do 8 million tonnes per year, but.
What are you finding based on your testing you've done so far can it go higher on where are you on.
Yeah, So now John's going to kick my butt for saying it but yes, we think that we can go higher right. So.
We were.
We're currently running even above 8 million tonnes per annum.
With that being said, we need to caution everybody right. So it was designed for $7 75, we've already put out eight we're running above that right now, but we don't have any experience right. So I think everybody is telling me to just hold off and we're happy to say eight without putting the upper end upper number on there.
It has the potential to go higher but that takes into things like maintenance and how do you. How do you layer your critical spares and your downtime and all these things that we really have to look at it and we don't have our head around yet so I'm a bit low to give an upper bound.
Okay fair enough. So the guidance for 2020 cost for 775 million.
Millions of times per year run rate and so when you mentioned pardon relative to add on additional 250000 tons.
You get 25 months with I just ran some math here it looks like you'd be writing about three three grams per ton, which would be well above the guidance.
Guidance granted 2.3.
Is that right you're sort of thinking to get that 25000 unit you'd be topping three grants from Tom from Cardinal.
Yes.
I would say, yes, but maybe Randy can correct me.
Okay.
<unk>.
So it sounds as though if you're going to get to a 250000 tonnes is probably going to be hitting capacity, but or is there any other opportunity to bring on something else from Anaconda. I think you had mentioned that was mentioned maybe on previous calls.
Yeah. So from Anaconda, there absolutely is the potential but remember that that's in a separate license area. So that has its own set of issues. What we're doing there is we're doing.
We're doing an internal study right now to see what that looks like.
Once again, Randy Reichert is managing that study with with the intent not only to take a bulk sample from Anaconda, because we don't see this as like a short term issue.
We believe there once again, there's a pretty significant resource at Anaconda, but they need time to drill and so really in 2021, and 2022, which other people have noticed that we have a bit of a dip in 2022 as well we have the potential to.
Add some ounces from Anaconda and so the plan is to take is to permit a bulk sample because remember a lot of that is saprolite. So then you get into the issue on not only not only is that 8 million tons or is it higher net Dennis can you add saprolite on top of that what's the percentage.
So we wanted to take a big bulk sample again from Anaconda and that we think that'll happen in the second half of the year as a test and then that will really tell us what's going to happen in 2022. So the answer is yes additional ounces potential from Anaconda, which.
I talked about previously and in 2022, we can once again see additional ounces in that regard.
Okay. Okay. Thanks for that Bill and maybe just one final question on Grandma All day.
So you've got that sense, it's coming out in April we look forward to that but in terms of the go forward decision are you going to wait until after the Chiacchia fast in June are we going to take your time and how will they for example, Tom mentioned, even encourage by what he's seeing in Pakistan is there anything else on your pipeline that could potentially delay on go forward.
Susan on Grandma all day.
No I would say not at all and grab a lot too.
Person, it's Bruce into queue for sure.
Ahead of key ACA and they're not sure if we get the results of the study were looking for in the end.
And go with a drilling plan will be got sort of a top priority and I think it's really important to realize that the good news is that the local people to local government in antioquia local community and the federal government everyone wants since moving to go ahead as fast as possible. We've made a great cleared to us So you don't run.
Our pipeline because for a reason because it's ready to go on.
We're looking forward and subject to the feasibility study, giving growth right away on it but also very important with your social license of expectations here. So there's a lot of expectation on for many years from grandma watching where the people on the government, saying okay.
We're gonna start construction, so we wouldn't be driven only by that criteria, but you've got a willing government a woman population.
Really good joint venture a lot of good works been done and we got our construction team chunk of that debt to get on the ground. So.
And more importantly is all of that are more important than all of that.
It's what we expect it to be this is a significant addition of Cobra <unk> cost us a year to be too low.
And it could be funded over the next two and a half years, our share capital, which is estimated to be around $450 million.
And some of that would be asleep, so it might be less commodity.
People see it over five years. So we can clearly from our current projections from our share.
Capital of about two and a half year period from cash from cash from operations. So so no. It's a head for sure Chiacchia once again, you're talking about a government casino parcel, that's very keen like old coverage today.
Almost all day parts of the world from a need meaningful investment in gold mining is from coming to improve on the soldier and pull them into an actual.
On the Investor in this country. So I think in the case of Burkina Faso as well, we're working closely with the government. We are on their next week meeting with them to talk about what the taxes are going to be like to try and really advance our our feasibility study for a view, but rather on the middle of the year now we've always said, we're never going on we're never going on.
With our construction team and build two mines at the same time.
That's quarter per key star success from this remarkable team being focused but we talked a bit about before bill and his guys on looking at it. So let's say we get positive studies on both of them well, we could bring a partner in from <unk>.
So let me ask on of course.
But we're also looking at the idea this is true.
Thus, we think it might be.
Based on internal results subject to taxation et cetera, then.
On those guys are talking about sequencing. So could you have the earthworks crew for example, which would start gremolata hopefully as early as September would you have that crew ready to go from from a lots of moving to go to Chiacchia potentially.
The real construction team comes in two Gram of launching and then subsequent day move on so can you see consumer we're looking at that so I wouldn't rule anything out I don't want on I know some people will freak out and go Oh My God look at all those capital that need to go on is going to spend over the next three years, we will not make too many assumptions on that we have many alternatives grumble ought to be on a go forward with it.
On the positive study, we expect with our partner whether it's yes.
There's a whole bunch of alternatives if it's as good as we think it could be and why wouldn't we want to continue to grow the company for our shareholders by considering that either on a joint venture with someone else or do ourselves, but we've been.
Pretty remarkable track record over the last 13 years of growing.
Through acquisition.
On the exploration.
Chapter of US here are these are two assets we own.
With very little value on our share price one of them, which is understandable at this point in time, but.
I think we're never going to be reckless, but will continue to aggressively grow the company and its hard to argue against the track record of success from kind of doing that we're not going to wake up stupid next week and didn't make it.
So the decision about the development of this company in my view. So we'll continue to very disciplined about how we do it.
But it's great to have these assets some people looking at Oh, My God look at the capital expenditure or do they have with us.
The way ahead of the game right now.
And.
At the other day, we're not seeing just trust us, but will come up with a plan.
So we think were please.
Please our shareholders and not take on too much risk.
Okay, Great that's very helpful.
So that's all from me and congratulations on a strong 2020, okay.
Excellent I appreciate it.
Your next question comes from the line of Gary.
Mccurry from Canaccord Genuity your line is low.
Hi, Good morning, guys, maybe just another question on Cardinal you've talked about sort of the impact on potential impact on 2021.
Just thinking beyond 2021 is the goal with cardinal to sort of sustain that 500000 ounces on the colo longer or could you increase production over the next couple of years.
Well.
That really gets into <unk> gets into what the ultimate resource looks like which I think.
I don't think there is an initial resource coming out, but the ultimate resource I think is still a ways away from being developed and so I would probably turn that over to Tom.
Yeah.
Yes can you guys hear me.
Yes.
The resource.
As you're doing the great control on right now is this on.
When it's when we complete the resource which will be in a couple of weeks here, that's going to be incurred.
And we're probably going to leave the bulk of that resource of them towards our exploration drilling for this year is we've got some tight drilling and where the ore shoots are.
To try and follow those down plunge we've got.
From drilling to set aside for deeper exploration and we and we've got a little bit of.
Yeah.
More on sort of grade control style drilling within the exploration budget.
This year alone, we've got close to 12000 meters of Diamond and <unk>.
<unk> 6000 meters of RC drilling plan for Cardinal.
We still see it as an exploration of debt, but theres a lot of.
From my perspective, it's still early on the Cardinal which is from last year basically.
Now, we're starting to mine it I'm not complaining I'm, just saying that we're very early on at sort of the ultimate sizes.
So yet to be determined but as part of our active exploration program.
That answers your question.
Alright, that's helpful. So beyond the bulk sample theres, no sort of England plant.
Keep it into the mine plan in the near term or is there going to be like a bulk sample when they break or is it.
You can kind of just keep mining and as you go on as you as you get in front of me on the exploration.
No I didn't say that.
The incurred inferred model that we're gonna have there's going to.
Would be incorporated into the planning by the mining Department, we don't plan to turn that into all the indicators are.
They are already doing great control drilling on it and we'll continue to fall is that they will continue to drill the deeper.
Okay, great. Thank you, but we're hoping we're hoping it's in the mine plan going forward. We hope it continues on for Bill.
Oh, yes for sure I mean, once again, I hate I hate, saying that because as quiet Eric Clive as Tom just pointed out we're talking about an inferred resource that quite frankly, we havent even seen the latest update on so absolutely I mean, it's 500 meters from from the edge of the existing pit. So it isn't an ideal location.
And we will take that as soon as it becomes available.
Great. Thank you.
Thanks.
Your next question comes from the line of Anita Soni from CIBC World markets. Your line is open.
Hey, good morning, guys. Thanks for taking my question on most have been asked and answered but the only one I have remaining is I bet. The Cardinal just to be clear. The 20 to 25000 is that within your guidance incorporated already and.
In terms of the production or and secondly in terms of cost with that on.
Higher grade material have a beneficial impact on the cost or is that more just tied to the strip ratio.
Yes. So the first part is no its not including it in our existing guidance any guidance, we put out even on a five year guidance that I think we did it at Investor Day last year does not include any of our and further upside.
On sources and so what we put out was 775 million tonnes per annum.
Throughput agricola with no upside from Cardinal on as far as cost I think once again, because we don't even know.
What the contracted rates or anything on like that I have a bit low to say about that but.
We're talking about just a small amount on a small percentage versus the 500000 ounces were already producing.
Okay alright, thank you.
There are no further questions I'll turn the call back to Todd for closing remarks.
Okay, well, thanks, everyone. Good questions and as I mentioned the outset you have further detailed modeling questions.
We're here to share and be transparent helped on the model so don't hesitate to reach out.
There's other questions you would like to Austin.
We're very excited about.
You are coming up this year and we look forward to reporting back to you as we get exploration results from that other developments like feasibility studies over the next period of time, we'll have a lot of news flow for you.
Thanks, everybody.
That concludes today's conference call you may now disconnect.
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<unk>.
Yeah.
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Okay.
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Mhm.
Okay.
Yeah.
Hmm.
Yes.
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