Q4 2020 B2Gold Corp Earnings Call
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.
For your patients.
[music].
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 in 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.
There will be a question and answer session. If 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 key.
I'd now like to turn the call over to Clive Johnson, President and Chief Executive Officer and director. Thank you. Mr. Johnson you may begin your conference.
Thanks, Jason and thanks for joining us everyone.
Welcome to our conference call to discuss our.
Q4, and year end financial results for 2000 and the <unk>.
'twenty.
We had a enamels session about who put other production numbers this year, which I think was very useful per where everyone emissions.
Essentially we're welcoming shareholders are solid.
Party children, especially net loss a few other detailed modeling questions. When we open up for Q&A I would ask you to.
In this forum, we're happy to discuss the strip ratio and that's value in 2030 or whatever in 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. In this call you can follow up with him and he'll put you in touch with the right person to ask those to each other.
Modeling questions.
In terms of what were you obviously you had a remarkable year in 2020 by any measure in terms of operating and financial results since youre going to hear.
For Mike.
Tickets, we've talked about it before but I think we're very proud of what we've been able to accomplish particularly.
Time of Covid.
We did a lot of things as well this year and I think we having a COVID-19 with our employees all of our stakeholders.
I would like to listen to the script successful.
All of these countries have been different challenges and all these projects during COVID-19.
I think it's a testament to our culture and our trusted relationship we have with all of our stakeholders. So the governments in these countries that we're in and our employees.
Local people in the published rent on the company all have one thing in common which was we wanted to keep mining.
Keep appointment up per taxes and do all the other great things, we do during Covid, if we could do it safely.
It's been a great result, and I'm, just going to shout out to all of our a tremendous executive team management teams at the mines from all of our employees Covid.
Routing together those all.
All of those sales part of the Beach book family to do an excellent job during this challenging time.
So you'll hear about the results from the year that leaves us in a tremendous position to.
We continue to optimize production at our existing mines.
We have a very strong financial position going forward and also of course continue with our dividend paying the dividend.
Strong dividends and also our ability to utilize cash from operations to further grow the company.
In terms of looking a little bit forward now, there's a lot of things going to happen to share the well laid out the benicia list, but we have the.
Gremolata and feasibility study results should be out in April.
Yes.
We're hoping a positive study then we would be calling medical or a development plan very shortly thereafter each day.
On Investor Day yesterday are apparently.
We're very optimistic we are about the project.
I think it's an important part from apparently what they've said from there.
Is there a future in Columbia are running very much to be a good strong partner and we have worked very well together.
When things are going very well on site in terms of.
The location some of the other.
Requirements, we have to try and get boots on the ground in September if we have a positive feasibility study in question. The development decision. So the partnership at this time and for some time, it's been pretty much.
On the same page.
Actually coming up the shields detailed arrangements with <unk>.
Were cautiously optimistic at this point I guess about Siaka, we'll see by the middle of the year, we'll have the results of an updated feasibility study, but the reasons, we're encouraged not just coal price, which really.
Some of other things have happened we haven't we did some more drilling and have a better resource model for each one.
Other things are the potential for.
Potential risks and changes in terms of power fuel and power cost et cetera, looking at job liquid matching with natural gas.
The hybrid power combined solar and dual fuel haul trucks et.
In central Soma.
That gives us reasons to hope our internal non suggested the economics should capex 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 we're gonna talk a little bit about them.
To answer your questions.
A question and answer for you, but just to touch on exploration, obviously, a very important part of our history and are successful in terms of brownfields and greenfields.
Over a long long period of time.
We do have a budget of $66 million for exploration this year.
Hum.
And we've got some 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 from exploration.
The resulting ounces with discover it other than brownfields or Greenfields, we've always had a track record of <unk>.
They're successful in utilizing this large exploration budget to have from <unk>.
True to payback tremendously in terms of the options generated from it. So this year a lot of it there's a lot of it from brownfields or jump up to $25 million of exploration budget.
Could be allocated for Greenfields, where theres a number of things we're excited about it and they just want to point out that.
This is a marathon for us and we've done it.
From a long term in exploration over time. This has been a very important part of our of our ability to grow the company and continue to extend our mine life. So we will continue to be driven by <unk>.
<unk> not geography, as we have been around the world and dealing with each of growth. So some of the things. We're now getting to look at we've been pursuing for a while respective standard we actually started pursuing that in 2007 from the <unk> as a great opportunity for low cost deposits.
We have a joint venture there and very excited about the targets we're seeing there.
And of course, we have.
Finland, which for both to be drilling other very exciting.
One there which has significant potential obviously and then there is a number of other things. We're working on of course, the Anaconda area from potential major additions to our.
Reserves or another potential discovery.
But we'd be detailed out on it and the niche which is well known the Cardinal zone, which could potentially in the near term some additional.
Throughput for the so called the mill so theres other operating station opportunities. We're working on that so that's part of a potential headwind from.
The other budget would be for other opportunities elsewhere in the world.
Which will be at the detailed militia go onto per year.
So I just wanted to point out to talk a little bit about that and the importance of ongoing importance of exploration.
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 numbers and then those I think we can open it up to question.
After that.
Thanks Cliff.
So I'll talk about the quarter fairly briefly and then just comment on the year to date. The overall results given the that's our year end reporting.
And also discuss a few things from a cash flow as well so.
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 in Q4 that they actually have 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 from 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 caliber.
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.
Syp production other than they basically had budget for coal 159000 ounces.
Is that a 58000 ounces and old Chicago 40000 ounces.
So when you take a look at that.
Budget production and look at how it is.
It flowed into cash costs and this is kind of.
How are we guided I think in Q3, so on the cash cost on a total from all apps, including caliber cash costs were $473 per ounce produced.
That's about 50 bucks higher than budget and and those higher end budget cash costs really mainly come from coal aware, which because of some mining sequence changes during the year and also.
Some higher costs, there, especially on the <unk> side and on the labor side related to like dealing with Covid.
Rotate sort of personnel costs there.
Total total cost per ounce at for Cola were 397 Bucks, an ounce, which is 90.
90 bucks higher than budget.
I Miss body was $5 85, which was 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 of all the reason for coal fuel costs were actually over budget on the HMO side, they're about 11% over budget was because the fuel costs in West Africa, if they don't flow just from the general market.
The government that's the fuel prices are it includes a bunch of cost per ticket cross border from the ports right into the country and 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 budget $14, an ounce, mainly just due to mining sequence changes because overall <unk> did also see lower fuel costs.
They also benefited from a weaker Namibian dollar during the year.
And then moving to all in sustaining costs for the quarter total, including extra caliber $926 an ounce.
Which is 190 bucks.
Per per ounce higher than budget in a game is pretty much as we guided we thought was going to happen.
At the end of Q3, so that's.
That's 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 costs. 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 started significant portion of it related to fleet fleet costs either.
Fleet purchases or maintenance that had been deferred or delayed from earlier quarters from the year.
And then just going to comment now on.
On the year's results so.
Firstly on the revenue side, just under $1 8 billion in sales.
Annual record for future growth sales of just over 1 million ounces at an average price for the year of seven $777 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 141 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've 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 and shut down their operations as they dealt with Covid, Nicaragua, but we never changed our guidance in Indiana, We still came in at the upper end of that consolidated production range.
The individual components of that from our side. The Cola 623000 ounces that that's above the high end of its guidance range of $5 90, 620 is body was 205000 ounces right in the middle of its range of 200 to 210, I know what Jakarta was 168000 ounces.
Right in the range of $1 65 to 175.
To comment as well as body and not only did they deal with Covid.
And some other 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 in the middle So very impressive performance at all sites.
Commenting now on cash costs and all in sustaining costs for the year. So on a consolidated basis, so I'm not sure at caliber $423 an ounce.
Overall, that's $11 an ounce.
Under budget. So we did see some higher input costs for coal, but then that was offset.
By cost savings in both MS. Patti I know in Chicago.
So individually ethical over $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 Batty six.
$9 per ounce well below budget by $57, an ounce and like you say they benefited from <unk>.
Significantly lower fuel costs, and also college and stripping costs 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 costs and a weaker Namibian dollar.
And then when you translate that all end too.
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 was just slightly above its guidance range of $5 55 per 595, as a result of slightly higher input costs.
And also remember when we 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 in the year.
And his body and $985 an ounce so pretty much on budget and at the law and within its guidance range of 965 to one 005 per ounce and I know what your code of $920, an ounce sold which is well below the low end of its guidance range of a one.
1000, tens of thousand 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 cut production released earlier.
In January a.
Couple of comments on some of the significant stuff going on at site.
At <unk> the expansion there.
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 for 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 and higher labor costs, but but overall it ran smoothly and the solar plant the new solar plant at full color. It was originally forecasted and budgeted to be completed in 2020, but we actually suspended that for a while to give us.
More room in the camp to complete our labor rotations for the regular operations. So it did recommence later in 2020 and is now scheduled to come online and 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, we did have a.
Fire and.
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 over the third quarter of 2021 other.
Or what your kodo well.
Shanghai underground.
Development of that.
<unk> is underway portal development started basically near the end of the third quarter.
We are about $11 million on your budget for the full year 2020 are those costs 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.
And we're also under on them.
Theres, a potline 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 done. This year, we were about $6 million under budget as a result from that.
At Ms. Betty I missed that is basically a machine just ran smoothly theres no significant day.
<unk> or Capex variances at MS Studies, we went through the year in fact, what we did was we even accelerated a little bit other capex. There from 2021 some of the fleet that we were going to by early 2021, we actually completed in late 'twenty.
Grandma 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 the cost side. It did delay the key activities that we're pursuing there and then as clay mentioned we are still.
We're revisiting jackup.
We looked at that through the course of 2020 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 fuel a key component of our costs.
Have still maintained our hedging program, where we had up to 50% 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 and that is that is benefiting us now in terms of mark to markets as we go through the first quarter.
<unk> seen fuel costs rise.
One of the things that came up I think when we did our production releases for 2021 was there are some slightly higher customs and duties costing in Mali as we come out of our exoneration fees, we had a three year exoneration post startup of the mine activities there and we.
We've now we've now reached that phase at for coal. So we have to pay some more customs and duties on imports and there was a question about what impact per ounce that was for colas. So we quantified that free 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 costs 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.
Mezz battery impairment reversals or is it the significant items in the P&L there are $174 million that we reported earlier in the year, but just remind you that's in there for the full year.
And that's the.
That's the reversal of any remaining impairment that we've historically taken Atlas 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 Calvert shows we took caliber shares as part of the deal. So they've currently got a market volume somewhere around $140 million.
On the tax side I know that.
A few of the ounces you definitely had questions on taxes. So the total income tax charge.
According to non accruals 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 do and to remind you that that also those that tax charge also includes the priority dividend up to call. It and it was quite this the whole tax situation volume and how it's reported in booked and paid for it as it is.
All of 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 and how we pay them and we've also put some guidance in the MD&A for your audience taxes on page eight and then one for Cola dividends hold out that all works on page 13. So.
Hopefully that will help clarify for any of you that still are welcome juice 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 day 310 million charge for the year that that that includes about $140 million.
That hasn't been pages will be paid in 2021.
The main components of 140 or 75 million of remaining for Cola income tax liabilities and $50 million for payment of the 2020 for Colo priority dividend. So again, we laid that out in the MD&A. So hopefully it's clear free now.
For the total year well for the quarter actually week net income was $174 million or 16 cents per share attributable.
Attributable 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 the most value impairment reversal and deferred tax adjustments year to date. The 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.
Cash flow per share and for the year $950 million, that's a record.
For be true big number and to remind you guys that that did it.
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 from the cash flow statement I 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.
We're slightly further under budget other than 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 <unk> totaled $28 million.
We will check undergarments imagine to $11 million under <unk>.
We'll check Potline 7 million under and that was offset by some the overruns from your expansion.
As I discussed in and some lower exploration costs were approximately 7 million Undrawn exploration.
A lot of that was greenfield that we didn't get to this year because of some other restrictions that we face but we're.
We're hoping to get through it next year as Clive alluded to in his opening remarks.
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.
<unk>.
Yes.
Thanks, Mike.
So I'm just wondering I neglected to mention in my opening remarks was just on strategy I think it's free and clear from the news release them from the recent calls from pad, but our strategy remains the same which is obviously to maintain a strong financial position as we said in the ability to pay the dividend and advance our growth projects.
The growth projects the potential we have but.
Launching.
Okay.
The Anaconda area, that's not true Oh.
All of the exploration funding, what we were doing for.
Both brownfields and Greenfields, we're pretty close from an ability to grow shareholder value in this company.
Yeah.
Over the year without having to question pursue M&A. So obviously, we will look at M&A and when you all had a big haircut from the highs when we were at some other companies have as well, but for us to do M&A at this point with everything we've got going on that we think can she can add a lot of short value would happen between shooting compelling.
Even though the unreal.
Unrealistic expectations on certain companies have tried to come down because of that we're seeing opportunities because of the gold price.
We will see we're always looking at every.
The other day.
Great Big ones at this point about M&A, which is a good place to be I think people will be able to play. It if something comes along that makes sense from you think adds value from shareholders of course, you know what my background.
We will definitely have a hard look at it.
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 build up from one on your telephone keypad to withdraw your question press the pound key.
Pause for just a moment to compile the Q&A roster.
Your first question comes from line of other.
Tyler Langton from Jpmorgan Your line is open.
Good afternoon, and thanks for taking my questions.
Just on each other.
Yep.
On Cardinal I guess in terms of I know you mentioned be sending.
Some detail to it to get processed at the mill.
In Q2, and 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.
Net cardinal suit could contribute.
This year to production at Docomo.
Yeah sure sure. Good question and maybe we should have talked 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.
Discovered when we were doing condemnation drilling so there is a surface.
Very close to surface exposure.
The ore.
Ore body or other 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 $7 75 million tons per annum, we have the ability to at a minimum run at 8 million tonnes per annum in 2021 based on the or competition that we're seeing so we have this extra capacity.
As opposed to running low grade material campaigning low grade material through the mill in 2021 on top of that 775 million tonnes per annum. We looked at alternative sources and of course the closest source is the cardinal.
Resource the current research, they're going to continue to drill on it and they do.
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.
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, there's a couple of things for us obviously it increases the great.
The ounce 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.
Hum.
It will be at it we'll be able to add on to 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 that 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 a <unk>.
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 call. It 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 basically hauling from the cold up here. So we've got the issue of.
How do we how do we truck 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 2021 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 I guess when you come out with the the studies for Grandma day in CAC, a little bit later.
Should we assume that those 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 current level of cost when he I don't I don't understand what you are kind of like current I guess.
Current 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 is trying to.
To get a sense for that.
No I mean, I think you are aware, we updated that day.
So Anglo Anglogold did a P. A R. Sorry, a PFS in 2017, which we updated into a PPA and that's because of the inferred to indicated question in 2020 right till 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 costs in it.
We've gone out for quotes for sure.
Got you okay. Thanks, so much.
Thanks.
Your next question comes from the line of obese Habib from Scotiabank. Your line is open.
Thanks, Operator, hi, glad than two P. M Ram congrats on a good quarter and thanks for taking my questions.
Right.
On Cardinal.
Kind of I think the kind of gave a good overview of.
I mean.
Guessing the net.
From a 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.
Should we be thinking about this.
It really elevated.
You could say, yes, but the real answer if I'm being completely honest since 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 had talked about potentially swap.
Swapping Anaconda bulk sample and cardinal bulk sample, but because of 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 we are out there great controlling it right now.
Perfect.
And.
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 which will.
Eventually come out, but certainly doing this bulk sample, but just one other 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. Thank you thanks for that day.
John do you want to comment at all on the metallurgy for Cardinal.
Yeah sure Bill.
The metallurgy is very similar to to call or we've done testing on a representative samples and it responds very similarly to.
Or do I have the cola or so.
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 should we be looking at where you guys are going to be focusing on with this exploration budget.
Yes, I'll just first of all I'll, just make a comment and clients you know kind of as you said this and I'll say this I'll repeat it.
It's a pretty big budget, but its a culmination of many many years.
Project generation and talking to juniors and talking to governments and going out and looking at things.
Slowly with accumulated these early stage projects.
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 as much as on right now.
That's been a project Dear to my heart.
Our hearts because.
We worked on it for so many years to generate this.
If we look at what we're doing in Finland, we're drilling next to a.
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 keep those two myself without because we were still generating things that are and we plan on drilling later this year.
Okay. Thanks, Tom.
But from you 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.
Yeah, I noticed that the commentary in the call information that the priority dividend will be paid exit as attacks.
In the cash flow statement this quarter, they were still a distribution to non controlling interest I guess some of $9 million.
What would that be related to net is that expected going forward.
Well the priority interest that we have we do we do have.
Interest and.
Namibia right, we have a 10% holder.
Older and like owner.
Dakota. So there are some payments made to them.
Okay is it safe to assume that the.
I guess the full 20% so what do you want to call. It the free carried and the equity interest for calls that will be captured in the <unk>.
Taxes line not the.
Distributions to Noncontrolling interest line no no. It's split so the first 10% of Cola.
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 grammar, Let's say I guess two questions. So with some other commentary from the 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 by day.
Eric.
Uh huh.
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 in their investor calls a day.
They are keen on Grubhub I'd tell you is the project. We also think it's very important for them.
<unk> done a project and other things that are they.
We want to do in Colombia.
We're a bit behind our grandma timing so.
She was very important to be involved from a successful joint venture with us those operator interest.
Show the government of Colombia, what the first.
Potentially first significant Goldman with country looks like and how well we're gonna do it from the great part of the country to be in Geo care. So I think I'd be I would be at this point in time I would be quite surprised if the.
If there was any ownership change as you know we've talked about it before but based on our agreement with each day. Besides after we submit a development plan. If you don't want to fund and we have the opportunity to.
To purchase their 50% interest on the <unk>.
Turning to face summer from a feasibility study economics. They also have the option to go down from 30% within the agreement as well.
But also of course, we would have the opportunity to bring in other partner and if we so desired from there I think it would be.
A long list of companies you see economics or work from hoping to see that we'd like to partner up with each of gold and.
The Columbia, having our team build the mine. So so I'd be surprised at this point in time things can change, but our agents who are committed to Colombia and from what they are saying they want to be part of this.
Part of this project subject to feasibility and other 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 I'd take lane.
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 zone.
They kind of jumped in there and said that they would lay claim to have a small portion of that the government has rejected that outright alright. They 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 could never develop it 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.
But they don't agree with that.
The government themselves states without merit right. 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 there is no merit to this case at all.
It's just got to play itself out.
And in the absence of this being resolved.
Is there a way you can sort of just continue with the construction of 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 understand that the government wants the project to go forward expeditiously right, there, they're pushing us even harder than we are.
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 Randall Randall.
Great. Thank you very much.
Josh just to just to follow up on your first question. So I was just trying to remember the timing of the call is that we did make a very the very first ever dividend ordinary dividend payments to 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 I had in my mind. It was early January but we actually 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, Clive and team thanks for taking my call.
First question is for Bill.
Bill.
At the call you mentioned before you were testing higher throughput rates in December I was wondering if you could give us something how that's going I heard you say earlier it looks like maybe you can do 8 million tons per year.
What are you finding based on your testing you've done so far can it go iron or where are you on.
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 at we're currently running even above 8 million tonnes per annum.
But with that being said, we need to caution everybody right. So that it was designed for 775, 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 net Brian there.
But 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 in any of 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 loath to give an upper bound.
Okay fair enough. So the guidance for 2020 call for $7 75 million.
A million tons per year run rate and so when you mentioned pardon relative to add an additional 250000 tons.
To get 25000 ounces I just ran some math here it looks like you'd be grading about three three grams per ton, which would be well above the.
The guidance granted 2.3.
Is that what you're sort of thinking to get that 25000, you you'd be topping three grams per tonne from cardinal.
Yeah.
I would say, yes, but maybe Randy can correct me.
Okay.
And.
So it sounds as though 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 in previous calls.
Yes, 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 it 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 two.
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 not only not only is that 8 million tons or is it higher net benefit can you add saprolite on top of that what's the percentage.
So we want to take a big bulk sample again from Anaconda and that we think that will 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 got it.
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 or we can take your time and how will they for example, Tom mentioned he's encouraged by what he's seeing in Pakistan is there anything else in your pipeline that could potentially delay goldkorn decision on granularity.
No I would say not at all in your Grandma launching this.
First and as Bruce into queue for sure.
Ahead of key ACA and very much sure could we get the results in the study were looking for and and and.
And do other drone plant will be got sort of a top priority.
It's really important to realize that the good news is that the local people the local government in antioquia local community and the federal government everyone wants its mind to go ahead as fast as possible. We've made it very clear to us. So you don't run.
And our pipeline because for a reason because it's ready to go.
We're looking forward to something from feasibility study, giving growth right away on it but also there's growth.
What are your social license of expectations here. So there's a lot of expectation out there many years from grandma watching where other people in the government, saying okay.
When you're going to start construction, so we wouldn't be driven only by that criteria, but you've got a willing government. A woman population are really good joint venture a lot of good works been done and we got our construction team jumped up a bit to get off 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 tune across doses a year to be true gold.
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 a fleet so it might be less commodity.
You can see it over five years. So we can clearly from our current projections from our share.
Hum.
Capital of about two and a half year period from cash from cash from operations. So so no. It's a hit for sure Chiacchia. Once again see how can you better governance casino parcel, that's very keen like old coverage today.
Almost all day parts of the world from a need moving forward the restaurant in gold mining is becoming improving the soldier and pull them into an external investor in this country. So I think in the case of Burkina Faso as well, we're working closely with the government. We have guys down there next week meeting with them to talk about what the practices are going to be like to try and really advance our our feasibility study for review.
But rather in the middle of the year now we've always said, we're never going to we're never going on now.
With our construction team until two mines at the same time.
That's quite a are keys to our success from this remarkable team being focused but we talked a bit about before bill and his guys are looking at it. So let's say we get positive studies on both of them well, we could bring a partner wind from the <unk>.
You could sell the asset of course.
But we're also looking at the idea.
This we think it may be.
Let me turn over is also good protections from et cetera. Then those guys are talking about sequencing. So could you have the earthworks crew for example, which would start and grab a lots of hopefully as early as September would you have that crew ready to go from Grandma watching to go to cash flow potentially.
Obviously real construction team comes in to grow velocity 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 to I know some people will freak out and go Oh My God look at all those capital. The beta goes 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 we want to go forward with it.
Based on this positive study.
We expect with our partner other TR, there's there's a whole bunch of alternatives such as goodness, we think it could be and why wouldn't we want to continue to grow the company for our shareholders by considering that either in a joint venture with someone else or do herself but.
It's pretty remarkable track record of the last 13 years of growing.
Through acquisition and exploration.
Scepter bus here. These are two assets we own.
With very little value in our share price, 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 the decision about the development of this company in my view. So we will 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, we're gonna have well that's way ahead of the game right now and.
But 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 are not taking on too much risk.
Okay, Great that's very helpful. So.
So that's all from me and congratulations on a strong 2020.
Excellent I appreciate it.
Your next question comes from the line other carrier <unk> from Canaccord Genuity. Your line is open.
Hi, Good morning, guys, maybe just another question on Cardinal you've talked about sort of impact from pension impact on 2021, just thinking beyond 2021 is the goal with cardinal to sort of sustain that 500000 ounces at the colo longer or could you increase production over the next couple of years.
Well that.
That really gets into it 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.
Tom.
Yeah can you guys hear me.
Yep Yep.
The resource that you guys are doing a great control on right now.
It's all when it's when we complete the resource which will be in a couple of weeks here, it's going to be incurred.
And we're probably going to leave the bulk of that resource for them for 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.
Some drilling set aside for deeper exploration and we and we've got a little bit of.
More sort of grade control style drilling within the exploration budget.
For this year alone, we've got close to 12000 meters of Diamond and.
About 6000 meters of RC drilling time per Cardinal.
We still see it as an exploration bet, but theres a lot of.
From my perspective, it's still early on Cardinal which is found last year basically.
Now, we're starting to mine it.
Not complaining I'm, just saying that we're very early on it so the ultimate sizes, it's still yet to be determined that but as part of our active exploration program.
If 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 in the break or is it you.
You can kind of just keep mining and as you go as you as you get in front of moving exploration.
No I didn't say that the incurred model that we're gonna have there's going to be incorporated into the planning by the mining Department, we don't plan to turn that into all of the indicators.
They're already doing great control drilling on it and we will 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 into mine plan going forward. We hope it continues on the other bill.
Oh, well, yeah for sure I mean, once again I hate I hate, saying that because as Clive just Eric climate 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 the 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.
Yeah.
Great. Thank you.
Thanks.
Your next question comes from the line of and even Sony from CIBC World Markets. Your line is open.
Hi, Good morning, guys. Thanks for taking my question most have been asked and answered but the only one I have remaining is I bet. The cardinal just to be clear that 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 higher grade material.
A beneficial impact on the cost or is that margin tied to the strip ratio.
Yeah. So the first part is no its not including it in our existing guidance any guidance, we put out even in our five year guidance that I think we did it at Investor Day last year does not include any of our and further upside.
Sources and so.
What we put out was 775 million tonnes per annum.
Throughput agricola with no upside from Cardinal and as far as cost I think once again, because we don't even know.
What the contracted rates or anything like that I'm, a bit loath to say about that but.
Youre talking about just a small amount of a small percentage versus the 500000 ounces were already producing.
Okay alright, thank you.
There are no further questions I turn the call back to Todd for closing remarks.
Okay, well, thanks, everyone and good questions and as I mentioned at the outset you have further detailed modeling questions.
We're here to share and be transparent and help with the models so don't hesitate to reach out.
There's other questions you would like to Austin.
We're very excited about.
We're coming up and or 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.
Thanks, everybody.
That concludes today's conference call you may now disconnect.
[music].
Yes.
[music].
Yeah.
Hum.
[music].