Q4 2020 SSR Mining Inc Earnings Call
Challenges presented by the COVID-19 pandemic.
During this period of on price it and a change we met our 2020 objectives with all four of our operating sites exiting 2020 with momentum and clearly defined growth initiatives, which we will touch on later in the presentation.
I'm proud to announce we declared our and overall quarterly dividend. This morning in line with our recently announced capital returns policy, which is the designed to maintain balance sheet strength.
On future growth opportunities and return capital to our shareholders of.
The balance sheet with $457 million and net cash and continuing peer leading free cash flow will allow us to assess additional capital returns in the form of supplemental dividends and share buyback programs moving forward.
From a growth perspective, we delivered a number of exciting catalysts highlighted by the release of the chip of technical report, which demonstrated the scale quality and long term value of these assets.
The report and mainly for each of the outage and was the first step and defining the significant organic growth potential of this world class assets.
We also announced the discovery of situ copper gold porphyry and affecting wide mineralization below of the Jetblue pit.
This is just another emerging example of this.
Of the significant and material growth potential within the business.
And Marigold and Seabee and across the board broader portfolio, we have a number of organic growth and exploration opportunities. We expect the highlight as the year progresses.
We remained focused on sustaining and growing our business with the goal to demonstrate our organic ability to sustain production of seven to 800000 gold equivalent ounces for the next five plus years.
On this note we are planning to provide a longer dated production guidance to the market later in 2021.
Building from a fundamentally strong business, we have and exciting platform to firmly establish SSR as the Permian and mid tier gold producer in the sector and our fourth quarter results clearly demonstrate the strength of the business.
So turning on to the next slide.
ESG has always been and grind and the culture of SSR mining.
Going forward, we will continue to do the right things and be recognized as the true partner with our employees and the communities where we operate.
We're compiling our 2020 sustainability report and look forward to providing an update on our progress as well as the discussion on our 2021 priorities.
From a safety perspective, we hold ourselves and our high standard and have many examples of best practices across our business.
I'll take a minute to recognize two achievements and in the quarter.
Firstly I congratulate the triplet team on being awarded the 2020 SMA Hilton Safety operational Excellence award, which is truly a great achievement for the site.
And at Seabee and the team was successful and meeting the new diesel particulate matter of regulations of the province, with the recently installed ventilation upgrades.
This means that is no longer mandatory to wear respirators in the underground, which is an excellent outcome for all.
We are proud of our achievements and will continue to be progressive and our approach to ESG and moving forward.
Looking ahead at 2020 outlook, our guidance represents and overall improvement relative to our 2020 performance.
Our focus for the year is to ensure site production and we have several initiatives being implemented to continue to improve our overall safety results.
We expect to generate peer leading free cash flow, while prudently investing in high return growth opportunities across the substantial asset base that we have.
Some examples of our growth initiatives include the flotation circuit of construction and ramp up of share Pla.
Ongoing cost and continuous improvement initiatives of Marigold and focus on increasing underground development rights, allowing us to utilize lightened mill capacity at Seabee and the future and the transition to owner operated haulage fleet of Qunar.
On the exploration side, we are investing $65 million across the portfolio and expect these efforts will take center stage as we advance the exploration targets and provide some clarity on this scale and timelines during this year.
And this regards there are a few areas you should pay attention to and 2021.
C two and outage at share plan, new millennium, and trained and Kenyan targets and Marigold and the same toy gap hanging wall at Seabee.
And Steve will touch on these lighter and the call.
I just wanted to highlight a few quarterly highlights before I turn the call over to Greg and shoot of dive into the detail operationally, we had a very strong fourth quarter with all four of our operating assets exiting the year with momentum and confidence moving into 'twenty one.
Our consolidated gold equivalent production totaled 220000 ounces at an all in sustaining costs of $976 per ounce.
And <unk> set a number of operational records, while chip, let's see the and Pune all contributed to the strong results.
From a financial perspective, we reported and adjusted EPS of <unk> 50 per share and generated a $157 million and for a cash flow in the fourth quarter, ending the year and an excellent position with consolidated cash of nearly $900 million and.
And net cash of $457 million.
The results would've been even stronger if our sales had not lagged production due to the timing of gold pours and concentrate shipments at year end.
So with that I will turn the call over to Greg who will discuss our financial performance in more detail.
Okay.
Thank you.
As outlined by Rod of Fantastic final quarter for SSR mining with our assets integrated and all operations delivering.
We posted impressive financial results, which demonstrate the new strength and scale of our business model.
While COVID-19 continues to impact on cost and efficiencies it did not stop our mines from achieving revised guidance.
With annual numbers being a blend of pre and post merger results I'll focus my comments on the fourth quarter.
Revenue for the quarter increased 65% of $371 million as compared to $225 million and the previous quarter.
As we benefited from <unk> contribution for the full quarter combined with sequential improvements at all for assets.
Income from mine operations increased 76% quarter on quarter to $146 $5 million and net income effectively quadrupled from 90% to $98 million from $25 million and the third quarter.
Adjusted net income increased 61% to $109 million or <unk> 50 per share and this quarter from $68 million and the third quarter.
And so strong financial momentum across all metrics as SSR resets into a new higher scale peer space.
Perhaps the only blemish on the quarter was our results would have been even stronger if ounces sold would have equal ounces produced.
Timing of gold pours, the ear and drove higher carryover of finished goods inventory at our gold assets.
And for those of you familiar with the concentrate market, which is how our silver gets sold you understand the normal lags from restarting concentrate shipments post COVID-19 closures.
Our concentrates and Argentina are generally smelted and Europe or Asia, So shipment cycles are long.
Shipments were back to steady state of November and as a bit of a bonus for selling our concentrates into stronger silver prices to this point in Q1.
As I noted on our third quarter call amortization of fair value adjustments related to acquisition accounting for the last year will be and ongoing impact to reported income.
These items totaled $28 million and the quarter and $49 million for the full year and are identified and our adjusted income table.
And also through the fourth quarter, while all less than the third quarter, COVID-19 cost care and maintenance costs and transaction and integration costs all impacted reported income.
Cash generation and the quarter was outstanding cash.
Cash from operations and the fourth quarter increased five fold the relative to the third quarter to $217 million.
We generated $157 million and free cash flow, even while sustaining capital investments increased.
As the site to return to steady state operations.
Our net increase and cash was $127 million considering debt repayments.
The strong results support our inaugural quarterly dividend of <unk> <unk> per share announced today.
The maturing of SSR two of business that can sustain and grow our quarterly dividend has been a goal of mine since I joined the company. So it is satisfying to see this achievement.
As we discussed last quarter, our dividend framework of considering incremental shareholder returns above our base dividend from excess free cash flow provides opportunity to further consider these issues as we wrap our arms around the combined business.
Our balance sheet is an exceptional shape with $897 million of consolidated cash and $457 million of net cash.
We will continue to manage our capital structure and a responsible manner to ensure the ability to efficiently fund and grow our asset base.
Our outlook for 2021 as published earlier in the quarter puts us in a good position to continue our strong financial performance and free cash flow generation.
Capital intensity remains well managed as we grow to over 700000 equivalent ounces.
And our outlook, we noted cash flow weighted to the second half of 2021, recognizing the production profile, particularly as the flotation circuit at <unk> starts, but also our sustaining and growth capital profile, which is heavier in the first half of the year.
Looking specifically at the first quarter. These cash flow effects are amplified as our working capital build is loaded towards Q1 due to the Seabee ice road restocking and and expected build and receivables as we return to steady state concentrate sales.
The first quarter also sees the concentration of cash tax payments.
With <unk> strong 2020 performance, we paid intercompany dividends in January which results in a joint venture partner distribution and the quarter.
And as announced we will recognize our first dividend payment in Q1.
So overall expecting of great 2021 within those first half second half variations.
With those comments I'll turn the call over to Stuart.
Thanks, Craig before we move into the Mansholt summaries as always I'll start with AI chips, and this environment health safety and sustainability.
Well a lot of Covid remains pervasive we are managing it at all sorts of caring for our people and getting on with business Marigold and shipper.
It didn't suffer shutdowns due to the pandemic and both the Seabee and puna have bounced back to full production.
Our COVID-19 protocols focus first on protecting our pay per contract is and the communities in which we work.
As part of the merger integration, we reviewed our ESG policies, which were updated and approved by the new board the.
The alignment and updating of the IHS and the standards, followed and will be completed by the end of the quarter. This forms the foundation of our AI chips and ice management system, ensuring both efficiency and execution and that we have a high standard across the business.
I was delighted and very proud that our Turkish business unit and gold was awarded the 2020, SMA health and safety.
<unk> Excellence award.
Hey.
The award recognized the achievement of over 22 million hours LTI free during the transformation of that business with the construction and commissioning of the $750 million sulphide plant.
<unk> is currently more than 500 days and approaching 7 million hours LTI free.
Not to be at.
Marigold was also awarded the 2020 and Nevada Mining Association. The Safety award for large operations, which was a well deserved recognition of the Marigold team.
The new SSR sustainability report as the drafting and we plan to release this without annual filings of the end of this quarter.
Leveraging best practice across the business as the core of our integration process and the sustainability.
Paul we will reconfirm our commitment.
Two of our communities and the environment, along with continuous improvement and reporting with disclosure starting to the CDP and Tcf. The plant later this year.
We have a well resourced and experienced high chassis and the operations teams within SSR.
Now please move to slide eight for some commentary on each of the slides two.
2020 was another really big year for the chip.
Operations, despite the challenges of Covid the team managed to deliver within guidance.
327000 ounces.
$752, an ounce there was some indirect COVID-19 impacts, including production and the pushing back of some work and costs into this year.
Despite the challenges of 2020, the sulfide plant continues to perform at the higher end of the expectation and is now consistently operating well above does on throughput. The older clubs achieved an impressive 92, 5% operating time and 2020.
Chip demonstrated of game it is truly a world class operation and district with solid performance and the outstanding development pathways.
And Q4, we released the 2020 share per district Master plan and technical report.
All of the city and until 2020 as we call. It. This is the next step and the development of the district of included of supplemental flotation circuit, and the bias case, which significantly increases throughput rates and and alternate.
<unk> for the development of the Nemo and outage deposit the.
And the board have approved the construction of the flotation plant, which is on track for commissioning mid this year.
Key takeaways from the CDP, CDN and <unk> 2020, where the.
For the base for the mineral reserve case, which incorporates the supplemental flotation circuit increase processing rates lowered costs significantly increased reserves and resources extended them on loss and delivered an NPV of $1 $7 billion set of 5% discount rate.
And the loss of bond gold production for the reserve cases of three 6 million ounces.
The sick and scenario included and alternative.
<unk>, which had the development of the outage deposit.
She is located six kilometers northeast of the truth of the processing facilities, where it's all will be treated.
And the NPV for the P. Iqos was $2 $2 billion at 5% discount rate and the loss of on gold production was four 6 million ounces with plenty of upside there.
And there were 175 holes drilled into the outage of the contributed to the <unk> 2020 since those first wells, we've drilled and another 130 halls and exploration and infill drilling is going on as we speak.
<unk> and the last half of 2020, we discovered the copper gold porphyry directly under the main pit.
And cheerful them on on the 25th of November we might and exploration release for the first of all of halls creatively we designated the targets for the two I'll talk more of FC to later on.
Please jump to slide and on and we'll talk about Marigold.
<unk> operated through 2020 without of Covid stoppage due to excellent work and the effort by the management team they.
And I didn't just keep the mine operating by broke record for annual production and 2020, along with quarterly and monthly production Records in Q4 for.
Reducing 77000 ounces in the quarter the.
The Q4 production benefited from all being stacked onto the lower loose both the leach pads.
Record material movements were also achieved in 2020, and we expect these vehicles will be beat and the guy and in 2021.
In Q4 issues with the new hydraulic shovels were largely resolved and we're off to a good start in 2021, the expanded fleet improving performance and short of holes of supporting the higher tonnage rights and the mine.
The head grade crept up and the first quarter higher than previous quarters as always extracted from Mackie for Mackie.
All in sustaining cost for 2021, and $222 an ounce and they were impacted by the increase and royalties as a result of gold price as it did at all of our sites.
Exploration drilling continued across the property with some interesting results Marigold has very large land package from acquisitions over the last few years. This provides lots of opportunities to discover and develop low cost name on resources by leveraging of <unk>.
Hal and our infrastructure and I'll talk a little bit more about marigold exploration lighter placement.
Please move to slide 10.
We see real potential and seabee above whats been a pretty consistent performance over recent years apart from the Covid impact of course.
On the AI chips, and a front rod has already mentioned, the CBS achievement and lowering the diesel particulate matter and improving the working conditions.
Seabee continues to manage COVID-19 with some cases presenting on slot. While this is credit difficulties for operations they are carefully.
And safely managing and.
<unk> the ramp back up in August and September had a record month mailing on average.
271 tonnes, a day and Q4 of the mill caught up with them on and the average mill throughput rate was 1081 ton per day, which is consistent with our P. Iqos, which was released in 2017 predicting 1050 tonnes per day for the loss of mine.
The processing plant clearly has capacity and the mine is the bottleneck.
This improvement opportunities and the mall and are being pursued including some replacement and extra equipment, which is scheduled to come across the Australia and the next few weeks.
Additionally, we are putting a lot of effort into resource and reserve definition and the mine along with increased exploration targeting two targeting extensions to mineralization on strike and a very large tenement package and the contiguous Fisher JV areas.
Within the mine and Q4, we did more than eight kilometers of drilling and the spend toy hanging wall target, which is adjacent to the existing on infrastructure. This will be of focus for the reserve and resource development team in 2021, and we're expecting that it will be the next development opportunity behind the gap hanging wall.
With the developing a sick and still end of the GAAP hanging hanging wall and aiming to convert the significant portion of the gap hanging wall resources into reserve for the end of 2021.
Please move to slide 11.
And then as ramp the back after the hiatus for Covid and it Hasnt had a great run at the end of the year throughput rates average just over 4005 hundred ton per day, delivering $2 2 million ounces of silver and Q4.
The overall 2020 produce for 6 million ounces of silver and exceeded our updated guidance.
<unk> was $15 22, and ounce for silver and as Greg mentioned, the IOC was impacted by the light suite.
Silver concentrate sales.
The team at Puna are very focused on continuous improvement and cost control at the end of this quarter, we transitioned to iron ore haulage from the mine for the 40 kilometers of trips for the processing client.
Coming out of commissioning and the Covid shock Pune has stabilized really well and is consistently delivering now please move to slide 12.
I've already covered off a lot of this already.
And I'm going to take a couple of minutes to help frame. It the way we see the portfolio from an exploration perspective first of all of its fantastic portfolio rich with brownfield name on targets, which present opportunities for low cost of capital DM on and in mine development.
And CV, we have non mineralization that if developed could leverage off of the fact of the processing plant is of much higher capacities and the current law and configuration can deliver.
<unk> has potential to achieve one of the number of value of creative outcomes first and increase in the head grade and resources from NIM on which would then be processed and the current heap Leach pad areas. We are focused on increasing the grade and believes that there is good probability of a successful outcome.
And the areas of body and the historical periods recent opinion acquisitions of really boosted this prospect.
Secondly, expanding and developing the resources of the recently purchased Trenton Canyon and Buffalo valleys.
And finally, the discovery of an economic sulfide ore body similar to other mines and our district is the tantalizing target, which we have reason to believe is the real possibility.
Finally, but not lost.
As chip.
Jeff has the plethora of opportunities that can take advantage of the process and complex, which has the capacity to treat both oxide and sulfide ores and the development of Chuck not tip of them on and recent used is a great example of our ability to execute the strategy.
Average is the most advanced project with the targets the liver or to the share for processing facility and 2023.
As I mentioned earlier developing outage is expected to add at least 1 million ounces of gold to the production of chip flow.
And our newest discovery is the two which also has the potential of significant value.
Please move to the slots at and and and I will give you a brief update of where we are let's say too.
<unk> was discovered and the last half of 2020, and we re leased the exploration.
Data for the first of all hall for halls.
The best in the CIT was bit of over 240 meters at 2.0 0.7 to.
For the St copper equivalents, starting from just 37 meters and included grades.
Included designs for the grades for well over a percent.
And those halls were compensated for lithology and sense of Canada for <unk> testing, where we are encouraged for the preliminary results the.
First round of met testing will be completed and the next weeks and the data analysis before the end of the quarter and the center of the slide you can see a photo of the chunk of power at trough from the lab testing of the <unk>.
And there's really good reasons to be excited about <unk>. It seems to have dried and there is good potential for volume there on.
Higher grades near the surface the mineralization starts practically and the final bottom of the existing pit, which you can see from the cross sections at the bottom of the slide.
The <unk> breath blessed with great infrastructure and importantly, we've recently demonstrated that we can deliver and major project and in the area.
There is a lot of work to the extent C. Two into a project and we are running hard at it we of non drills and see too with the mining ended and are advancing of thinking and preparation for of development study.
You should hear more about <unk> and the future.
Thank you very much and back to growth.
So thanks to you and thanks, Greg.
So despite the challenges thrown at us by Covid.
The team have done a tremendous job of managing our operations.
Putting the merger and integration all while finishing the year with exceptionally strong fourth quarter performance.
<unk> Air and overall dividend this morning, which highlights the financial strength of our new business and a responsible approach to capital allocation.
We will assess the potential for further capital returns to our shareholders in line with our capital allocation policy.
With our quarter, one 2020 financial results.
And in 'twenty, one we remained focused on creating value for our shareholders safety and execution, while progressing the many organic hard value growth options that we have been moving.
Harm audit during this presentation.
So with that I'll pass along to the operator to take any questions you might have.
Thank you we will now begin the question and answer session.
And the question queue. You May Press Star then one on your telephone keypad and you will hear of tone acknowledging your request.
We're using a speakerphone please pick up your handset before pressing any Keith.
Of withdraw your question. Please press Star then two we will pause for a moment of callers join the queue.
Our first question comes from obese Habib of Scotia Bank. Please go ahead.
And Robert and team and thanks for taking my questions.
Ron just.
The first question again.
And again, you've touched on asset allocation and quite a bit.
And talked about share buybacks and.
Is there.
And obviously your balance sheet is extremely strong you're you've got you're going to be generating a lot of good free cash flow in 2021.
And.
And your free cash flow profile in the second half weighted is is this kind of what you are looking to get over in terms of announcing any sort of the share buyback program or is there any other plans in place.
Thanks advice and.
Look I'll answer the question and the slightly long version because I think it's important the.
The capital allocation policy that we established towards the end of last year was really.
And three prongs in the the <unk>.
First part was to maintain the my time that strengthen the balance sheet to ensure we continue with our debt management and other needs of the business.
Keeping and onto the future and some of the the exciting growth prospects that we have.
The emerging in the portfolio and particularly more recently.
And we want to be able to to maintain that strengthen the balance sheet to allow us to grow from within our marine. So that's really important to us and then obviously the loss basis returning.
Excess cash.
To the shareholders.
Nice dividend that kicks it off this morning.
Is the the first step in that direction.
And and that's something that we feel very confident of that can sustain through.
Any cycle and so we have really really really pleased to get that behind us.
And then obviously with the.
The email now already and 21.
Once we complete our quarter one financial results were in conjunction with those quarter. One financial results. We will start doing the the assessment of August supplementing those base dividends with innovative another dividend and all the other share buyback.
And so it's not too not too far down the the on the right here of ice.
Okay. Thanks, Rob just the.
Moving on CCAR I guess.
Just moving on to exploration.
And definitely focus seems to be near mine and organic opportunities and looking at it.
<unk> as well as CBD.
What are your plans on the Korea, and San Luis and Wood.
Are those assets, becoming a little bit non core or just will remain part of the portfolio and then once you do kind of go through your three main assets. Then you will start looking at the.
Those assets.
The next.
And the organic pipeline.
Yes no.
We haven't made any determinations about.
The core and non core and.
The the portfolio at this stage, where we will go through the process and we'll continue to do it as normal course business for us too.
And sure that.
And we always have of you.
Q2, and managing the portfolio because you can easily get.
In the bad habit of not doing that and being ruthless and rigorous and those approach.
It's still status quo in terms of.
San Louise and Peter Rehearing, and particular in the equation.
And we will continue to look at those during 'twenty 2021.
And then your opinion of the <unk> is another question that comes up quite a lot.
<unk>.
Peter.
A great little cash flow generator, and particularly we silver prices, where they are today.
The way that continuing.
And this year, we are going to put some money into investing of looking at some of the exploration potential around the.
Around the <unk> as well to see what else might exist there. So at this stage.
Of a holding pattern of.
<unk> and.
The really important that we.
I understand and the full value of the portfolio.
And as time goes on multi of those questions will become more front of mind for us.
Okay got it thanks, so much and.
And again, thanks for taking my questions.
Our next question comes from Cosmos <unk> of CIBC. Please go ahead.
Alright, Thanks, Robert and team for the conference call and great to see that you've put in the inaugural dividend here.
Maybe my first question is on our reserves and resources Rod.
Great to see that you put in the technical report.
Last year on share.
Updating of the reserve and resources there.
But how about the other deposits in terms of Marigold, and Seabee and Hawaii.
What we should we be expecting in terms of the reserve resource update and on a go forward basis should we expect it on an annual basis in terms of.
The resource updates at the various deposits.
The Cosmos, it's it's true of here.
So we used to do this differentially LLC to do it annually.
And.
With the <unk> and that's what we're going to do going forward.
So youll see those come out the prepay.
The it ready to go and we're just finalizing them and ticking and tying them at the moment, so youll get to see those with the filings at the end of the year over year and filings and I should say.
Okay. So it should be coming out for.
The assumed within the month.
And we will do that regularly and.
Okay.
Okay sounds good.
And then.
Yes. My next question is on.
In terms of <unk>.
Great to see that you have made a discovery here, but.
Maybe it's too early right now, but I'm just trying to figure out how this kind of fits in and you put it you put out the.
And the technical report the Tripwire and Master plan late last year.
Clearly <unk> is not and it yet.
But how does it sort of and kind of fit in and and clearly.
The different youre getting down to the pore free now.
<unk>, two multi app with thermo deposit up at the top and so it sounds like to me youre going to have to put in some of infrastructure. However, Stuart as you said there was already some infrastructure in place could you kind of help me in terms of trying to piece it together and how does it kind of fits in and potentially could fit and based on what you know today.
So because I think I think the.
And I'll just make a part of it pointed.
And I'll, let you to also.
<unk> contributed on this question and particular the the.
The take report that we put out for the Triple a loss last year.
We're very clear that it was really just the start for.
For for that asset in terms of.
Dialog and the full value and the full potential of it.
But we did we did.
I still have constraints around the other drilling around the outage and so there'll be more to come.
A number of other targets that we will pursue.
And on the chip will settle and also within the chair of lipid. So so it really was just the beginning of the of the.
The new story for.
The cheerfully related and obviously on the back side of that.
We discovered the Aussie to see too as well so.
My view is on agnostic to discoveries of in terms of.
Whether it's the gold copper porphyry or whether it's the gold discovery of annually.
Because of the time, great and Thats, the best Bang for the Bakken the best value for.
And for our shareholders, but.
Definitely.
Definitely exciting is true.
Yeah. So.
Maybe I could just help us how to think about it so the.
The poll free.
The deposit.
We should we're thinking about that.
The potentially of Standalone, porphyry, which would carrier, which would carry outs on infrastructure. So.
Typical concentrate on.
And Thats the test work that we are currently undertaking that said.
If.
As we do the Capex, we would expect to pick up more of the epic thermal on the contact at each of the context call the <unk>.
We also have the areas.
And at the local market that might be very high gold and lower and Copa which might be suitable for the sulfide plant.
Going forward and one of the things that we have been looking at in the laboratory is whether or not.
And after we make the the typical copper concentrate with the there is any any opportunity for us too.
And recover more of the gold into a par on concentrates.
And typical cheerful of fashion.
Got lots of opportunities, but if you look at the grade.
Of the.
The first holes that we pulled out.
And the length of those and with a seat and the strike length.
And if we can get enough volume in the bottom of it.
And into the porphyry.
It'll stand well against the other porphyry discoveries and the world.
Okay, Great and then as you mentioned SKU on the grade.
The the drill intercepts that you've put out day on the California equivalent basis could you remind me whats the split here between copper and gold and is it really the icon.
The non banks behind here is it really copper driven.
It's called driven so that two thirds go.
And in value.
At this stage for the first full hauls that we sold.
Okay.
Okay, and just wondering because I guess so.
Because thats typically how people look and pull throughs.
Brian and just help people to understand it's available to write against out of core for us.
Got you, Okay and.
And then.
And as the other thing.
And with the cohort with the pull free they tend to be larger volume lowered grades so.
And the development of our core free would generally million of larger and larger throughput concentrated.
Robert sort of the higher grade lower and lower tons that you see fitting the current share for facility.
Gotcha. Thanks, Joe.
And maybe I'll ask my last question is on the 'twenty and 'twenty, one and catalysts.
As you mentioned and Marigold Youre looking at ongoing cost reduction continuous improvement and.
Initiatives.
Could you maybe expand on that I.
And I guess on the past SSR mining and I talked about.
Equipment replacement and Marigold.
And something that's being considered great control drilling.
Enhancements or is that something that's being considered and I'm just trying to get a better sense in terms of how youre going to get about.
And getting to that.
Continuous improvement of Marigold.
Yes so.
We've obviously got the.
Quite a program of fleet replacement at Marigold going on at the moment. So the the PC set of thousands of really started to hit the straps.
This year when we did the original pass of the plan the plan was showing the.
The biggest movements that we would have ever seen and the pit.
And as.
Part of the caution was we kept the throughput right based on the fact that we thought we might see congestion and we think theres, a real opportunity to start to pause and the higher level of control.
Over the top of the dispatch.
And we're doing some work we've done some work we've actually got operating.
Within share flow within the plant some Iowa.
And there is some advances in the similar technology for credit control. So the guys are starting to look at those types of that top of of wood as well as the the out of the talks of continuous improvement that we're always working on site.
As part of the merger.
We're going through a process.
<unk> net hull.
Improvement space and we've really broken into two parts one is continuous improvement which is the.
Doing good business, you're not doing better at what we do every day and lean six Sigma.
And these programs the second the second part we are doing is how can we how can we get step change improvement into the business leveraging off of some of this new technology at at sort of low cost and to get it into price quickly. So.
We're not looking immediately to automate fleet, but how can we use AI to help us to manage and plan and beta.
And allocate resources better and.
And the amendment caused the marigold increments of really meaningful.
No.
Some of the work programs and we'll obviously talk about as I as I get through further replacement issue.
We've been busy reaching out.
And to all of that network.
To see how we can advances.
And I have to say the marigold team of pretty impressive team and.
And.
Always looking for and hungry for these opportunities.
Yes, Hi, Ken Karels, there three years ago, and and I was quite impressed by the team out there at Marigold.
And my last question here again on the 2021 and catalyst at CEB you mentioned.
And to increase the mining rates to exploit the latent mill capacity here.
And again could you help me understand and elaborate on what you and trying to do at CBS and toy.
Yes.
In the in the first instance.
And as the same the continuous improvement program and increasing lateral development is recorded at Seabee.
Some of that was required just to meet the continued go forward plan and then.
And we're also looking at.
So.
We've got a couple of jumbos coming in the same type of things that I was talking about doing at Marigold, we are looking to implement <unk>.
Hey.
Going forward.
This year will be stabilized I shouldn't getting the lateral development rates up and have the Si.
Implementing sort of continuous improvement work.
At the end of last year and sort of started to move consistently at rates that they hadn't moved that before at the beginning of this year.
The the slot.
Ahead of what the plan has in place for us.
Remove intellectual right. So that's sort of a guy and that's the foundational continuous improvement and the other piece of that.
We're doing a little bit longer lived.
Everybody believes that CB is I.
Project, the sort of always has four of five years lots of in front of it and we will have for fog block used lots in front of it for the next 20 or 30 of 40 years. However, hell of a long we manage to continue to develop the next tranche and bring it on the question has to be we put a bit more.
Focus and effort and money into exploration and we can lift out time horizon, the little bit we would be able to bring some of that other some of.
The other mineralization forward and invest in building up the mine capacity to be able to at least meet.
What the mill can do and then might be fully exploit the resource.
So you sort of got the immediate do better on what we're doing and go faster and halfway of that.
The improvement.
And sort of innovation and then the longer term.
Lift the horizon and then.
Can we change the paradigm for us.
And there's a lot of work to.
To do the work out whether that's.
Going to be achievable book, we believe that there is a pretty good chance that that's the real opportunity.
Thanks, Thanks for the very thorough answer here and those are all the questions I had thanks a lot.
Our next question comes from Tyler Langton with Jpmorgan. Please go ahead.
Yes, good afternoon, and thanks for taking my question.
I guess.
In general manager of the oil prices up diesel prices up are outside of those are you seeing sort of just any inflation, whether it's through labor and materials equipment that could kind of pressure some of it.
The cost targets for the year, and then I guess on where.
And specifically with Kepler.
And I guess any of the flotation circuit.
The huge capex spend but we think just of the P/e case and and.
The capex there.
Over the next year or so.
And sort of inflationary risks with that.
Hi to all of its Ron I'll, let I'll, let Gregg take all the the.
Most of that question actually total.
Okay.
Yeah sure. Thanks, Thanks Tyler.
I think we're still seeing cost pressure is to be fairly moderate and generally from the labor side, where we're operating obviously, we're still seeing generally economic conditions not fully rebounded and so we're not seeing significant pressures as you noted obviously commodity prices are trending up so.
That is an area that we're monitoring.
And we're fairly well protected on the diesel side for 2021.
We're well hedged at both Marigold and Seabee on that pace. So we do have we do have some protection and on those assets lets sell at <unk> and at <unk>, but it does provide a bit of better protection against those pieces. So it's certainly an area, we'll be monitoring, but I would say currently we're not seeing significant pressures translate.
Through.
Great. That's helpful. Thanks, and then in terms of.
The follow up on the capital allocation and is there.
And then can you kind of ended the year with.
Close to 900 million of cash and is there a sort of and as you go forward of minimum level of cash that you want to keep on the balance sheet just to kind of provide support for the various sort of projects.
Projects and exploration and Youre looking at.
Yeah look I think I think it's a.
And we sort of take a more holistic view of the portal that moves towards all of it yes. That's definitely part of the objective to ensure we have the the balance sheet and recognizing we're in a cyclical business.
And as quickly as things go up we've seen more recently prices prices come off.
And.
Ensuring that we have the ability then to.
So fund the growth that we have and the pipeline. So that's definitely part of the the overall.
<unk> for us and.
Obviously with the current share price weakness will will.
And we'll definitely look more closely at using tools available to us lock and NCI value program for share buyback.
Moving into.
And this quarter, so I'm not promising it but it.
It definitely becomes.
And definitely becomes.
A key piece of our considerations as we move forward. So it's really it's trying to do it all the.
Recognize the strength of the business recognized the growth potential and recognize the.
And the cash flow generation through the cycles. So.
And this whole COVID-19, obviously evolving it's it's new it's still the new company and.
We will continue to mature our thoughts as we move along.
Great. Thanks, so much.
Yeah.
Our next question comes from Daniel Morgan with UBS. Please go ahead.
Hi, Rod and the team.
Two questions if I may firstly, just on Marigold.
And you Simplistically talk to when it will hit its sweet spot.
This year, you've got record record material movements coming.
And I think Greg correct me, if I'm wrong. This year will still be below reserve grade. So just wondering when are we going and get that sweet spot, where stripping comes off and you get.
And a great at or above reserve grade.
Yes, it's not it's not and this year, it's and the next few years.
This year, we've got.
Or is true pressure.
We do get some hard right at the end of the year when we move to the fourth.
And to the north.
But it's of another stripping year.
Yeah.
Okay and.
At Chubb.
<unk> just wondering if you could elaborate on one of the shutdowns budgeted for this year I'm just trying to get my.
Quarterly.
Numbers and Im trajectory we're on.
If you could also call out if there's any major and.
Seasonal quarterly changes to production this year that it was worthy of note.
Yes, so for this year the.
And we've only got one major shutdown on the other clients and level the.
<unk>, one which will happen.
At the end of this quarter the beginning of the next quarter.
It will be.
<unk> three weeks.
And then other than that the big drivers the chip for this year.
The grade varies a bit just based on the mine plan and then the big.
Big footprint is the commissioning of the flotation plant, which happens.
And studying and.
Starting at the beginning of the third.
Good quarter.
And when we put it out.
21 on guidance.
I'll, let Brian and Greg just to give you the exact numbers, we actually did note that the.
Production will be backend weighted for the year.
And for some of the reasons choose to stay on long, but for other reasons and other operations as well and I think Greg gave a really good overview of.
And how it also translates into cash generation in 2021 so.
If you look back of those documents and it and anything else. We can always we can always do it offline.
No that's perfect. Thanks for your and thanks for answers.
Our next question comes from Ryan Thompson of BMO. Please go ahead.
Hey, guys. Thanks for the update.
Most of my questions have been asked but maybe just a couple of housekeeping things for the model.
I think Greg mentioned the dividend to the JV partner was paid in January just for.
For the benefit of the I guess the legacy assets on our analyst one is like how should we model of that that dividend going forward in terms of the.
Timing and then just secondly.
And just on the the sales lagging production is it safe to assume the.
The bulk of both the gold and silver that will flow.
And then Q4 is going to hit the Q1 income statement.
Yes, sure I'll, let <unk> address those Ryan I think just first talking about the sales I mean, we will see normal variations moderate quarter on quarter.
Was extreme and the fourth quarter, just as really all for assets returned to much higher levels of production relative to Q3. So typically on a portfolio of effect, we won't see that kind of variation Knorr and.
And assuming we stay at steady state, which is obviously something where we're expecting we'd see that moderate so again youll see youll see normal variations, but I think as we move towards the end of Q2 will be will be right on track.
With regards to the dividend piece.
That's a question and that's really challenging to answer specifically.
A lot of that is going to depend on some of the issues that <unk> talked about in terms of the needs of that operation from an investment standpoint that would dictate how we look at distributions out of that operation going forward.
And Theres also debt repayments and other things that come out of that operation as part of the debt structure and there so.
Well, we'll provide guidance has as its appropriate but its something that we can't really give you a formula to determine in any in any manner.
Okay I appreciate it I appreciate the update guys. Thanks a lot.
This concludes the question and answer session I would like to turn the conference back over to Rod Antal for any closing remarks.
Well, thanks, operator, and thanks, everyone for participating today and look forward to keeping you informed of our progress in 2021 and.
Obviously recapturing some some loss of momentum here as we.
And I'll give this year get this year and start the dialogue some of the.
The excellent growth potential we have and the portfolio.
And with that good afternoon, and good <unk>, good evening and good morning.
This concludes today's conference call you may disconnect. Your lines. Thank you for participating and have a pleasant day.
Yes.
Yes.
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