Q4 2020 Equinox Gold Corp Earnings Call

Thank you for standing by this is the conference operator.

Welcome to the Equinox gold fourth quarter, and fiscal 'twenty, and 'twenty financial results and corporate update conference call and webcast. As a reminder, all participants are in listen only mode and the conference is being recorded.

After the presentation, there will be and opportunity to ask questions to join the question queue. You May Press Star then one on your telephone keypad.

Should you need assistance during the conference call you May signal, an operator by pressing star and zero. If you are participating through the webcast you can submit a question and writing by using the Textbox and the lower left corner of the webcast frame I would now like to turn the conference over to relent Bally and <unk>.

<unk> President of Investor Relations for Equinox Gold. Please go ahead.

Thank you of Anastasia and thank you everybody for joining US day for the Q4 call. The will of course, the making a number of forward looking statements. Today. So please do take the time to visit our website and to visit our continuous disclosure documents on SEDAR and Edgar and not going to turn the conference call over to our CEO Christian the allow for opening remarks.

Great. Thanks for Atlanta, and welcome everyone today.

Just looking at slide number three and and running true. This past year, we had a heck of a busy year and marks on the go a strong finish to the year and the good performance on the health and safety front with the.

Very good and buying the integration and work on the safety front. The during a very true tax a year when the Covid was a key impact on the business and we tested over 15000 people for Covid during the year and our Workforces Omega and just under 6000 people. So multiple tests per person on average and.

And I think we've done an excellent job so kudos to the mine for for managing through that difficult year.

We had the highest production quarter and Nate and good cost performance and we're pleased with the and for the year as we go into a big investment year. This year, we had very good solid cash generation and Peter will talk about that and a few slides here. So good entered the year and we turned over to slide number.

For.

Busy on the development and corporate highlights fronts of development was extremely extremely busy during the year with the castle Mountain phase one going into production and then hitting commercial production in the fourth quarter the.

The usability study for Castle Mountain was ongoing and we've been optimizing that and ready for release of the next few weeks, we'll keep an eye open for the coming out of.

While she loves feasibility study update and is also underway and a little bit behind and I'll come out during quarter, two and the mid part of quarter. Two so just behind Castle Mountain phase two.

And we're expecting some good results from that in terms of the reserve and resource expansion and the addition to that we've finished off the underground drilling at Autozone and Theres. The PFS study underway, which we expect to give up the market and the second half of this year. So lots of on that front and lots of new information and exciting additions coming to both the reserves and <unk>.

Sources, so a big year on that front.

We also saw a nice increase last year, and the reserves and resources of mosquito and kudos to Scott and the team did a great job of basically increasing reserves and resources substantially there and also really pleased and Huskies performance overall, we've owned it for just over a couple of years of just over two years now and it just over $150 million for it and we generated free.

Free cash flow of almost $140 million, so almost repaid that purchase price within two years time, so excellent performance.

And also the saddle lose feasibility of and just released with strong results really good high return project of $100 million of capital construction started and we're now about 25% complete we have also appointed Sally Eyre to the board. So welcome to her this past year as well and we integrated the legal merger and all the teams are now and one one off of.

And Vancouver.

And we also announced the Premier Gold acquisition, so very busy on the corporate development front as well so I'll pass over to Peter to walk you through the financials on the next couple of slides.

Thanks Christian so on slide five you can see we had a good year, we sold of 135000 ounces of gold and an average realized price of about 18, and 71 per ounce, which generated revenues of $253 million.

On the cost front, our cash costs for the quarter were $848, an ounce and just under 1100 announced for all in sustaining.

Now, let the my earnings for mine ops for the quarter of $95 million.

Income for the quarter was $89 million.

And when you would for and EPS of <unk> 37 cents a share when you adjust out a number of noncash charges. Our adjusted earnings or income is $34 million at and adjusted EPS of 14 cents a share fully diluted thats 12 cents a share.

Most importantly, we generated a lot of cash during the quarter. It was our strongest quarter for that generating 87 million and up and our operating cash flow before changes in noncash working capital.

That continued to strengthen our balance sheet, which is with cash of $345 million at the end of the year, which is up and the $310 million at the end of Q3.

In addition.

The strong balance sheet, we of 200 million of net debt, which if you assume the end of the money converts or equity is 55 million of net cash our net liquidity. After you include the $75 million Canadian dollar financing is about $600 million.

In addition, our investment of Solaris has performed really well we equity account for it so it only as the book value of $22 million and our balance sheet whoever the fair value of the shares that we own and there are about 150 million U S. So a good strong balance sheet for for the pathway ahead, and the development that we need to do more.

Moving to slide six.

You can see here our quarterly results by mine.

The mesquite, we had a strong quarter as you can see with an increase and protect our ounces sold part of me from Q3 of 125000 ounces to the <unk> hundred and <unk>.

Well 36000 ounces produced and 135000 ounces sold.

The mesquite, Arizona for Zander.

Particularly strong quarters mesquite benefited from an increase in and ounces recoverable ounces stacked in Q3, which came out and Q4 or so and of benefited from a higher throughput and stronger grade, which we always love to see with the 37000 ounces produced during the quarter.

Moving to slide seven which highlights our earnings and operations results.

Here, you can see and the comparison of prior year really the increase and scale.

From the legal merger.

One item I would point out is.

We finalized our purchase accounting for the legal merger and Q4.

Unfortunately that create a bit of noise, because we updated or of sudden shows on the gold price to use the fair value of the heap leach pads at Las villas.

And when you make changes and your purchase accounting you have to apply that are for US requires you to apply that back to prior quarters, which is my previous quarters are updated as if those changes have been made on day one.

And do you want to emphasize though of that none of those changes affect cash.

Looking forward to 'twenty 'twenty, one and while we had a very strong Q4. It is a year of investments and we have a lot of sustaining expenditures you would have heard from our guidance call and our guidance news release from February.

To help understand a little bit of the structure of how what what our expectations are for the year, 61% of our sustaining expenditures and the first half of the year, but only 40% of our gold sales, meaning that we expect to have higher all in sustaining costs and the first half of the year versus the second half of the year, that's mostly going to affect castle mountain, although the FILO Center.

Mesquite.

The final point before handing things back over to Christian is that all of the financial results that we've that we're reviewing today and that are in our press release are unaudited and we are sort of first year of Sox and where and the process of just finishing up the control side of the audit and with respect to our financial statements and we expect that to be done and the <unk>.

Next couple of weeks and you'll see our audited financials and MD&A about then I will turn the time back over to Christian.

Great. Thanks, Pete and looking at slide number eight just wanted to run through the operations and a little bit of a look back and a little bit of a look forward and.

<unk> 'twenty 'twenty, one and so.

Looking at Mexico, and California, first Los Angeles, and mosquitoes or as Pete said and in an investment phase here and particularly during the first half of this year.

Ausiello, we're opening up the Guadalupe open pits, we're also ready to start the Burma all underground once the social collaboration agreement is signed with the community, which I'll comment on just the second here.

We restarted the last few of those mines in December and it for at about 13000 ounces of gold last year and is on track to be.

The ramped up the full production here as we speak so.

Please proceed that back and operating.

As we said last year on the last conference call.

We've been working on and updated social collaboration agreement with the the local leadership all of the carriers the legal community and.

And there are key areas of sticking are sticking points basically were around employment and contracts for the future growth and the operation, particularly around Burma Hall, so like the <unk>.

Greed, those clauses around employment and sharing between the various communities and ultimately contracts and.

Awarding certain contracts or tendering and to the local community. So we're pleased that we were able to come to the resolution on those we're still working on the final dispute resolution mechanism and the contract and hopefully we will have that resolved here and the next few weeks, but.

Getting very close we have made progress since last time, we spoke to you and Ross and I were on the call a few weeks ago here. So.

Good progress being made and we plan to see that finished here in the near term and get back to normal business and unless he loves to get the mine expanded.

I have escaped the big heavy stripping period during the first half of this year as Pete sort of alluded to the brown and <unk> is being stripped theres very little new or go on to the pads. During the period. So we are residual leaching and and adding sort of some supplemental ore to the pads and.

We're also spending of about $9 million and see you on exploration and the scheme.

Yeah, we've been it's.

And an outstanding performer over the last couple of years and it's been a key area of focus to continue to extend the mine life of this.

Said earlier it was a good job of increasing resources and reserves and we want to just keep doing that this year as well so opening up the new area of Brown and looking to expand the resource and reserve and the best and that's mine and we've also lease the new fleet from Caterpillar, because we have such confidence and the future of this mine continue on for a while so.

Lots of investment in there and those two mines this year.

When we look at castle and we've been ramping that up we hit commercial production later in the fourth quarter last year.

We're still working on some legally coin surround solution flow and leach pad and management one of the key investment this year really is in the.

Expanding the leach pads actually spending the capital to build out the phase one leach pad the cover whole period of phase one and so we're going to put all of that investment into this year. So it gives us a lot more flexibility and the operating team a chance to work on increasing the flows and having more flexibility on the leach pad.

So we'll see production.

And so a little bit lower the first half of the year and it will ramp up and the second half of the year.

Turning to slide number nine looking at the Brazil operating mines.

Extremely good year last year very satisfying to see all of those mines performed well obviously the currency was a key impact and help on the cost per.

<unk> wise in terms of production all of the mines performed well last year and.

We expect the pretty steady performance of this year quarter over quarter, So youll see less variability and youll see and the other mines in Mexico and California.

Arizona I do want to point out of just had an outstanding and the 2020 as Pete said of about $100 million of free cash flow last year.

And that's only the second year of operation. So very good results there in 2020. One has a large stripping program and of TSS list lift some of the sustaining capital is a little bit elevated this year operating costs are basically in line with last year, but it would be slightly elevated.

All in sustaining costs will continue to allocate expense exploration dollars as well with that underground sees the pre feasibility study coming out and H two and continue to work on.

Satellite and <unk>.

Tension as well as looking at some new potential deposits, which are within the 10 or 20 kilometer radius of the mine.

We're really excited about the future ear and we were allocating the capital to extend the mine life.

The agenda of kind of continues business as usual, it's been going for on and off for about 25 years. So business as usual it's had a good start to this year RDM again, another good start the mills performing very well the mining contractors continued to perform well.

We got that large pit expansion permit late last year, we're spending almost $35 million on stripping. This year. So lots of key portion of our capital for the growth capital this year and.

And interestingly, there's been a rating a quite of rainy period. During this rainy season this year and the as you remember historically it always was challenged with having enough raw water and the world water dam to get true a full year of production but.

This year, the actual hot water dams, overflowing and we'd probably of two years' worth of water, So really really clean and pictures of the C over the last week or so.

And the largest continues on a smaller scale delivering free cash flow.

And just sort of steady state.

Turning to slide number 10, just the refresh on the guidance that we put out a few weeks back and.

600, and 665000 ounces, that's a 30% increase on 2020, so continuing our move towards that million ounce target.

The cash costs are up slightly as mentioned earlier, you know fuel reagents labor and FX of.

Slightly more conservative assumptions this year going into the year, although we're actually seeing almost the opposite on the FX front I think a bulk of the peso and the Brazilian real have actually been weaker than a much weaker than we expected early early this year, so I'm getting some.

From that at the moment all of the.

And sustaining costs increased a little more substantially due to the capex programs that lots of Clo's Mesquite Castle and RDM.

We'll be improving those substantially and the second half of the year as Pete alluded to in the quarter for looks to be a really good quarter and as.

As we open up new ore sources of both mesquite and lost the loss.

Growth Capex, you know basically the key components of that are the 100 million dollar investment and Santa lose restart I'll comment on that and the second year of $35 million on the pit expansion and RDM.

And also opening up the Guadalupe open pit and the Burma Hall underground and lots of people. So those are the key components that make up that $200 million. So we're spending about $400 million on capex this year and total including the sustaining but it really does set us up for a strong 'twenty 'twenty two and beyond so next year and 2022, we should be producing up to 900000 ounces of gold.

Turning to slide number 11.

Looking at the development projects of Lafitte looks expansion and the plan. There is the move that towards 350000 ounces of annual production of all fair.

The steady basis from 2023 onwards.

We've selected and 8000 ton per day plant and that new feasibility studies and I said, we'll be out in Q2, and we won't start that investment until that social collaboration agreement is signed for Burma. The underground, but we hope to have that up and running a fairly soon here and we should be in a position to launch in the construction on the CIO of the department of Leach.

Later this year.

Well and turf.

A set of lose and we did start construction as we announced and the second half of last year and about 25% complete just seen pictures on the concrete cores for the mill foundations.

So for the tank foundations resin has been ordered.

Steel work is well underway and mining is expected to start in may and so it can really could start to see progress there.

It'll be constructed by year and the physical construction will be done and so there should be pouring gold and early 2022 at the moment of the mine is on time and on budget, so great to see and some of the teams that help build of Arizona are down their spearheading this month.

Looking at the Castle Mountain Phase, two feasibility and that'll be ready imminently, and we expect that I and the public domain and a few weeks' time here and I can.

Show, a nice increase to the mine life the annual production for the reserve base on and off.

And the back of all of that will also be lucky and a slightly larger mill and then what this feasibility will allow us to do is start the permitting process to amend that permit and the summer this year when we make a submission to the regulators.

And we expect that will take us up for three years to permit.

Which works and really well with our current development pipeline, we get sound of Lou's done by around this year and cadre of potentially could be started in the second half of this year and completed around the end of 2023 early 'twenty for then you could be starting construction on castle mountain and so a nice sequencing of our projects.

Looking at page number 12.

And the Premier acquisition.

We announced that I think it was December 16th the boat happened last week, we got 99, 9% and favor for the premier of shareholder vote.

We're just waiting on the Mexican antitrust approvals and we expect that and the next few weeks here.

Similar to what we had last year with legal and it took us till mid March. So we expect probably second half of March we should have that and.

And also the Ie spin outs that you and downy and we'll be running.

It's had a nice sort of visibility.

<unk> in the the premium share price, it's probably moved up to about $250 million of implied value of 30% stake and will be just under $100 million. So nice to see about value creation happening already and a focus on that pure Nevada based company.

Okay, a little more closely on slide number 13 at the hard rock asset as.

As we announced earlier this week, we will hold of 60% stake and hard rock, we bought the 50% through the Premier acquisition and we've negotiated deals of by another 10%, which will close just after closing of the premier deal well acquire that 10% from Orion for just over $60 million. So really pleased to have that majority stake lots of really be able to.

Say that were behind this project 100 per cent and we actually got a chance to visit it last week and put our feet on the ground and actually see the excitement and the local region for for this project are they're really keen to see it up and running and all the stakeholders of behind it so nice to start with that support.

As well and just a quick reminder, and I'll. This is the permanent project of social agreements in place and it's the first nations and that's.

Truly construction ready and has a project team that's been there that's done the feasibility study and Thats built a few mindshare agnico eagle and fairly remote locations and northern Canada. So really got all the pieces in place to get going later this year. So we're pretty excited to get the acquisition completed and and I'll do a bit of work before we can launch and the construction, but really getting this thing.

Moving later this year.

And this asset will be a cornerstone asset for us for years, the comments of five and a half million ounce deposits. So great scale to it and will produce over 400000 ounces and the early phases lots of exploration upside and potential I was really great and see that last week, you know there's potential for and underground eventually the 14 year mine life as the only focused on the open pit as well there's.

Potential satellite deposits to the west of the property some really exciting girl results come out of there as well. So we see this as a multi decade mine eventually it's got a great starting project and the climb to get into the construction that hopefully later this year.

Okay. The other assets and slide number 14 of the Premier acquisition.

Mercedes and 50000 ounce producer currently.

And it is producing good cash flow, it's about $1000 all in sustaining cost so January and good cash on a quarterly basis.

The saga and exciting Red Lake property and it could be of mine one day, we plan to do some exploration there in due course, but we're really excited about that one Ray Hill Bonanza, it's a bit of of smaller projected cash sitting between some evolution properties and all of them.

The logical part of that complex and the long term for sure and then.

And I E. The gold and as I mentioned earlier, you know you and down here will be running that out of Reno, Nevada.

Free focused assets in Nevada, one producing one that can be put back into the production fairly easily and of high grade exploration project effectively.

And thank you and and the team will be able to create the real value there and and as we've done with Soliris and we think we can support them and help them surface of that value of focused U S based gold mining company.

And turning to 15 just of kind of bring it together when you look at this portfolio of assets with the Premier of acquisition completed it really does create a nice balanced portfolio.

We're happy with the diversification, you've got almost a quarter and each of these jurisdictions in Canada, The U S, Mexico, and Brazil, and reserves and net asset values of.

The upside and expansion potential and all of the exploration that debt sits in this portfolio is just fantastic. We're really pleased that we were able to balance it now almost 25 per cent and each of these regions and I think this year will be exciting because you'll get a number of studies out you'll have some exploration results and what we'll be able to do is expand of couple of the assets and and really show that the.

Growth and potential and all of these regions, we're not reliant on any one of its actually nicely balanced going forward.

And turning to 16, and just pulling that altogether, what does that really translate to well. This is the leading growth company in the sector right now and I'm not sure. If there's anyone with that kind of growth rate as you can see and the third column there.

We plan to be hitting that sort of 1 million ounce Mark and a couple of years time here and we also have a nice reserve base of almost 16 million ounces and we see that growing and the near term here. So at the leading and of all of the peer comparable categories here on the slide except threat and the valuation and so our key job here is to move that multiple of price to net out.

Asset value up from 0.5, the 0.6 up into that sort of range like our peers of that 0.81 times and really over the next 12 to 24 months of as we execute as we expand the portfolios and we've come of 900000 of 1 million ounce producer. We really think that re rating has got a really good chance of achieving that and the balance sheets and place to deliver on the.

That growth.

Okay.

And just in summary here on slide number 17 and all.

It's been a busy year and 2020 of long list of catalysts for 2020, one and we're going to focus on delivering on the production and the cost base that we have of that production will have a 30% growth factor built into it and we've also got of $37 million exploration program, which will be mostly focused on extending the mine lives and around the mindset of.

The shorter than 10 year mine life. So.

It's nice to see that we're actually reinvesting in our own portfolio. This year, it's more inward looking and it hasnt been probably and the last couple of years, we'll be looking to close and integrate the premier gold acquisition would be looking to support Soliris and 80 gold as they create some value and really on the M&A front, it's a little bit more subdued I think going forward right now and we're focused on base.

And then expanding our assets delivering on the value of all the great assets, we have internally here and simplifying the portfolio.

So what we think we've done it here and created the company. It was all of those pieces to create value and it's well positioned and this gold gold the cycle.

Diversity scale and mining friendly jurisdictions and the Americas. The growth is all owned internally at the moment, we don't need to go out and buy it.

And we've got strong balance sheet $600 million and liquidity and another couple of hundred million dollars investments and it.

Low net debt to EBITDA ratio of well below one time so.

With that and our long and long term palm and vision with our core shareholder base, we're really excited about the future here and.

Do you think that equinox is really set up for a strong future and the 'twenty 'twenty, one will be of fun and exciting years, so with that I think al and the formal part of the presentation and maybe turn it over for a question and answer.

Thank you Christian operator can you please remind people how to ask the question.

Certainly once again to join the question queue. You May Press Star then one on your telephone keypad and you will hear auto and acknowledging your request. If you are using a speakerphone. Please pick up your handset before pressing any keys to withdraw your question. Please press Star then two if you are participating through the web.

Cash you can submit a question and writing by using the Textbox and the lower left corner of the webcast frame, we will pause for a moment of callers join the queue.

Thank you we do have one question from an investor and the United Kingdom.

And just outline Christian for the very impressive growth plans for the coming years, what do you think of the market isn't the same what does the market need to do to believe and equinox gold and have that reflected and the share price.

I think one of the key things that certainly are and the feedback. We get is we do have a lot and our plate. So really focus on your core projects and and the.

Opportunity to create value and those core expansion projects and areas where you can.

And expand the reserves and deliver on what you say you're going to do.

And I think it's all about the execution here and we've gathered all the pieces of the puzzle now we just have to put them together and be on time on budget and execute and I.

And I hope that.

<unk> done a good job of building of mined per year over the last few years of doing some M&A and integrating cultures and companies and creating some value already and I just think that it's a matter of executing is the key the key thing and I think the balance sheets and a strong place to allow us to do that and and again the shareholder base and got a common vision with us of delivering something that.

And has a long term vision not just the short term.

Vision.

Thank you, we'll take a question from the phone please.

The next question comes from Kerry Smith with Haywood Securities. Please go ahead.

Thanks, operator.

Maybe Doug can answer this question just for these big pre strips you have at mesquite, clo's and or is the owner and I guess R&D and would that pre strip.

And sort of equally over the year or is it sort of front half weighted runs for three quarters, just a bit more clarity on how it's going to be scaled out of their scheduled over.

Over the year.

The RDM through the year Las villas, and there's more front end weighted as are we and we stepped down.

Guadeloupe and and get in and to the or Mosquitos. The again front end weighted as we open up the brown the pit the access the AR the ore and the and the southern part of the update.

And autozone, the stripping is a bit of a holdover from last year just continues into this year and.

Will go through most of the years of wall.

Okay, So and I think with the rainy season, there Kerry we tend to move more tons. Obviously after sort of April may so probably pretty evenly distributed.

Yes.

Oh, Resona buildup of very big stockpile coming into the rainy season, and I think it was over 1 million millions of tons. So we we take advantage of that as we worked through the rainy season, and then and get back into the stripping for the rest of the year right, Okay, and that's of a guy who's.

Just on RDM for the production that mine has been doing the sort of 18 and 19000 ounces of corridor for the last few quarters at least and.

The guidance this year of 55 to 60000 do you want to maybe just.

Talk a bit of of why that.

And is actually a bit lower than what you'd kind of expect on you on a quarterly annualized rate.

And we were waiting for the permits to be able to do the.

The pit stripping, which came through the middle of last year and that's why we're pushing it through the series that we're actually I would say delayed and getting going with that the strip and now now that we're into it we're more focused on that it means that we have.

On a more modest grade through 2020, one that said that's actually it's been doing pretty good so far this year against our expected grade so.

Maybe it will get a little bit of a bump, but and it was kind of expected. The when we got into the stripping we would have a more modest rate going into the into the plant. So that we could get access to better grade and then the remaining life of the mine.

Okay, and then does that.

And all of that stripping finished by the end of the here than it is some of the rollover into the rules it rolls over.

Yeah.

Okay, Okay and.

And Christian or Peter could you, maybe just let me know what the book value will be for your Ied position once the deal closes the financing closes and the company starts trading and just what your dollars of millions.

And we'll be for you allocate the book value there.

I think that one for you Peter.

Yeah.

We're gonna have the fair value. So a we will have to do fair value accounting for it.

So.

The the short answer is.

It'll be at whatever the the shares trade at initially at inception.

The fair value of that is going to be in and around call it $100 million $80 million to $100 million.

Okay.

I mean that that is a debt that's a let's wait for Q1 question really carry right right, okay, but if I just took the sort of it.

Price and trade that the first week and just multiply it by the share is that's kind of any of the your book value at.

Correct, Yeah gotcha, Okay. That's great. Thanks, very much guys.

Thanks, Gary.

Thanks, Carrie take another question from the phones. Please.

The next question comes from Lawrence Danny Private Investor. Please go ahead.

Good morning, gentlemen, and thank you for all your hard work.

One of the Cta of a tad bit concerned on the all in sustaining cost numbers with the acquisitions and streamlining of you're going to be able to cut cost and are those numbers kind of fall and the.

Coming quarters.

So.

The bigger trend here as obviously as we expand and develop the the longer life larger assets those will naturally bring down our cost, but also we have the call. It the short term impacts of of the stripping programs and.

Less of the war going on and the pads et cetera, and mesquite and <unk> and the first half of this year. So we have and elevated period here and the first few quarters of this year and and you start to see that downward trend and I think as we get into sort of like next year, you're running at almost 900000 ounces and and we go.

Got some expansions that have already come to fruition and you start to see those costs starting to come down and gradually over time as we get hard rock in the production as we expand the castle and as well as we extend the P loves to its full capacity those will all of the lower cost. So it's the.

The process here that we're going through of bringing costs down over time for sure.

And will that lend itself to the potential of dividends you know like after.

After those things happen and will that be more.

You know lend itself to maybe the <unk>.

Potential of dividends you know maybe in 2022 of 2020 three.

Yeah, and not sure of the exact timing yet, but it absolutely we're heading in that direction and and the goal here really is to get this portfolio of humming and spend.

And some of the development and growth capital, where we think we can get some great returns on it and then we'll move to more of a dividend model and you'll probably be able of allocate some capital back to the shareholders as well as invest and future growth, but I think youre right. Its 22, and two maybe but 2023 of them much more likely for that.

Yeah that should help valuation too thank you very much.

Yeah. Thank you.

Thank you Lawrence and the other question from the phones. Please.

The next question comes from Mike Parkin with National Bank. Please go ahead.

Hi, guys. Thanks for taking my questions and Mike could you speak to how Santa loses development budget is kind of tracking.

Are you seeing kind of any wins on yeah of.

Certain kind of cost items and.

And you know wherever you can kind of give some color.

And maybe I'll start there, but Dayton and Doug please jump in as well.

So far we've seen it pretty much tracking I think it's a percent or two behind where we expected it to be in terms of at this stage I think around 25 per cent and no. It should be at 26 of 27.

And I think it's tracking basically on plan for for the budget as well and we're obviously getting the the tailwind from the FX rate.

And I went to a slightly better environment, and we had to work here and up in northern Brazil, there with Horizontals and the rainy season and that doesn't have as much of impact and.

Finding the contractors and the area are probably a little more qualified and so far we've had a really good start to it and I really encourage you sort of fair.

And the short build because of lot of that infrastructure is in place. So you know when we get asked what's the critical path and what are the key issues that could cause any issues of delays you know.

Not about waiting for a middle of the come from from China or from Europe, or whatever and you know those are there on site. So it's more about executing on the concrete pours getting that early mining going and getting the steelworker record of etcetera, and so there's less areas for things to go wrong with the of course of the construction project and you can't be totally certain but.

And so far it's tracking really nicely and Doug or repeat and I don't know if I missed any.

And I think well.

Well.

Go ahead for you.

Right.

No that was gonna stay the same.

Alright excellent and.

Unheard rock could you just give us an idea of like once the deal closes and.

It's already permitted for construction can you give us an idea of where.

And what kind of activity, we should expect on that project. This year and you have.

The percent of engineering completion on the projects that you can share with us.

I'll comment on the maybe the first part of their dog I know, how and if you can come on the second part, but the idea here is the close you know we have been out of sight, we've sort of.

Started the process of getting up the speed with the team you know we of a few questions to answer and a few points, we want to explore and look into but overall, we were very happy with the work done to date and the project team in place and.

We know.

You know of Premier's given the go ahead I guess on just getting some early works done like tree clearing and that the there has to be done during the call. It the the summer months and.

And you know, it's the lighter and the early works and you know I can't predict the exact timing, but hopefully in the second half of this year were and are positioned to be able to launch and the construction. So youre going to see call. It the lighter and of works, where you're hiring a few project team members, maybe doing a bit of tree clearing.

You know the.

Ordering of few things with some deposits, but youre not going to see of big capital spend certainly for the next three to six months and.

You get into construction later this year, you could see us launch and do a bit more detail and.

You know that stage, we can give a cool cool budget and time line and be able to articulate just capital, but you know a small proportion of the capital will be spent and the second half this year of course.

Okay and then.

And why and engineering.

Yes, Hey on the engineering and Gotta go to all of you know.

The.

Exact percentage of error, where theyre at well part of the work and the latter half of the year as updating all of the costs.

And <unk>.

The majority of the costs are for all of the equipment was based on firm quotes. So there is and updating phase and the completion of additional engineering and the variable between about 50% complete on some of the detailed engineering on.

And the plant up to closer to 90% complete for TSS and the highway rerouting.

And I will add the part of the pushed for the second half of the year is established and the Tam and the.

Hello, and water treatment plant that are needed to be in place prior to being able to initiate the the main construction for the project.

Alright, that's very good color, thanks, guys very much.

Yeah.

I'll take a couple of questions.

The questions online now for the first one I get asked all the time by email thing and I'll, let you answer it Christian are there any plans in place and argue that mesquite with core mining and Purion Gold project.

[laughter].

At this stage that's for sure and we're pretty happy with what we've got going on at Mesquite, there and what do you find the best investment dollar we have at the moment of actually go in and exploring and out of galaxies reasonably cheaply through the for.

The drill bit or the work with Scott and the team and and Tom are doing out there. So that's what we're focused on and because of all of the upside and the potential of the castle and the because when you think of the not quite as one complex, but we certainly share some of the <unk>.

Some of the the people the skill of the systems, we tax consolidate we're able to smell to all of the Golden Mosquito and have a somewhat symbiotic relationship and we think of that is not just one complex but of a link set of two mines and you know we've got a long mine life and lots of opportunity. There. So at the moment, you know and we're really focused on that and.

And the last year, we'd say, our we haven't you know, we're probably done a lot of in terms of the acquiring side of things and we've got a good portfolio now of really and really focused on our own assets and not really and acquisition mode at the moment and we need to execute and deliver on what we've got on the plate.

Thank you and another question for Michel holder, and Estonia, and do you see any political or of union related risks for any of your mining and locations.

I think I would say the more generally is that you see no political risks and.

Around the world that anywhere you are and and you know with today's environment and Covid I think there are.

Certainly some moving shifts in terms of obviously and government and public spending and maybe some cash tax risk. So I think a lot of governments are looking and increasing taxes I believe the U K government did so yesterday of the day before and.

And so that's something we certainly keep an eye on it.

But I do think that the jurisdictions. We're in there are very mining friendly I mean, Ontario is one of the top three and the World you know the U.

The us a fantastic where we are in California, I know people say, you can't mine and California, but you know the mosquito and going for 30 years Council went for 12 years before and we're having out of getting all of that right. Now so we're very happy there and <unk>.

Mexico has got a long tradition of mining and.

And there's a bit of a little bit more of left leaning government the moment, but the key engine for the economy, there and and Brazil, you know honestly when we got back involved and 2016, Brazil really really improved and we've seen and on the labor relations the government policies around permitting.

And I'm also contracting has actually improved and maybe its all marginally, but we've seen of incremental improvement across the board and tax rates have stayed very very amenable and Brazil as well so.

And I think we're prepared now we've got a diversified portfolio and if there are changes we can withstand that and that's one of the key things and part of our story is being diversified and and evenly split amongst our four countries rather than being reliant on one or two assets and a much more at risk but.

You know in terms of unions, I think we've got and unions and a lot of our sites, we have good relationships and the.

And that's something just like communities that you have to work on it for long term partnership and I do think we have pretty good relationships with all of them and.

There is always risks of the most kind of partnerships that need to be cultivated and managed well and Dan certainly and lots of people. This is an area that we've learned a few things from some after acquiring it and we'll we'll do our best and improve that partnership and it's the same with unions, but so far and I'm seeing no major issues jumping out at us.

Thank you Christian I've got another question on line for one of our institutional investors and the U K at current levels of the equity is extremely discounted at the management open to considering of small buyback the doesn't materially impact cash levels.

Okay.

Yeah. That's the question, we get I mean, the dividend and share buyback question is always on the radar and and it does get raised and this market.

You know I think with our growth profile and the ability to invest and the need to make sure that where our balance sheet remains solid and I'm not sure of it would send the right signal necessarily and do a buyback at the moment and you know it.

Take some of that capital away from all of the expansion projects. We have on the go there's some really low hanging fruit and our portfolio and I think we wanted to focus our capital on that but I think we're more likely to look towards you know of.

The sustainable dividend, when we get to that stage and sometimes share buybacks can be fleeting.

Bleeding of momentary because they are by definition of effectively finite and you just can't keep continue on with them. So we wanted to do something that's got a more sustaining long term view here and Oh.

And of course, we worry about the share price. We're all owners of this company and Ross and myself and all of the management team, we have and eight 5% stake. So we're very very attuned to the low share price and.

But really it's the long term vision, but when wrote here and we do believe that we've got the right team to deliver on value over time here and we don't necessarily just wanted to do a short term buybacks and we'll focus on getting to that point, where you of a sustainable dividend.

Thank you operator can you. Please take a question from the phone line.

Certainly the next question comes from Andrew Weekly with Smith Weekly Research. Please go ahead.

Thanks, operator.

Wanted to extend the appreciation for the work you guys have done and the pipeline. This is a really good and I don't think the market is paying attention to anything other than <unk>.

And your rates and a little bit of the gold price you are at the moment, but Christian can you add any color as to some of the highlights of the forthcoming community agreement at lot of Cmos and if you can share maybe just vaguely what things do you think we'll keep this relationship of line longer term.

Yeah, Thanks, Andrew and.

And I Wanna be careful I don't want to go into all of the granularity of and agreement, but I think I was pretty forthcoming and the last few calls and even a little bit earlier, where.

The goal here is the set of collaborations and social collaboration agreement with the community the that make sure that we we look after.

Areas of concern and where we can help that include things like improving the water distribution system, which we committed to previously and we will continue to be kind of too and we'll make sure. We upgrade that things that are involved.

Gold scholarships and medicines and other areas that we can contribute to the wider community and make a difference of positive difference and the key areas and then obviously, we're one of them.

The local community leaders were pushing for is making sure that you know, there's a reasonable and fair distribution of employment and contracts and you know for US it's absolutely vital that it's reasonably split between the three core communities. There like it is for any of the communities, we effect and the all the other mines as well and those of the key area of that were focusing on because of the planned to be there hopefully for a long career.

And at a time and there's lots of investing and to go in and so we want it and solid as possible. We wanted was understandable as possible and and particularly as we said the dispute resolution mechanism of grievance mechanism is and it's clear as possible so that.

And blockades don't happen and the future and and what they feel they can come to us and as an institution, we're able to work with them and deal with things and it's not wanting the visual or one person that builds a relationship where actually a company and.

You know with Ross as background and certainly ours.

This kind of stuff is critical and vital.

Well, it's something that we've all had good experience and over the years and and we're disappointed with how this played out we didnt get a good chance to go in and build those relationships one of them on a personal level as well amongst senior people and Vancouver and at the mine site level.

Cause of Covid and because of the of transaction happened just before that so we're looking for to when I think I'm pretty optimistic that sometime later this year and most of the countries of the room until really the goal will be under control and will be able to start.

Building upon those partnerships and relationships and and part of it having the agreement in place, how the well understood managing and well having a regular dialogue grievance mechanism, but also it's about building all the personal relationships that the stem all the way up to Ross and all the way down to the local team that are working with the community and.

It's hard work of regular thing that you have to keep up just like exercise you have to keep the your body and shape the kind of keep your local relationships and shape and it's an ongoing.

And multiple touch point relationship and.

And I think it's just the boat that hard work on that front and and I think the agreement is the foundation of it and the relationships are the key that keeps it going and keeps the machine oiled well.

Yes, I appreciate that Christian and I think it is important for the ESG part of it.

What's happened and in this market, which has been largely unexpected and of course, you guys have been servicing the ESG for many many decades here, but just wanted to bring that back up and I'm sure you guys are looking for.

And the community wants as well and trying to find the common ground. So I appreciate that you guys keep up the good work keep up the efforts and take care.

Yeah, Thanks, Andrew and and we get you know we have a lot of.

Personal joy and pleasure from actually making a positive difference to communities and to the regions. We operate and so we take it really seriously and and I'll, we'll invest and that and I think you know COVID-19 and I'll just touch on that because you kind of alluded to that no COVID-19, it's been a big impact last year, and it's much mentally and morally and just.

Just the impact it's had on on testing and and the way that we operate and protocols, but we do see that the case levels have been reducing the cros, probably the portfolio of mines with like minded and done a wonderful job of managing the Covid and obviously and the U S. We're seeing a big rollout of vaccines I think everyone know how of the chance to be vaccinated and the second quarter. This year, we've even been approach.

And in Brazil about do we want to the company the order of vaccines, which it's something that we would have to consider I don't know if we want to do that but.

We're seeing the vaccine starting to come out and.

I do believe that this year, hopefully will be turning a corner on that front.

Thank you.

Thank you Andrew and one more question online from a brand new shareholder as of this week and you've got your first project in Canada now or are you thinking of expanding in that country.

Well, we were we're always keen to add Canada, and I think Ross was saying of their on site last week, just first time back and kind of a few years I mean I I wish you all of these with new gold that we're really excited to be back and Canada, I mean, theres a lot of good reasons to be here for the great mining jurisdiction.

And the people, who know what they're doing and mining and it's really perspective, you know obviously rule of law and the social relationships are very strong. This project as well and you know of number of shareholders said to US you know one of the key pieces that would round out our portfolio of be adding all the good scalable Canadian assets. So we hope that we picked that bar.

And we're really excited about that project as a part of our portfolio and I think the we can add some value to it and.

And yeah, I mean, why not we'd love to and it could be a little bit bigger in Canada, and it wouldn't hurt them, but we're not actively out there looking for more projects at the moment, particularly a development stage and because our pipeline is full and we've got kind of lose hard rock and then castle and now and there was a bit of work obviously to go on and CLO overlaps of it. So we want to focus on what we have.

Got in hand, and the we're not in a rush to look for something and you know if we do ever do anything and the next year or two and it certainly has to be an accretive deal and and we gotta get our multiple and a revaluation up so our focus on delivering value and.

And having people realize the portfolio well undervalued right now and we get and that re rating.

And that is the end of our questions for today. So thank you very of everybody for joining us and you do have questions that you think of the radon and please don't hesitate to get in touch and I will hand, it back now to Christian for closing remarks.

Great. Thank you and thanks for the group of questions for them from Kishore shareholders and supporters who've been around for a long time and and patient here with for building a great pipeline and portfolio and this business. We've got the best growth I think maybe globally for a good size mining company and.

And you see us execute over the next couple of years here of the stunning and exciting ride as we you know we.

Creep up and not re rating in terms of our valuation and the quad.

Glad to have you along for the right now and thanks again for all the questions and we'll speak to you again soon.

This concludes today's conference call you may disconnect. Your lines. Thank you for participating and have a pleasant day.

[music].

Yes.

Okay.

And.

Yeah.

Yeah.

Okay.

That's true.

Yeah.

Yeah.

Yeah.

And.

And.

Okay.

Yeah.

Yeah.

Okay.

Okay.

Okay.

Yeah.

Yeah.

Okay.

[music].

Okay.

Okay.

Yeah.

Yeah.

Okay.

Yeah.

[music].