Q4 2020 Hycroft Mining Holding Corporation Earnings Call

Thursday Thursday

Ladies and gentlemen, thank you for standing by and welcome to the high cropped your end 2020 earnings call at this time. All participants are in a listen-only mode after the speaker's presentation. There will be a question-and-answer session to ask a question during the session. You will need to press star one on your telephone keypad. Please be advised that today's conference is being recorded. If you require any further assistance, please press * 0. I would not like to hand the conference over to your speaker today Tracy Tom. Thank you, please go ahead.

Example today everyone. Thank you for joining us today. We'll be discussing our 2020 results and providing guidance for 20 21 for which we filed our form 10-K and issued a press release this morning. This press release can be found on our website. Ww.w. And as a side note. Please keep an eye out for a new presentation to be posted in the coming days off on our website as well. Please read the press release and listen to this call in conjunction with reviewing the form 10-K which contains additional disclosures. Also, please note that some information provided during the call may include forward-looking statements that involve risks and uncertainties and assumptions, even if the risks or uncertainties have been materialized or the Assumption proven, correct these results May differ materially from those expressed or implied by such forward-looking statements. Yep.

Including the most recently filed 10K, we assume no obligation and do not intend to update any such forward-looking statements. I'll now turn the call over to Diane Garrett president and CEO. Thank you for a month. And I want to welcome everybody to high profits. My name's 2020 year end and twenty Twenty-One Outlook conference call. I'm Diane taraz president and CEO of Highcroft Mining and with me today. And when am I going to do is Jack cameras r c o o stand right out our CFO my eyes line our general manager Tracy Tom investor relations and my telephone we have Jeff seber finance and Treasurer. I'm going to ask Santa ride out or CFO to review the highlights of our 2020 Financial followed by my pipeline who will report on the metallurgical update and then Jack Hendrix Google report on our operating plan on giving the new team that we've assembled and that we've only been with the company less than six months. I think it's important that our audience and our shareholders have the pleasure of hearing from each of the senior members on this particular month.

Well, then open the call.

Except for questions for my I begin my comments. I do want to address the delay in our earnings release from late February that same to take people by surprise and it was not obviously a desirable move to make sure what the basis for that was our plan was to issue the earnings release and advance of our 10-K filing so that we could take advantage of some of the virtual investor conferences and early March. We are a new public companies reporting under the new SEC disclosure guidelines. And this is our first 10K due to the work that needed to be completed we decided not to let the investor marketing schedule Drive our process. So it made more sense the weight of all the documents simultaneously because the amount of work that we have that complete as well as reflected on our share price when the market these delays they tend to go to the negative but I ask all of you to please keep in mind that they're sitting material news ever the company has an obligation whether that news is positive or negative to disclose it immediately and we are always available to you to take your calls and answer any questions.

That you may have so beginning my comments for today. For those of you who know me. I always start with the team because it's the people that make a mind and a company successful when I was the phone know, we always said good management will make more money with a bad mind than that management with a good mind. So it's all about the people you have at the end of the day. That is the asset that you're investing in joined this company a little after six months ago as soon after assembled the technical leadership team that we have at highcross today. And honestly, I cannot say enough good things about the intellectual horsepower that we've assembled here. These individuals have precisely the experience and knowledge that is relevant for this particular project. This team has come together so quickly and hit the ground running with one goal in mind and that's a commitment to Life Lock in the full potential value. If I crossed the benefit of all of our stakeholders this mineral resource we have is amazing and we are all very very excited to be working on this month.

Justine knows how to approach a project to do the required work up front and that way you mitigate any potential start-up risk. This is the way our team is always wage project and collectively we have the successful track records to prove so very excited about some of the things we have on the horizon that we're going to talk be talking to you about today. We're only we spend an awful lot of work just in a very short period of time and stuff coming together beginning with a material Improvement and safety performance improvements and our operating performance reduce downtime on our equipment and significantly reducing costs by eliminating wasteful spending and realigning our team in order to receive a Reliance on contractors. We started started seeing the benefits of this and the first quarter of 2021 in terms of the reduced and and we're continuing to manage our cash resources wisely as we go.

our cash today

That we have will see us through this year to complete the development projects that we have on the table and we'll be talking about those items and a little bit the prior team up a plan was not achievable. If I crossed it was designed to mind sulfide that had been stockpiled for six years and it turns very acidic and created issues when it was placed under oxidation accessing fresh and commercial-scale sulfides representative of what we're going to be mining over the life of the mind is not possible until we get to the end of 21 for the beginning of twenty to age because there's so much transition and oxide material that must be mined in order to gain access to those sulfides as we alluded in our third quarter call 20 21 will be currently is conventional run of mine. He pleads operation.

We have plenty of room on the existing Leach pads for the 2021 line Plan and there's no urgency to complete the larger LeapPad until such time as we either need it for additional lockside material wage or have address the design changes that are required for the small size of these design changes are things that we identified through our recent work and that we've also noted in the press release.

We mine through the transitional and oxide material. We have also encountered and mind and stockpiled about three hundred thousand tons of sulfide material this material may be available for the Tuesday. Sedation and leech process. Once we've completed some additional work to ensure that we have accounted for everything necessary to make it a successful pre-commercial testing. I want to be very very clear because I've gotten some feedback already from the market this morning. We are not starting from Ground Zero. We are not starting over actually. We haven't delayed any schedules at all because we can't even access the commercial scale sell five material until late this year or early next year anyway, so it gives us this year the complete the testing that we've identified that is lacking and make sure that we can set ourselves up for success as we model and Design This on a commercial scale some of the work that was not dead.

Play the in the past where additional variability test work while there was a lot of work done in the past and we agree with that. It did not address each month geologic domain nor areas that are most representative of the long term life of mine plans for the project. And as you always have as you always know what these domains you've got to see how they're going to perform metallurgic lie in order to ensure your start-up success. And for those of you who know me, I've said it my entire career if you don't get the Metallurgy, right nothing else matters at the end of the day.

So from work that we've done today, even though with limited timetable we've had available to us as a team. We've identified a number of things that were not known in the past and these are going to help immensely in improving our process over all on the sell-side oxidation process. We do see oxidations and we do see increases and gold recovery is a function of that but our work is ongoing and this variability tests work is absolutely critical so that we can model each specific domain and know how much time it requires for octopus. And what does associated with covering bar when we put them on a commercial scale he bleach

You that we've done the past work in addition to a lot of the work that we've conducted on our own revealed some very important findings that has not previously been addressed by prior management and these are noticed in our press release noted on a long ways with just a few of the things. I just want to touch on here. One of them is that we know forced air injection not pass it. There is absolutely critical to the application process and needs to be designed under the new lead pass. The copper industry is done this since the 1980s. This is this is not new information, but first air injection is cruel to the oxidation process.

Also in the original design there was no system for segregating Solutions those being the soda ash the freshwater rims and the cyanide Leach solution. And when you have multiple Solutions and off he left he he needs to be able to segregate them to prevent commingling of the solutions throughout the various phases because if not, it will negatively impact recovery. So we are designing in Thursday. We're working on that now, we also now know that the happened Crush material does require agglomeration while in the test pads and the pre-commercial pads, you know them are single if when you get into multilift Heats, you can have compaction issues and therefore permeability issues. So agglomeration will have to be factored in we know that through the various tests have worked conducted throughout 2019 and 2020 that higher consumption of soda. Ash were going to be required along with some other reagents how much so to Ash by each geologic domain will come out of the Dead.

So we do on the variability testing this year and I've already talked about it before but the other piece is the variability in Mineral lots that are ology works. It has to be completed so that we understand how long do Maine Hayes under the sulfide oxidation process. So what was that in the past was inadequate and incomplete there were multiple samples that were composited down a few samples that we need to truly test each geologic domain so that we understand how it's going to perform and ensure ourselves the best success possible when we go to commercial sale.

Another item is I often get asked and and it came up this morning and supposed does the process work or is this the only process it can never work at hycroft? And if this doesn't work, then nothing works at highcross. So let's be very clear. We do know that Ox oxidizing sulfides does work. It's not in the industry. We know how the chemistry works and we know how the process wage but we are working to develop is the most economic flow sheets for all of our different or types of high crops Haven did really good work and 2013-2014 wage across feasibility study on the billing process with very very successful results.

At the time the oil prices were beginning to decline. So it was determined billing process. It was successful but also work in a heap Leach setting off. It could possibly be more cost-effective and that is the same process that we refer to today as the two-stage sulfide oxidation and he'd leave the exact same process. Just not in the Middle Amana heat. Mm drivers being temperature differences and also fresh for grind size for the mill, but we know the chemistry work it has been proven. We are working to perfect it in a heap Leach setting off and we do see good implications of this oxidation and increasing cold recovery. But again, if I said each domain was not adequately tested and so we need to do that work best this year and fortunately the Silver Lining is that we do have the time to do it and this work will be completed this year. We've just kicked off the ten million dollars you have that drill program to begin this work.

And he played setting so you said that it does.

For a lot more work up front and planning cuz it's difficult. It's more difficult to control than a heap environment than it is saying a middle scenario. But another thing that we've been identified wage is you don't want to put your higher grade material through this process on a heap Leach because if you do that, you're going to leave too much gold in value in the Heat and we don't believe enough attention was previously paid to the vet grade ranges of the sulfide material and there's some higher grade areas at high cross and some higher grade intercepts intercept that were not followed up on and we have identified these as additional opportunities, but absolutely should be considered we sing that high cross was previously viewed as simply just a very very large low grade ore body. But in fact the work that we've done today. I gotta find a number of these grade ranges on the sulfides. So this is why as we continue to do the tests work for the sulfide oxidation process. We want to make sure that a potential. Yep.

Read operation doesn't generate even more economic values. For example.

A possible scenario could be where you take the oxide and transition material and send it directly to leech. Can you take a higher grade sulfide ores and routes and possibly to a small but scalable Mill off and then you treat your lower grade sulfide using the model oxidation process. That's just an idea of what a hybrid would look like most of the large lines in them out of all wage employee a hybrid approach of processing streams because the geology is very very complex out here. So what our job is to do is determine the best economic potential for each of our org Greg range distributions and geologic domains.

If there is a determination and we're going to do the work on the bill, so he's been good work on the processing. There was actually a pilot plant on on site at hycroft as I mentioned. So we're going to cross that off for lack of a better term and wrap them new economics around that we don't think we would if we even use a mail that wouldn't be at the size contemplated in the past but it definitely is about that is we have a brand new signal for brand new ball Mills had a brand new fine grinding bill in our warehouse courtesy of the predecessor company. So we are and we are fully committed for a Milling operation and were permitted for a tailings facility. In other words were way ahead of the development timeline. So there's a lot of work to do this year on all fronts and our team as well engaged in all of these activities. So on the process side variability tests were testing completing the metallurgical password making sure we can model and scale-up dead.

And the design of the Heap and the design of the lead pad and all of that will be completed this year. And then on the mining side, we've got mine optimization studies looking at these better grade opportunities improving our cash flow operating performance at the Mind side. So a lot of work to do but it will be done this year. And again, I just want to reiterate there's no delay. We can't watch anyway, and we're doing a very nice run of mine conventionally bleach operation right now.

while we're still in the

Thank you so much and Saturdays, we're not yet cash flow positive from our operations, but we're closer than we have been in the past and that's due to the reduction and found the better mind planning and continuing to work on improving that I do have some constraints on site particularly with plants and the refinery we're limited by the solutions that the plant can handle to the Heat and except from these. So we need to reach the North Merrick Road Plant and we're going to need a larger Refinery the new technical leadership came at hycroft is accomplished. So many things on the operational front page as I mentioned that they're over to an assessment of all the prior metallurgical password optimization of the current mind plan and identifying potential opportunities for higher grade material to enhance the current long-term mind off and under the leadership of our co-workers. We are extremely optimistic by what we're seeing. This is all the maximizing gold recovery. Probably perfect the sulfide oxidation process look at Birth.

The other opportunities that might generate extra value for our stakeholders the scaling up to commercial status. So with that I'm going to turn it over to stand right out who's going to walk us through the month financials.

I crossed is operating at a pre-commercial scale in developing the oxidation leasing process for extracting gold and silver while a team of sight is making a lot of progress with inherited operational challenges as well as challenges with operating in the current Provost pandemic environment. High cross has not been able to generate positive met in college or cash flows from operating activities and that's attributable to the low production and sales volumes and then our current right relative operating costs profile with the new operating team though. We're seeing a positive trend for gold sales for full-year 2020 gold sales were $24,892 houses which contributed to forty seven months of total revenue and that compares with 14 million and 2019 Granite 2019 was a partial year with sales starting in the third quarter.

For the year ended December Thirty 12020 not financing activities provided $189 million of cash, which more than offset the cash used in operations and investing activities with our past position that you're in was 56 million, which was an increase of approximately fifty million from the beginning of the year. And that leads us 846 million available cash to consider our pin million minimum cash balance required by our death Covenant. We're 20 21, the Run of mine production and sales volumes are projected at 45,000 to 55000 ounces of gold and four hundred thousand four hundred fifty thousand ounces of silver which includes monetizing some inventory in the first half of 2021 that has been previously built up on our path and a lower mining rate that aligns with our current processing capacity, which is mentioned previously was limited until we complete the capital expenditures the rebirth

What's the North America plan?

And construct a second Refinery for which we have the equipment our capital and projects pin is forecasted fourteen to eighteen million and that includes the $10 million for the variability a.m. And then leveraging off the team's focus on operating safety. We're seeing improvements in controlling our Span in managing our cash but despite these efforts because of our current provider wage reduction volumes and the current metal prices Foster expected to the exceed, you know, those current metal prices with that. I'll turn the conversation over to Mike and Jeff like power value opportunities take you stand good morning everyone, you know died and did a great job summarizing, you know, some of the things where we are today, but I'd like to give a little bit more context and colored some of the things we're seeing and working on in the background if I might as you know, as most of you know, we've been working with Hazen in John Mayer song.

Very closely, you know to I guess get a get a get a better understanding in a deeper understanding of the a lot sedation process. And the reason for that. We have a new technical team and we got a new operational team and you know, we certainly want to understand you know, how we got to where we got to where we are today and and and really understand going forward the principles driving across so that we can operate effectively obviously so some of the things we decided right off when you to look at, you know, the the driving principles behind the oxidation kinetics, obviously that's pretty important to understand and change the chemistry like Diane discussed earlier, you know was pretty critical to making sure everybody's confident that what we say is going to happen is going to happen out there with the chemistry facts and then finally really understanding the relationship in detail between the degree of oxidation and the amount of recovery. We can expect based on that. Lock sedation off.

Not only for the password, but for all the work types going forward and we'll discuss that here a little bit and in a minute and what we really started to see is we as we drove into those things is dead. We were fairly disappointed in you know, the level of detail and really the the thoroughness or lack thereof of some of this overall sweet a test work that was done. So we were running into you know, uh insufficient data from some of the previous tests work, you know, we we saw on discuss with the previous groups about some of the the testing protocols off, you know the inefficiency, these are some of those protocols and how they were enacted, you know, and and really overall execution of some of the testing, you know, the led the gaps in the data off and and really, you know, some some issues that we felt we had the cover cover and really understand it and and and really decide you know birth.

increasing it tuning going forward so, you know in really what what

What was really, you know, you know quite concerning up to a point was that level really understanding and seeing some of the variability and that degree of oxygenation versus you know, the expected recovery. So we really want to feel that back a bit and get down in the science and say okay for X degree of oxidation. What what why level of recovery can we expect and and and that took a took a quite a bit of effort and focus and you know, we actually did learn quite a bit from that process and I think we have a real rural understanding of its chemistry does work, um, you know, but it it led some other issues that will have to keep working on and we'll discuss those, you know a little bit going forward at the same time, you know, looking at the Heap project. He bleached knew he pleads project, you know, we started to notice, you know, some some some gaps and some issues that weren't either, you know weren't identified up from birth.

Or adequately identified or or grass store or both and you know, all of those, you know, are are potentially serious operational issues that could impact recovery and you know them kind of summarize those with air injection and and uh glamorization and whatnot. So, I think we we also I think that a pretty good job of taking long that project through again and it kind of picking those apart and I think we've identified those pretty well and our teams are are pretty engrossed in in solving solving those problems going forward as we advance all this other work some other things that I think is important for this group to consider on the call today is you know, when Jack Hendrix and James Berry came on board was opportunity for us to take a different thick step back and look at this resource little bit different like dying indicated, you know Highcroft was, you know, kind of being viewed as a clo grade like she said, you know,

A plus thirty year life of mine and you know, if it's akin to you know, one giant bucket up beige paint, you know being being applied with one brush and you know for most of you that off and in this industry and and no little bit about you know, refractory gold that's not necessarily the case. So we believe that as well. I think this work body is much more complex and I think the team does as well and as we started to look a little bit odd before we start to see different colors emerge, you know, and obviously some different types of paint that dropping out on the palate there. So, you know, we're even want to which is another reason home. It's kind of drive in this variability testing that I alluded to both from the front end of the test work that lacked the variability testing and the understanding of the chemistry and how it applies to the different names as well. As you know. Hey, maybe there's a better way to treat this or that unlocks the, you know better value for the operation. You know, this is a Thursday.

This wouldn't surprise me to be a uh, a multi-faceted approach, you know, if you look up and down the highway 80 Corridor where we sit you.

See several different or bodies and operations that have more than one process alternative and there's a reason for that those are complex or factory or bodies and they benefit in value tremendously by having a different approach. So we think we think there's some exciting potential on the board and we're diving into that one pretty deep. So so where does that leave us today? I you know, um, we've got a great team that's got great in-depth experience on complex refractory or bodies both from The Mining and the processing side many of us including myself with me if cut our keys on these complex mining operations and processing operations and we built games I think here at hycroft and will continue to do so that the support that everybody's really exciting job opportunities from our approach, you know, really hasn't changed, you know much we're building off the previous work. Like Diane says, we're not starting over there's an enormous volume of work birth.

There that we're going to capitalize obviously that in order to further understand things. We've got to really I think go back a few layers and do some of that stuff. So, you know while I will process, you know, most consider a novel process, um myself and others have been working in the household teaching and autoclaving and roasting and you know novel processes as wage are what we do and and complex mining operations to support those or are kind of second nature for a lot of us. So, you know, long story short, um see a lot of great potential here. And I think we can crack this nut and something that I'm excited. That's why I'm here to really look at excuse me these opportunities and and see what what kinds of operation we can build here. So with that I'll turn it over to Jack cameras are Co

Thanks, Mike. Good morning. Everyone the first week I was on site we started the might optimization work and where that began. I'd like to work from your body out need to start from a body. So we began with the Mach Mal review and it's really about understanding, you know, breaking it down right from the drilling and understanding the modeling. I'm pleased to report that the work that we did with third-party a review of that block model the block model validated quite nicely and Reconciliation looks good. So no major issues there but what's really exciting about doing a level of review is certain opportunities start to emerge you start to see opportunities where I am large the black model is limited by data.

We see that depth block stop. We're drilling stops on the flanks it on the wingspan. We see the same kind of thing.

It's a target-rich environment and there's quite a bit of opportunity there as you look at the Block model not only that but in and adjacent to current mining areas and future mining areas, there is quite a few opportunities to convert inferred blocks indicated blocks with minimal amount of work. So that's an exciting opportunity for us as well. So look at through that block has presented many many opportunities that I'm very excited about. So we've been focused. We we just recently changed the focus as we wrap up the review of The Block model. In fact do a short-term and long-term mind planning. The purpose of that is really to optimize our plans that optimize our phases to create the most value for our shareholders Dodge Jeep in an eye on we want to be able to remain or retain are optionally and flexibility as we continue to mind down through the ore body, which means we might throw oxide.

Transition material and then get into sole size bottom line very excited.

To be here and I see a lot of opportunities. We have a lot of work in front of us, but it's a lot of good work and we got a great team and we've been in the midst of doing some really good work and we got a lot of morgue good work to do.

Okay operator with that. Thank you Jeff. Thank you. My thank you Sam. We can open the lines up for questions.

At this time, if you would like to ask a question, please press star then the number one on your telephone keypad again. That's star one to ask a question to withdraw your question. Press the pound key or just a moment to compile the Q&A roster.

Your first question is from the line of Vincent Anderson with stifel.

Yeah, thanks. Good morning. Everyone. Good afternoon. I was hoping to get into a bit more detail around the update to the pre oxidation process. So, you know just first off was this new list of modifications, uh in your press release in the context of just getting to that 65% recovery rate from the original technical report or did you make a decision, you know the line with this to address these parameters against a higher bar in terms of the recovery, right? You want to see out of it?

so it it's kind of a

it's a good question. I mean the the detail there that we've been finding with the previous work and the confirmation will work is that you know there different factors that contribute to recover some of those are physical and metallurgical or Geo metallurgical aspects of the war others are how the order is placed back then in the pad is operated. So there there were enough wage gaps in that in data in the previous tests work that we felt that we needed to to Really step back and and and ensure that we understood what what pieces were both acting which part of the oxidation and Recovery aspect. So we feel back to fundamentals of the the oxidation kinetics and you know start to look at home and and really understand that the how the chemistry drives the oxidation and recovery and then start to see the issues that were developing with you know, or pipes and then you know looking for

Currently at how this padded be operated and you know the physical aspects of that and and really wanted to make sure that we that we could combine and recombine all of those and do the drug testing to ensure that we understood the performance of these wars and then how ultimately that would be operated on the pad and that's why you know, we have we have a fair amount of work yet in front of us to make sure we have a clear understanding of those relationships and the impacts operation going forward. So yeah and Jensen I would just add to that and by the way, excellent report that you put out today, that was very good. I was just add to that, you know throughout the minds life. You're always working to increase your recoveries every way you can walk and so the work that we were doing like Mike said he's ability study was based on seven samples and that's not a robust Database Dead.

Is it on a commercial scale?

Much less a process. It's not been done at that level. So it's more, you know, just confirming the past work. What was known when when you come into a project, you know, you do a gap analysis is everything depends on whether it's all the studies for permitting or environmental or or Technical and so some of those gaps that we identified. We need to go back and fill in in those gaps and just make sure that it's continuing to tell us what what we are expecting to face.

Okay, excellent. Very very fair. Maybe less Fair given what stage you're at right now but to get into some of those specifics. I mean, you know, what are you looking at aside from the physical configuration of the pads? What were some of the key differences between the order that it was tested previously and got to those mid eighty percent recovery rates even under suboptimal operating condition. You know, how did those compared to what you found subsequently? I mean it maybe I'm reading too much into it. It sounds like maybe differences and Trace elements or iron content, you know might be a a leading concern here. But just what should we look out for as we move forward through your additional or testing?

Yeah, I mean, I think it's pretty simple the you're referring to some of the initial test pads what we found is, you know, those tests pads off not representative of a lot of the material that's going to be mine. Some of it was from stockpiles and some of it was from transition and there were also a, you know, a different Crush sizes put on those pads. So there were a number of things like that that to us does not say those tests pads were identity, you know, super consistent or representative of what we should be looking at life as mine. So again while there was good work done in the past but we have to know is every geologic domain. How is it going to behave? You know, it was it was my pet peeves ability study that there's different oxidation rates for different areas, but there's some areas that just were not tested and we need to know that because you don't want to put material out on a big Heap Leach pad until 5 a.m.

On the work to know exactly what you're going to get out of it. Once you put it out there same as in the mail or any scenario, you know, I mean you do this whether you using a conventional process or not, so so that's what we're doing is we're just filling in the gaps to work and making sure that we have tested every single Gia metallurgical domain anything you want to add that much in that way because of the lack of that variability testing and and some of the

In the manner in which the most test pads were operated we want to make sure we understand, you know, the the results the conclusions from the different horse tested because there were you know, there there were things that were confusing to us as well. So we want to make sure that we fully understand how everything's going to behave and and they're just more work to do there.

Okay.

It's it's helpful leads right into my my last one. I'll give somebody else a chance. But you know, you talk about completing this work this year. It does sound like there are quite a few quite a few months or more tests to do. Are are you going to be able to test the pre oxidation process specifically on pads, or will it go back to a lab setting?

Well, it's going to have to go back to the lab setting initially just to just to make sure we understand the driving principles and and and get a really good handle that variability testing. That's where the lab the very, very ability testing on the work types in. The lab is the first step in the critical step before you go to that to that that next commercial test pad. So, you know just to be sure we're not sure because there's a fair amount of drilling and sampling we have to do in lab work and and our goal is to try and execute a commercial test PAD as soon as we can and we have enough data to operate effectively, It's a high-cost. We want to make sure we got all our ducks in a row before we stack the potential Health side and try something. We want to have a successful test, obviously.

Sure, since it's going back to a lab setting, you know, if you already had discussions with the prior lab or you going with a new one or there any significant changes that are going to make to the lab test procedure that better off, you know, kind of ensures that those results are more aligned with the true commercial-scale operation.

Yeah, so so we've got a mix of both internal work and external work we'll be doing and and we've we're engaging some different labs to help obviously. It's quite a bit of work. And and yeah, so we've got plans in place that we're already moving on to get messed up moving. Yeah, and I would add to that done tons of the work that was done in the past is all done internally that site and so we're using third-party labs and we're using Hazen which is one of the very best kind. Of course, we have Don Marsden on our team who is, you know, wrote the book on the chemistry of Bolt extraction. So he's known as the hope of Metallurgy in our interests as we finally call him. So we're we're doing everything through Hazen. They're intimately familiar with this. They did all the work on the billing process if Hale sorry it hi, And so the very very good at what they do. And so we're utilizing them for this work when we talked about going back to the lab. That's not really starting over birth.

Every project starts in the lab because it's the best controlled environment you have right and then you can experiment with different things in the lab. You don't want to be experimenting on you know, a hundred thousand tons out in the field. So I'm going back to the lab does not mean we're starting over. It's just the right first step before you go to the field. And again, you know, we've seen a lot of the tests work in the past that we had reviewed and been able to duplicate all of that work. So that's worth. It doesn't need to be redone but we're just filling in the gaps on some of the other domains that has not been completed.

All right. Thanks very much and

the month this year

you bet. Thank you, Benton.

Again to ask you a question, please. Press star one on your telephone keypad again. That's star one.

Your next question respond. The line does make a daily with TV Mr. Hi good good afternoon. I've got a comment and a question and I'll do the comment First Choice Diane and team I think going forward you should not report earnings at you know, 7:30 in the morning and then have your conference call, you know, four and half five hours later. You're a West Coast company or Central company. So you could do your report at you know, 4:00 eastern time and then have the conference call afterwards because you know, people are sitting around for three or four hours and they're just looking at the headline Dow Jones news that says Highcroft see faces lower prices increased competition, you know, which is probably one of the reasons why your stocks, you know down 20% today so I know this is

Your first quarter and you had a lot to do as a public company, but going forward I think having a 4-Hour window between the report and the conference call is a it's a it's a bad way to go.

and your question

and the question is there's been a lot recently about Rare Earth minerals. Are there any rare minimum wage at your mind?

Just Trace Amounts or is that okay? All right. Thanks very much.

somebody else

I'm sorry. We do have a question over the phone.

All right. We do have a question from the line of Mike not he's here with scared equity.

Hi, this is Mike me Heiser from Scarsdale a a question. It seems that since in the in the recent time. You mentioned a forced oxidation off injection process. Could you describe what that looks like? I'm not familiar with a heap Leach or in the pre oxidation phase how physically that would occur whether it's a capital intensive process or you know, if it has to be laid out or kind of like the opposite of a where the cyanide comes down from above maybe the oxygen coming in from a low below and we could share that process and what the pitfalls are of that like if there's channeling or those kind of things. Thank you.

yeah, so

The forced air injection, you know, like Diane mentioned, you know, the copper industry's been using that for quite a while oxygen is critical to drive and that oxidation process of completion and really what it amounts to on a heap Leach is laying out a network of typing at the tow as a list and plumbing all I got into large volume low pressure blowers and and bowling are forcing air up through the heat as you're trying to percolate solution down through it. So, uh and again come back with the glamorization, you know, we had to find crush and if you don't a glommer AIDs and provide permeability and pass through the solution in the air to migrate through that that list then yeah, you could have six and she's so both of those are are fairly critical and need to be mapped out pretty well. As far as capital goes You Know The Blower's are it's it's fairly low Capital. It does add a bit operation.

Experience because you have all the additional typing and lay out of that but you know little objects from the power, but generally, you know, it's not to capital-intensive.

Okay, that's a very good answer compared to Donnie bungling the question and with with regards to variability. I know that this is a really large project with several identifying potential pits and within those pits each each or body has the oxide the transitional and then the sulfide and what I'm hearing is that even within those very large pits the numerous pits, they have variability within those oxidized and transitional areas. And so I'm I'm picturing that this is an immense task if you were to understand everything that you have and I'm wondering if really what you're trying to do now is develop systems to where you understand the critical elements with each month. That's to be mind and and how it's going to be mixed and placed on the pad so that you can maximize the the recovery and be able to

The build a recovery process ahead of that. So really I'm I'm thinking this is more than just testing as much as developing systems and a catcher's mitt to maximize recoveries. Is that close?

Yeah, I think that I think that's fair. I think that characterizes quite accurately. We are trying to understand the variability as well as a different geologic NGO metallurgical domains to understand how they're going to behave differently with different different options that that that we can bring to bear and we're just scratching the surface of beginning at work. So it's exciting opportunity. But again a lot of work to be done their job but isn't isn't variability natural with every geologic body. Yes. Yes it is.

so really shouldn't come as

Surprised it just seems like the issue here is that you're so big and like you pointed out there was so few tests done earlier on that. You're still earlier in perfecting the process but you suck on do what you think is going to work eventually.

Yeah, that's correct. There's just some gaps in the previous work that we're trying to fill in so we should be looking forward to the end of this year and the early part of next year to see the true potential of the whole project plus. Yes. Absolutely, correct. Thank you very much.

We have a follow-up from the line of Vincent Anderson with stifel.

Yeah, thanks for humoring be so I mean just going back through the going back to the I apologize for the dogs in the background but going back through the original slide deck off. Uh, you had a pretty exhaustive and detailed Capital spending plan. Is there any early numbers that you can throw around for us for 20 21 maybe in 22222? It sounds like some things might get prioritized here.

Yeah, I mean, I think it depends on what what we come out with at the end of the work. I mean the capital that was included before, you know, the rail spur so that we could talk pile submerged quantities are so Dash on site that still on the table that something would look at I can base tax system. We are doing work right now on whether we would do a complete a stack or we would do a short-haul dump and and do them or or do we track yet? So those are ongoing things for us at site? I don't think a lot of those Capital items have changed. I mean certainly some of the designs into the LeapPad. The only thing would be if we you know end up determining that we can provide our stakeholders a lot more value out of this project by implementing a small meal then that would that would be something as well. But our plan is to to tackle the the drilling for the geometrical work dead.

The hangers-on worth the lab work done on that mineralogy and variability password ideally be able to have that in in a time frame but we can get that off touchpad knock out and apply all the good things that we have learned and identified today reflected in that you get the North Merrick Road Plant refurbished. That's what's prohibiting us right now and being able to mind it at higher rates that we're going to be focusing on that and that we also were going to need a better health leave a song about her third quarter, you know, the Project's done somewhat capitalist firms. I mean the fleet that we have is aging so that means we spend a lot of time and down time and maintenance and and it's old equipment. So I can't even find parts for it. So we're having to cannibalize parts from other equipment. We do have a couple of rental fleets through a Jimmy but you know, ideally we're able to be in a position where we left off.

roll into a new a new Hall Fleet that is going to be able to narrow and align better with mine plans the Jack and his team are

Beijing so that that will be worth it will be forthcoming do the end of the year and then we're going to be messing up at wrapping some new numbers around it looking at a new flow sheet of resizing that it may make sense. It may not make sense. But we have the time that we should be looking at every opportunity available, you know the gold prices today or thirty-five to fifty percent higher than the last time that was even considered. And so what we always do with all of us as a team and have done in our prior work is you know, the driver's to create more value and you know what those drivers where The Sweet Spot is and and when we took the prices on this environment, we we absolutely would be remiss if we weren't taking a look at a hybrid operation and you know just because you know, you look all around us here in Nevada. And that's what everybody else that's working well for them and the idea that one-size-fits-all and letting a particular process Drive the whole my plan doesn't make a lot of sense to this team. So we want to look at that. We don't know where we're going to land with it.

End of the day but all of that is work that will be done this year and we look forward to updating the market throughout and then having a plan in place by the end of the year or early in the new year.

Perfect. And then just to get everybody's money's worth on on the 1-hour call smoothing out the next three to four quarters, you know, you've addressed the operating constraint off on North Marilyn Crow, maybe some planned down time for the refurbishment. How should we think about the pace? Um, you know kind of threw the next call it. Yeah three to six quarters in terms of our goal introduction.

So we we issued are targeting gold production here. Here's something to keep in mind and in the second quarter and a third and the fourth we're going to be mining at a reduced penetrate. The real life is we're not sacrificing any production ounces by doing that and we were at the higher tonnage rates. There was a sale that bold inventory on the pads because I was constrained to be able to retrieve that. So what we're doing right now is we're drawing down inventory that have been built up on the pads and we're doing a reduced mining rate, which is more cost-effective going to be using the same number of production houses that we that we would have. So this will give us time to do those refurbishments and the and address the refinery jobs that are production targets for this year or you know still still in the forty-five fifty five thousand ounces of gold and four hundred four hundred fifty miles an hour.

Silver were there the work that Jack's doing we're looking at you know, how we can move some of the grade. We've identified forward and make me out a better plan and optimize it that way. So I trust us we we are looking at every opportunity to generate, you know, the best cash flow we can and and work our way to a cash flow break-even. If not, ideally positive cash flow when we get the new athlete and we're able and we get the refurbishment spend the plan then we'll be able to you know to really realize the the better cash from operations with more times moved in mind. We did just bring it in 994 motor so loading capacity with a bit of a bottleneck before but now we've. Properly so that's I believe my front right now and it's being the summer and then we do have plans to bring in a leather loader next year birth.

the higher ramp-up phase

Is mining capacity versus the actual gold output so so perfect. Thanks again.

Sure. So since we're paying by the hour, we got four minutes left if you want to add another question or two interested. If I ask anything else I might I might start sounding even more uninformed. So I'm going to go ahead and let you guys get back to work exactly but I do think we have another question waiting on the line.

Your final question is from the line of Mike Annie Hauser with the Scarsdale equity.

I'll try to get them. Do you can you just quickly detail some of the cost savings that you've been able to Institute since you've come to the company?

Sure, a lot of it is not, you know dealt with getting rid of contractors that are very high costs candidly a big cost savings, you know not crushing on straight to leech. You know that we weren't yielding more gold for the extra cost. You know, we've been right-sizing our Workforce and that's more on the adding of our own home and not having to use those contractors. Um, you know, we're looking at the little things as well. But you know, those are kind of the really big buckets and then candidly, you know renegotiated after contract some of those old role in in, you know, the second quarter where we're able to get the better pricing and then we're bringing in the 994 came and that will be much more cost-effective than the shuttles. We've been operating. You know, a lot of work has been done by Mike's team, you know with maintenance planning and you know that down

I'm still getting the efficiencies, you know, it's a lot of detailed work and you know, some of these aren't huge numbers, but they start adding up and you know in a lot of the benefits. We'll see I'm starting, you know, second third fourth quarter. So and real quick. Can you can you give us an idea of whether you're going to be able to get to Breakeven cash flow without raising equity and I'm sorry for going so long. Thank you. That's it off our plan that we put together kept us, you know on the right side of our debt Covenant, you know, the ten million minimum cash balance, so and we're you know continuing to work for opportunities to enhance that opportunity and you know, we you know made adjustments on consumption of reagents and you know, just a lot of the process controls that Mike and the team put in, you know, we're able to you know to chip away at these things. So our our goal in our plan and you know in our guidance is is that you know, we're we're going to you know say on the the right side of birth.

Okay, perfect. That's exactly what I was what I was getting at with the the

Ten million and and then depending on what Jack's able to come up with his team on the line and plan, you know, you know, our goal is to get the you know, positive and break even cashed first break even and then off of cash flow. Yeah, I think if you look at the burn rate and the past and it was excessive with the work that we've done over the last five months and were starting a result of that come to fruition. My you know, the the the primary that was going on in the past the money's that we raised last fall, you know, essentially would be done by April of this year the fact that we can not only find all of these development opportunities and make our cash last throughout this year and stay on track for ten million threshold under our debt cabinets should really resonate that we have done a remarkable job that reducing spend some better performance that are operating performed.

and

You know really showing up the the financial state of the company and our and that's that's our that's been our goal and certainly our goal is to move to cash flow break-even and positive as quickly as we can. So we're in good shape for this year. Well, sorry for pushing it 30 seconds passed the top of the hour. Thank you.

Hours, so, it's fine. Thank you. Thank you, Diane.

Any other questions for me? Okay. Well, I just like to wrap it off to say that I'm a half of the whole. Hi Christine. We really appreciate all the continued support from our shareholders that our stakeholders long as we work to develop and unlock the value of this asset again. It's it's it's a world-class mineral endowment and and we're all thrilled about the opportunity to work on it. We think we've got some great ideas and and this I mentioned before we selected a team that is absolutely super qualified and their experience to to address what we need to do here. So I hope you could read the enthusiasm by all of the team for what we're doing and what we think the future holds for the company and we we appreciate your support. We are always available. Unfortunately in the COVID-19 world where we can't get out and see everybody face to face which is what we really want to do, but we are going to be doing very aggressive marketing one-on-one dead.

We've had over a hundred people on this call and I think that's just really great that people are dialing in and listening. We want you to watch our story. We want you to watch our news flow. We're going to do good things. So appreciate all the support reach out to us anytime. We'll be in touch with you and hopefully one of these days soon. We'll all be able to see each other face-to-face.

operator

this includes the high craft beer and 2020 earnings for thank you for your participation. You may now disconnect dead dead dead dead.

Yes.