Q1 2021 Kirkland Lake Gold Ltd Earnings Call
Yeah.
Good afternoon, ladies and gentlemen, my name is Jason and I will be your conference operator today I would like to welcome everyone to the Kirkland Lake Gold conference call and webcast to discuss the company's first quarter 2021 financial and operating results all lines have been placed on mute to prevent any background noise.
After the Speakers' remarks, there will be a question and answer session. If you would like to ask a question. During this time simply press Star then the number one on your telephone keypad. If you would like to withdraw your question press the pound key.
I would now like to turn the call over to senior Vice President of Investor Relations Mark.
Thanks, very much operator, and good afternoon, everyone welcome to Kirkland Lake Gold first quarter 2021 conference call and webcast on.
On the call today are many members of the.
Senior management team.
Speaking today will be Toni <unk>, President and CEO.
David Soares, our Chief Financial Officer.
Natasha Vaz, our chief operating officer.
Larry <unk>, our general manager for Detour Lake mine.
Having held share vice president of mining for Kirkland Lake.
Ian Holland, our vice President and co lead of Australian operations, and Eric Kallio, Our senior Vice President of exploration.
There are.
Several other members of the management team on the phone as well.
After we go through the presentation, we will open up the call to questions. We ask that each person limit themselves to two questions.
Slide deck that we'll be referring to is available on our website both on the homepage and in the events section.
Before I get started I would like to direct everyone.
Two.
Forward looking statements on slide two of the slide deck.
Our remarks and answers to questions may and likely will contain forward looking information about future events affecting our company. Please refer to slide two as well as the forward looking information section in our most recent management discussion and analysis.
Dated may five 2021 for more information.
Also during the call, we will be making reference to non <unk> performance measures.
A reconciliation of these measures is available in our most recent MD&A.
Finally, all figures mentioned today will be in U S dollars unless otherwise stated.
With that I'll now turn the call over to Tony <unk>, President and CEO of trip from Michael.
Thanks, Mark and thanks, everybody for being on the call I know, it's been a trying time for people but.
At the same time.
It's a pleasure to get the opportunity to get give the update on how the success. We've had at Kirkland Lake in Q1 of this year.
On slide slide four and.
And actually getting back to you just you just went through that.
<unk> will start off with.
These are challenging times, but there are also opportunities.
Net.
Yes, more and more as we go through this and I know, we're all going through COVID-19 fatigue and.
A lot of people and lot of different ways, but not a lot of good news coming out of people then you've really got acknowledged it support and Oh.
We received from shareholders from communities from even the support we received from the healthy net mobile how he was I think Kirk and make them and you can be skewed region in northeastern Ontario, as well as the support from the.
People in Australia also.
No.
<unk>.
We have to acknowledge the people that worked for US. They're you know, they're definitely trying times the family to come in to work and.
Performing debt and putting in a good base work this time and we really appreciate all the efforts from happening.
Our main goal is to maintain a safe workplace.
It's definitely there is things that are constantly evolving and changing and it could be challenged but because of the people and the support we're getting from all the people that work for us I think.
We're moving forward and were went into battle.
Okay.
With this slide I'll begin to talk about COVID-19 and home in terms of our COVID-19 1919 protocols, we have a lot of protocols in fact.
We continue to be impact from quarter end as well.
Net.
New measures, including much more rapid testing of detour Lake we can test basically income to our operations lead antibody testing within 15 minutes, we would give you the result.
In terms of some of the impacts of COVID-19. During the quarter. You did have eight workers test positive five that Makassar and three at detour and every case that this happened to workers were fully recovered fully recovered and there has been no additional transmission of the virus on site.
To five cases that the cash that we're all in early March and they were deemed an outbreak as defined by the local health unit.
In response, we should.
<unk> 60 per rep participates in over 1200 swab kits from accounts scientists of the entire workforce.
The upgrade was resolved quickly with no further transmissions on site just over a week ago, we had another concept cancer being classified as an outbreak by public health and.
And involved our near surface ramp protect that aetna cash flow a little bit.
What piece of that growth.
Near surface ore.
We ended up here.
Overall seven people tested positive we did suspend the work on the appropriate contests at all all people during the period of time and project was halted for just under a week and then.
We had we I can tell you we've had no further cases emerging we have resumed work on that on the ramp on this project last weekend.
Turning to slide five.
<unk> in 2021 was also a very important quarter for us in terms of our commitment to responsible mining we released our 2021 sustainability report.
And it didn't mean, we highlight greenfield progress.
Companies May book in terms of the work we're doing in our capability in our reporting and disclosure of ESG issues also during Q1, we pledged to achieve net zero emissions by $2050 earlier, we're well positioned to achieve this goal and have already being an industry leader in reducing and minimizing greenhouse gas emissions.
During the quarter as part of follow our pledge with we made a commitment to invest $75 million per year for five years in technology and innovation that our sites.
And working towards looking at alternative fuels and supporting our efforts toward.
Reducing our carbon footprint.
And a big part of it is in supporting our communities.
Our three key areas, we will focus on.
And here in one day calculator.
First thing in alternative fuels and energy looking for new ways to do work that that reduces our carbon footprint building.
Building the mines of the future by promoting automation and Digitization looking for alternative ways week.
And the impact what we do at site.
Whether it's determined cash or at Fosterville and find ways. We can we can we can minimize that impact.
Eliminate that impact or offset it in some ways and also I think the big thing what we've been doing is investing in communities and investing in communities, especially during these times around our focus on mental health.
Homelessness and addiction.
Citizens care and tend to be.
Area that we feel is important in youth training and development.
A number of reasons.
Turning to slide six and get into the results of the first quarter. We turned it could turn the solid performance. We previewed previously indicated that the first quarter to share with respects to be our lowest quarter production and the highest quarter of unit cost for the year, we even put out guidance for the quarter to drive that point home, we beat our guidance.
When we reduced our production.
And within our all in sustaining costs.
The beat of our guidance and even our own our own budget for the quarter really reflected a very strong strong operating performance from the people out of work then we really cant came together about in March.
And for the quarter, we produced 302000 ounces and United operating cash costs of $5 two announced in Australia in terms of equal six months I'm sure everybody can read that.
Looking at earnings and cash flow, we had adjusted net adjusted net earnings of $6 <unk> per share with free cash flow of $43 million in the quarter, assuming current gold prices, we fully fully expect to see strong the numbers for the balance of the year on financial performance and that of price.
<unk> net also on price or operating results.
We also returned just under $100 million to shareholders. This included $50 million of dividend payments during the quarter. Following a 50% increase in the quarterly dividend and $46 million related to our NCS share repurchase since you are in CIP.
Going to slide seven now we had some key developments as well in quarter, we achieved additional exploration success and in fact, we issued a press release earlier this week with Newberry encouraging drill results at Detour Lake and really this was.
Theres been a number of very good results coming out of detour in the drilling we're doing there we are.
Also continued to make excellent project with our growth projects. During Q1 number four shaft project, but net net cash remains ahead of schedule and the multiple projects at detour Lake are going very well.
Larry and Natasha will talk a little bit about that later on in terms of some of the progress. There also we issued a new technical report for <unk> at the end of the quarter. It outlines a very attractive project that we expect to improve upon going forward.
Mainly supported by what we're going to drill.
Drilling income that put an updated resource and reserve, but even even if you go to that.
Look at that that report and our projections now for the next five years production.
680 to 720000 ounces a year and then growing to 800000 ounces. This year that reported show in depth.
While you're negotiating two or three.
A low grade cycle.
Okay.
Extra stripping per year, and then we grow production of over 900000 ounces a year in that report.
Part of what we're going to.
We're going to work Congress with the updated resource and reserve estimate that we expect to come on at the end of 2021 going into 2022, an updated mine plan is looking towards maintained.
Once we get the 800000 ounces per year to two <unk> to try to minimize that trough or eliminate that trough and see a way to move forward and we have been permitted to to process, a $3 8 million tons per year and our current forecast, we just see ourselves getting up to 28 million tons per year.
Anyway. He is still on slide seven there's also a few things.
I can emphasize as well.
And.
I think.
And there's lots of excitement, but in terms of Kirkland Lake Gold, we think we're definitely what we do.
Physicians performed well going forward.
Why was that why would I say that well we haven't having completed Q1. We are now poised to have three very strong quarters over the balance of 2021, we were on track to achieve all of our 2021 guidance and we have a number of catalysts coming that we believe have re rate potential peak tomorrow evaluations.
I got to tell you a little bit more of that whether it be by that.
Let's start with the detour Lake on slide eight.
Can you give some discussion on the technical report in terms of weighted was doing and as I mentioned part of us going forward as we see us not only is this a very good approach it now.
And very definitely positioned for significant cost reductions.
And significant levels of production for quite some time quite quite a long mine life.
As you can see.
As I mentioned earlier, we expect to be able to come up with that.
And improvements to this because we as we go forward into 2022.
On slide nine we are clearly.
You see in traditional supported with some of the exploration results.
Net debt continue to come out of this.
<unk> here is shown.
It's taken from that exploration press release, Eric forgive a little more color on it but you can see with the drilling.
And what's what's happening both in terms of extending the resources.
Mineralization, both to the west through the saddle zones between between between the potential could be storage currently that range potential future.
Future West pit, but also you can see that mineralization, we identified at depth both in the current resources and reserves at June from the main pit and took the.
Resources.
And reserves at the West <unk> West pit and then to the West and I can say on this zone on this long section. It also shows.
The bottom of the old mine workings from Detour Lake underground mining and this is this is basically demonstrating over may.
Maybe a 45 kilometer.
Surface.
Long section.
The potential growth for.
And we've seen 30 to 40 million ounces of mineral inventory of minerals.
Resources.
700 meters.
<unk> been Midland.
More testing.
Below the 700 meter level below the the old underground mine that does at Detour Lake and maybe we haven't even found the ore body, yet so I think theres a lot of upside in terms of feature.
Turning to slide 10, and I've already mentioned that the number four shaft project cash flow, it's going very well.
The really the key point is that it will mean when shaq.
The shaft is done we're talking we've been talking for quite some time at the shop will be very transformed into macassar fundamentally we're building a new lineup of cancer and as we seek oriented.
By the by Q4 next year or 2022, we'll be able to start taking advantage of the share and with the new shop, none of them would allow us to go broke production, where we're targeting to grow production over 400000 ounces by 2023, but it's going to improve working conditions in the mine improved ventilation in the mine.
Improved productivity.
The shaft the moment Beadle from 4000 tonnes a day.
If we go back to two.
The number three shaft to price sitting around 2000 tonnes a day at capability 'twenty, one 'twenty 100 tonnes, a day capability, where we went up to 4000 tonnes per day.
With this new share will still have the old shaft to help us in terms of thing that we see that.
No.
Combination of it improve working conditions improved <unk> productivity.
Improve our <unk>.
Net cost substantially easily bring an all in sustaining cost of about $600 per ounce and very importantly, facilitate a whole new chapter because it's going to create all new exploration platforms underground you can go back and re explore the correct per.
On campus.
It was 100 years old and moderate volume about a lot of work done over 100 years in terms of gold production.
In terms of what we average it's just as.
It's almost like you get to a new discovery.
At all.
Slide 11 now.
And then you know we also have big changes as possible.
In terms of reducing the production in the Swan zone to draw combined my flow, we executed drone programs.
In terms of that there are two key points I would like to make first day at anywhere between 225 to 425000 ounces per year at cash cost between two and 200 200 and $300 per ounce. So also will still remain a very profitable mind you. The fact that we expect to continue to be one of the most profitable gold mines in Australia and <unk>.
Definitely.
Top globally second and most importantly, we continue to believe that there is very attractive exploration upside at fossil that's why we are investing around $90 million in exploration. This year looking at a share price. We firmly believe that there is nothing in our valuation today for future exploration success as possible with the exploration.
<unk> program, we are completing in the multiple targets, we have to drill all containing quarterly visits all while providing the <unk>.
There's still a big pull system here.
We think there is.
The demonstrated.
Creating value and per clinic Goldman password exploration Diamond drilling and we see this we see going forward that there's still lots of value creation to come from Fosterville.
Turning to slide 12 from just so somewhere about summarize before I turn the call over to David.
We believe correct. Many gold is very well positioned right now to outperform number one bra and we are poised for three strong quarters of performance. This year and we expect to lead to a very strong 2022, we're on track to meet all of our 2021 guidance. We just issued an attractive technical reports for detour Lake and we'll be issuing a new one in 2022.
We believe from established Detour Lake is one of the worst premium all mines.
We will effectively be opening a new mining accounts from next year, leading to higher production lower unit costs increased profitability and very attractive exploration upside and we are drilling extensively across what we believe the success. We are targeting very accretive to our share price I'll now turn the call over to David <unk>, Chief Financial Officer, who will give you a little bit of highlights on the financial results. Thanks.
Thank you Tony and good afternoon, everyone.
I will be starting on slide 13.
Q1, 2021 adjusted net earnings totaled $167 8 million or 63 per share. The difference between adjusted net earnings per share of 62, 6% and net earnings per share of 60 cents. In Q1, 2021 was mainly related to the exclusion of the Holt complex after the impairment charge of $6 5 million.
And $5 7 million of noncash foreign exchange gains, reflecting the strengthening of the Australian dollar against the U S dollar during the quarter.
In addition, nonoperating site costs of $4 2 million incurred at the whole complex <unk>, which are not reflective of our operations and COVID-19 related costs of $2 9 million net detour Lake related to the introduction of rapid testing are also excluded from adjusted net earnings.
Appreciation also had an impact on the quarter, we will go through depreciation and depletion expense in more detail in subsequent slides.
Turning to slide 14.
Q1, 2021, the total revenue is $551 8 million the change from Q4 2020 was more impacted by day.
Decreased sales volumes.
And that 87 per ounce increase mortgage gold price compared with Q1 2020 at 202 per ounce increase in average gold price from $15 six to 17 88 accounted for $55 million of the revenue growth year over year offset by a decrease from the ounces sold.
Looking at EBITDA on slide 15.
Q1, 'twenty, one EBITDA totaled $349 million the change from Q4 2020, primarily related to a 20% reduction in revenues impacted by lower volumes and lower gold price higher production costs, reflecting higher moving them consumable costs that mature and increased mining rates and Midland costs out in cash.
Casa.
Compared with Q1 2020, the change in EBITDA was largely driven by $72 $9 million of foreign exchange gains in Q1 of 2020, resulting from a strengthening of the U S dollar volume.
As well as higher production costs, mainly reflecting three months results from detour Lake in Q1 2021 versus two months in Q1 2020.
All of this was partially offset by $33 8 million of transaction costs related to the detour acquisition last January 2020.
Depletion and depreciation totaled $104 million in Q1, 2021 compared to $21 million $121 million.
Q4, 2020 as discussed on our fourth quarter results call depreciation in the fourth quarter 2020 was impacted by a onetime adjustment of approximately $10 million, resulting from purchase price allocation adjustments on inventory.
Ed.
The remainder of the change from the fourth quarter in depreciation is mainly due to lower sales volume.
For the balance of the year, we expect depreciation to remain at levels similar to the last two quarters, excluding this onetime adjustment.
Turning to slide 16 to look at our cash balance and cash flow.
On the slide you will see that our operating cash flow was strong we generated $272 million of operating cash flow in the quarter before $64 million in cash taxes paid in the quarter.
During the quarter, we invest in our key assets spending of $165 million capital as well as $1 $6 million on strategic investments and received $2 8 million from the sale.
Of.
<unk> in the quarter.
Cash used for financing activities of $98 2 million reflected the $46 3 million was used to repurchase shares in Q1 as well as $50 2 million used for filming of the Q4 dividend.
Moving to slide 17, it looks like the change in cash in that slightly differently.
You can see that the largest contributor to growth in cash was our operations, which generated about $294 million of cash which is before income tax paid of $64 million growth capital investment of $46 million exploration spending of $42 million.
Other cash outflows include costs incurred at our nonoperating sites at DMT and whole complex of $10 2 million and corporate G&A up $14 9 million.
As noted in the previous slide during the quarter $96 6 million was returned to shareholders through share repurchases and dividend payments.
The $56 million and other largely reflects payment of AP balances at year end.
Next I will turn it over to cash or as our chief operating officer.
Thanks, and hi, everyone. Okay. So starting on slide 18 Labor force.
Quarter of 2021 per day.
207000 ounces, which actually exceeded our target level because of higher than planned average growth for the quarter.
All of our work.
$5 7 million from <unk>.
Q1 2021.
Good levels.
That's helpful.
On March 2014, and watching and capable of moving to.
That could have a possible client of over 10000 tons.
So we are moving like that.
Alright from now looking at operating cash costs average $748 one per the quarter book.
And keep in operating cash cost per ounce sold compared to Q1 last year largely relates to a stronger Canadian dollar in Q1 2021.
We incurred highest stripping costs.
With the.
Fee income compared to Q1 last year. So that means we will book higher more maintenance cost from higher costs for consumables, such as well this quarter.
After all in sustaining cost per ounce sold averaged $1064, an ounce, which was down from the previous quarter.
Things lower deferred stripping costs and sustaining capital as well as lower income, which is related to tailings management.
I'll now call on loan does that skew.
General manager.
Moving to project with <unk>.
Thanks Natasha.
Looking at slide 19.
As Tony mentioned earlier.
Project cabling of Detour Lake, which support division from the mine.
Our growth capital expenditure in Q1.
2021 totaled $27 8 million.
This includes $14 $9 million related to deferred stripping with chase floors in the main cash.
The remaining $12 9 million was related to the procurement from mobile equivalents from projects involving capital management area.
Process plant enhancements as well as construction of the new assay lab and air shipping.
We are fully mobilized it up already.
From a tailings dam with an earlier start and Utah.
As for the process plant enhancements were on track to accomplish share.
Our objectives for this year, which supports our ramp up plans identified in the mine plan.
This year's focuses on crushing CIP and detox circuit.
Traditional surface infrastructure projects include a new core shack yield maintenance complex.
<unk> expansion improved access road and Choctaw construction.
State of the Air Communications improvements initiated this year will support our investments in technology for years to come.
So thats a true call back to the cash.
Thanks, Okay pertaining to the cancer from <unk>.
Moving to slide 20.
In Macau key volume 2021, although it's a total from 7000.
Operating cash costs of $699 an ounce.
And all in sustaining cost from $947 nine.
The change in production from Q1 of last year reflected lower pump platform. While the change from Q4 2020 was mainly due to lower planned grades in Q1 2021, I think about the mine to come from.
The increase in operating cost component from both buyer pool.
<unk> will come from higher operating tons mined in Q1 2021, and this is intangible or anvil can we.
We also have increased maintenance costs related to mobile mine equipment and thoughtful as well we have the impact.
Stronger Canadian dollar.
As mentioned before eight per ounce sold average net win $7 from Ireland from Q1, 2021 which was largely unchanged from the previous quarter on higher operating cash costs were offset by lower sustaining capital energy.
Sustaining capital totaled about $9 2 million in Q1.
The completion.
Completion of the number of projects during Q4 'twenty from.
We also had lower levels of capital development in the quarter and we also revised the timing of delivery.
Mobile equipment.
Okay.
Routine mining cocoa.
Perfect.
Thank you Tasha.
Looking at Slide 21, we had a very good quarter in terms of our projects.
As Tony mentioned earlier, we continue to make excellent progress on the shaft four shaft investing approximately 750 feet for Q1, and reaching a depth of 5000 feet by the end of March.
Another project, we made good progress in Q1 was our ventilation expansion involving the development of two new that raises.
The first raise is targeted for completion by the end of this quarter with the second expected to be completed in the first half of 2022.
The two new raises will almost double the ventilation going into the mine dramatically improving working conditions.
We achieved a major milestone on the vent raises on Tuesday of this week the growth through to surface with the first race. These races are significant and that there will be two of the longest raises ever completed for a mine in north and South America, extending over 3300 feet. So to provide some context on that thats twice the height of the CN tower.
I'll now pass the presentation over to <unk>, Vice President colleague Australia operations.
Hey, Thanks, Kevin Good evening and afternoon everyone.
Taking you to slide 22.
I've talked about with Jason just under a 100 non-GAAP masses in Q1 2021.
Good day to.
Approximately 160 day advances in Q1 2020.
And 164 hasn't answered the previous quarter.
The change from prior periods, mainly the result of lower average price consistent with our previously stated plan to.
To reduce production in the Swan zone by increasing mining activities in other areas of demand.
Being taken as the crowd and most sustainable operating over a longer period, while continuing our extensive exploration program.
Production in Q1, 2021 exceeded planned levels, mainly reflecting greater outperformance from this one zone in March.
Just one zone accounted for 42% of <unk> and 72% advanced we produced in Q1 2021.
Yeah.
Compare that to 62% and 93% respectively in Q1 2020.
Looking at costs operating cash cost in Q1 2021.
$228.
Our all in sustaining cost of 420 tradeoffs.
Measures were higher than in prior periods with the Capex driving unit cost performance by any impact of a lower guide on sales volume.
In addition.
<unk> to Q1 2020, we also had significantly higher tonnes mined and milled.
So for that plane crash Panther described with increased throughput levels.
So those are foreign exchange impact given the significant strengthening of the strong dollar which contributed to our black Hawk, particularly their slot is this quarter.
I will now pass the presentation over to Eric Kallio, Senior Vice President exploration.
Thanks, very much Anne and good afternoon, everyone.
Okay.
Thanks, Dan and good afternoon, everyone.
My first slide today will be number 23 related to detour, where we're continuing to dent. The large scale job growth program. We commenced in 2020 to evaluate resource potential surrounding domain and digital upticks.
As previously announced the program includes a minimum of 250000 liters and aiming for an updated resource and potentially expanded mine plan for announcement in early 'twenty. Two in terms of progress to date, we believe it's been going very well with close to 70000 meters of drilling completed in 2020, another 60000 in Q1 and things still proceeding.
Very very well.
Cash flow for this is now at <unk>.
It is now already seeing quite a large number of asset return at five press releases, including one earlier. This week with results that we believe are very very encouraging.
Horizon. Some of these results is the image on the current slide which is a long section from the latest release and as.
<unk>.
Or the new hole, which are mainly from the saddle zone, but with a number of others from both under and to the west of the future webcast. Although all areas continue to look very good we're especially happy with what we're seeing in the central and east part of the saddle per drilling continued to NASDAQ broad zones of mineralization at very good open pit grades with higher grade tabular.
<unk> results further central and East area are shown on units with total Green Dot and as indicated include a number of outstanding intersections such as 113 over $155. One two point or three over 73 nine over $13 31 over five all from the lower part of the current resource sale as well as <unk>.
<unk> <unk> 56, and <unk> nine of 100 kilometers from areas very close to surface.
Additionally, the Bill we also saw very good results nearby to the future Westgate.
Where again the intersections not only demonstrated very good rates, but extension of mineralization at depth.
And to the west.
Key results from old test from the depth are shown on the image of flow.
And then coal intercept such as two nine for over 51 per y.
Two three established over 36 meters with intersect the central part of the area.
Between the 'twenty five anticipated although below the current pit shell.
We also had to fix over 'twenty, one and one point off of our over $46 nine on the east side of that.
But that area.
Key holes to the west are highlighted here in yellow and as indicated not only confirm strong mineralization up to 400 meters infrastructure, but include a high level of $10 six six gram per tonne over 13 liters.
We worked to date, a detour continues to that very well and argue furthering our initial theory that there is a much larger growth system here than previously thought.
So now turning to my next slide.
So as number 24.
We see an image from the customized.
<unk> outlined the overall exploration exploration plan for 'twenty, one as well as progress for Q1.
As announced in the past, we're aiming for a minimum of.
50% to 300000 ounces to replace the ounces mined this year and it's going to be from abroad.
Areas are strong.
Yes.
Of the current resource.
Orange as well as an estimated break this out.
These are all high potential target areas, where we've always had a lot of success in the past.
But we're very optimistic again this year.
So thats. The plan includes work on a number of new hires on the 34, 51, and 58 level, where there had been knocked in any of these to work the <unk> have a lot of new potential to add.
<unk> eight level will be done mainly from our new growth being developed for access to the number four shaft and.
And targeting both the up dip extension of the SSD as well as the worst part of the normal break at depth, where we announced high grade intercepts in the new Highway corridor.
Last year.
Brooklyn, 34 will be from Jeff.
Felt that number two shaft and testing for extensions of the main rate.
Shown here in the dark blue in the background.
And as well as looking for new structures, which could be above on parallel to the south mine complex.
And the work from 51, which is on the far left side of the slide here will be book will be from a new drift, which we're going to be developing this year and extending west from pre shopped.
So our net area, what we'll be targeting is really the down plunge extension of the main break so again the larger the new structure.
On the slide here net area is going to bring it out past the previous limit of Avalon, where there's very little capex.
Slide the less we have a small amount of work both on surface and in the new service ramp where again, we still feel there's a lot of areas that have not been fully tested and a lot of untapped potential.
In terms of progress to date I believe it's been going very well from 46000 meters of drilling completed in Q1 and more a lot of this focused on the SMC.
Some small amount from $34 58 already started it.
Also accomplished about 450 meters of development with good portion of that is being completed to gain access to the new targets from 34, 51% and 58.
There are no results to report today.
We see good progress being made so far and I am confident our success from 'twenty one.
So now turning to my next slide.
As number 25.
We should see an image.
Sure.
For the possible mine area and outlining the exploration plan and recent progress here in Q1 as well and.
And as with the Capex program here is aiming to at least try and replace all ounces mined in 'twenty, one which is in the order of about 450000.
As indicated the plan includes work on a number of different targets.
With most of the focus being on the lower part of the Fosterville.
Nine.
The Robin's Hill area with the remainder being on a series of new but what we believe are very interesting targets line to this out.
Broker possible will be all from underground involve drilling with a strong focus down plunge of the Swan zone to both convert and expand the current resource.
We know this is a very high potential area, we already have.
We already have widely spaced drilling indicating that the system extends for at least another 900 meters.
Plunged with locally higher grades and visible growth. So we're putting a lot of emphasis on this some of the work was planned from existing guests.
Part of the zone and already in progress in Q1, but the largest part of this will actually be from a new hanging wall drive which is being developed.
Near the 3900 level.
And.
<unk>.
Aiming for completion in mid June so as such most of the new results from this drilling which we will believe will be quite positive will only become available till later.
Later this year.
First of all the tail EBITDA, mainly from drilling from surface, but expecting to do at least some drilling from underground platforms and our new exploration drive starting sometime in Q3.
And as with Fosterville, the drilling will be strong we're focused on the area down plunge of the current reserve we already have seen some good success, but believe there is a lot more potential per ounces and higher grades.
In terms of progress to date.
It's exceeding well again and accrued over 39000 meters of drilling with the key targets at both Fosterville and Robin's Hill. We also have one eight kilometers of development on our two main exploration drive at lower Phoenix and Robin's Hill.
So in summary, I think we had a pretty good overall quarter for exploration and still being feeling very confident on achieving our goals for 'twenty one.
So with that I'll now pass the call back to Tony.
Okay. Thanks.
Thanks, Eric and thanks, Natasha and Barry inventories and Ian.
And Mark for character is supporting this call I, hopefully by giving you a variety of speakers, we keep everybody interested.
Anyway.
As summarized on slide 26.
Again, I think if we if we just keep things in very shortly after in terms of what the highlights of our third quarter. It was a very solid quarter from our perspective, we beat many of our own targets for the quarter.
We are now poised to three very strong quarters over the balance of the year and we are on track to achieve all of our full year 2021 guidance and we see what projects coming on this year in 2022 being very strong year 2023, having a bottom.
Another development that really we see a lot of upside competitively continue to move the company forward, but very importantly, we are well positioned.
Coming into Q2 and.
To outperform our peer group in the coming months and really based upon a number of in Q3.
Three key points. One is we had we continue to have significant success at detour Lake and <unk>.
Sure.
We really believe it true we're going to get three years from the premium.
The coal mines.
In North American and definitely in the world and we will be demonstrating that over the next while number two we have continued progress where the number four shaft at macassar combine that with exploration operating success from operating growth, where we are going to be creating a new mine with significant upsides. So we see <unk> being cut.
Going into 2023 being one of the one of the most reasonable.
One of the top 10 in terms of.
Largest underground coal mines and buy one.
Again, one of the most profitable coal mines in the world and number three with our extensive exploration program at Fosterville, we see.
We have a connection and attractive exploration upside in revenue.
To be able to demonstrate positive it was already one of the best coal mines in the world.
With the exploration success.
New discoveries of new mineralization of possibility, which all things point to it from being able to demonstrate long term sustainability.
At phosphate as well so we have three solid projects very profitable company cash flow generating.
And we are focused on responsible mining and really being able to be leaders in terms of moving forward in terms of making a change in supporting a lot of change in months portfolio communities that growth that we're working and we thank you again for participating in today's call and happy to take any questions.
Yes.
At this time, if you would like to ask a question. Please press Star then the number one on your telephone keypad, we will pause for just a moment to compile the Q&A roster.
Your first question comes from the line of Cosmos <unk> from CIBC. Your line is open.
Hi, Thanks, Tony and team.
Maybe my question is on cost.
Nowadays some concerns about inflationary costs.
Mining sector.
<unk>.
With a big project like shop number four.
Are you seeing any kind of impact in terms of higher input costs.
<unk>.
And how are you managing that risk and I guess, if you can talk about the strengthening Canadian dollar as well.
This case am I actually hope, if you're making any purchases in U S dollars, but could you talk about.
<unk> inflation and how do you manage that risk or a big project like shop number four.
Okay.
I'll start and above that.
Cash and maybe give us color in terms of some of the things they are seeing and Sheamus and.
Great.
I guess the cash.
First off for shaft underperformed net project has been ongoing for quite some time out of the procurement has been done.
We know that you are correct that there is.
<unk> and.
And theres extra costs associated with launching you coming out and learning how to live within this pandemic type environments in these processes, but for the most part the number the number four shaft net since the scope is defined since the there's a lot of other parts of the approaches grid fine, we don't see ourselves going over budget at all.
At Mckesson in terms and schedule in terms of completing that we we are seeing.
And facts and fuel costs et cetera.
It'd be better if by that said Larry.
Marian Ian and ebb and give some color there I don't know Barry do you want to get a little bit of thoughts on where you see some thoughts happening.
Yeah.
<unk>.
We're seeing an impact I guess with some of our consumables.
Fuel in particular machine.
Increased from a price issue.
And scale and strength.
Training material in vitro, obviously because of.
With a high volume range.
<unk>.
We're seeing a slight increase in maybe from some things like steel.
And part of it but again a lot of a lot of the activities and repairs.
We have ongoing through this year that are switch patients.
Unfortunately, we have.
Truck box moving we have.
Contracts in their case.
We will get impacted that way, but it is.
There is some pressure.
And could be material.
Sure.
Yes and no.
I think it's definitely the day strengthening both Canadian and Australian dollar has offset some of the some of the impacts in some of these areas.
Any color in from Australia.
Yes, Thanks, Tony.
We haven't really seen strong pressure across the board.
Charlie is tied very much.
Scientists, Larry we've got a number of long term contracts in place.
A lot of air from shambles.
And app and their budgets and therefore, our guidance were based on.
Slightly conservative numbers, there is anywhere where etsy track from slightly under and some of them.
Sorry, sorry.
All right.
<unk> certainly from a libre from the life of point of view, we're not seeing any significant increases in terms of.
Library across index is when thinking about that.
Great. Thanks, Doug sorry.
Sorry, Tony.
And for the most part.
As you can see we're not ready.
And any of our cost guidance.
We see you think rig manageable as we progress throughout the year so okay understood.
Understood. That's the only question I have Keith Barr copy so thanks again.
Thank you.
Your next question comes from the line of <unk> Habib from Scotiabank. Your line is open.
Thanks, Operator, hi, Tony and customer and team and thanks for taking my questions.
A couple of questions from me.
Just starting off with the performance you had in March and obviously it was a pretty strong performance that you've been talking about.
Any color you guys can provide on whether this performance has continued into April.
Natasha you want to you want to give some from.
Color there that's okay sure sure sure no problem.
So with respect to March we had a we had a pretty strong.
Much into areas of Detroit, and Mike had mentioned there are throughput by that and that's a function of the conditions pretty mild winter. So we were able to operate both mine and along.
Better than expected net time, so that helped them on fosterville.
Thank you and our dimension.
We had a stope that outperformed.
Bryan Jordan, a pump with a conciliation momentum.
Income.
April.
Q2, we'd expect growth I mentioned I think we had a week we were planning for our Q1 book.
Okay.
The next three quarters and conducting to be betting.
Hum.
Labor day.
Okay.
Tom.
<unk>.
And Ken Burns on the Capex.
Good productivity they span from.
Some good things.
Perfect. Thanks from project and just kind of follow up on that.
Regarding detour.
<unk> grade was higher than average in Q1.
We're expecting in Q1.
Was this due to positive reconciliation or was this just the fact that you moved into a higher grade areas during.
During the quarter and essentially what I'm asking is have you moved into phase III from periscope.
Thank you right now.
That could be actually mined more we took more out of the pit.
And now what we had planned with.
Marshall, we were able to book on if anything I would say 50 50, we have had positive reconciliation, but we also were able to bring up higher grade material that you have.
Cash flow accountability.
Okay. Thanks, Josh I'll I'll stick with my two questions and jump back into queue.
Your next question comes from the line of Mark or Mike Parkin from National Bank. Your line is open.
Hey, guys. Thanks for taking my questions.
One would be on the new debt raises that net can answer that.
Now in a situation where the challenge you had last summer with high ambient temperature side.
Meeting, where you could access safely underground from the heat.
Our perspective is that kind of a thing of the past so you've got that.
Q3 kind of Derisked.
Go ahead Evan.
It's definitely going to help its helping.
As we speak.
Yes.
Absolutely going to provide more air in cooler air down there. So the raise the raise actually extends all the way down to 5600. So that's just two legs, but the longest lag is 3300 feet.
Okay.
There is a parallel range.
That's ongoing right now too so.
Hopefully you can get that done and then <unk>.
And that's another step change and then amendments the shaft is connected.
Third and major step change as well.
Okay Super Oh, yes for sure.
And then just from the investments being made on the USG Brian.
With the goals moving towards net zero share any thoughts around PMT tour, maybe using an in pit conveyor to limit the amount of trucks youre using is that something.
That might be considered for the new life of mine plan, especially as you if youre going into the west Detour moving further away from the pit seems like it could be a big opex savings too.
Yes, good good points, we're looking at a variety of alternatives and that's that's more men and.
The cash at Larry again, even provide some supporting commentary on that.
Yeah, as part of that and that initiative.
Looking at a number of watching things, we're looking at Vale day conveyors have been looking at Hollywood as well.
Yes.
And then.
Just starting off.
Yes.
So there's still a lot of work going on.
Hmm.
Moving to win.
We have to share from all of those things are moving.
Yes.
Can we put more material in the pit and not have to hold true.
And today the spoils from other energies.
That's one area, where you can be sequenced the pits, where we're at this point in time, when you start putting index going back into the pit as you move from east to West, but there is a number of them.
Those initiatives one big initiative for this year.
Our private area networks. The partnership we have with Rogers Communications.
Up in the region and be able to start advancing treatment excess use of technologies and be able to look at in broader ways to really transform their.
The operations at <unk> over the next one.
Great.
Just one last question.
$75 million or planning to spend on those ESG initiatives true next several years, how should we think about that flowing through will be all capitalized.
Go into different buckets from the financial statements.
Go ahead.
David.
And a variety of areas some of it.
Person did that are already in our budgets, but David you can answer it.
Yes, a lot of the tons per hectare that is already incorporated into our guidance.
<unk>.
There is.
Good luck in the technology.
Our business optimization.
That are focused on growth.
And so I'd say, a little bit in each of the buckets.
Focus on growth.
Uh huh.
Okay Super Thanks, Ed.
For you guys.
Your next question comes from the line of John Tumazos from John Tumazos, very independent research. Your line is open.
<unk> on the good work guys.
Two questions. So I can move from New Jersey shore in a diesel or cash.
Yeah.
First <unk>.
Thank you for disclosing great.
Tonnes and ounces.
Fosterville.
It looks like Harrier, and lower Phoenix more than doubled their tonnes from a year ago.
Their grade rose from 9.4 to seven true.
9678.
So something real goods happening in the new Stopes Foster growth.
Q2 elaborated on that first.
Second.
The whole number one of three that was the first line of the press release Tuesday.
I understand the great result.
There was nine grams over 13 meters.
The other 141.6 theaters.
The algebra workshop 0.397 grams.
Net too.
The 113 grams over 155 meters of roughly 146, one a mistake.
Or do you have to take that out.
<unk> 397 grams per day.
Joseph between 350, and 400 meters in the pits.
And youre going to have the world's biggest stockpile from 2040 to <unk>.
<unk> 45, or 50.4 Gram material.
Eric.
That's great.
The nine over 13 meters does not the whole 103.
I might have an average roes the first sentence of true.
Please.
Well no.
No it's not included.
103 is.
That one is $1 one three over 155 meter.
And then that's in one of three <unk>.
<unk> is an <unk> 79.
BMW.
So it's not incur so they're all different interception theres no smearing.
Right, that's a separate intercepts altogether.
Thank you excuse me I thought it was.
Something else.
None.
Sure <unk>.
Tackle the first part of that question when it came true.
Productions.
We've got a number of designs in lower Phoenix.
That contributed for the quarter.
And so I was wondering.
The first from remand starts in the rap that area.
Certainly has proven to be.
Solid contributor per quarter, and we did have.
Well with that.
We did have some solid contribution from the area and we saw some higher grades in area hard than we historically have seen.
Hi.
We are trying to balance the entire mining production currently.
Looking good at Fosterville.
Yes.
Once again, if you would like to ask a question. Please press star from the number one on your telephone keypad. Your next question comes from the line of carrying recurring from Canaccord Genuity. Your line is open.
Good afternoon, everyone, maybe just a question on detour just wood.
The daily limit lifted there just how should we think about throughput over the balance of the year I assume.
It's going to increase from here.
When we gave out our guidance from the year. We expect this year to be about 24 5 million tons total give or take a few percent process. This year.
And then by 2025, and our forecasts and our technical reports gets up to 28 million tons a year.
And that's based on a number of project initiatives that as we as we progress but.
Natasha and good momentum are there you want to give it.
With the support for that.
Well I think we.
Mentioned book in 2021, and we're planning on $24 5 million times, so that hasn't changed so on average revenue.
Let's get that 1000 tonnes per day.
And then slowly growing up between 25 to 28 mile implant share.
I'm doing well just over 25 million tons and slowly add for the project.
We got the 27 million in 2007 2020.
And then maybe.
But go ahead I'm sorry.
And I think day.
One of the things that's going to it and Thats, where as the year progresses and Larry.
I'm working on alternative feedstock, but I think the biggest two projects we have going on this year would be the installing that screen index be before that.
Between the primary crusher and the secondary crusher on both the secondary crusher sites will be doing one and then the other one in meantime, as an alternate feed system being put in place to try to keep the mills to be able to keep the mills running under <unk> side running during the during this period of construction and then Matt to maintenance of further increases in 'twenty two.
From progressive future years right. So.
Yes.
Okay. Okay, Great and then in Q2 last year, there was a pretty big cash tax payment just wondering if theres something similar that we should look out for this year for Q2.
David.
Thanks, Tony.
Yes last year, there was a large.
<unk> came in in June that was really related to.
Filing of Australian tax returns.
And so we're.
Still working through the.
In terms of this year.
We probably will see an increase from Q1, because Q1 was.
Yes.
But as we close off the year, we had a very strong year.
Last year in Australia.
We would expect an increase from Q1.
Sure.
But I am assuming nothing of the magnitude as last year.
Well it could be it could be you know last year was again a record year I expect the taxable income to be.
Significantly higher.
Last year was the previous year, our installments keep in mind, our installments are gone.
No.
Not last year taxable income per year before so 2019.
And.
So I'm expecting so our installments aren't really enough to cover the full taxes in Australia. So that's how you see that a bit of a cash.
In Q2, because we are not prepaying.
Taxes, so when we file our tax returns all day with up and we but we get a better idea on what like.
Sometime in Q2, when the tax terms of financing.
Okay, great. Thank you.
That concludes our Q&A for today I would now like to turn the call back over to the senior Vice President of Investor Relations Mark Haden for closing comments.
Thanks, very much operator, and thanks, everyone for participating on the call today is <unk>.
Currently they've got a lot going on we've got a lock on the look forward too.
And a lot that we're going to have a lot to talk about over the balance of 2021 and into next year. So we look forward to our next call to update you on how much more progress with knows whats going to not start a good day.
Thanks.
But I conclude.
Today's conference call you may now disconnect.
Yes.
Okay.
Okay.
[music].