Q2 2021 Yamana Gold Inc Earnings Call

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This conference is being recorded so it's cool sales. It don't go as you see.

All participants please standby your meeting is ready to begin.

Thank.

You all for joining us this morning before I turn the call over I need to advise that certain statements made during this call today may contain forward looking information and actual results could differ from the conclusions or projections in that forward looking information, which include but are not limited to statements with respect to the estimation.

<unk> of mineral reserves and resources, the timing and amount of estimated future production cost of production capital expenditures future metal prices and the cost and timing of the development of new projects for a complete discussion of the risks uncertainties and factors.

Which may lead to actual.

<unk> financial results and performance being different from the estimates contained in our forward looking statements. Please refer to Yamana press release issued yesterday announcing our second quarter 2021 results as well as the management's discussion and analysis for the same period and other regulatory filings in Canada and the United.

<unk> states.

I would like to remind everyone that this conference call is being recorded and will be available for replay today at 12 P. M. Eastern time replay information and the presentation slides accompanying this conference call and webcast are available on Yamana website at Yamana Dotcom Island.

I'll turn the call over to Mr. Daniel Racine, President and CEO.

Thank you operator, thank you all for joining us and welcome to our second quarter 2021 conference call and webcast.

1 thing with me today is Jason Leblanc, our chief.

<unk> financial officer.

Ron Bouchard Chief operating officer.

And Andrey Marsden senior VP exploration will be available to answer a question.

I will start as always with Elton safety, our total recordable injury rate was <unk> 58 for the first 6 months of 2021.

Earlier this year, we introduced our climate action strategy.

We continue to advance this strategy during the quarter with work ongoing to their turn mine baselines and gathered data to develop abatements scenarios.

The strategy is 1 pillar of our approach to ESG.

<unk> safety, and environmental management governance and community engagement.

Our deeply rooted within our organization.

Proud to have been named 1 of Canada's best 50, Canadian corporate citizens by corporate Knights Yamana ranked 31 overall and was the top ranked Canadian mining company.

Best 50 ranking are based on a series of Criteria's.

Our offloading 8 environmental metrics, 5 social metrics sixth governance metrics and 3 economic factors.

1 more about our ESG performance I invited invite you to look at our latest material issue report and global reporting initiative reported.

What are available on.

Okay.

Sure.

Turning now to our Q2 operational highlights we had a strong production with 217.402 ounces of gold.

Standout performance at Jacobina Canadian Mill, Artic L opinion on and Minera, Florida.

On our was benign Kenny on the mill Arctic I'm pleased to note both reach all time quarterly high.

At Cerro Moro production increased compared to the second quarter of last year.

Both but as we indicated previously we're expecting the mine to <unk> to see much stronger results in the second half of this year.

Reduced 163 million ounces of silver during the quarter.

Geo production was 241.341 ounces.

Quarterly cash costs were $7.20 per Geo and all in sustaining costs were 1081 per <unk> in line with plan.

Our strong cash flow generation.

On an increased cash balances continue to position us well to return cash to shareholders in the form of a higher that are higher dividends.

As reported yesterday, we are increasing our annual dividend to <unk> 12 per share up nearly 15% from the previous dividend and our fifth 500 percentage.

Percent increase compared to Q2.2019.

We also announced a normal course issuer bid that allows for the purchase of up to 5% of the company issued and outstanding common shares over the next 12 months.

First half production and costs were in line with our plan set out at the beginning of.

The year.

As with prior years, we expect Q4 to be the strongest quarter.

I would like to remind everyone that we guided production to be at 50.753 split between the first half and the second half and this is exactly what we have achieved in the first half.

Taking a closer look at our operating.

Operations as mentioned Jacobina posted record quarterly production of 47.5 on.

103 ounces of gold.

As you may have seen in our release yesterday updating progress on the phased expansion of Jack will be not at all.

Richard would put for the quarter was 70 to 100 tonnes per day up 5%.

Over the prior quarter with throughput averaging 7500 tonnes per day for the on the entire month of me on.

I'll talk more about the phase expansion in a moment.

A third opinion Geo production for the quarter was 52.1607 ounces.

39492 ounces.

Answers of gold and 891 to 155 ounces of silver.

We continue to expect plant production in Q3, and Q4 with the second half production to account for approximately 57% of the operation and <unk> production.

You didn't take either a record.

Record quarter, producing 92106 ounces of gold exceeding plan due to higher grades and recoveries from or found deeper and domestic pit.

The operations remain on track to complete topographic drilling and blasting in the Barnett by at the end of Q3 of 2021.

I'd also love, Utah was a standout performer during the quarter production of 23818 ounces of gold was above plan on higher than the same period in the prior year.

And they are all development continues to advance well ahead of plan.

Flourish on the results continue to demonstrate extension.

To find areas of mineralization and new discoveries.

Net save them, although it was $23.25300 <unk> com.

Per to 15450 <unk> in the prior year period.

This include 14488 ounces of gold and silver production was.

736820 ounces in the latest quarter channel.

So LNG water conditions and limited travel and impacted shift change. However, the company took the opportunity. During this time to fast track certain L safety and other site improvement originally planned for the second.

Half of the year, which will benefit future quarters, the transition to more mill feed coming from the underground ore at higher grade than the open pit ore will continue into the second half of 2021.

There are a number of compelling growth opportunities in our portfolio and that.

We're very excited about 1 of these is the phase expansion at Jacobina, we've made significant progress on phase 2 expense expansion to increase throughput to 8500 tonnes per day and raised production to $230 an ounces per year.

Jack will be not plan to continuously exceed expectations.

Pension our success underscore the simplified approach that we are now taking to complete phase 2.

This include the both total nicking the processing plant and tailings system as well as operational improvement that Derisked. The project greatly reduced capex and eliminate the need to install an additional.

As missed.

While capital costs are expected to be only a fraction of the original estimated amount not exceeding $15 million to $20 million. The key takeaway in yesterdays update is the greater certainty and reduce risk as we know required incremental optimization and the operational improvements to.

To achieve the phase II throughput.

Subject to the successful completion of required permit modification, we expect check will be not to began to begin producing the new 8500 tonnes per day in the second half of 2023.

As we advance these 2 engineering for phase III expansion.

10000 ton per day with advance in parallel with the plan modification origin any plan for phase III now consider adequate for the phase III.

The phase <unk> study for the Phase III is scheduled to be completed in 2023 and project commissioning is still on track for 2027.

In addition.

<unk> the phase 2 update we also disclosed strong exploration results at <unk> will be not yesterday.

The results included exceptional drilling from kind of era Central's.

And moral event as well as the discovery of a news on at Joe <unk>.

With 536000 ounces.

Officers of mineral resources the results support the phase expansion and demonstrate check will be not as exceptional long term growth potential and ability to further extend strategic mine life.

Turning now to was imac are all day, 1 gold project in Quebec prolific Abitibi Themis germane.

Region, we're excited to be growing our presents in Quebec, which is also on to our Canadian mill RT cooperation.

Whereas <unk> is a great project and since acquiring it early this year, we have made it even better which carried out several studies that have expanded reserve and the average annual.

So on while increasing throughput and plant plant nameplate capacity.

As a result, we've made a decision to advance the project to construction, we expect to receive all permits and authorization by the third quarter of 2024.

We have identified opportunities to improve ramp up and degrees the processing.

I think Dan construction per unit.

<unk> will be fully funded from available cash on cash flow.

They have not been as completed production will ramp up quickly and it will achieve full production of approximately 200000 ounces per year in years, 2 and sustain that level for the next 4 years with costs well below.

The company's net company's advantage.

What's that Mac as a reserve of $1.91 million ounces, along with indicated resources of 326000 ounces in inferred resources of 258000 ounces with excellent additional exploration potential.

We believe was on Mac will be a very long.

Mine life of 15 years don't from or more.

And assuming these strategic mine life and BV will be in the range of 850 to 900 million at $18.50 gold price.

Just 100 kilometer down the road from ones that Mac is our Canadian mill Arctic operation where.

Where are we advancing the Odyssey on grid underground project with our partner. This is another outstanding project that will extend Canadian <unk> mine life true at least 2039.

In the second quarter, we've competed overburden excavation and grouting to prepare for the construction of the production shaft and ethane.

We've also made.

Good progress on the ramp on the underground ramp development is ahead of schedule with approximately 764 <unk>.

Meters completed this year and 1500.87 million near meters completed since the start.

Flourish under map is expected to take about 2 years to complete with.

With the first drilling platform established in early July.

We have also completed construction of the shaft collar and engineering is progressing on that frame Oyster room baseband power line substation, the workshop and the warehouse construction of the air frame and always true them is slated to begin.

In the third quarter of 2021, and with that I will turn it over to Jason.

Yeah.

Thank you Daniel and good morning, everyone.

Turning now to our financial performance.

Adjusted net earnings for the second quarter were $77.7 million or <unk> 70 per share combined cash and cash.

Cash equivalents at quarter end totaled $702 million, an increase of approximately 8% over December 31 year and this includes about $223 million that has been made available from tomorrow project.

Cash balances along with further liquidity and cash flows are more than sufficient to fully manage the company's business and capital allocation.

Objectives, which includes further returns of capital to shareholders.

We continue to generate robust cash flows with cash flows from operating activities, increasing to $153.5 million in Q2 versus $129.4 million on the same period last year cash.

Cash flow from operating activities before.

Net change in working capital were $167.8 million and free cash flow before dividends and debt repayments increased 34% year over year to $51.4 $2 million.

Net cash flow to improve in the second half of the year with Q4 expected to deliver the strongest performance in line with the production and costs.

For Q3, and Q4 capital spending will be a little higher than the first half of the year is expected for.

Sustaining capital will average about $50 million of spend per quarter per.

Per expansionary Capex, the average will be about $40 million per quarter with about half that attributed to Odyssey and.

And for exploration will spend between $25 million and 35.

5 and $30 million with a 70.30 split between capital and Opex.

We continue to see a strong performance across our portfolio with production and cost tracking to plan.

Our first half results are well aligned to our 2021 guidance released that it started the year, which called for 53 per cent of production to be weighted to the second half.

Sure.

Our cash costs were also tracking in line from where they thought they would be at the end of Q2 and prospectively with minimal impact from inflationary pressures from the balance of the year.

As noted we expect stronger production and lower costs in the second half Q4 is expected to be our strongest quarter with the highest quarterly production and lowest.

Quarterly costs, continuing a trend from previous years and with that I'll turn it back over to Daniel.

Thank you Jayson.

Before we begin the Q&A I want to talk a little bit more about was on that.

On our growing presents in Quebec.

To highlight the points raised by our executive Chairman Peter Marrone.

Of the most recent blog.

If you haven't read it yes, the block I encourage you to do so it's publish roughly once a month.

Peter share his perspective on a wide range of topics related to low gold mining sector.

Is the message in the blog can be summed up in 5 words focus on big picture.

And isms.

Our long term production profile in Quebec, including was on Mac and Odyssey.

As for 450 to 500000 ounces per year between 2028 and 2035, while that's a strong profiling on its own right. We believe it's just the starting point.

The mineral resources on exploration.

<unk> from profile that was imac and Odyssey will generate significant production and mine life upside that's.

That's where we're forecasting a 15 year strategic mind on iPhone, <unk> and <unk> and why we believe obviously will be in production on far from beyond 2039.

We know that projection like this California element.

Of trust on your part and trust on benefit of the adult are in short supply in our industry for Russell. Good reason as a result of event in the last cycle.

Over there have been many changes in our industry and in our company in particular, along with many successes.

We believe we mirror the benefits of that.

Net out that's our long term track record of converting resources to reserve on tell opinion on <unk> will be and our success at Canadian <unk> got good reason for your faith and confidence without diminishing the success of our other mines are this is a game changer changer. That's a mine that that's been a significant.

Can't win for us on cash flow, but before Odyssey Canadian loyalty was seen is limited only to its well establish open pit.

Today as a top tier generous on all open pit and underground mine.

So we urge you to look at the bigger picture what that Mac has the potential to become.

Intergenerational mine in our portfolio and mine that will be in production on for at least 15 years carried carried in our strategic mine life. We look forward to advancing this mine and realizing its full potential and we hope you join us and enjoy the full episode.

Upside in that in term of art.

Our Canadian profile and short and few short years, we have established a platform. This is among the biggest in Canada in dirt on production with our production platform that we'll reach an initial roughly 500000 ounces of gold all comes from concentrated in 2 minds in the same region of the country.

With that I will turn it back.

Back over to the operator for questions from greater.

Thank you we will now take questions from the telephone lines. If you have a question and you're using a speaker phone. Please lift your handset before making your selection. If you have a question. Please press star 1 on your devices keypad you may.

Cancel your question at any time by pressing Star 2 please press star 1 at this time. If you have a question there will be a brief pause while participants register for questions. Thank you for your patience.

And the first question is from Anita Soni from CIBC World markets. Please go ahead your line.

<unk> is now open.

Good morning, guys. Thanks for taking my call. My question is with regard to the eye.

That you'd given for inflation going forward can you give us a little bit more color on some of the offsets that you were seeing.

I think you mentioned that you are seeing some inflationary pressures that you've got.

Some operational Ah sorry.

Sorry, operational synergies that can offset that and areas, where you might not have the operational synergies when we might see some cost escalation makes.

Thanks, Anita I'll start and I'll, let Jason to give more detail but.

Talking about inflation, you know a big.

Of course this is manpower.

And then we have negotiated 2 contracts this year successfully within our budget. So we have not seen really inflation in that theres been some inflection in.

<unk> pressure in the first half, but like we mentioned we were able with ours.

<unk> some some good operational next sentence again, 2.2 to 2 and you know to limit the impact on than we were right in line. So maybe Jason you can give some detail of what we see coming and all we we plan to mitigate these discuss pressure yes.

Sure Danielle and good morning.

As Daniel mentioned.

We're seeing inflation those headline items like everybody else out there they're on their trickling down to consumption level of grinding media and.

And the like explosives et cetera, and those are all up year over year up a little bit more and more than our plan, but we indicated it is.

Not significant.

With the guidance range that we provided previously of accommodated in there you know with a little bit stronger foreign exchange I'd, probably peg it at $15.20 of.

Of negative impact compared to where we where it started the year and obviously, we're working to try to offset that with.

All of our procurement efforts we feel.

Without that and then also operational excellence I think it's been a big.

Big part of our.

Our success over the last number of years on that program is just that much more mature in advance. So we feel like we're in pretty good position to offset some of these impacts on what we do think they are cyclical in nature. They are.

All of these.

Pretty good on a direct inputs are up quite a bit from recent cycle low so they've come off from highs earlier. This year. So they do seem to be moderating, but there is definitely an element of uncertainty here in <unk>.

Have to do our best to manage it.

Okay and then.

Second question is just on Jacobean.

And I think you guys mentioned that.

You've been pulling lower grades for the second half of the year as the mill is now outpacing the mine as we go forward and that was temporary and it's going to it's going to be your setup into 2022, but how do we think about grades in Jack a benign in 2020.

On 2023.

Previously, we were kind of targeting towards that 2.3 gram per tonne material to achieve those production targets is that still your your target.

Yeah, I need to have coming from the underground mine itself. That's the growth you can expect but.

But you can understand that our phase 1 was 6500 tonnes per day.

But it's higher than that at 68, but you saw on number we're achieving 70 to 175. So the mine is not ready to produce that amount of of ton.

But we have stockpiles at a bit lower grade. So this is why the greatest would.

It's low worth so we're gonna process Mort on a bit lower grade and then in total that will be a higher production at the end of the day I think we have to take the advantage that we can put that supplemental on an incremental or.

And 2 a day meals and that's what we're doing we were making a lot of money, even with $2.1 dreams grams per tonne that Jim.

That's what and then eventually when are we going to catch up to the production on the underground production on to what the mill is able to do within the greater will come back to that $2.323 percentage 0.4.

So yes, I guess I was just asking when do you think you'd get back to that 2.3 year to 4 and then secondly.

As you mentioned Youre, making.

We'll be back to 0.1, so then what kind of.

Is there any kind of.

I guess processing cost reduction with the higher throughput that I should be thinking about in the model. While you are still processing 2.1.

Well why don't you answer that question.

Yes.

Thank you.

We are we going to see pressure I mean, we're doing step by step implementation tool to the purpose on console for sure with what.

What do you have in mind by increasing to 8000 per hundred ton per day without having placed on a curve ball mill you can count that we're going to be a much more efficient. So yes for sure. He tells on 500.

But with that new I would say approach.

I would say I would expect to see some kind of decrease with processing.

Okay regarding grades regarding grade.

That's 1 phase 2 was planned so around at the.

Second half of 2023, and you should see grades going back even.

Maybe next year, you Shouldnt see great companies with that $2.3 2 to 1.4.

Okay Fair enough. Thank you and then last lastly on Cerro Moro.

As we look at the just taking a look at the production year to date overall.

Is it fair to say that it might undershoot, the original sort of guidance range for that.

For that specific assets, where other assets that are outperforming with minera, Florida on an opinion on them versus your budgets might make up the difference.

Sure the other.

4.

Yeah.

Do better, but we're still targeting to achieve our guidance for several more.

Well no.

Planned to be a very good.

Are we going to see there's always a risk yeah, we're still aiming to achieve our guidance net settlement alright.

Alright, so that was on throughput reverting back to normal throughput softer that sort of health and safety shut down that you guys had and then.

I guess, a really good grades right, yes exactly.

Okay. Thank you very much that's it from my questions.

Thank you. The next question is from Fahad Tariq from Credit Suisse. Please go ahead. Your line is now open.

Hi, Good morning, Thanks for taking my question just on the dividend.

I noticed there was some commentary around maybe.

Maybe a different methodology or a slightly different perspective based on minimal cash that's needed can you just touch on.

Kind of thinking around how the dividend is.

Increased Ah if that has changed given you know there's obviously some.

Second amendments that are coming up over the next few years with Boston American Mill Arctic you add that up it could be you know almost $1 billion of Capex over the next few years, just maybe just any changes to the way youre thinking about the dividend.

Good morning.

Yeah, Yeah, we mentioned in the past that we might look on.

No the former.

Formula to afford dividend, but we've decided not to do that we look at our like you mentioned with those hard to our future capital our future cash flow generation and then Westwood can afford as a dividend and then when we look at what's coming thats might uptick it wasn't Mac.

Saw that Jack will be noise on lots of ethanol.

Capital, if we can afford to increase our dividend to 212 cents per share and then we're going to continue to look at it.

In the future and then we want that that like we mentioned many times that dividend to be sustainable. So if we were able to increase it from 10.5 to 12 cents per share. It is because we believe our profile in the next many.

Doctors can we can afford to be it.

At that level.

Okay. That's clear so so if gold prices stay above <unk> 50, an ounce. It's fair to assume that this dividend would be consistent it will be consistent at $13.50, absolutely.

Okay, Alright, that's it from me. Thanks, so much thank you.

Thank you. The next question is from Josh Wolfson from RBC capital markets. Please go ahead. Your line is now open.

Thanks for taking my questions.

<unk> on Cerro Moro.

You know is there anything.

Is there any details you can provide in order for us to sort of connect the dots as to what's required to see improvement in the second half of the year historically in last year, obviously, COVID-19 being a bigger impact.

Getting the development rates seems to be a challenge, what's what's maybe giving you more comfort on the outlook now in terms of expected improvements.

Good morning, Josh. Thank you I'll, let you wont answer, but I'll say development as the rates are improving there.

Going a lot better now so so maybe you can go on you can give color on why we're very confident that the second half will be quite a good half a turn them on.

Yeah sure good morning, Josh So as Daniel said I mean, we would.

It's progressing pretty well got you back on or the blocked on so we're not moving a lot of activities with mining.

To give you. An example, when we start July we were only we are the only to do so they need meters of development to meet all the requirements for the next 6 weeks, so we're getting in better position.

We have hired reconciliation I would say better.

We did pretty consistent between what we mined versus what we see so the mill, we did some progress as well with controlling dilution and what's already on our vein so all of that together.

I think that the operation now reach a point, where we see it I would say Q3 and Q4 will reach the target that we want it so again.

But I'm gonna be a progressing approach on a quarter over quarter up at settle model. So a pusher on I will not title is going to be challenging to meet or just on guidance on that 1 but the plan that's going on in front of us.

It's showing a good trend if we if we succeed to maintain that high level of development.

Okay and for the heap.

The study what was the grade of the material that was used for the column tests.

1 grams per tonne.

Grant.

And when Youre thinking about.

This 5 million ton target I guess initial resource is that a comparable grade.

And we should think about.

Bleach for this opportunity.

Yeah, I think it's worth Yep Yep, that's correct.

Okay, Great for sure I mean, we're going to see we're going to sales both to meet these as well I mean, we won't dilute book, we don't have to but that can be on evergreen as well, but I would say 1 gram per tonne adult minimal each heap leach on them.

Sure.

Okay. Thank you very much.

For okay.

Thank you. The next question is from Mike Parkin from National Bank. Please go ahead. Your line is now open.

Hey, guys. Thanks for taking my questions.

With Odyssey.

Has there been a good plan developed in terms of what will ultimately.

<unk> be involved with the Canadian <unk> mill in terms of what it'll be scaled down to right now you've got the big say feeding into the 3 ball mill lines, if I remember correctly.

I know theres been some preliminary talks about potentially you're moving the sag.

The idea of the kind of run.

A couple of the ball mill lines and kind.

Keep a third 1 is a spare or what's the thoughts there.

Morning, Mike.

On maybe you can put some color on it but we know exactly what needs to be done to to achieve but again, Mike you were what 6.7 years of which will be in full production underground at Odyssey, So things might.

Might change and we we are partner announcing and we said the same thing and you know a new discovery at met uptake.

<unk>.

The second quarter, so if we find more or more areas to be mined than towards both might increase in near future financing.

But for now we know exactly.

Actually what what's needed to achieve 20000 tonnes per day. So maybe you on on demand on what needs to be done.

Yeah.

I will not go into detail on my quick quick question, but.

What's unique to what we need to understand here is we cannot match the ore because the processing time, because we need to keep or do you still plan on running.

Took on many of the mining sequence. So as you said, we need to see a rightsize it puts us in times of about 20000 tons per day.

And the idea here is it going to be to be to do with efficiently. So we are going to park. Some of the some of the running units some of many equipment going to be part, but that's on.

In order to move in case of <unk>.

Something up it's coming so we're going to have we're going to have we're going to remain with that flexibility.

So from the current.

Let's say from the current.

Costs processing costs by by processing less time, we believe that.

That puts us on cost will decrease by about.

And let's say top on my head $1.50.

All of our U S per ton multiple processing going on 20000 ton per day.

Okay that's perfect.

Another question with the Jacobina.

Kind of revisit on the phase 2 simply just kind of looking at it in terms of.

Where the bottlenecks are.

And.

Unlocking the potential by addressing those rather than going ahead with a bigger capital expense you just give us a couple of ideas, where the bigger bottlenecks are within the mill and.

How you're you're working to address those.

Yeah for sure I mean, Chuck will be on Halloween, We go we had.

Surprised the team on working like they were.

Good job I mean to do though the bottleneck King Little project and it just creates a price on it bring us due to just consider what we are what we on for a phase 2 extension. So I would say on the short term, they're going to work on the <unk>.

Like what will be the water pumping system.

Really even in slurry pumping system and we also wanted to do some modification to our appealing line fully then you've put in some we still have to do somebody education there to release on the system.

In parallel I mean, what what we see there is we have we're using a power draw with about 92%.

On the sweet spot on mining to the bulk.

<unk>, 5% to 97%, so we're going to take them on to the vintage of your assets into hardware at all running units.

I would say we also under utilized the crushing circuits from Reed.

On a research contingent was about 38% and the second on a rig time.

Crusher Circuit is you end up about 50% so we see.

See some opportunities there.

By optimizing use usage and I would say maybe decreased I think on them at 3 of these although up the crushing.

So that's a little help.

I would say the second 1 is that with the third point is going to be to optimize grinding size and also screening.

Screening on site learning performance.

2 Fisher unload on load the grinding units and be able to push more tonnes through the mill.

Do you expect any loss on recovery or have you already kind of done some studies on that where you're not seeing material.

No.

Yeah.

Yeah. Good question I mean, maybe you saw it up and all in all in our belief that we run 2 tests in Q2, and we went up.

We've closed on mill up to 8600 sounds pretty on the day and we average really high tonnage over a short period of time.

So for sure we saw a decrease of recovery during that time, but that's.

With 10, 1% I would say a general thing that.

I mean by doing on that then for sure I'm not we're looking at Michael P. D.

We actually have design of 160 Micron I mean between on road 60 day not have anything Mike on doesn't make a big difference. We believe that we can push out a little bit further and we don't see.

Was at some point so.

So that mean by being.

Cutting a little bit by by processing I would say coarser materials, so share within a cut on power requirement as well so as I said this is something that.

On that come up like in Q3, and we are already excited and we still try to understand what is going to be.

You can see the positive impact on cost going forward and they're ready to find where it is going to be a sweet spot for processing rates.

Okay. That's good.

And then last question.

With respect to the NCI B, how should we kind of think about the execution of that are you going to be strategic.

Or looking to kind of just be irregular participant in the market.

With it and buying kind of Oh.

On a fairly steady pace.

Pace of share sort of the next 12 months.

We are going to be strategic and Mike.

Don't intend to buy a small amount of shares. So we can have when are we going to decide to do.

What we do is it's going to be on a strategy point of view.

Okay. That's it from me guys. Thanks, very much Mike.

Thank you once again, please press star 1 on your devices keypad. If you have a question or comment. The next question is from Ralph <unk> from 8 capital. Please go ahead your line.

With you from open.

Good morning, Thank you Daniel for the question.

There's a quite a comprehensive tailing strategy being built around jacobina and I'm. Just wondering is substitution of the surface tailings to the highest degree possible to go here, where you're taking more sort of an ESG.

On his narrative or are you coming away with more of a strategic mine life at the increased processing rate of 10000 tons per day, when you're managing the surface tailings capacity.

Good morning, Ralph good good questions.

A lot of strategy behind the 10000 tons per day.

Jack will be now.

We have to think about trading you know we mentioned already that we are going to.

Our goal with another dwelling backfill system to start buying them from that being on this which eventually or ask both also at Batesville system to put more on attaining underground and even though we're studying.

Dry stack.

Standing on surface to have to use less.

That's based on surface and all of that is included in our strategy.

I would like to use as much as possible and the maximum Dx trajectory will attaining and thats, what we have been successful at doing.

At 16.6500 tons per day, we added.

13 years.

16 years of sustaining and mine life, we will increase to 85% and we will have the same because we are going to implement a backfill of the system. So the next step going to a higher tonnage to you at the same strategy. What we can do to maintain our obtaining mine life still increasing the the underground.

<unk> mine life, but putting more maintaining so you're absolutely right to that's part of our strategy to put as much or more more tailings underground or reduce our footprints on surface with attaining we're doing already quite good, but we see opportunities in the future and thats going to be bought.

Underground after a big part of the phase III expansion.

Okay, Yeah. Thank you Ann.

My second question is coming back to some of these wage inflation pressures you talked about the 2 contracts secured would it be safe to say that those are in that sort of.

Plus 2% to 5% range that we're seeing on the industry benchmark.

And specifically when does the Cerro Moro wage negotiation come due.

With the <unk> opinion in the Jacobina this year.

Several model I don't remember maybe yamana.

Danielle on ultra called sorry, yes.

Get back to you but.

Well I don't think it's this year.

2023, guys 23, okay.

So we're 3 years away.

Okay. Thank you that's great.

Thank you Ralph.

Yeah.

Thank you. The next question is from Tanya.

Yeah, Jeff mechanic. Please go ahead from Scotiabank. Please go ahead. Your line is now open.

Hi, Yes, good morning, everybody.

Just wanted to come back on the share buybacks I know.

And you commented on it being strategic I'm, just trying to understand how you view your dividend versus.

Versus your share buybacks dividends about $115 million your share buyback should you do all of it that's over 200 million probably double.

Your dividend I am just wondering how youre balancing that do you have a target in mind that share buyback would be similar to your dividend just fine.

So on the strategy.

Jayson.

Yeah, well I think first firsthand yeah, it's got to start with the overall capital allocation. So we still have a balance across all of those priorities. That's the first kind of point a point of reference and as Daniel said.

With the 12 cents, that's a that's effectively fixed in our mind.

It's sustainable we'd make sure it's sustainable true through the cycle and not.

I was going to be the first priority and then once we look at those other capital allocation opportunities and we can look at the D&C.

So straight duty first and then a little bit.

Components go into the in CIB.

Okay.

On a target within the component that's whatever you well there isn't a target basically where we can't look at just the dividend in and of itself and kind of look at all of the capital allocation I think we've got the transparency on on capital now, it's very well laid out with the 2 projects and Odyssey and what's a Mac now it's spread out manageable on every year.

And we will still continue to chip away at the balance sheet too. So we're going to be balanced across across everything like we have been for the last several years.

Although we mentioned and we mentioned many times that we have like 3 buckets or capital allocation the dividend.

And on reducing the debt and then.

That is.

So they hang on level now that we are very comfortable it will continue to improve so.

At 1 point when does enough cash then we might decide to do it in the D. M CIBC.

It's all included in our strategy we.

We look at all the time to 3 of these 3 buckets and then if there's.

Reaching a level at 1 point, we might we might do.

I mean, you might do with the share buyback.

It will all depend on what happened with so many other factors.

Gold price net.

That we don't control.

Okay, No that's fair enough. Thank you and maybe just coming back to the inflation Anita.

Nida assets I just wanted to come back on you talked about <unk>.

<unk>.

Offsetting this inflation on Jason Thank you for the currencies of 15.20 Bucks.

Due to strength.

The stressing of the currency.

Just for ourselves are you.

The inflation when.

When you looked at all of these numbers.

Going forward in that 3% to 5% range that youre looking to offset I'm, just trying to see if that.

Similar with your peers in that sense.

So maybe just start to clarify the 15 to $20 would be.

Both both FX and inflationary pressures baked together on kind of gave you a 1 stop there. So that's the 2 of them and there it is.

Coming through on on on a component of items, we highlighted a few on or disclosure, but we're seeing the.

The results of our procurement efforts selling lower cost on other stuff. So I think.

That's part of it as well to the extent we are seeing.

Your costs on.

Straightforward stuff about grinding media ware.

Where we're actually seeing lower costs on cyanide by example, because of consolidation work that we're doing so.

It's a bit a bit of both but the net is a little bit more on inflation for sure. So we've got a focus.

On more of those.

Bundling and consolidation opportunities to try to take the edge off of it and then.

Back to our pure operational excellence, so that's more of a.

Productivity avoidance type type approach there so it's a.

We're coming on it from all angles, Okay. So it seems as though you're probably down on the lower end of that.

On a range.

<unk> in terms on what you are seeing inflationary wise, yes for sure that that volume of 3% to 5% I think that fits squarely within the labor component that Daniel mentioned very much within our.

Very much within our.

Planning and then you know on a line item basis, we may see higher than 3% to 5%, but when you when you look at the aggregate.

Work, it's going to come out more to that 3% to 5% range.

Oh.

Great. Thank you so much for the insights.

Daniel.

Thank you there are no further questions registered at this time I'll turn the meeting back over to Mr. Racine.

Well. Thank you operator, thank you everyone for joining us.

We look forward to updating you on our third quarter call in October These day care stay safe and enjoy the rest of the summer. Thank you bye bye.

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Of all of them.

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