Q2 2021 Golden Star Resources Ltd Earnings Call
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Okay.
Ladies and gentlemen.
Welcome to the Golden Star Resources second quarter 2021 results conference call.
At this time all lines are in a listen only mode.
During the presentation, we will conduct a question and answer session. If at any time during this call you require immediate assistance.
Jim Please press star zero for the operator.
Today's call is being recorded on Thursday July 29th 2021, and I would now like to turn the conference over to Mr. Michael Stoner Director Investor Relations and business development. Please go ahead.
Thank you everyone, joining our Q2 results call.
Before I hand over to the team.
Please could you note the disclaimer on slide 2 the presentation is already available on our website and so you could not like a follow on the webcast or with the PDF on the website.
Im joined today by Andrew.
Ray.
Graham crew.
No.
Paul Thompson, our CFO and then Mitch Wassail.
Exploration efforts.
And with that if I could hand over to Andre to commence the call. Please.
Okay.
Thank you very much Michael and good morning.
To everybody if we move onto slide for.
And a quick reminder, that of who we are where we are and also the updated plan.
We put out earlier this year and incentivize the reserve plan.
And the like.
Life of mine extension in the Pea, which takes us up to around 17 year mine life, and we will talk through progress on that plan to work that.
Ongoing and where we believe we are in that respect.
If we move on to the next slide slide 5 specific.
Specifically.
Q2 and performance in Q2.
And as you can see there.
The non that some of the numbers as we highlighted a few weeks ago below target there.
1 or 2 challenges come up during the quarter, which Brian will give a little.
A bit more detail on and which we're making pretty good progress to resolving which is good.
At the same time.
We continue to strengthen the balance sheet, which Paul will go into a bit of day tie alone and.
We're in a good position to.
Continue investing.
And the business to deliver the plan that I referred to from the previous slide.
On the next slide and.
And specifically looking at the ongoing Covid situation I think it's probably.
And these set of results a year ago, where we.
Showing the first quarter.
And the Covid and I don't think anybody at the time, so we'd be here a year later.
And in many ways and the same positions on his regards COVID-19.
There has been and gone or another tick up and cases.
As we've seen and many other countries. So we're back to probably the sort of rates.
And we were up in and February going into early March.
We maintained all of our protocols controls at site and unfortunately.
And <unk> to.
Really minimized any impact certainly we've had no serious illness and no fatalities, which I think is the most important.
And the thing.
And the business has had minimal impact to be at we have seen in terms of logistics for getting people in and out of sight in and out of country is clearly a lot more complicated than it was which has meant some skills and harder to get.
And we've seen that and.
Certain of the operational areas, which particularly affected some of the day.
And then we've had to plan around that so we're working with that but Fortunately from a health perspective.
Minimal impact.
On to the next slide.
Mentioned we've had.
And number of challenges you can see reflected there and.
And the guidance so our focus as we go through this year is resolving those challenges.
This year continue.
Continuing to invest for the longer term future of the business and really exiting this year into <unk> into 'twenty.
22, with the business back on track and where it expects debate.
And with that I'll hand over to Graham.
Thanks, Andrea I think Thomas startup cost cost of slide number 9.
To give everyone a little bit about updates and to the paste backfill system.
And as Andrew mentioned and in the in the guidance update.
We spoke about day, so we had some delays to the commissioning guiding back to Q1 and facts and then when when we pulled the first test site, we have some of the the quality assurance and results come back.
Less than what we would've.
We expected from the from a Tesla.
So we've moved on to doing more test work now and.
And the recent test results.
Coming from the sort of QA, QC and giving us.
Some confidence and moved to.
Third and other tests.
And Q3, which will be happening and the next.
A few weeks and from there what we are planning that we should be able to recommence filling in Q4.
And at this size will be going with a higher cement blends and we had originally planned.
And for that additional factor.
Psyche, and we'll continue to test work to optimize the mix. These on.
As that moves through sorry.
Over the quarter some some positive results from the testing.
And the clear path to restarting that plant. It is contingent on the second test site for performing as expected.
<unk>, but that's that's the current plan to get back on track when it comes to the price spill and mining secondary stopes.
From 2022.
Moving across to the next slides Andrew touched on some of the.
Some of the challenges here.
The mining rate was down a little bit for the quarter that's really.
In the quarter really related to the development.
And we put we've put development in into the slides. This time just to talk about that a little bit more and you can see this.
Step up in development.
From a 2019 through to 'twenty 1.
Q3, 2020 is when we added some additional equipment.
And we were expecting to see that step up with Covid and some challenges around certainly ex patriot operators et cetera.
And that.
That ramp up has been slower than we had planned for.
And then going into <unk> 2 that's that's really the impetus for the.
For the right guidance and and not been our demand and the secondary stopes that we have and the plans. So although the development is stepping up its a little bit behind.
And pleasingly over Q2.
And the.
And the development in June was much closer to the right and we're looking for going going forward, sorry, they'd say and good progress with the development <unk>.
Development improvements at Sot.
Production in.
And in line with.
The slightly lower volumes.
And Greg on expectations.
And moving across to the next slide.
Just looking at and the costs.
Little bit of a step up in costs.
Partly related to the and relatively fixed cost price.
So, although there's a little bit of cost increase coming through certainly from Q2 Q3 last year, where we we had some benefit of some power.
Cost rebates.
And a little bit of cost inflation coming through and and areas such as ground support. So as you were saying the step up in.
It was a little bit more ground support coming through and some increase.
<unk>.
Cost for transport and et cetera, So and logistics site.
Just saying a little bit of cost increase coming through.
Assessing costs it was still still producing from the low grade stockpiles and we're seeing the benefit of.
And that extra tonnage volume through the plant with the processing costs.
On the Opex and oil and sustaining costs.
Yes up upward trends in line with the production volumes importantly, we are continuing with the sustaining capital and the and the investment at <unk>.
Wassa, which.
As we bring up the volumes as we improve those productivity, we expect to see that start to improve.
And with that I'll hand over to Paul to talk about the financial results.
Thanks Graham.
Good morning, good afternoon, everyone.
And contextualize, the key to being a good quarter and from a financial perspective, despite having.
Lately local guidance assume that just under 35% anxious and no.
And as issues, which agreements and get that calculated just by way of note and the.
The purposes of the comparison to Q2.
And the 'twenty I'd just point out this quarter really strong operational and financial performance.
Part of the reason that we had a really good quarter from a financial perspective is due to the macro environment and strong gold price. So.
During Q2 the business realized.
And average spot price of just over $800 and items, so that was $18.7.
At $17.9 post the impact of the Royal Gold stream.
So the business continues to produce strong and robust EBITDA that was 7.6 million for the quarter and a net.
And adjusted EBITDA of $26 million.
In terms of those adjustments from EBITDA to adjusted EBITDA, We had $18.4 million.
So these comprised the following non cash adjustments that we had $700000 for the fair value adjustments on the financial edge.
For months that was lost and hedges of 900000, which was offset by the gain and the convertible debenture embedded repetition of $200000. These are obviously a function of the gold market and the share.
Share price movements during the quarter.
The large item.
Relates to 17.
$17.17 million of other expenses, which relate primarily to the expected credit loss adjustment for the FTR receivable, which will document did in our press release this week and also.
And the teachers with notes within the New York and he can be share there.
In terms.
Earnings per share this was impacted primarily by the expected credit losses, and I've, just explained and respected the $17.4 million adjustment.
Please go to slide 14, please for the balance sheet, so as Andrew was alluding to earlier.
The balance sheet continues to be repositioned to pruritus.
And a stronger more robust base for the business and.
And so recently we have.
Restructured and Upsized and Macquarie facility, and 10, Rcs and not facts and provided additional liquidity to give the business and more appropriate debt structure and as the bedroom.
As the business continues.
To grow and evolve.
<unk>.
With that it's important to highlight that we have conservative debt related to issues here. So just to put that into context in terms of what restructuring our debt restructuring apologies has actually done.
If we cast our mind back too.
T..1 and 2020 day net debt position of 65 million I mean, now actually sit with a net debt position of just a dark for.
2.1 million and.
And so this is being done against the backdrop of.
Significant investment within the business and in 2020 and 2021.
Summing up the author of 100 million that's being invested.
So that that significant investment, but actually benefit assessments and the medium to long term, which is key in terms of this phase we're going through and I.
The key thing for us not in Q3 is that convertible debenture, so that students be deemed until and the oldest.
August 15, 2021, so and 2.3 weeks time, so given the current share price for walking and the assumption that this will be settled in cash which is 51.5 million. So as you can see we've got adequate cash to actually do that and to and to proceed with a normal level of cash.
And the business going forward.
So as part of the it's part of that refinancing with Macquarie, We actually put in place from attractive zero cost collars and terms of hedging program over the P from <unk> to 'twenty, 1 to each 1 and 2024.
So you can see that we've got but lower.
Floor price of 60.
For the night with a ceiling of over 2100.
This is a good range of pricing, which actually helps preserve significant upside and the gold price plus giving cost protection at a sensible level with respect to waxes ongoing development.
And you come to slide 16.
And please.
Cash management is.
A key consideration for the business. So the business ended the quarter, but the healthy cash balance of $72.7 million.
The key points to know and net cash flow bridge for Q2 and as follows. So you can see from this.
For our slow what's a strong operational performance and nice.
We generated over $11 million.
So we're continuing with our capital investment program to underpin the future development at Wassa and.
We spent over $10 million on Capex.
So we're continuing.
And best and exploration as well Super discrete 3 millions and speed.
And during Q2.
And with respect to the financing activities. The ATM proceeds were $5.2 million during the quarter, which were actually January because in April and May and it's not actually been used since that.
So just in summary cash possession is approved again in Q2, 2021, which facilitates continued investment and the business.
So going forward for our focus will be on exploration and development.
With that if I could pass you over to net she was going to cover.
Exploration and geology.
Starting on slide 17.
Thanks, Paul.
And just on slide 17, as Paul mentioned, there are just a general overview of the areas of focus for our exploration programs.
And we spent $3.3 million and this quarter.
And the exploration.
And as dawn and most of the Wassa drilling the up and down debt mineralization from the known reserves, we were busy with 5 drill rigs over all 3 at Wassa. We had 1 at <unk> Suisse, which moved in towards the end of the quarter and we have and airport registered and working on several regional targets up and down the trend.
As I mentioned that the focus is now going.
And we broke out on the and mine area and near mine, which has been completed and a little bit on our retail and stuff on there.
So let's move over to slide 18, and take a look and isometric view of the Wassa deposit as it stands.
We're looking at here is are you looking towards the east and the results, we're looking at everything and borders.
And Q2 results that we've had from the up and down dip drilling and the smaller thought there and see results we've achieved to date.
We're looking at here is and the Red line for the Red Dot and circles are the areas and we're focusing our drilling on the infill on the update for getting us closer and some spacing to follow up on some of them and instantly.
We had in 2020 late in 2020.
20 meters at $6.9 grams per tonne and we're gonna be stuck and 50 meters north and south of that trying to prove that up and to your resource hopefully by the end of the year.
Material and that's down debt that was gonna be tightened up to about 100 dealer space and just to follow up some other down debt material that would be hit below the knee and Vichy.
And the total for the quarter, we drilled roughly 5 games in this area totaling approximately 5000 meters.
And let's move on to slide 19, and I look a little bit more detail on some other sections and some other hits you had on slide 19, what you'll see is the 2 intersections and the whole and fix and whole 8 which actually intersected with.
2 for 2 zone, which is of interest for us because this is part of the upper mining zone and were looking at generating at Wassa and you recollect that we've.
Got rid of the Big open pit and we're looking at mining and material from the open pit from the underground and from 2 areas and 1 of them being the 2 for 2 area. So.
This would be a hopefully and different.
To access that we'd have them for their need and wanting us to get into and underground in a scenario, where we have but and.
Separate to decline and everything going and assets. So that's going to be a focus of us for going off a matter and the other interesting point on this section of intersected mineralization and and whole 6 at depth approximately 160 meters below the.
We should now and what this really demonstrates is that mineralization does continue at depth below the b shoot and it opens up a whole new exploration play force for additional targets to be tested below the main b.
And you should 1 occur is there.
Moving on to slide 20 as another.
Other section I'm looking at intersections.
And are hanging wall zone that was intercepted on and all 7 a M and the 1.
Significant zone of about 17 points for either a proxy of true with it for 6 grams per tonne.
Mineralization is open day and star along strike for the North and South. So that's part of the 100 and infill drilling programs and we're actually going to be looking at for kicking off.
Just now with the 3 rigs at Wassa currently.
Okay, let's move on to slide 21 on a more near mine exploration programs and what we've been doing with 1 other rigs at Wassa, we've been testing several jones and around outside the main zone itself, which is very big on the slide there testing the mid east.
Of our bedroom and 2 zones, which we are known as another big full closure, we've got you stepped and women and men and so 1 of the worst keeping them and mid east and are there.
And the results that youre seeing off and the cable for the right hand side are within the limits and.
And if you're familiar with the geology at Wassa and refine our concentrations and higher income.
And I'll use usually associated with.
But for closures.
No theres a large regional for closure here much the same as we see it the main deposit between the B shoot and the 2 for 2 zone. So we need to do some more work on the.
Drilling that we've done so far to determine to Oliver and the screen and closure responding and between north yourself.
Additionally, we've been drilling at the soft patch and can get switches and fact pitsaw could be.
Last 1 on the left hand side of the picture there and have you been drilling along a major structure, there and Ah intersecting broader zones of mineralization and answered there. So we're going to set for the structure and some of those older.
Alright, and then a little bit lower grade, but we're sort of affected the structure.
And the 5 targets that are within the cash as other currently been deferred till 2022.
And 2 we are pursuing the permits and stuff for reentry into the pharmacy channel, which is currently at the Ministry.
And we'll move on to slide 22, and what's sort of covered lives and that area towards the south which is a really be true and denso concessions.
And then busy down and we currently have a drill rig drilling below soubresaut east pit, which was mined.
And 2014 and that sort of there and the.
Hitting targets towards itself and our projected plunge to the south there we've been busy with the air core drilling Cleveland Hill at about a zone and also found and that's up to and say from so those programs you initially wrapping up.
For mobilizing and.
Relative to who prefer them to be coming into these and follow up for your fleets and stuff.
And it was drilled and the combination of the geophysics and your kids are going to be used for some follow up for next year. We've got some significant hits that are broadly and which is part of Nevada concession, which was approximately 1.
And the leaders at <unk>.
It was a long time line for China.
And that's where I'll summarize and the press release, where you can take a look at the regional or Closeouts for we touch other hit something very wide spacing for drilling which is a quite interesting.
Okay on that note I'm going to hand, it back to him and he can.
Wrapped up there for someone.
And you have it.
Thank.
Excellent thanks, very much Mitch.
So just to conclude on slide 23.
As I said over the quarter, we've had and chat.
And just and I think at the same time as you've just heard we've made continued to make some significant progress in the business with Graham said.
Well on our way to resolving those operational issues that we've encountered.
And getting the operations back to where we expect them to be.
I think that with strength in the business longer time, we've continued.
And to invest and that's.
Rich was saying that we have.
Seen some really encouraging progress in the exploration activities over the front half of the year.
And at the same time, the focus has been on the balance sheet.
As Paul said, it's pretty impressive.
And our net debt from start of last year for <unk>.
A lot of money.
And to the business at the same time, and we're well placed to do.
Deal with the convertible bond, which is 1 of the last pieces and getting ourselves properly stabilized and for.
For pad for a longer time on our financial footing and.
That'll allow us to continue the investment plan, we outlined through the reserve P. I.
Plans and really.
That's a business and for the longer term.
With that I'll hand, it back to Michelle and we're happy to take any questions.
Thank you ladies and gentlemen, we will now begin the question and answer session should you have a question. Please press the star followed by the 1 on you touched on.
And phone.
You will hear a 3 pronged technology and your request.
<unk> will be taken in the order they are received.
You wish to withdraw your question. Please press the star followed by the 2 and if you are using a speaker phone. Please lift the handset before pressing and he keeps.
First question comes from Bryce Adams of CIBC. Please go ahead.
Hi, Good afternoon, I have a couple of questions on the price test work and and development right.
Firstly on the price test.
What are the tests are being completed in Australia that cannot be done.
You are free is that compressive strength tested and cost testing of chips or is it something much more involved with that.
And it gives us both for questions price and then I guess that probably bites are growing but and then we can do with them both together.
Yeah, that's a pretty good guess these will probably go to all to.
And <unk> sorry.
For a follow up on that 1 I guess just to clarify and 1 was.
And maybe a reminder, about.
Underground Shockwave at Wassa, and Theres, no shock grade underground and from my memory.
And then I'll move on to the development right. I was just wondering if you could remind us on the number of.
Jumbos underground how.
Many jumbo crews are working and the average and.
The average development rights that they achieved per month, and then just building on that 1 from the development of the for 95 level.
And I think he said the level access has developed and I was just wondering where the prices where it now is that in the footwall drive or.
Brian and bought it on any all draws.
And what.
What would be the total development meters for the entire for 95 level.
And is that indicative of other level that has the footprint and increase our slot.
Slightly with the next level.
I think our I think that's what I've got now, but maybe there'll be something more that comes out of other anthos.
Thanks, Brian.
Yeah, Greg and I think over to you.
And that's quite a list of questions brought how are you.
On the test what are they.
And he led testing that can be done in Australia that can be done at home and garden are and that's why we're working with price.
And 1 field services and units.
And where more until the other for.
It's valuable.
By a price experts and.
And I have worked with a lot of price plants around the world. So really that's about optimizing the mix of these on site.
We'd always planned that there would be.
And opportunity to optimize the mix. These on down the track alternative bond is et cetera, what we saw and the initial test work was.
A high a degradation of strength over time.
And and it certainly.
And certainly at the lower and the plant cement volume days less so at the highest and then Brian sorry.
Which is why we're going for a higher cement now so really their role is about optimizing the mix and so on and ensuring that our testing and is consistent across the board.
And.
So that's that's the first question second question is on underground shelf price. So we now have that as part of the price claim and commissioning we now have a batch plants on site.
And so creating equipment for wolves barricades et cetera. So that's that's now part of the Wassa.
Arsenal if you like.
No plans to use that for ground support.
At this point and time.
Jumbos. So we have we have for frontline jumbos and.
And we're looking at 800 odd Nato's amongst.
And of those antibodies for frontline jumbos.
And getting all of those men and consistently with Covid long rosters et cetera has has been a challenge and I think other people have suffered from that challenge.
On the phone on 5 development for.
Plug and play.
Relatively typical level as we come down and the the plunge and what we see at Wassa was relatively consistent.
At the moment, we're focusing on what will drive.
From.
From there we will.
For all.
And on from and tends to be certainly and the.
And in the and a crosscut areas tends to be more adjusted time sorry for.
The primary focus on for 1.5 is to get the whole development inside that week and then develop.
And just like accessories as we guard.
But actually credit.
Yes, I think that's it I guess I'm coming out of that it's interesting that you've got the Shockwave fleet on saw it specifically for <unk> and barricade.
It sounds like if you get the.
Price plan and the price still working properly and.
Resolve.
Developed issues, they may be and opportunity to do in soco and.
And support.
At a future day.
Well certainly for us and certainly that's potential its not 1 that we saw and it's not 1 that we've done a lot of work on them.
The the the capacity.
<unk> is built for doing barricades and walls.
But it is it is potential down the track, especially as we get deeper.
And at the moment Wassa and draft conditions are still good at you know as you've seen them and you know I split sets and mesh and most areas or are you know pretty.
Strength and much what's required.
Yeah coffee debt.
Good luck with the second test start we'll be watching for update thanks a lot.
Thanks Ross.
Yeah.
Your next question comes from Raj Ray of BMO capital.
Pretty well.
Please go ahead.
Thank you operator, good afternoon, and Andrew and team and I.
And I've 3 questions for Prime and the first question from.
And <unk>.
The amount of for open pit stockpiles for you do you expect for the second half of the year and.
Q2 was significantly higher than what you had guided at the beginning of the year.
Second question was a follow up on the paste fill with increased cement content and give us some rough idea about how much cost increase you expect as a result of that and.
And my third question was on.
The balance sheet and liquidity now.
March and moved it doesn't seem to be any concern and certainly I don't see any concern, but 1 other question I had was with respect to the $30 million revolving credit facility and you do have a cash call them and so where do you need to maintain a minimum cash balance from $35 million to be able to draw down on debt.
So and his dad.
And that and something that could cause a bit of a challenge. So yeah. That's those other 3 questions for now.
Thank you Ron and I think.
Graham and for the first to see you then move us to pool in terms of the Macquarie facility.
Yeah, Hi.
Hum on the Arts and pit stop pause we were.
We've got stopped Paul to that will last through to the end of the year it might be might be a little bit into next year sort of onto the 0.6 Gram material now and and.
And the and the harder to get to.
Kind of areas sorry, Yeah. We we just took the wall the underground volumes were down a little bit and you know we work yeah. We're looking at the second half of the year, we took the opportunity to get some of that material through and and bring that cash flow and essentially so I will continue to do that.
Other hydro too.
Yeah give and ask stoping is going to be a little bit restricted until we can get the price Phil.
Going and the development.
Far enough ahead.
I think that'll be that'll form part of the strategy and heightened too as well.
In terms of the cement increase.
Good question.
Sorry, we.
And we guided at the start of the the price.
Paced adds about 5 to $7 for ton miles.
Through adding that price so roughly half the cost.
Yes.
And that's or bond across and going with.
Question by some in percentage so I, so if we say that for.
$3 becomes and we got from 6% average to 10% and at least initially and that trade the losses to make costs and it becomes $4.50 and.
And to use very round numbers say about you know about a 50.
For the whole increase and the cement costs, which as you know it might be $2.50 to $2 to that to that mining cost, but as I said, we will continue to work on optimizing that that mix is on for.
Alternative bond is.
Certainly full and part of that.
And.
Percentage of about some of that'll be about getting the logistics and place for fly ash or whatever that alternative bond a 10 day after day.
Which will really help the guy the strength degradation issue that we saw in the and the quality assurance work.
Thanks, Pam hopefully that answers to take questions.
And those things.
Thanks, Hi, Robin maybe yeah took for the covenant and cash covenant.
Yeah, Thanks, Roger and it's a good question and there are there are 2 factors just to perhaps management space and it's Paul.
So we've got to grow a bank, which you're quite right and identify stock 5 million. So.
We've been watching that very very closely for obvious reasons. So C.
And we are very comfortable and turned to being able to get to that position. So we've got quite a bit of headroom. There I can't tell you exactly what it is but suffice to say that there is sufficient headroom there to allow us to do that without any pre.
And then after that we have the ongoing.
Covenant in terms of the minimum cash possession. So it then goes to $25 million in terms of the ongoing cash position, we need to me and we actually need to maintain as a minimum.
Yeah.
Okay.
Sure. Thanks, Paul.
And Andrew if I may just a follow up question and probably this is for Mitch.
Wanted to near mine exploration and the regional exploration targets and.
And given the drilling and that's been done to date and what's remaining for the for the year.
Can we expect.
And initial resources and I know on any of the targets or is it just too it's still too early to expect everything right and up there.
Okay.
Ah well, what we're doing right now is starting on the and <unk>.
Infill programs themselves.
Depends on drilling and production right. So we're looking at getting that stuff organized.
Kickoff the resource estimation process in August so what we have is depending on how many drill results. We have it will be able to incorporate some of those drill holes into the actual updated resource day models, but realistically, we probably won't have all other holes in there. So a portion of that would be incorporated into the.
And a resource update for this model, but I think realistically, we'll probably have more of that and the 22 and updates.
And between the targets to meet you highlighted and the slides 21, and 'twenty, 2 which ones would you say are most prospective and most advanced.
Once and for most advanced at this point and time.
We're looking at the Oh for them for the near mine and when Youre looking at Washington, and looking at Yeah.
And your mines and then the regional.
Yeah, I would say the most advanced ones, there's probably going to be the mid east and that matches because we do have a lot of drilling that was done.
And the open pits and their their own historical open pits from there so we.
Have to sit back and sort of assess what's going on as far as the structure is concerned because it was very wide spacing drilling spacing and that's at least was over a half a kilometer and debt notes, you'll I think it was a couple of hundred meters and between drill fences here. So there's still a lot of room for.
Further interpretation and then we're going to think of what we're gonna have to do there for the next phase of drilling on it but I would say that that.
Resource updates and those particular areas are probably at least a year out from now depending on how long you hit it and what targets would come up with.
Okay, and then the regional and stuff.
Regional stuff well, we've we've had some good hits already but this is just.
Like I say, we're drilling 400 meter spaced air core line.
For a ways away from that and that we're gonna, London, Gatwick and on the IP and stuff for the better targets. We've got there and that'll help guidance for the next phase of drilling so we'll depending on expenditures that we have for next year's budget for 2022.
We will be focusing obviously on the best targets, which is probably going to be the stuff at Clinton Hill and adapt our guar.
And Queen Hill is important and there's a lot because it's already within the pencil mining lease. So you wouldn't be looking at permitting issues and stuff for their it's already within our line and myself, we can accelerate that that would be 1 of the price targets to bring something on that earlier than later what are the other ones you still have to look at drilling and the new permitting process and stuff that would have to go through we should we be successful.
Good day.
And so that's it from me thanks Andrea.
Thanks, very much front.
Your next question comes from Jeremy Hoi of Canaccord. Please go ahead.
Hi, everyone and thank you for taking my questions.
Most of my.
Questions have been answered already but.
But just back to development quickly and I'm wondering you know are you guys anticipating.
That 2022 production will be impacted at all at this point or are you pretty comfortable that you guys will be able to catch up in H 2.
And Jeremy maybe Greg and John will touch on that.
Yeah. Thanks, Thanks, Andrew Thanks for the question Jeremy.
I think the.
Development development is definitely a key to us building inventory and building flexibility, but the other key is getting the price Phil.
Back on line size, they probably out 2 key operational projects at the moment.
Over and above production, because that's really what unlocks the value and 2022 site getting the price fuel operating and Q4 its debt.
6 months.
And where we wanted it to be when.
Thank you and he started commissioning and apply them to the side of the year and it should unlock a lot of that secondary site materials into 2020 total side.
And we agree rejigging.
And all of the schedule side.
Getting the development rights up getting the high school back on track and those things should.
And we should unlock 2022 pretty well.
And I think just to underline that Jeremy.
The what we've got under way as Graham said and development, where we're starting to.
More consistently hit the rates that we targeted some of.
The strength tests coming back out of the place Phil is all aimed at containing those issues to 2021 and so we exited the year.
With effectively resolved.
We're going to obviously continue to optimize the pace, we're going to continue to target further increases and development rates, but.
To go beyond 2022, and up to achieve what we set out in 2020.2.
Got it thank you very much so and in and sales or both.
Both the critical path at this point.
Yes.
Yes.
Thank you.
Thank you.
Yeah.
Your next question comes from Don Demarco of National Bank. Please go ahead.
Well, thank you operator, hi, gentlemen, good morning.
And I'm curious about what what additional levers you have for improving our balance sheet and the event that they're needed.
I think we're all feeling pretty comfortable about the converts coming up and repaying.
Repayment next month.
But and are you done with the ATM.
And and what else could you draw upon and if necessary.
They burn a little bit of cash and the back of the year and you need some additional buffer heading into 2020.2.
Thanks.
And maybe hand, although you might think.
And there's a slide you want to refer to and pool that shows the liquidity available and just address specifically, how we're looking at that.
Yeah, exactly so gone now and slide 14, you'll see that we've put any liquidity in terms of the claims from available liquidity available to the business. So we've got the cash.
Cash and currently at 73.
The remaining ATM capacity ultra shocked he said she'd be choose to grow that day and then this day $29 million net available.
Available and respect of Macquarie.
And Rcs.
Let's say so.
There's a number of options and <unk>.
Terms of providing that and additional liquidity going forward the zone.
And the fact of operating within a stronger gold price environment. So you know prevailing prices.
Losses, actually obviously very beneficial to us.
Okay.
And maybe you don't just to underline that you know the way we look at at the moment is.
On the basis that the plans, we set out and we put a fair bit of detail out in the P. I, even at lower gold prices and this business will from those I think as Paul mentioned earlier between.
And it gives us share for this year.
And the best part of 100 million capital put into the business.
And where you would say reduced the net debt by 50% and go.
Going forward, we can.
Start to see some of the benefits of getting the development and place where they need to be and tons of volume. So that's going to.
To improve the cash generation out of the business, which will then from incrementally step ups in investment to deliver further increases in volume and so as we look at it backs for business.
From those from ongoing cash flows and you know we'll use from Macquarie.
Between line facility, but that's what we need short term to repay the convertible was and then well funded and ongoing.
Ongoing basis investment into the business.
Okay.
And that additional color that's all for me.
Thanks, and thanks Don.
Ladies.
And gentlemen, as a reminder, should you have a question. Please press the star followed by the line.
Mr Ray and there are no further questions at this time. Please go ahead.
Thank you very much.
Thank you.
Everyone for your time and if there is anything else you need please let us know and we'll get back to you and look forward to speaking again soon thank you.
Ladies and gentlemen, this concludes your conference call for today, we thank you for participating and ask that you. Please disconnect your lines.
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