Q2 2021 Eldorado Gold Corp Earnings Call
[music].
Thank you for standing.
Okay. This is the conference operator, welcome to the Eldorado Gold Corp, Q2 at 'twenty, 'twenty, 1 and financial and operational results Conference call.
As a reminder, all participants are in listen only mode and the conference is being recorded.
After the presentation, there will be an opportunity to ask questions.
And by who joined the question queue. You May Press Star then 1 on your telephone keypad should you need assistance during the conference call you may signal, an operator by pressing star and zero.
I would now like to turn the conference over to Lisa Wilkinson, Vice President Investor Relations. Please go ahead Ms Wilkinson.
Thank you operator, and good morning, everyone I'd like to welcome you to our second quarter, 2020.1 conference call on.
And on the call today, we have George Burns, President and Chief Executive Officer.
Joey Executive Vice President and Chief Financial Officer.
Joe <expletive>.
Decorative vice President and.
Operating officer, and Jason Cho Executive Vice President and Chief Strategy Officer.
Our release yesterday details, our 2021 second quarter financial and operating results.
It should be around in conjunction with our second quarter financial statements and management's discussion and analysis.
Chief of which are available on our website. They have also been filed on SEDAR and Edgar.
All dollar figures discussed today are U S dollars unless otherwise stated.
We will be speaking to the slides that accompany this webcast you can download a copy of these slides from our website.
Before we begin I would like to remind you that we will be making forward looking statements during the call. Please.
Please refer to the cautionary statements included in the presentation as well as the risk factors set out in our annual information form I will now turn the call over to George.
Yeah.
Thanks, Lisa and good day everyone.
Here's the outline for today's call.
I'll provide a brief overview of Q2 results and highlights before passing it to Phil to go through the financials.
Joe will follow by reviewing operational performance and then we'll open it up for questions.
And the second quarter, we had strong project and operating results and kiss FM to groom and Lamar.
However, olympias was affected by work slowdowns as we progress our transformation efforts at the Cassandra mines.
We continue to be on track for 'twenty, and 'twenty, 1 production and cost guidance.
And our transformation focus on increasingly increasing productivity across the Cassandra assets, which is essential to create value.
We are actively engaging with our stakeholders on this initiative and we are confident with their cooperation we will make meaningful progress.
Joe will discuss our transformation plans.
Sound reminds and more detail later on the call, but first I wanted to touch on a few highlights.
During the quarter, we reduced our debt and maintain our strong liquidity position, while investing to grow our business.
We ended the quarter with a cash balance of $410 million and our balance.
And that continues to emerge as a major strength.
It will enable us to fund growth and maximize the opportunities ahead of us.
And the second quarter of 2021, we successfully completed the acquisition of <unk>, which significantly increased eldorado position and the Abitibi greenstone.
Sheik and is consistent with our strategy to invest and world class mining jurisdictions.
The addition of QM matched to our portfolio opens a range of opportunities to expand our activities and the region and to leverage our existing infrastructure and Eldorado strong operational exploration and stakeholder.
On Belder expertise.
Shifting gears on looking ahead to the second half of 2020, 1 and into 2020..2 we have several upcoming catalysts that I will discuss on this slide.
Starting with Turkey, and commissioning of the high pressure grinding roll circuit at Casa that is now scheduled to initiate.
At the start of Q4.
We expect the HB, Jr to increase gold recovery by approximately 4% and enhance the already positive results achieved with the CIC trains and the new carbon regeneration kiln that were completed and the first half of the year.
And Canada.
Mark the decline and connecting the Sigma mill with a triangle underground mine is progressing on schedule and is expected to be complete and the fourth quarter.
Work continues to progress on the remark P. A with expected completion and the first quarter of 2022.
We've taken some extra time with this study.
Study is our operational performance has improved and exceeding nameplate at the mill.
As a result, the <unk> will reflect the optimization of the asset.
Moving on degrees.
The updated feasibility study for Sirius continues to advance and we expect to completed and the fourth quarter.
And that schedule is largely driven by our focus on capital discipline with respect to the additional scope for infrastructure related to legislative changes.
And that change impacts on water management and inflationary cost pressures.
The study will support our process of finalizing financing and a decision by.
Management, and our board to restart construction for this world Class project.
With the timely completion of construction in 2 and a half years low cost production from Sirius represents significant upside and our current 5 year production profile.
In parallel we are also working towards submitting and updated.
The IAA for the Cassandra mines in Q.
To be clear the update of the IAA will accommodate future olympias expansion and.
And as for total import modernization.
Finally, a parameter hill and updated technical study remains on schedule for completion in early 2020.
Data too.
In parallel with the steady work, we will be working with regulators to efficiently permit the project leveraging our recent successes with the recent amendments and a Cassandra EIA for the use of dry stack tailings.
We continue to monitor cost and capex inflation across our operations.
Actions and Turkey inflationary pressures have been mostly offset by the weakening euro.
In Canada.
Mining project activity has picked up and the Val Dor area, which is putting pressure on our contractor and labor rates and COVID-19 has impacted supply chain, causing minor shipment delays.
'twenty and June we released our 2020 sustainability report, which showcases details of the sustainability framework and our ESG performance.
We achieved our sustainability targets, which included developing a sustainability integrated management system, having zero fatalities.
And zero environmental and regulatory noncompliance incidents.
And we originally targeted a 10% reduction on our lost time frequency rate and in fact, we reduced it by 43%.
We also aimed at a 10% reduction and our total reportable injury frequency rate and surpassed.
Paul there are 2 by reducing it by 27%.
We continue to focus on safety improvements with a strong emphasis at the Cassandra mines as part of our transformation efforts.
Our system, our sustainability framework is our foundation for how we approach responsible.
Simple mining.
And articulate our 4 key pillars that our commitments across environment, social and governance indicators as follows.
Number 1 first and foremost safe inclusive and innovative operations.
Second engaged.
On a go prosperous communities.
Third.
Responsibly produced products.
And finally healthy.
And now and for the future.
This slide highlights from our 2020 sustainability report grouped under each of these 4 pillars of our sustainability.
The framework.
I am very proud of and for achieving these successes and delivery on our commitments. We believe we will continue to be a preferred partner for our host communities and countries and have the access to capital to grow our business to benefit all stakeholders.
With that I will turn things over to Phil for a review.
First and second quarter financial results.
Thank you George.
Good day everyone.
Starting on slide 7.
We had another solid quarter of operational results with production and cost both in line with our 2021 annual guidance.
Revenue.
Revenues were consistent with plan and expectations.
Supported by strong sales and an average realized gold price of $835 per ounce.
Free cash flow was lower in the quarter due.
Due to the increased growth capital spending increased tax cash payments.
And the timing of ROI.
<unk> and interest payments we.
We expect free cash flow generation to improve and the second half of the year.
Eldorado reported a net loss attributable to shareholders and Q2.2021 of $55 million or <unk> 31.
<unk> per share compared to net earnings of $49 million.
Our 29 per share and the second quarter of 2020.
After adjusting for onetime nonrecurring items, including a 99 million noncash impairment of the token casino project among other things and.
Adjusted net earnings for Q2.2021 increase.
<unk> increased to $29 million or <unk> 16 per share.
And increased from $24 million or <unk> 14 per share and Q1 of 2021.
Cash operating cost in Q2, 2021 average $645 per ounce sold and.
And increase from $550.
And Q2.2020.
The increase was primarily due to lower grade ore mined and processed that kiss a day <unk> and olympias.
<unk> and fewer ounces produced and sold.
These increases were partially offset by a modest reduction and cash operating cost per ounce sold and <unk>.
As a result, and a weakening Turkish lira, and a change and the structure of concentrate contracts whereby lower payable ounces are offset by the elimination of treatment charges and other deductions.
All in sustaining cost per ounce sold.
Average $174, an ounce and Q.
Q2.2021.
And increase from $859 an ounce in Q2.2020.
Primarily due to the increase in average cash operating cost per ounce sold.
Higher royalty expense at <unk> and <unk> grew as a result of the 25% increase to gold royalty rates.
Effective from September 2020.
Higher royalty rates at Olympias and effective from March 2021, following the ratification of the amended investment agreement.
And higher sustaining capital expenditures.
Capital expenditures in Q2, 2021 were 72 million.
Compared to $37 million and Q2.2020 and.
And $64 million last quarter.
This reflects a planned increase and growth capital spending at <unk> and Mark.
Capital expenditures at the Cassandra minds, and Greece are lower than expected and the first half.
'twenty 1.
A result of our ongoing transformation work.
We are focusing on rigorous capital discipline across our portfolio of assets.
And we will specifically be looking at capital allocation more closely at the Cassandra minds as we progress through our transformation efforts.
Over the remainder of 2000.
'twenty, 1 and into 2022.
And as a result, we expect capital expenditures at the Cassander mines to be at the low end of our guidance range for the year.
Tax expense decreased to zero point and $1 million in Q2, 2021 from 25 million.
'twenty, 1 and Q2.2020.
Mainly driven by the investment tax credit received in Turkey, and Q2.2021 related to Kiss a day heap Leach improvements.
The investor the investment tax credit reduced the corporate tax rate.
Resulting in current tax savings of $22 million and the second quarter.
As we typically pay quarterly tax installments on a 1 quarter lag.
We expect a lower tax expense in Q2.
2021 to result, and lower cash tax payments in Q3.2021.
This difference also led to high cash tax payments in Q.
Q2, 2021 of $27 million.
As a result of the higher increase current tax expense that was reported and Q1.
Depreciation expense totaled $51 million, and Q2, 2021 compared to $53 million and Q2.2020.
Which has been recast.
And as a result of the correction of an immaterial error related to the prior year's depreciation.
The decrease in depreciation this quarter reflects lower sales volumes.
We are forecasting full year 2021, depreciation expense to be and a range of $200 million to $215 million.
And moving on to slide 8.
On financial position, we continue to focus on maintaining a solid financial position, which provides flexibility to unlock.
<unk> for our portfolio of assets.
At quarter, and we had unrestricted cash and cash equivalents and term deposits of $410 million.
We made a $50 million repayments on our revolving credit facility during the quarter and response to the improved circumstances pertaining to the COVID-19 pandemic.
As a result, we now have approximately $150 million undrawn and available under our revolving credit facility.
We also completed a scheduled payment.
And $2 million on our term loan.
Which now has an outstanding balance of $100 million at the end of Q2.
Our net leverage ratio is at 0.08 times.
As at June 32021, compared to zero point and 4.6 times at the end of the second quarter of 2020.
2000, and this reflects a much improved credit profile for the company.
And reiterating George's comments earlier, our balance sheet continues to emerge as a major strength.
With that I will now turn it over to Joe to go through the operational highlights.
Big scale and.
Good day everyone.
Our second quarter operating performance continued to be strong and and we are tracking in line with our 2021 annual guidance range of between 430.460000 ounces of gold.
And I want to take.
I want to say per team for their hard work over the past quarter and achieving these results.
As always the foundation of our production performance is our health and safety culture, we continue to be a fatality free organization since Q3 of 2017 and several sites and functions have completed more than a year and from multiple years without a lost time injury.
We produced 116.
<unk> thousand 66 ounces of gold and the quarter and cash operating cost of $645 per ounce sold and all in sustaining cost of $1074 per ounce sold.
As Phil mentioned earlier capital expenditures were higher in Q2, 'twenty, 1 compared to last quarter and last.
Last year, reflecting our planned increase and growth capital spending at cost for that and the Mark.
We're focused on disciplined capital allocation across our operations.
And specifically, we will be looking at capital allocation and more closely outer Cassandra minds, and Greece as our transformation efforts continue to progress.
Starting with Turkey, just sit on our second quarter gold production totaled 44016 ounces at cash operating cost of $529 per ounce.
The commissioning of the high pressure grinding roll circuit and are scheduled to initiate at the start of the fourth quarter.
As George mentioned, we expect the H P G.
ER to increase gold group by approximately 4% and enhance the already positive results achieved from the CIC trains and the new carbon regeneration kiln and completed in the first half of the year.
We're also progressing well on our multiyear pre stripping campaign and studies are actively underway.
Underway to assess the potential for accelerating this work to bring value forward. It just for that.
Work continues on the north heap Leach pad construction.
We can continue to be on schedule and completion of phase 1 and as expected mid 2022.
Yeah.
Over the FM to growth.
Second quarter gold production totaled 23000, and 473 ounces at cash operating cost of $520.525 per ounce.
Our recently installed flotation columns continue to operate well as we continue to evaluate optimum ranges.
Has resulted and will continue.
<unk> result, and significant improvements and the quality of our gold concentrate.
And 2 group continues to deliver quarter after quarter with a strong track record as a safe and reliable operation.
Turning to our Canadian operations second quarter tons and grade of the Mark continued to continue.
Labour to plan second quarter gold production totaled 35000, and 643 ounces at cash operating cost of $658 per ounce.
The underground decline between triangle and the Sigma mill is progressing on schedule and we expect completion and the fourth quarter.
We expect to reduce operating cost upon completion of the decline is surface haulage cost are eliminated and the current up ramp underground group is replaced with straight line haulage to the Sigma mill.
At Arm Act early infill drilling results for this 800000 ounce made and gold resource has been as expected.
Preliminary mine planning studies are underway to assess the initial scope of this resource with them from a mark operation.
Once completed the underground decline will enable the team to drift over the deposits and gain additional information to integrate this promising new discovery into future mine plans.
Work continues to progress on Mark P E and we expect completion during the first quarter of 2022.
We've taken some extra time with this study as our operational performance has improved exceeding nameplate at the mill and the T able to better reflect the opportunities and optionality to assets, giving us the.
The opportunity to view capital with a longer term outlook as we evaluate and the context of a much larger land package.
Over to Greece.
At Olympias second quarter gold production totaled 200.900.
And 34 ounces at cash operating cost of 230.
Dollars per ounce.
Earlier this year, we initiated transformation efforts at the Cassandra minds focused on increasing productivity, which is essential and realizing the full potential of these assets.
Transformation is key to underpinning investment and longevity of the Cassandra mines.
And.
70 happy to see our Union partners now taking part in this effort and understanding the importance of our transformation plan and.
And we'll talk about transformation.
A bit more in detail on the next slide.
First I wanted to touch on per M. A hill, where and updated technical study remains on schedule for completion in early 2000.
Unless you.
We also continue to see great exploration potential and the Thrace region supporting opportunities for growth in and around per M of Hill.
And in parallel with the study work would be working with regulators to efficiently permit the project leveraging our recent success and amending the Cassandra EIA for.
20% of dry stack tailings.
Now, let's move on to our transformation initiative at Cassandra mines, which we briefly discussed a few months ago, and our Q1 conference call.
And wanted to take this opportunity to provide a few additional details.
Essentially the transformation work.
And.
Greece is a sustained to optimize the Cassandra minds.
Purchase on every part of the business and Greece, including employee education and training.
Physical plant upgrades business system upgrades and leadership.
The overall goal is complete and increase productivity and operating safely.
<unk> economically and a globally competitive levels.
Implementing this scale of changed and an existing operation like the olympias is challenging and entails risk, which we have planned for as part of the transformation work.
We expect this effort will lead to sustainable continuous improvement and value delivery as we move into 'twenty.
2022.
The long term benefits and safety culture, and productivity will result, and a stronger operation with greatly enhanced economics.
We remain committed to responsibly developing the Cassandra and minds to create value for all stakeholders. This includes job creation and <unk>.
And the local communities.
These and opportunities for local suppliers, while maintaining our high environmental standards.
And I'll turn it back to George for closing comments.
Thanks, Jim.
With strong operational results from the first half of 2021 and numerous upcoming catalysts expected and the second half of the year.
Eldorado remains well positioned to deliver on our growth plans and create value at our assets. Thank.
Thank you for your time everyone.
And we'll now turn it over to the operator for questions.
Thank you we will.
And now begin the question and answer session to join the question queue.
Press Star then 1 on your telephone keypad.
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The first question comes from Cosmos <unk> with CIBC.
Please go ahead.
Alright, Thanks, George So Joe and team.
And my first question is in Greece.
As you talked about you're working on the transformational work optimization.
Of the Cassandra and mines, you don't say olympias, usually sandro because I would imagine you're looking at it from the entire Greek operational.
<unk> level I'm, just wondering you know as you kind of walk through how you can optimize olympias are there any benefits.
And that you.
Foresee for scarious as well and is that in part why you know you've undergone this plan in terms of transformation optimization and then the second part of my question is is there a target that you're trying to get to.
Before you make no further commitments to scare.
<unk> and how are some of these this optimization and we're gonna be factored into it and to your feasibility study that's upcoming force carriers.
Thanks, Cosmos, Hi, Joe I'll start.
I'll, let Joe jumped in with some details so.
And we refer to Cassandra because thats our subsidy.
Subsidiary that holds the assets of Olympias Securities project, and our amount of steadfast with Tony operation, which is a.
Kind of immaterial base metal operation.
And the primary focus is definitely on Olympias, that's where we're currently producing and we have an enormous opportunity.
He is to reduce cost and increase productivity and create value.
But youre right were also and in the early stages of preparing for construction and series and.
And we're looking to make improvements across all of those assets underneath Cassandra and.
And with that I'll turn it over to Joe to give you some more details on transforming.
Jim.
George first and kind of relation to the.
Squamous Olympias relationship Cosmos I think.
And certainly work and safety culture, and those things are very similar between both sides for Scott here since it is a different operation.
Open pit more technology, maybe the the kind of the productivity.
<unk> on directly transferable, but a lot of the cultural items are and that you know that pertains to our entire workforce, including and <unk>.
Our staff and our miners.
We're.
For me and I'm pleased that we have experienced miners.
At Olympias and they know their work I think our biggest challenges is really.
And the introduction of management operating system and and.
Our culture of continuous improvement and as we look to.
And really.
Optimize.
Our short range plans, how we convert those plans too.
Executable shipped plans, how we manage the ships on a on a short interval control basis, how we feedback at the end of the day on performance.
Those are those kind of things haven't.
Really all down on and on an ongoing basis and we've introduced all of that.
In addition, we've looked at the mining cycle from.
Drill and blast and the.
Types of rounds.
And the length and Browns and we have all of that along with Paul cycle times.
And our hope and productive time cycle.
And in the mine and a set of Kpis, which are labor partners are reviewing with US now on a on a bi weekly basis and so we're pleased about that.
We've kind of put it in a 2 day.
2 tiered.
And our.
First this week.
Haven't been and our.
Work to get ourselves to a first step and olympias growth to around 530000 tons and them to 650000 tonnes. So we've kind of phased that out through some benchmarking and other things as to looking at similar mines, how they perform and.
Some booking to be kind of and that average performance range from where we are today. So.
Which is a bit of a step and I and I think it boils down to mostly productive time and shift utilization.
But there are many other factors around technology.
And perform.
Performance on them and.
Hum.
Safety.
On our business plans and other things and.
I've mentioned that we are and the process of introducing dispatch and helping.
Helping us with ship control and historical data and so there's a lot going on.
But we're pleased with.
With the.
Work, so far and you know, it's a lot of change, but but necessary change.
Yeah for sure. Thanks, Joe that's really helpful. Yeah, and you know I guess more specifically on the scariest here.
As you mentioned you know Q4 are you expecting a feasibility study.
I think in the past George you had talked about potentially.
Finalizing some kind of joint venture partnership.
By 2020, 1 as well is that still sort of potentially the timeline and then the second part of my question is I see that per scarious.
You've done about 2.
And to tell them $8 million in terms of Capex.
I believe your full year guidance was $25 million to $30 million.
You.
Are you still expecting to hit those numbers for full year are you.
As some sort of capex delay due to COVID-19 could.
Could you maybe comment on that as well.
Sure.
So for series the schedule slipped a little bit we at the beginning of the year expected to get the feasibility study completed in the third quarter to support progress on financing and the fourth quarter and now we're looking at early Q4 to finalize the feasibility.
Ability study and Thats, probably going to push the financing evaluation into Q1 next year, so a little bit of slippage and you know in terms of why that occurred and we're full.
Focus to ensure this feasibility study.
Is updated and it gives us.
Good estimate of schedule and.
And no there hasn't been some changes and both EU and Greek legislations that are being baked into this feasibility study. We've also taken a fresh look and climate change and the impact on precipitation to ensure all of our storm water management facilities are adequate. So there is some changes happening in that regard.
Cost modest, but things that we need to to have our hands completely on.
And then and in terms of.
Our strategy on how we will fund the construction of <unk>, we're still believing that a joint venture partner at Cassandra level.
Is the optimum optimum strategy and.
And a couple of factors for that 1 we're looking for some strategic partners that can bring influence and expertise to the development of the Cassandra assets. So that's 1 and 2 and equity injection that would.
Position us, we think and on optimum.
For our overall portfolio as well as our balance sheet and and delivering on the B and the.
And the outstanding upside we have with these high quality assets. So that still remains a primary strategy, but we're obviously looking at every alternative for financing.
And the project financing potentially streams.
And we're taking a broad look and and in terms of schedule, it's probably going to slip into Q1 of next year, but still remain confident these high quality assets.
And we'll be able to deliver significant upside to our current 5 year guidance.
Yes sure.
Yes.
George.
So a couple of comments on on Cosmos question about.
Capital outlay and scores this year.
And will likely be a bit under cosmos.
Certainly.
Mobilization and getting the owner's team together all of those together adjustments and schedule and.
And just the we had some preconstruction activities that.
Were planned and.
And some modest construction work that we were to get going with this year, but that all kind of times with the <unk>.
With the owners team and and.
Preparing to be able to execute so.
We can still.
And then as we move further into Q3 and into Q4.
We will provide more information on another month 6 weeks down the road.
Great and then maybe just 1 last question here as we wrap up the discussion and Greece, Joe as you talked about as you engage on.
And these different stakeholders and Greece.
Any concerns about potential strike risk well and kind of.
Labour risk and then the second part of my question is it all for Scarious what.
What are you assuming right now in terms of labor productivity and you're currently assuming kind of current level of Olympia.
He is productivity or have you factored in and some upside to it.
So on the first question.
There is there's always a risk, but we're confident that at least at this point that.
And we'll find workable solutions with our labor partners regarding.
<unk> ongoing work slowdowns and and potential work stoppage.
And that is.
Focus as we move through this quarter.
You know as far as the kind of on the mine productivity and that kind of information that come on with that kind of transfer that comes over it's it's.
It's kind of apples and oranges and.
And the Brown and work yet.
Just curious is is quite different than that and olympias.
So they're not directly transferable, but we are and that kind of.
And globally competitive from.
Type productivity.
For planning, a serious and and both and in pit and underground, but but we're not at all.
You know kind of on the on the optimistic side, we're kind of metal on the road.
Of course.
Thank you for that final question on that.
Yeah.
Yeah, I might just add something.
Supplementary comments, so I mean overall as Joe mentioned, we're aiming at kind of globally average productivity rates for mines similar to olympias and.
And as always and including all of US some call. It when you need to change, sometimes it's not easy and it doesn't.
And feel comfortable so we're working through those issues with labor I can tell you, though that we're all aligned our communities our workforce everybody wants these assets to be successful to be profitable and.
For success over the next couple of decades with the assets based on the current reserves and so.
We've got great alignment, there and and the and we.
We understand that we need to deliver on the transformation, we need to attract the financing for series and will follow that all of our stakeholders and you're going to benefit greatly so.
And I focus on those positives and we recognize there'll be some bumps along the road with.
With that change as there always is but we remain confident we're going to deliver on this.
Great, Thanks, George and I.
Totally agree with you and thanks.
Thanks again for answering all my questions and have a good weekend.
Thank you.
The next question comes from Josh.
Josh Wolfson with RBC capital markets.
Please go ahead.
Thank you.
And I noted the day commentary earlier on the call.
About the plan to submit and updated EIA and the.
And fourth quarter.
This and.
Forgive.
Excuse me if I, if I'm mistaken on this and that seems to be and new development because I was under the impression I think you had sort of already received the amended EIA. So what does this sort of incremental step and the process.
Thanks, Charles for the question so on all this.
And a new expectation.
And a requirement. So we did earlier this year and get a modification to the mill.
The prior EIA to enable us to deploy dry stack tailings and series and <unk>.
We discussed frequently that's a massive improvement and project scope and risk reduction.
And environmental performance.
What we've always said is that the current permitted production rate at olympias.
It's a 2 step process as Joe mentioned and.
So the first step we're focused on driving productivity and efficiencies up but to get to the expanded potential.
Throughput, we need a revision to the EIA and so.
We've been working on on this modification with regulators and and engineering firms.
For around a year now and.
And we will be submitting that revision and essentially what it is we're going to be moving more tons out of the underground and the existing <unk>.
Okay.
Anticipated.
And processing it through the plant and then delivering the tailings.
Sure the cassette to the Coke and I'll of course, yeah.
Extremely high quality tailing.
Tailings disposal facility as dry stack tailings, so we're just increasing volumes and all.
That has to be engineered.
<unk> and modeled and and walk through the normal permitting process. So this was always and the plan and that's part of our 5 year guidance and our 5 year plan and and we're on schedule to deliver this year and expect approvals next year.
Okay.
Just so I can understand.
I understand it so.
Yes.
Or Cassandra overall, but the real only changes are related to olympias.
Yes, well be on Olympias. The other thing we've mentioned we use the strip Tony facility, which has a port to export the olympias concentrates.
And at least a portion of them currently and.
And so some of the concentrates coming out on Olympias mill and up being bagged and truck to physical and Achy works then shipped to customers a portion of the olympias concentrate goes through that stroke, Tony Port right at our operation.
Honestly at a much lower cost and then or.
And our kind of immaterial base metal mines.
From a financial perspective, Mabus Petrus, we also ship.
Concentrate from that mine outlet strip, Tony part so what the CIA our plan is to upgrade that port monitored modernize and improve its environmental controls, but at the same.
Time set it up that we can ship all concentrate from olympias directly out of that port reducing our freight cost.
And the CIA is mainly about the olympias expansion and mine production and plant throughput, but it also supports this modernization is for Tony.
So that is and.
And.
Maybe I wasn't clear.
Cassandra minus has a single EIA and it's been that way from the beginning and under that EIA we have.
And the operations and projects. So it's a staged approach and we're on schedule and as planned to deliver on that.
Okay and.
And first screens.
I'm, sorry for Olympias excuse me.
The plan to submit.
Steady for.
Processing, they were refractory or are there by 2023.
We sort of should we think about this.
And the <unk>.
Equivalents or maybe the famous.
And the Ole study.
For the flashed out there or is this going to be a new type of study.
No. It's a new study so our business plan and we're committed to.
And on completing the construction on <unk>, expanding olympias and modernizing the strip Tony Port So I'd call that our base business plan.
Now if you look at our guidance, what you see and our guidance is and <unk>.
Simply the expansion of Olympias and for now we don't have.
<unk> and our 5 year production and cost guidance simply because we had finished the engineering and walk through our capital allocation process and ultimately seek financing.
And <unk> management and board approval to proceed.
So that's where we stand with with.
With our production guidance and our and are.
And on the permitting.
I've lost my train of thought and now if you could repeat your question.
And if this was.
Weighted to the processing plans for the refractory ore.
And.
Yes, so thats really not built into our base plan and what we're saying here is that we're looking at other alternatives other than flash melting that might be economic and with good invest.
And <unk> to improve.
On the value of Olympias and so any 1.
1 option would be.
And 1 that's commonly used for these types of ours would be pressure oxidation and leaching and with that we can produce.
A day.
Gold.
<unk>.
In country.
And we'd still be shipping out the lead and zinc concentrate in that scenario. So thats just 1 alternative we're taking a fresh look at technology, but its not smelting.
It's other alternatives.
Okay.
And the wording on that.
Making.
And are committed to providing a proposal on this processing plant for olympias.
Should we understand this is part of.
Requirement and developing these assets.
Yes.
And for every country.
There is a desire to maximize value out.
Of the natural resources that are being produced and.
To benefit the country as much as possible. So Kris is like every other country they'd like to see as much of the work done in country and so on.
New investment agreement that was signed and ratified by Parliament and <unk>.
We've committed to just do the study work.
And you've proceed on on another technology for further processing of the Olympias gold pyrite concentrate on.
Unless we find and economic solution and assuming both government and us are comfortable with that with that investment opportunity and the permitting that would go with it there would obviously be public console.
Patients and so theres no requirement to execute the plan and Theres, a commitment and a requirement for us to evaluate and assess alternatives and then to work with government on whether or not we might proceed with them. So.
Hopefully that's clear.
Sure.
Okay and.
And I'll try to limit this and maybe.
Unsold and more question.
On the commentary on some of the additional work that was done for the La Mac tailings.
What sort of thinking should we have in terms of the takeaway recommendations that are that are upcoming.
Joe do you want to take that 1.
So what we have done.
It is essentially reviewed the plan.
Italy and de risked it I don't think we see too much different than.
Prior we're continuing with the Sigma tailings lift on.
On schedule.
This summer and we're looking at the.
The tailings facility, we acquired wood with QM X to make certain that it is maintaining it.
Reasonable standard as well as the landmark tailings and.
And we don't expect anything material at this point.
And potentially looking at either of those facilities for.
Optimization as we continue to work on potential for and pit going forward.
So all we've really done and has had a good solid look at current plan and work to Derisk that plan.
Great.
To supplement that answer as well I mean, obviously there has been a major focus on the way our industry manages tailings and.
Eldorado is positioned significantly better than most companies with with our deployment of.
And it's dry stack tailings disposal, both on our operations and and our future projects.
As well as underground cement and paste backfill and solar I think were way better than average in terms of where we manage tailings, but we're also looking at our historical sites that we've inherited and how we improve and manage those historic facilities and as Joe mentioned, we've got a long runway of exploration opportunities that have expanded and the market.
Property post acute on mix.
Acquisition, and Q2, and so we're just trying to be.
And strategic about the alternatives for a long term tailings disposal with and appetite of.
And and mine lives and hopefully higher production rates so.
And with success, there we're going to have.
To have more tailings capacity and we're assessing those alternatives and <unk>.
And and deploy the best available technologies right now.
And our Sigma tailings facility is the only conventional tailings disposal, we have and are operating.
The company and and.
We want to move that to.
2 and improved.
Tailings management standards. So we've been working on this for a couple of years continue to work on it and the focus that we're expecting to grow our business. There. So we're going to need more tailings capacity.
Okay. Thank you very much.
Thanks, Josh.
Once again, if you have a question. Please press Star then 1.
The next question comes from Tanya <unk> from Scotiabank.
Please go ahead.
Hello, everyone and thank you for taking my call.
I just wanted to come back to just inflation.
And then I'll start first on the inflationary pressure and you're seeing our cost structure before I get to capital. So can I just start.
With the inflationary and put into your cost structure and terms of labor consumables, given energies and easy and I wanted to understand.
But of your labor and.
And I assume on both can you go through the jurisdictions you operate in and what Youre seeing.
Sure I mean, starting with Turkey.
Turkey's economy is dealing with some pretty significant inflationary pressure and we're seeing that and our cost from a Turkish lira perspective.
But as.
And can be seen in prior inflationary periods and Turkey.
Net.
U S dollar exchange rate with lira ends up washing away that effects. So if anything we're probably seeing a slight benefit.
Turkey overall, when you look at from and U S dollar perspective.
In Canada, and the opposite is true to some degree we've seen.
Like everybody is seeing and price of copper is up so if youre buying anything with copper and and it's going to be a little bit more expensive and <unk>.
And the normal labor rates.
And then pushing prices up on everything.
But I would say again that no.
We simply can't impact that we can measure and our current cost.
Other than diesel is up a bit and some of these inputs are up slightly and.
And I think the bigger issue with our Canadian operation is just the negative headwind on FX exchange rates and the U S. Dollar. So that's put some pressure on the mark.
No signal and.
And Greece.
On the exchange rates and a bit of an issue there.
On our inflation rate index.
And Greece has not been that high of almost the same inputs.
Input costs are obviously, having some impact so I would tell you overall if you look.
Our results through mid year, we're not seeing a material impact from inflation, but I can say we are concerned about it we're seeing other projects that have announced recent capital increases.
And we don't have any indication yet on our series update we're in the middle of that and as.
And as Joe mentioned total internally.
Look I've seen some numbers and Q3 and as we work those and finalize it and we'll update the market in Q4.
But.
The things that I can speak to diesel is definitely up from where it was.
And for US we only have 1 open pit mine and and that's usually where there's the most impact.
<unk> will be.
And Thats <unk> thats, not a high strip ratio in mind, so a modest impact and.
And the rest of our operations our underground so so yes.
Diesel prices are up but not that material.
And then in terms of and overall project and kits.
Most of the major equipment is in place we got.
By the filters and.
And all the equipment that will go with running that.
And we got a purchased the building.
We got to construct the primary crusher, there's still all the wiring and the instrumentation and the flotation plant needs to be completed so copper prices are up there's going.
And in fact there.
Theres lots of underground development to be done.
And impacts on steel.
We'll have some <unk> and.
<unk> on ground support and other.
Normal infrastructure and an underground mine we.
Have.
<unk> dam that will sit at the bottom of the dry.
B and a tailings facility as erosion control barrier so.
Theres colleagues from the open pit waste down into that valley. So.
And some minor impacts.
We'll have a lot better idea of the fleet inflationary impact on series once we get this feasibility study done and.
I've studied the market there.
Is there pressure for sure there's some.
Can I quantify it.
Our existing results.
Not very well Tanya and I think again.
And we're on track to deliver on our guidance for the year, So I'd say nothing abnormal but for sure and global inflationary.
While our pressures out there and every jurisdiction is a bit different and we're continuing to monitor it.
And that's why I'm asking more specifically on your jurisdiction because every jurisdiction is different.
And then on it and from that you've mentioned, obviously copper you've mentioned seasonal of course, you've mentioned and steel.
And I just asked.
Specifically for your operations are you seeing any pressure on explosive and our cyanide and <unk>.
Mentioned labor and just kind of wondering you know forget the FX impact that.
On offsetting it but generally what are you seeing labor inflation at.
So just the assignment.
And her.
Go ahead.
And inflation on general inflation is over 20%.
But again, we've seen these and high inflationary periods and the FX rate is adjusted for that and reality and country and we're seeing that again, so overall, it's washes away in.
And with our U S dollar cost average.
And I'll, let Joe jump in here and he probably has better detail and I can speak to that.
And the only place I know, we've had some issues with Covid and Quebec there.
And with some issues earlier in the year of moving materials out of Ontario.
And the border was restricted at some point.
We got to go into some some alternative suppliers.
There are some minor delays, but none of that really impacted our production profile and and as far as Idaho and immaterial impact on our cost structure. So far so.
And those are my thoughts Joe if you got anything you can add jump in here.
Sure George.
On to a couple of specific questions you asked.
Around.
Cyanide.
Explosives.
And no material or significant change to this point as George mentioned.
<unk> prices are up slightly.
As far as labor goes.
And.
Net net or better and Turkey.
Modest pressure in Greece and.
Modest pressure and.
Mark and.
Maybe a little more.
Significant.
Mark based on just a lot of activity and the area. So its twofold.
FX plus.
<unk>.
The amount of activity and the area.
We're not at this point at least projecting.
And significant labor cost change going forward, we'll continue to review.
View, it but at present.
We're holding price.
Standards Historic.
Inflation rates.
Okay, and and maybe if I could leave off and that's and move back to Olympias and at the end and your commentary you talked about this transformational effort that youre doing.
Doing and trying to minimize some of the risks within that can you just talk to us what you see the risks and the transformational change that you're undergoing.
Certainly I think it and always when you go through a change like this it's the duration it takes and make the changes as George.
<unk>.
And that in his comments we're confident.
And it will get through it.
And see ourselves as a.
And a more productive operator on the other side and and it's really a matter and how long does that take and we're a bit encourage and we're seeing progress and.
And practices and and results already were.
Seeing a bit of progress and.
Ship duration around first and last trucks as they get in and out of the mine.
Coupled with that with and Olympias that we have.
And painted on a bit of a.
Development deficit.
Or at least.
Certainly having progressed that greatly so according to plan. So we are and what kind of facing 2 issues 1 is.
Lack of faces and.
Pork areas at the same time that we're working to increase.
Productivity and and so those things kind of go hand in hand, and and it's just a matter of how long does it take and we think we will see a.
Kind of a turning point or broaden and bottoming as the as we move through Q3.
And what we're planning and our plans are for.
Seeing increased or improved numbers as we get into 2022 and and value creation on on the <unk>.
Of that.
The as far as the risk mitigation and and.
That side of it.
We're certainly.
Have open and transparent communications ongoing with our labor partners.
And as I mentioned.
During the discussion.
Our meeting by weekly basis with the.
Unit presidents on.
And how things are going relative to.
Key performance indicators and.
And and metrics.
And and we also have several.
Improvement teams that go from from minor on up through kind of a superintendent level working together on solutions. So what we're really positive about all that.
It does take time.
Yeah.
And maybe a couple of supplementary comments on this topic. So we went through a pretty difficult period a.
A couple of years ago, with the last government and delayed permits and putting stories and care and maintenance and and on.
All of that was a headwind and I can tell you our labor workforce and leadership.
And full support of.
US getting through those difficult times, and and full support of the revised business plan and and setting us up to be able to grow our business there. So.
And we've got strong community and labor support on that.
Change is never easy on.
On any of us and and we're working on our way through the changes that are going to make these mines profitable and.
Material assets for the company and.
And again as I said, I am confident about that and it will be on.
And how we are mitigating the risk of working through change and 1 of them is training so.
Our work.
Looking on our new training facility that will support some of this transformation our existing operations and support the training and development of a new workforce that we're going to need to bring series.
And the and operation So here again, and we're going to have alignment we put on board together for this training center. The unions got are represented up to help.
US design this in and build the systems to support it.
Bring success. So I just wanted to put a and optimistic tone on this even though the reality is working through changes is never easy and remain confident we will get through all that and youre going to see some pretty good numbers next year.
And maybe just my.
My final question on and that's because you mentioned, you're not getting the appropriate leadership in place and that's it.
To get all of US that go and do you have day leadership.
And you have the right people and place to do that for you.
Unit tenure.
This is Joe we're confident.
That we do.
Have the right leadership in place around the transformation.
We're looking forward to.
Some more call it.
Resource sharing and cross El Dorado, and and you know kind of short term.
Assignments and and subject matter expert help but we're confident.
Around the transformation resources that we have and.
And we think it's important that we work through this.
As a team and as Hal Dorado when I was talking earlier about leadership I was talking more about the owner's team per score is that we are now and selection process on Paul.
Okay.
Okay.
Great. Thank you.
Thanks Tanya.
That is all the time, we have for today and this concludes the question and answer session and today's conference call you.
You may disconnect. Your lines. Thank you for participating and have a pleasant day.
Right.
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And.
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