Q2 2021 Eldorado Gold Corp Earnings Call
Thank you for standing by.
This is the conference operator, welcome to the Eldorado Gold Corp, Q2 at 'twenty, 'twenty, 1 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 to join.
And 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 zero.
I would now like to turn the conference over to Lisa Wilkinson, Vice President Investor Relations. Please go ahead Mr. Wilkinson.
Thank.
Thank you operator, and good morning, everyone I'd like to welcome you to our second quarter 2021 conference call on the call today, we have George Burns, President and Chief Executive Officer.
Joey Executive Vice President and Chief Financial Officer, Joe.
Joe <expletive> Executive Vice President and Chief.
An 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 read in conjunction with our second quarter financial statements and management's discussion and analysis both.
Operator are available on our website.
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 followed by reviewing operational performance and then we'll open it up for questions.
In the second quarter, we had strong project and operating results to kiss a lot of ethane to groom and la Mark.
However, olympias was affected by work slowdowns as we progress our transformation efforts at the Cassandra minds.
We continue to be on track for a 2021 production and cost guidance.
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 plan.
<unk> took the sand reminds in more detail later on the call, but first I want 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.
<unk> continues to emerge as a major strength.
It will enable us to fund growth and maximize the opportunities ahead of us.
In the second quarter of 2021, we successfully completed the acquisition of <unk>, which significantly increased eldorado its position in the Abitibi greenstone.
And is consistent with our strategy to invest in world class mining jurisdictions.
The addition of <unk> to our portfolio opens a range of opportunities to expand our activities in the region and to leverage our existing infrastructure and Eldorado strong operational exploration and steak.
On Belder expertise.
Shifting gears and looking ahead for the second half of 2021 and into 2022, we have several upcoming catalysts that I will discuss on this slide.
Starting with Turkey commissioning of the high pressure grinding roll circuit at <unk> is now scheduled to initiate.
Stakeholders at the start of Q4.
We expect the <unk> 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 in the first half of the year.
In Canada at.
The decline connecting the Sigma mill with the triangle underground mine is progressing on schedule and is expected to be complete in the fourth quarter.
Work continues to progress on the remark P a with.
<unk> completion in the first quarter of 2022, we have taken some extra time with this study.
Study is our operational performance has improved exceeding nameplate at the mill as.
As a result for <unk> will reflect the optimization of the asset.
Moving degrees the updated feasibility study for Securities continues to advance and we expect to completed in the fourth quarter.
The revised schedule is largely driven by our focus on capital discipline with respect to the additional scope for infrastructure related to legislative changes climate 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 securities represents significant upside in our current 5 year production profile.
In parallel we are also working towards submitting an updated.
Yea I E for the Cassandra mines in Q.
To be clear the update of the IAA will accommodate future olympias expansion and for Tony for modernization.
Finally, a parameter hill and updated technical study remains on schedule for completion in early 2000.
'twenty 2.
In parallel with the study work, we will be working with regulators to efficiently permit the project leveraging our recent successes with the recent amendment to the Cassandra EIA for the use of dry stack tailings.
We continue to monitor our cost and capex inflation across our operations.
<unk> in Turkey, inflationary pressures have been mostly offset by the weakening euro.
In Canada mining.
Mining project activity has picked up in the Val Dor area, which is putting pressure on our contractor and labor rates for COVID-19 has impacted supply chain, causing minor shipments delays.
<unk> 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.
We originally targeted a 10% reduction in our lost time frequency rate and in fact, we reduced it by 43%.
We also aimed at a 10% reduction in our total recordable 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.
<unk> mining.
It articulates, 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.
Our gold prosperous communities.
Third.
Responsibly produced products and.
And finally healthy environment now and for the future.
The slides highlights from our 2020 sustainability report grouped under each of these 4 pillars of our sustainability.
The framework.
I am very proud of volume 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.
In the second quarter financial results.
Thank you George.
Good day everyone.
Starting on slide 7.
We had another solid quarter of operations results with production and costs. Both in line with our 2021 annual guidance.
Revenue.
Revenues were consistent with plan and expectations for <unk>.
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.
Interest payments.
We expect free cash flow generation to improve in the second half for the year.
Eldorado reported a net loss attributable to shareholders in Q2, 2021 up 55 million or <unk> 31 loss per share compared to net earnings of $49 million.
Or <unk> 29 per share in the second quarter of 2020.
After adjusting for onetime nonrecurring items, including a 99 million noncash impairment of the token casino project.
On the other things adjusted net earnings for Q2.2021 increase.
<unk> increased to $29 million or <unk> 16 per share.
An increase from $24 million or <unk> 14 per share in Q1 of 2021.
Cash operating costs in Q2, 2021 average $645 per ounce sold.
An increase from $550.
Per ounce in Q2.2020.
The increase was primarily due to lower grade ore mined and processed that kiss a day mark in olympias.
Resulting in fewer ounces produced and sold.
These increases were partially offset by a modest reduction in cash operating cost per ounce sold at <unk>.
As a result of the weakening Turkish lira.
And a change in 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 $1074 an ounce in Q.
Q2.2021.
An 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 half from true grew as a result of the 25% increase to gold royalty rates.
From September 2020.
Higher royalty rates at Olympias 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 in Q2.2020.
And $64 million last quarter.
This reflects a planned increase in growth capital spending at <unk> and remark.
Capital expenditures at the Cassandra minds in Greece are lower than expected in the first half.
A 2021.
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.
Over the remainder of 2000.
'twenty, 1 and into 2022.
As a result, we expect capital expenditures at the Cassandra mines to be at the low end of our guidance range for the year.
Tax expense decreased to <unk> 1 million in Q2, 2021 from 25 million.
In Q2.2020.
Mainly driven by the investment tax credit received in Turkey in Q2, 2021 related to Kiss a day heap Leach improvements.
The investor the investment tax credit reduced the corporate tax rate.
<unk> and current tax savings of $22 million in 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 in lower cash tax payments in Q3.2021.
This difference also led to high cash tax payments in Q.
Q2, 2021 up $27 million.
As a result of the higher increase current tax expense that was reported in Q1.
Depreciation expense totaled $51 million in Q2, 2021 compared to $53 million in Q2.2020.
Which has been recast.
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 in the range of $200 million to $215 million.
Moving on to slide 8.
<unk> financial position, we continue to focus on maintaining a solid financial position, which provides flexibility to unlock Val.
Value for our portfolio of assets.
At quarter end, 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 in 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.
$22 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 for 6 times at the end of the second quarter of 2020.
<unk>.
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.
Thanks, Phil.
And good day everyone.
Second quarter operating performance continued to be strong and we are tracking in line with our 2021 annual guidance range of between 430.460000 ounces of gold.
And I want to take.
Want to thank the team for their hard work over the past quarter in achieving these results.
It was always for the foundation of our production performance is our health and safety culture, we continue to be a fatality free organizations since Q3 of 2017 and several sites and functions have completed more than a year and some multiple years without a lost time injury.
We produced 116.
<unk> thousand 66 ounces of gold in the quarter at 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 in growth capital spending at.
Cause for that and the Mark.
We're focused on disciplined capital allocation across our operations.
And specifically, we will be looking at capital allocation more closely at our Cassandra minds in Greece as our transformation efforts continue to progress.
Starting in Turkey with kits with 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 is scheduled to initiate at the start of the fourth quarter.
As George mentioned, we expect the H P G.
To increase gold 3 by approximately 4% and enhance the already positive results achieved from the CIC trains and the new carbon regeneration kiln 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 is expected mid 2022.
Yeah.
Over to FM to growth.
Second quarter gold production totaled 23473 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. This has resulted and will continue.
To result in significant improvements in the quality of our gold concentrate.
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.
Liberty plan second quarter gold production totaled 35643 ounces at cash operating cost of $658 per ounce.
The underground decline between triangle in the Sigma mill is progressing on schedule and we expect completion in the fourth quarter.
We expect to reduce operating costs upon completion of the decline as surface haulage costs are eliminated and the current up ramp underground route is replaced with straight line haulage to the Sigma mill.
At Arm Act early infill drilling results for this 800000 ounce maiden gold resource has been as expected.
Preliminary mine planning studies are underway to assess the initial scope of this resource within from a mark.
Operation.
Once completed the underground decline will enable the team to drift over the deposit and gain additional information to integrate this promising new discovery into future mine plans.
For continues to progress some of them off 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 the asset <unk>.
Us.
Attunity view capital with a longer term outlook as we evaluate in the context of a much larger land package.
Over degrees.
At Olympias second quarter gold production totaled 1200, and 900 and.
34 ounces at cash operating cost of 230.
The opera in dollars per ounce.
Earlier this year, we initiated transformation efforts at the Cassandra minds focused on increasing productivity, which is essential in realizing for full potential of these assets.
Transformation is key to underpinning investment and longevity of the Cassandra minds.
I'm really happy to see our Union partners now taking part in this effort and understanding the importance of our transformation plans.
I will talk about transformation.
A bit more in detail on the next slide.
But first I want to touch on Corona Hill, where an updated technical study remains on schedule for completion in early 2000.
'twenty 2.
We also continue to see great exploration potential in the Thrace region supporting opportunities for growth in and around per M of Hill.
In parallel with the study work would be working with regulators to efficiently permit the project leveraging our recent success in amending the Cassandra EIA.
It's a dry stack tailings.
Now, let's move on to our transformation initiative at Cassandra mines, which we briefly discuss the few months ago in our Q1 conference call.
I want to take this opportunity to provide a few additional details.
Essentially the transformation work.
In.
For the east is a sustained to optimize the Cassandra mines. It touches on every part of the business increase including employee education and training.
Physical plant upgrades business system upgrades and leadership.
The overall goal is to complete increased productivity and operating safe.
Flea economically in a globally competitive levels.
Implementing the scale of change than an existing operation like the olympias is challenging and entails risks, 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.
<unk> 2022 for.
For long term benefits and safety culture, and productivity will result in a stronger operations with greatly enhanced economics.
We remain committed to responsibly developing the Cassandra minds to create value for all stakeholders. This includes job creation investment into local communities.
<unk> and opportunities for local suppliers, while maintaining our high environmental standards.
With that I'll turn it back to George for closing comments.
Thanks team.
With strong operational results from the first half of 2021 and numerous upcoming catalysts expected in the second half of the year.
For Eldorado remains well positioned to deliver on our growth plans and create value at our assets. Thank.
Thank you for your time everyone.
Now I'll turn it over to the operator for questions.
Thank you we will now begin the question and answer session.
The question queue you may.
Press Star 1 on your telephone keypad.
We're here at town acknowledging your request.
If youre using a speakerphone please pick up your handset before pressing any teeth.
To withdraw your question. Please press Star then 2 we will pause for a moment as callers for joining the queue.
The first question comes from Cosmos <unk> with CIBC.
Please go ahead.
Hi, Thanks, George So Joe and team.
Maybe my first question is in Greece.
You know as you talked about you're working on the transformational work optimization.
<unk> of the Cassandra mines, you know, what I'm, saying it with M. P answers it keeps Android because I would imagine youre looking at it from the entire Greek operational.
Level I'm.
I'm just wondering you know as you kind of walk through how you can optimize olympias are there any.
<unk>.
That you.
For sea for ski areas as well 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 scary.
And how are you know somebody's this optimization work gonna be factored into your into your feasibility study.
Coming for Securities.
Thanks Cosmos.
Joe I'll start I'll, let Joe jump in with some detail so.
I mean, we'd refer to Cassandra because that's our.
He is already that that holds the assets of Olympias Securities project, and our mabus Tetra for Tony Operation, which is a kind of immaterial base metal operations.
So the thing I mean, our primary focus is definitely on at Olympias, That's where we're currently producing and we have an enormous opportunity.
Subsidiary reduce cost increase productivity and create value.
But you're right. We're also in the early stages of preparing for construction at series.
And we're looking to make improvements across all of those assets underneath Cassandra.
And with that I'll turn it over to Joe to give you some more details on trends.
Formation.
George first and kind of relation to growth.
Scorpius Olympias relationship Cosmos, I think you know.
Certainly work in safety culture, and those things are very similar between both sites for <unk> since it is a different operation.
Open pit more technology, you know, maybe the the kind of the productivity.
<unk> are directly transferable, but a lot of the cultural items are in that that pertains to our entire workforce, including.
Our staff and our miners.
We're.
You know pleased that we have experienced miners.
Adelante us and they know their work I think our biggest challenges is really you know.
The introduction of management operating system and.
Our culture of continuous improvement and as we look to you know.
Really optimize them.
You know 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 feed back at the end of the day on performance.
Those for those kinds of things haven't.
Down on an on an ongoing basis and we've introduced all of that.
In addition, we've looked at the mining cycle from.
Drilling blast and the types of brands we're pulling.
The length of rounds, and we have all of that along with Paul cycle times.
Haven't been in our whole you know productive time cycle.
In the mine in a in a set of Kpis, which are labor partners are reviewing with US now on a on a bi weekly basis. So we're pleased about that.
We've kind of put it in a to a 2 tiered.
Our debt.
First as we.
No.
And our work to get ourselves to a first step in olympias growth to around 530000 tonnes in them to 650000 tonnes. So we've kind of phased that out through some benchmarking and other things as for looking at similar mines, how they perform and.
And we're looking to be kind of in that average performance range from where we are today. So you know, which is which is a bit of a step and I think it boils down to mostly productive time and shifting utilization.
But there are many other factors around technology.
And perform.
Sometimes some of them in.
Safety.
Our business plans are other things in it.
I'd mentioned that we are in the process of introducing dispatch and.
Helping us with ship control and historical data so there's a lot going on.
But we're pleased with.
Performance.
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 and then.
I guess more specifically on scary as chair.
As you mentioned you know Q4 are you expecting a feasibility study.
To come out I think in the past George you had talked about potentially.
Finalizing some kind of joint venture partnership.
By 2021, as well is that still sort of potentially the time line and then the second part of my question is I see that for scarious, you've done about 2.
$2.8 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 our U S.
As you know some sort of a capex delay due to COVID-19, our attention.
Could you maybe comment on that as well.
Sure.
So for <unk>, 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 in the fourth quarter.
And now we're looking at early Q4 to finalize the feasibility.
<unk> study and Thats, probably going to push the financing evaluation into Q1 next year, so a little bit of slippage in it.
In terms of why that occurred where for.
Focus to ensure this feasibility study.
Is updated and gives us.
Really good estimate of schedule and cost.
And you know there has been some changes in both EU and Greek legislations that are being baked into this feasibility study. We've also taken a fresh look at climate change and the impact on precipitation to ensure all of our storm water management facilities are adequate so theres some changes happening in that regard.
Modest, but things that we need to to have our hands completely on.
And then in terms of.
Our strategy on how we will fund the construction of storage, we're still believing that a joint venture partner at Cassandra level.
Cost is the optimum optimum strategy.
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 an equity injection that would.
<unk> positioned us we think in an optimum.
For our overall portfolio as well as our balance sheet and.
In delivering on the day.
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.
<unk> financing potentially streams.
And so 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.
We will be able to deliver significant upside to our current 5 year guidance.
For sure.
Yeah.
George.
So a couple of comments on Cosmos question about cash.
Capital outlay at scores this year.
We'll likely be a bit under cosmos.
Certainly mobilization and getting the owner's team together.
Most of the other adjustments and schedule.
It's just we had some preconstruction activities that.
Were planned.
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.
Preparing to be able to execute so.
We can still.
And then as we move further into Q3 and into Q4.
Phil will provide more information that you know 1 of the month 6 weeks down the road.
Great and then maybe just 1 last question here as we wrap up the discussion in Greece, Joe as you talked about you know as you engage on.
You'll see some stakeholders in Greece.
Any concerns about potential strike risk well and kind of labor risk and then the second part of my question is it all for scarious.
What are you assuming right now in terms of labor productivity are you currently assuming kind of current level of olympias.
These productivity or have you factored in some upside to it.
So on the on the first question.
There's always a risk, but we're confident that at least at this point that.
You will find workable solutions with our labor partners regarding.
He is part of ongoing work slowdowns and potential work stoppage.
You know that that is.
Focus as we move through this quarter.
You know as far as the kind of the mine productivity and that kind of information, but come or that kind of transfer that comes over it's it's.
It's kind of apples and oranges, even the underground work debt.
Korea is quite different than that at olympias.
So they're not directly transferable, but we are in that kind of.
Globally competitive for them.
Type productivity.
For planning, a serious and both an 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 middle of the road.
Of course, thank you for that final questions I have on that yet.
Yes, I might just add some some.
<unk> inventory comment so I mean overall as Joe mentioned, we're aiming at kind of globally average productivity rates for mines similar to olympias.
And as always <unk>, including all of us on the call when you need to change, sometimes it's not easy and it doesn't.
<unk> 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 problems.
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 in the end.
We all understand that we need to deliver on the transformation, we need to attract the financing for stories and we'll follow that all of our stakeholders benefit greatly so.
I focus on those positives, we recognize there'll be some bumps along the road with.
With with 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.
Wilson with RBC capital markets.
Please go ahead.
Thank you.
I noted the day commentary earlier on the call.
About the plan to submit an updated EIA.
In the fourth quarter.
This net.
Perfect.
Excuse me if I if I'm mistaken on this that that seems to be a new development because I was under the impression I think you had already received the amended EIA. So what is this sort of incremental step in the process.
Thanks, Josh for the question so.
This isn't a new expectations.
<unk> requirement. So we did earlier this year and get a modification to the net.
The priority EIA to enable us to deploy dry stack tailings at series and as we've discussed frequently that's a massive improvement in project scope and risk reduction.
And environmental performance.
We've always said is that at 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.
But we need a revision to the EIA and so.
So we've been working on on this modification with regulators and engineering firms.
For around a year now and we will be submitting that revision and essentially what it is we're going to be moving more tons out of the underground than the existing EIA.
AIA.
<unk> and processing it through the plant and then delivering the tailings.
<unk>.
To the to the Coke in Alagoas.
Extremely high quality.
Tailings disposal facility as dry stack tailings. So we're just increasing volumes and all of that has to be engineered.
And modeled and walk through the normal permitting process. So this was always in the plan as part of our 5 year guidance and our 5 year plan and we.
We're on schedule to deliver this year and expect approvals next year.
Okay. So just so I.
I understand it.
Yes.
For Cassandra overall, but the real only changes are related to olympias.
Yes, well beyond Olympias. The other thing we've mentioned we use this for Tony facility, which has a port to export the olympias concentrates at.
At least a portion of them currently.
So some of the concentrates coming out of the Olympias mill ends up being bagged and truck to first non Achy works then shipped to customers a portion of the olympias concentrate goes through that stroke, Tony Port right at our operations, obviously at a much lower cost and then our.
Or kind of immaterial base metal mines.
From a financial perspective, Matt was Petrus, we also ship.
Concentrate from that mine outlets for Tony Port.
So with 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 costs. So the CIA is mainly about the olympias expansion in line production and plant throughput, but it also supports this modernization is for Tony.
So that is.
Or maybe I wasn't clear.
San reminds has a single EIA and it's been that way from the beginning and under that EIA we have.
Moving to operations and projects. So it's a staged approach and we're on schedule as planned to deliver on that.
Okay and.
And for <unk>.
I'm, sorry for Olympias excuse me.
The planned to submit.
Steady for.
Processing, they were refractory or are there by 2023.
We sort of should we think about this.
<unk>.
Equivalent or maybe the same as.
The Ole study.
For the flash smelter or is this going to be new.
New type of study.
It's a new study so our business plan, we are committed to completing the.
Construction on series, 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 in our guidance is as <unk>.
The expansion of Olympias and for now we don't have.
Stories in our 5 year production and cost guidance simply because we had finished the engineering and walk you through our capital allocation process and ultimately seek financing.
And management.
Management and board approval to proceed.
So that's where we stand with with.
With our production guidance and are.
On the permitting.
I've lost my train of thought and I'll repeat your question.
This was started.
Sort of related to the processing plans for the refractory ore.
Okay.
Yes, so thats really not built into our base plan, what we're saying here is that we're looking at other alternatives other than flash melting that might be economic and good investments.
<unk> to improve.
The value of Olympias, and so any 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 dore of gold.
In country.
We'd still be shipping out the lead and zinc concentrate in that scenario. So that's just 1 alternative for taking a fresh look at technology, but its not smelting.
Other alternatives.
Okay.
Yes.
Wording on that.
Yeah.
You've sort of committed to providing a proposal on this processing plant for olympias.
Should we understand this is part of.
Requirement and <unk>.
<unk> these assets.
Yes.
For every country.
There is a desire to maximize value out.
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 in our new investment agreement that was signed and ratified by Parliament now as law, we've committed to just do the study work.
No.
Proceed on an another technology for further processing of the Olympias gold pyrite concentrate unless we find an economic solution.
And assuming both government and us are comfortable with that with that investment opportunity in the permitting that would go with it there would obviously be public.
We want patients. So there is no requirement to execute the plan there is 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 for.
Sure.
Okay.
And I'll try to limit that.
Console <unk> more question.
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 thoroughly.
And de risk that I don't think we see too much different than.
Prior we're continuing with the Sigma tailings lift on schedule.
And we're looking at the.
The tailings facility, we acquired wood with QM next to make certain that it is maintained.
Reasonable standard as well as for Lamont tailings and we don't expect.
<unk> anything material at this point.
And then potentially looking at either of those facilities for.
Optimization as we continue work on potential for in pit going forward. So so all we've really done is has had a good solid look at current plan.
And worked for Derisked 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.
Eldorado is position significantly better than most companies with with our deployment of <unk>.
Dry stack tailings disposal, both in our operations and in our future projects.
As well as underground cement paste backfill and so I think we're 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 we are expanding the market.
Property post acute mix.
Acquisition in Q2, and so we're just trying to be.
Strategic about the alternatives for a long term tailings disposal with an appetite of.
Standard mine lives and hopefully higher production rates so.
With success, there we're going to have.
Our tailings capacity and we're assessing those alternatives and trying to deploy the best available technologies right now.
Sigma tailings facility is the only conventional tailings disposal, we have in our operating.
Company in.
We want to move that.
2 improved.
Tailings management standard so we've been working on this for a couple of years continue to work on it and with 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 Ekeus connect from Scotia Bank.
Please go ahead.
Hello, everyone and thank you for taking my call.
I just wanted to come back to just inflation.
I'm going to start first on the inflationary pressure that you're seeing in your cost structure before I get to capital. So can I just start with the inflationary inputs into your cost structure in terms of labor consumables, given energies is an easier 1 to understand but of your labor and.
On <unk> can you go through the jurisdictions that 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 in our cost from a Turkish lira perspective.
But as.
And can be seen in prior.
Larry periods in Turkey.
Yes.
U S dollar exchange rate with lira ends up washing away that effect. So if anything we're probably seeing a slight benefit.
In Turkey overall, when you look at from a U S dollar perspective.
As we have Canada the.
The opposite is true to some degree we've seen.
Everybody is seeing the price of copper is up so if youre buying anything with copper in it and it's going to be a little bit more expensive when you got the normal labor rates.
Pushing prices up on everything.
But I'd say again net.
Insignificant impact that we can measure and our current cost.
Other than diesel is up a bit in some of these inputs are up slightly but.
I think the bigger issue with our Canadian operations is just the negative headwind on FX exchange rates for the U S. Dollar. So that's put some pressure on the mark.
No.
And in Greece.
The exchange rates that have been a bit of an issue there.
Our inflation rate.
In Greece has not been that high although those the same inputs.
Input costs are obviously, having some impact so I would tell you overall if you.
Our results through midyear, we're not seeing a material impact from inflation, but I can say we are concerned about it we're seeing other projects that are announced recent capital increases we don't have any indication yet on our securities update we're in the middle of that and as Joe mentioned total internally.
You look at we've seen some numbers in Q3 and as we work through those and finalize it will update the market in Q4.
But.
The things I can speak to diesel is definitely up from where it was.
For us we only have 1 open pit mine and Thats, usually where there's the most impact.
<unk>.
And that's <unk>.
It's not a high strip ratio in mind, so a modest impact in the rest of our operations. Our underground. So so yeah diesel prices are up but not that material.
And then in terms of the overall project kits for the most.
Most of the major equipment is in place we got.
<unk> filters.
And all of the equipment that will go with running that.
We got a purchased the building.
We got a construct the primary crusher, there's still all the wiring and instrumentation in the flotation plant needs to be completed so copper prices are up there's going.
By the back there.
Theres lots of underground development to be done.
So it impacts on steel.
We'll have some debt.
Packed on ground support and other.
Normal infrastructure in an underground mine.
We have.
For the rock down that will sit at the bottom of the dry.
My stack tailings facility as erosion control barrier so yeah.
Theres colleagues from the open pit waste down into that value. So.
Some minor impacts.
We'll have a lot better idea of the fleet inflationary impact on series once we get this feasibility study done in.
Would it be to take the market there.
Is there pressure for sure there's some.
Can I quantify it with our existing results not very well Tanya I think again.
We're on track to deliver on our guidance for the year, So I'd say nothing abnormal but for sure global inflationary.
We will have pressures out there in every jurisdictions a bit different and we're continuing to monitor it.
That's why I'm asking more specifically in your jurisdiction because every jurisdiction is different.
And from that you've mentioned, obviously copper you've mentioned diesel of course, you've mentioned steel.
Can I just ask.
And are typically for your operations are you seeing any pressure on explosive and our cyanide.
Mentioned labor just kind of wondering forget the FX impact debt.
Offsetting it but generally what are you seeing labor inflation.
So just the assignment.
Linda.
Yes.
Inflation on general inflation is over 20%.
But again, we've seen these high inflationary periods in the FX rate is adjusted for that reality in country and we're seeing that again, so overall it washes away in.
In terms of our U S dollar cost I'm going to let Joe jump in you're probably has better detail that I can speak to that.
The only place I know, we've had some issues with COVID-19 in Quebec. There there was some issues earlier in the year of moving materials out of Ontario.
For the border was restricted at some point.
Some are good some alternative suppliers.
There's some minor delays, but none of that really impacted our production profile as far as I know an immaterial impact on our cost structure. So far so.
Those are my thoughts Joe if you got anything you can add jump in here.
Sure George Tong.
We've got a.
Couple of specific questions you asked.
Around.
Cyanide.
<unk>.
No material or significant change for this point as George mentioned energy prices are up slightly.
As far as labor goes.
We are.
Net net or better in Turkey.
Modest pressure in Greece and.
Modest pressure in.
The Mark in.
Maybe a little more.
Significant.
Mark based on just a lot of activity in the area. So its twofold.
FX plus.
<unk>.
The amount of activity in the area.
We're not at this point at least projecting.
Significant labor cost change going forward, we'll continue to review.
View, it but at present.
We're holding to that standard historic.
Inflation rates.
Okay, and maybe if I could leave off that's moving.
On to Olympias.
In 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 in this transformational change that you're undergoing.
Well certainly I think it always when you go through a change like this it's the duration it takes to make the changes as George.
Stated.
In his comments we're confident.
And it will get through it.
And see ourselves that's a.
In a more productive operator on the other side and it's really a matter of how long does that take and were a bit encouraged we're seeing progress in.
<unk>.
Blasting practices and results already we're seeing a bit of progress in.
Ship duration around.
First and last trucks as they get in and out of the mine.
Coupled with that with at Olympias that we have.
<unk> been a bit of Uh huh.
Development deficit.
Or at least.
Certainly having progressed that greatly so.
According to plan. So we're kind of facing 2 issues 1 is.
Lack of a basis.
And.
Curious at the same time that we're working to increase.
Productivity and so those things kind of go hand in hand, and it's just a matter of how long does it take and we think we'll see a.
Kind of a turning point or Bob bottoming as the as we move through Q3.
And we're planning our plans are for <unk>.
Seeing increased or improved numbers as we get into 2022 and value creation on the back of that.
The as far as the risk mitigation and and that side of it.
We're certainly.
We have open and transparent communications ongoing with our labor partners.
As I mentioned.
During the discussion.
We are meeting bi weekly basis with the Union presidents on.
How things are going relative to.
Key performance indicators.
And and metrics.
Yeah.
And we also have several.
Improvement teams that go from from miner on up through kind of a superintendent level working together on solution. So we're really positive about all that.
But it does take time.
Maybe a couple of supplementary comments on this topic. So we went through a pretty difficult period.
A couple of years ago, with the last government and delayed permits.
Putting stories in care and maintenance.
All that was a headwind and I can tell you our labor workforce Union leadership.
We're in full support of us getting through those difficult times and been in full support of the revised business plan.
Setting us up to be able to grow our business there so.
We've got strong community and labor support on that.
Change is never easy.
Any of us and we're working our way through the changes that are going to make these mines profitable in.
Material assets for the company.
And again as I said I am confident about that and it will be on how we are mitigating the risk of working through change and 1 of them is training. So we're working.
Looking on our new training facility that will support some of this transformation for existing operations and support the training and development of our new workforce that we're going to need to bring series.
In operations. So here again, we're gonna have alignment we put a board together for this training center the unions got a representative to help.
US design this in and build the systems to support it.
Bring success. So I just wanted to put a an 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 this because you mentioned, you're not getting the appropriate leadership in place.
To get all of this that going do you have day leadership.
Then you've got the right people in place to do that for you.
I'm telling you 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 across Eldorado and you know kind of short term.
Assignments and subject matter expert help but we're confident.
Around the transformation resources that we have.
And we think it's important that we work through this.
As a team and as El Dorado, when I was talking earlier about leadership I was talking more about the owner's team for scariest, but we are now in selection process on.
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 may disconnect. Your lines. Thank you for participating and have a pleasant day.
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