Q2 2021 Torex Gold Resources Inc Earnings Call
Thank you for standing by this is the conference operator, welcome to the Tor ex Gold Resources, Inc. Second quarter 2021 results conference call.
As a reminder.
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I would like to turn the conference over to Dan Rollins, Vice President corporate development and Investor Relations. Please.
Please go ahead Mr Rollins.
Thank you operator, and good morning, everyone.
I'll be happy to torque team welcome to our second quarter 2021 conference call.
Before we begin I wish to inform listeners that the presentation accompanying today's conference call can be acts through accessed through the investors section of our website at www dot torque gold dot com.
I'd also like to note that certain statements to be made today by the management team may contain forward looking information.
As such please refer to the detailed cautionary notes on page 2 of today's presentation as well as those included in the Q2.2021 M DNA.
On the call today, we have Joseph <unk>, President and CEO as well as Andrew noted CFO.
Following the presentation Jodi and Andrew will be available for the question and answer period.
This conference call is being webcast and will be available for replay on our website.
This morning's press release and the accompanying financial statements and MD&A are posted on our website have been filed to SEDAR.
Also please note that all amounts mentioned in this call are U S dollars unless otherwise stated.
I'll now turn the call over to Joni.
Thank you Dan and good morning to all on the line welcome to the <unk> Gold Q2 results call. It's been any vessel first half highlights are as follows.
Operational performance in spite of ongoing challenges related to Covid and metallurgy issues as we mine deeper in the pit.
We're on track to deliver 2021 production and cost guidance and after months of study some key strategic decisions have come to grout, which we think brings enhanced clarity and certainty around the path forward for the company.
In terms of the agenda for the call I will provide a brief reminder of the strategic plan. We are working to then it will step you through the key business and operational highlights specific to the second quarter.
Now I'll turn the call over to Andy Snowdon for some detail on the financials and after that I'll provide a progress update on our critical path projects. The key decisions that had been landed and close with some commentary relating to the completion of our board refresh.
Dennis touched on our Safe Harbor language, so I'll move straight to the content slide for.
This slide sets out the 5 pillars of our strategic plan. These remain largely unchanged. We have been very disciplined about executing this plan systematically and have made substantial progress in the first half of 2021.
On that first pillar of optimized on extended L. G optimize asset optimization efforts are evident in the continued delivery of assets to class.
In terms of extending E. L. D. We published the updated E. L. D M. RMR in the first quarter, showing a 15% increase in underground reserves that for 2019, and we are on pace with our 40000 meter 2021 drill program at EOG underground.
Additionally, and importantly, we have now received board approval to proceed with the pushback at LMR pit.
I consider this to be just right sized our fit for purpose spending just enough capital to add approximately 150000 ounces to that transition period between E. L. D. In media Luna It late 'twenty 3 mid 'twenty for there.
There's more detail on that at the end of the call.
On the second pillar of Derisking and advancing video Luna, we have made a risk based decision to advance the medical even a feasibility study on the basis of conventional mining and development methods.
We're also continuing the media Luna infill drill program through the second half of 2021, which is completely consistent with the shift in strategy to increase focus on exploration.
We're adding another portal on the south side of the river to access the lower portions of the media Luna deposit.
And critically we've now submitted to the regulators our permit application for the Mia into ground.
I will discuss all of this in more detail as we live through the slides.
First on slide 5 starting with the ASIC business.
This slide sets out some key operational and financial highlights for the second quarter.
We delivered 118000 ounces in Q2, placing us at 247000 ounces midyear.
Clearly, we're well positioned to deliver on production guidance of for 30 to 470 that says I would caution not to expect that we will exceed for 70, given that grade will trend closer to reserve levels for the second half of this year.
Our total cash costs in ASIC at midyear are tracking better than the best end of guidance on both parameters. There were and will continue to be some offsetting puts and takes on these numbers increased reagent consumption offset by P. T you accruals under new legislation.
Both Andrew and I will address this in further detail on the update.
The cash generation capability of this asset continues to show itself for the year to date, a sick margin of $922 an ounce over 50% per ounce given that we were able to add to our bank balance and concluded the quarter with $196 million in cash and no debt given that that was cleared off.
Q1.
So with the large tax on pizza you payments behind us in the first half we expect the second half a day year to deliver healthy cash generation and to add to our total liquidity, which is completely consistent with our plan to cash up ahead of the media Luna belt.
Now on this next slide of already briefly touched on 2021 guidance. This slide sets out some of the specifics 3 key takeaways here production and total cash costs are tracking within our original guidance.
Second the range on capitalized waste has been increased by $15 million.
This is on account of the additional stripping that will be done in the early market for the second half of 2021, given that we are proceeding with the pushback.
Of note, we're not increasing the aortic range given that we're tracking beyond the best and adds up the middle of the year, we're keeping that range at 920 to 970, but I would expect it to come in towards the upper end of that range. Given the addition on capitalized waste.
Third leave that last line there in the chart that we haven't changed the non sustaining capital guidance. We are guiding toward the very upper end of that range as well given 2 key additions to the plan first we've allocated $7 million to an expanded infill drill program that net illumina and another.
$15 million for a lower portal on the south side at the medical there on a deposit.
Given the broad range that we started with and progress year to date on the non sustaining capital program. We expect to conclude the year apps for just above the $150 million guided.
No well I didn't mention Esg's strategic pillar at the outset, we would be remiss not to call up the highlights for the quarter, which sees us on path of continued ESG excellence.
3 points here 1 in the top left corner quadrant.
While COVID-19 is settling in for yet another wave in Mexico in case counts for sadly on the rise we're maintaining our existing approach of adherence to strict protocols and we bolted on a specific vaccination program in concert with the local health authorities.
At last week's counts, we have more than 1100 people with at least 1 dose vaccination. This is critical to safe operations moving forward.
Since plan the team just did an outstanding job with planning scheduling an execution for each monthly maintenance shut down on the quarter.
The issue was that the metallurgy through the circuit with higher iron and copper and Sulphides forced us to slow down or shut down the plant for accumulative 60 hours in the quarter.
We really did need additional residents time in beech to reach targeted metallurgical parameters with a view to maintaining recoveries and not waste and go to tailing.
On that note recoveries was a highlight maintaining 88% which is 1% above design in the face of those metallurgical challenges is a testament to the strength of our met program our systems and the metallurgical team.
And the underground team did not disappoint once again sledding another quarterly record of over 1400 tons per day at an average grade of 7 grams per ton.
This performance certainly supported delivery of balance is in the quarter.
Now this next slide sets up have a unit costs took shape in the first half year 2 notes.
1 you can see on that first line that are open pit mining costs are up slightly over 2020.
<unk> reported with our queue to production results are <unk> has been down for repairs. Since early June when somewhere was detected on the belt during a routine maintenance inspection.
Given the specialty nature of the equipment, a splice cat had to be sourced from Europe and technicians flown into install this we expect it to be back in service by mid August while.
While the team has done an excellent job to maintain production and blending by trucking or from the pit down to the process plant. The seed that has driven up our maintenance and re handling costs.
Second you can see that processing costs were up to $38 a ton in the quarter or $35 a ton on the half. This is driven by the cyanide consumption with our historical cyanide costs coming into the average $2.25 a kilogram this impact of processing costs does not insignificant.
We have several key initiatives underway to mitigate the higher reagent consumption, including operationally further refinement of Archie on that modeling and what high now called precision blending strategies.
And from an engineering perspective, we're looking at the possibility of bringing forward the installation of some aspects of the menu lunar flow street flow sheet to deal with the soluble iron, namely the water treatment plant and the iron flotation circuit.
And you can see on that slide if you look at the third line against the last line the offsetting costs at the higher the agent consumption versus the new treatment of the PTU given the new legislation that Andrew will detail.
On that note I will now turn the call over to Andrew for a review of the financial performance.
Good morning, everyone.
2.2 was another strong from.
$22 million has tended to free cash flow generated.
Fine for non you'll Mexican profit sharing.
Rosemary during the call from I'm not pregnant boards to the for profit shown.
From 2020.
In addition to restrict from November.
<unk> investment in capital expenditure during the quarter primarily for.
On on medium.
For 12 provided to someone on all from actual results from that I wanted to to provide some comments on some key driving from Vietnam.
Firstly, we generated revenue of 206 million on ebay or from being 20th from.
Although these outperformed consensus for both.
On $25 million on Q1 on <unk>.
Change is primarily sales on an improvement.
2000 ounces of gold.
Q2, Q1 amount was polyol, Sir on it for 2 dollar amounts higher reminds gold price.
Awesome.
Given the flow of Q2 sales volume reported for cancer went around 10000 ounces adoring on Hum from issues support for the volume on all 3 from production and the second half for Ya.
On call Sweet day reported strong T. T C N B C called performance with a 50% D C come on human reported.
For 2 key on stretching.
That's in your inbox within his performance on a on which to just briefly highlight on how you define on costs on <unk> P. T a profit sharing costs.
Firstly on fine on due to the highest for your volume levels. We received your fries from from 2 right search for it to be higher in 2021 from initially planned.
So you mentioned earlier was total consumption levels and the for a call for the year replace them on a tooth cylindroma times higher than last year, and we expect higher fine on consent to continue from 2021.
For for years 21, I expect this will impact cost for about $15 million to $20 million compared to the initial for them.
Next I'll need PTU profit sharing as I mentioned on the Q1 on his cool tax reform on the Mexican P. T. A profit sharing payment wasn't acted in April of this year.
From a financial standpoint related in part to terrorists.
[noise] account on the P. T a payment of a higher salary for the trailing through your average payment on this is calculated on an individual employee basis.
For most of our employees the 3 year average will be the most relevant comp on so I expect for the 2021 P. T U amount, which is payable in queue to next year to be approximately $20 million. This is $15 billion for initially budgeted.
Looking forward all guidance GCC range from 680.720 ounces of dollars an ounce is still in good numbers will see from higher mining costs from the second half of the year to remind some slightly lower grade materials dirty refer to them.
Moving out to slide 13, you can see here on the cash for for for cash balance of increased by $24 million during the quarter, which was driven by the strong EBIT gold performance.
In general the movements on this charge should be self explanatory for I will highlight a couple of items huh.
Firstly the changes in working capital you see here are primarily represented the $30 million PTU profit sharing payments made in the quarter relating to the 2020 years.
This was offset by net collection from about $13 million in V. A T.
The old for a call from a Q1 earnings call I did flag that we were experiencing some administrative delays and VIP collections on my guidance of these would be resolved in July in fact, we were able to resolve these these administrative matches earlier than expected and sore repayments resume in the month of June collecting 30.
$5 million of outstanding Vit amount month, I went out for tough to where we expect it to be mid year 2021.
Especially on Capitol, you'll see on on the charts share that we invested $43 million and non sustaining capital during the quarter amount is primarily related to media Luna as we continue to execute on the early works, maybe Luna infield drilling on the feasibility study through the quarter.
I expect overall non sustaining capital to continue on the levels you've seen her on queue to through the balance for Ya.
Putting non to slide 14, the key takeaway catering for our balance sheet continues to strengthen ahead of the media room to build.
Despite the significant capital investments on referenced on the last slide.
Is referenced earlier, we closed the course with cash of 196 million and we also have available liquidity of $345 million. In total. When you include are available on capacity on the revolving credit facility on I expect this available liquidity amount will continue to increase of the year progresses.
Finally on slide for Steve. This is just my typical quarterly reminder, on the seasonality of our cash flow generation, which you can see day will be cash will be backhaul pointed.
The large annual tax royalty and pte payments on now behind Us in 2021, which will support stronger operating cash flow in the second half of the year.
Quarterly payments and the third and fourth quarter will will now be focused on 2 items, firstly types and stolen from not guided in previous courses on time.
Installments that typically within a range of $7 million to $8 million a month.
We see that to be at the higher end of that range in the first half of the year by expect will trend towards the lower end of that range for the remainder of the year is taxable income will be impacted on anticipated highest cyanide on mining costs I referenced earlier.
Secondly, the day quarterly to focus on royalty payments, which will be made on not approximates $5 million a quarter.
And with that I'll turn the call back to Germany.
Thanks Andrea.
Turning now on these last few slides to some updates on our key projects as we worked for our strategy and we set the foundation for the future at Morelos. This slide set set some detail around the pushback at the early non pet.
It's been approved by the board. This will add approximately 150000 ounces through the transition period from E. L. G to many of Luna and that critical late twenty-three early 20 for a period.
The work is already well under way and have already touched on adding the $15 million to non sustaining capital for strict on the back half of 2021.
That's just a couple of comments about stripped you can expect it to peak in 2022, and then fall away significantly after that.
Over the for your pushback strip ratios to the pushback only comes in at about 15 to 1 which results in the remaining open pit life of mine strip at 7 to 1.
Without the pushback it was 6 to 1 announced 7 to 1.
Given that overtime costs will ultimately fold into the mining cost for the open pits, we both detail those publicly we don't give it some by zone updates of that nature I will say, however that the pushback generates positive cash flow down to $1300 gold. So it was a sensible business decision and I think of this as a profit making ensure.
<unk> policy.
These pushback ounces will be incorporated into a multiyear production outlook that we plan to release to market in the coming weeks.
Additionally on this slide you will see some information about the second focus area of the strategy to ensure a smooth transition from <unk> to medical Luna.
And that has continued exploration development and mining of our ALG underground. So there are 2 items of note here first for progressing on our part of 3 and second were advancing our exploration program is planned we've now transition to a focus on step out drilling through the back half of 2021, a reminder, that that <unk>.
Graham was 40000 meters at EMG underground for this year.
Now this next slide there's lots of text on it but it sets out released 3 key additional developments on our projects first after what amounts to a few years of study we've made the decision to advance the medical lunar feasibility study on the basis of conventional mining methods and not Michael Hi.
There were many and varied considerations around this decision making these included.
First the absence of any meaningful upside associated with deploying the technology either on on economic analysis through the lens of I R. R NPV, capex or opex or on schedule considerations.
We also consider the stakes involved for Torres well not are only operating mining Guerrero <unk> will be a primary source to feed starting in 2024, and it's a big mine.
We also considered the results for the test program at Altimo deep, which just concluded.
Specifically the rates achieved on development, both laterally and on the steep ramp and the rates achieved with stoping and backfill.
This program. This test program showed us that there is process improvement and engineering to be done on this technology.
We also considered risk mitigation in the event that the technology didn't perform quite to expectations given its level of maturity spit.
Specifically for medical Luna once too steep ramps are driven around that deposit there is really no plan b without significant cost or schedule a disruption.
So rather than bet the farm on the new Tech will consider including in the upcoming technical report a mucker high case that Epo.
<unk> is a smaller adjacent deposits outside of Medio Luna if we do consider this from the technical report it will be at the P E a level.
For the second half of 2021, no further funding will be allocated to the marker high testing.
Guided to spend $8 million on the program in this year and that has been spent.
Instead, we'll spend additional non sustaining capital through the second half of 2021 on I have other items that will derisks in advance <unk> Luna and those are noted on the right hand side of the slide.
$7 million to continue to infiltrate we're really just keeping the 8 drill rigs turning for the rest of the year and expanding the 2021 program from 44000 meters to 83000 meters.
And we'll add $15 million for an additional portal on the south side of the river.
Into the lower part tunneling of the medical lunar deposit.
This is important because it will enable us to open up the entire lower portion of that deposit. So we have enough development to support a successful ramp up.
And this tunnel at the lower part of the deposits has the additional upside of positioning us to continue tunneling from south to north to meet up with the law has tunnel coming in from the other side.
This provides mitigation for a key schedule risk and the development of medical Lind.
Now this last slice no text lots of pictures that includes some photographs of various aspects of development of Medea Luna in the upper left you can see a picture of the monorail based equipment dumping waste steps otherwise tunnel and on the bottom right.
You can see the portal prep work for the South portal uppers, well advanced and we expect to call her the portal to Florida.
Finally, a word about governance are bored refresh has concluded and was endorsed with overwhelming support of our shareholders at the AGM.
Tony Jr. Gagne, Jennifer Hooper, J Kellerman, and Rosie more have officially assumed their positions.
How is also stepped on the role of independent independent Chairman of the board.
On completely confident that we have the right mix of skills around the table to deliver Tarek Second Act.
With a new board and some cheese strategic decisions behind US are long term plan is coming together nicely and we're just going to get on doing what we do best which is executing on the plan.
But that first subject to any questions I will turn the call back over to Michelle.
Yeah.
We will now begin the question and answer session to join the question queue. You May Press Star then 1 on your telephone keypad you will hear.
A tone acknowledging your request if you're using a speaker phone. Please pick up your handset before pressing any keys to withdraw. Your question. Please press Star then too we will pause for a moment as colors joined the queue.
The first question comes from Life's Adams.
D C.
Please go ahead.
That's what I Miss it but.
For 150000 ounces in the pit lay back can you comment on the grade of those known food, but in line with with the reserve good.
Yeah, that's right Brian sits on line the reserve right up the pit.
Okay, Thanks, and a big change their the next question was just on the Wall Harris tunnel.
With the changes to the conventional mining it immediately no conventional morning and the feasibility.
Does that impact your advance rapes and that Tommy but all are you still targeting for.
10 meters per day on the back cover to Ya.
We're still targeting the 10 meters a day Bryce the decision not too advanced for many alien a feasibility study on the basis of the marker high technology doesn't change the process plan for advanced on the wall has tunnel using the Monterey based technology the risk profile on those 2 things are materially difference.
For driving laterally not on a steep ramp.
Not drilling at the face with the monorail based drilling we're using a 3 boom jumbo that's wheel based and we're not using the Flushing. We are instead using a hag loader in loading on to a trapping there and then jumping into the boxes to move it out we think that system.
Taken all together once we get it up and running will deliver in advance rate that exceeds conventional advanced rates and we're still targeting the 10 meters per day.
Whether we get there is another question.
Got that so it's still a hybrid approach to uhm, but maybe with the change to uhm conventional morning at media Luna.
Is there any design change to the tunnel the profile sides of the tunnel could you make it smaller and would that help you advance routes. So.
So we're not changing the size of the tunnel, it's 6 by 6 and a half and we're keeping it that way the the decision to advanced media Luna on the basis of conventional technology doesn't change the size of that.
Okay.
Just on the cost profile, you got it to always sustaining costs.
In the high end at the end of the range is that when you say that do you mean that bonuses.
Hold on sustaining cost for the full year will be in the high end or for the second half because if you're tracking at 870 for for the first half for the full year numbers to be at the high end, they're gonna need to be much harder than the high end of the range for the second half.
Should we be looking at them.
Brian.
Your initial for Andrew How're your initial comments were correct.
With guidance there will hit the range from a full year on year for end of the range for the for Ya.
And you run from leaves for a second half of the year non will come from a higher cost profile, Ohio ASIC profile on a multi drawing for for that to see.
Additional on stripping costs and sustaining cost choices for that majority referred to earlier on related to the push for us.
Is there anything else other than district, because cause it's given adding and that extra 15 million a stripper just I'm not sure I can quite get that.
The second drive on returning referred to was around from higher minded call from the second half of the year for him. So we are expecting that's a trend upward from the second half because of a low on the lower grade that will be mining fruit of our call for this year.
Okay. Thanks, I'll take another look at that my last question is just on the underground performance. It's been good can you remind me that still with the contract or is it on them on and if it is for the contract as any I think it was at some point some thoughts to change it to honor operator.
It's still a contract mines fries and there are still those thoughts.
Okay.
Mm. Thanks, a lot for answering the questions Tokyo again please.
Hey, Bob.
Our next question comes from Wayne Lamb of R. B C. Please.
Please go ahead.
Hey, good morning, just curious on the cyanide usage.
They usages quarters, kinda, but run right that we should thinking about as we move along and and in the later years as well it seems to be a relatively high wrote that goes into what you guys are doing last year and so just curious if you should kind of model that kind of cost and bad going forward.
Hi, Wayne.
As for this quarter was just over 6 kilograms, a ton last year, you'll recall that must be implemented that oxidation program through leaves we rounded out the year at about 3 kilograms of time, which is where we want it to be moving forward given the efforts on blending et cetera, I think it's probably save some model and the 5 kilogram a ton range and.
That comes with a caveat, if we're able to land the aspects of the media Luna flow shape to deal with that soluble iron.
Then that number will tank significantly and so the question is can we do it what will it cost how fast can we pull it forward and does that make any sense to do so and as I said on my commentary that's under investigation at the moment.
Okay perfect. Thank for men just curious on the Sinai then regency sounds have you guys been seeing any causes inflation.
On that from.
No actually we're holding pretty well at $2.25 per kilogram, 1 interesting developments that I didn't mention and the commentary is that we're looking at using an aggregator.
An aggregator in the country on cyanide supply if we can get together with a couple of them in other mining companies to support us and driving down unit costs will certainly I explore all options associated with that.
Okay, Great and then maybe just moving the look of high as you guys did the test taking over the past couple of years.
Just curious you know if you have more.
Detail on.
Where there were areas of further optimization relative to what was outlined in the P. A.
Yeah, I think the areas of focus for further optimization will be steep ramp developments loading the muck boxes on the steep ramp.
And.
Testing the loading to muck box integrated aspects of the system. So the.
The commentary on Mucker, Hi, I wanted to be clear isn't any kind of commentary about the potential of the technology. It's commentary about where the technology is and the massive steaks associated with deploying that technology at many of Luna for Torres.
Okay perfect understood and then maybe just last 3 on the lower portal Uhm I was just curious when that decision was made a day.
Comment that and I guess, given that you guys had an increase.
Increase the non to saving Taebo guidance.
Was there some kind of all set to that or will you guys just try moving towards the lower the bridge for the year.
On that decision on the south part of lower was under investigation for the first half of this year, we had been carrying it as an option depending on how the decision laid down with conventional mining versus marker hi, mining and we've been trending lower on the non sustaining expense for the first half of the year.
Hence the guidance towards that $150 million range with the addition of sub portal lower and the continuation of the unfilled drill program.
Okay perfect. That's all for me. Thank you very much thanks very much for the questions.
Uhm.
Our next question comes from Trevose Turbo Scotia.
Your Bank go ahead please.
Yeah, Hi.
I I just had a couple of follow up so I guess further on the muck of high.
I understand you.
That's kind of used up the budget for for test work on it this year and and obviously there's further.
Work on it does need to be done in terms of optimising, it and and kind of testing its capabilities. So I'm kind of wondering how does it move forward from here are.
It'll be work done with mucker high and kind of what's the schedule for continuing to to kind of optimise that.
That's under assessment for US right now and forever, but we did know for sure is that given that we've used for the $8 million for this year and we had a higher non sustaining capital priorities for the back half of 2021, given this strategic priority to Derisking advanced media Luna, we're just going to take a pause on it uhm if we take it back.
Up in 2022, we'll certainly let folks know.
Okay, and you know I heard you talking to to wait about it and and that you're not drawing any conclusions about the potential going forward..1 of the comments I was curious if you could elaborate on a bit and that is that aside from the risks associated with trying to implemented and keeping me.
Luna on schedule, you mentioned that it didn't there wasn't a strong case on the financial side and and I was just wondering are the are the costs associated with Monica high not really.
Coming through the the way that you had anticipated potentially in terms of.
Cause I I thought that that Mark, Ohio part of its appeal was the ability to actually be.
A means of cost savings in terms of development I'm, just wondering if you could comment a bit on the financial aspect.
Yeah, I mean, I think that appeal is still there as I said, there's lots of potential on the technology and as you know whichever I mean costs are rolled up on the basis of assumptions how fast you go what the advance rates are how fast you can clear the muck from the face and so we had to use the data from the test pro.
Graham to formulate the assumptions to build at the mine plan to roll up IRA are from which comparisons were made from the luck of high case that conventional case I won't give out details on that but I will say when we ultimately did the I R. R. A comparison between the conventional case and the muck of high case.
That big differential that you saw in the P. A closed substantially.
And so I do think there remains upside on like a high depending on what it's able to achieve in either test or small mine as appointments in the future, but the assumptions that we used sort of negated what the upside could be on either cost or schedule, both of which are important to us.
No I understand and and obviously until it's it's running as well as you would like obviously the costs are going to reflect its its potential.
My My last question sort of like a high related but not not really is just on the E. P. O deposits that you did mention as a place where you might still potentially find use for Michael Hi, I was just wondering could you tell us a bit more about that you said it was simple it was separate from media Luna.
But similar and I just don't remember hearing a lot about that before and I was curious if you could give us a bit more detail.
Sure Uhm a P O was in the P. A it's about an 8 million ton resource for a little lower gold equivalent Grand on many alina right around 3 and a half grams per ton gold equivalent uhm, it's literally a right turn off on the wall has tunnel south of the <unk> River and so that to my mind and Trevor is.
Still a potential for them up a high technology, depending on its abolition over the next couple of years that day prioritize for us as relates to the development of many Luna uhm, but we're certainly keeping the possibilities open to tech that in later smaller or body potential testing ground and something that we.
Have ready access to and on my plan after many other than that.
Okay, I understand where you made a lot of big decision for this quarter and a lot of good things to see thank you very much.
Thanks for the questions from.
Our next question comes from Ryan Thompson of BMO. Please.
Please go ahead.
Yeah, Hi, Jodie and Andrea Thanks for the update I think most of my questions get asked but maybe just 1 on the broke on sounds like maybe a couple of weeks and the slippage on on getting it repaired could you just for <unk> mine remind us is that.
<unk> going to be used for white.
<unk> E O G pets, and how that ties into pet way back.
Yes, I mean will continue to use the rope contrast, the life of the E. L. G pets, Ryan that's the short answer to the question and yet some slippage on the schedule I mean, it's a highly highly individualized piece of equipment throw COVID-19 over top of that and sorry thing Ah slight <unk> from Germany, and getting the right personnel on the ground.
After they've been Covid cleared in Covid test it was a bit of a trek and so yeah. We're looking at mid August night to get that back up and running I will say on it we ordered 3 slices <unk> not 1 uhm. So in the event that there's any sort of weird detected in the future we have that on hand.
Got it perfect.
Totally understandable.
With everything that's going on in the World was Covid and whatnot, maybe just the sort of shifting gears here to the good balance sheet can you just talk a little bit Ah debit balance sheet are you are you comfortable as you sort of progress with usability study work on on media room and you see.
Any sort of inflationary pressures come.
Coming through and the futility study and is there any need to sort of walk in pricing or anything like that as you.
When you're on on your work there.
So thanks for the question.
Overall for me from a capital cost perspective on on on media Luna, We all see uhm some inflationary pressures on obviously compared to what was previously disclosed within within the P E.
So we all see some some overall outside.
Nothing that for <unk>.
At this point would drivers to do anything from seeds from the kind of lucky in certain effects right. So it was also a few commodities. We all continue to be looking at her drink as being a you know inappropriate toxic to help manage capital costs looking forward, but I think if you highlighted in pilot.
For the mind material, we all sitting down on a very strong balance sheet free from $50 million on a available liquidity and still feeling become comfortably for ourself on media Luna throwing for the password. If that's what we choose to do so I think we're ready for that position, even even notwithstanding inflationary pressures of receiving.
What about the moment to be able to execute on that.
On a capital project permanent for you guys.
And in terms of locking in pricing right and I'll just bolt on 1 additional comment on as we're entering entering into contract on the set aside and really putting meat on the bill on on our contracting strategies for many of Luna, we're being very careful a given that we don't have a construction decision can be I'm very very has it.
And to lock in pricing at the peak of pricing for example for steel Uhm and so we're maintaining some optionality around receiving the benefit of price reduction at 2022, 23.24 move on on commodity specific contributors like steel.
Got it yeah. Nobody my question was more related to the gold price on the market and like bold bright for B L. G, but I think I covered that.
Nope.
Our next question comes from Spencer Lehman private Investor.
Go ahead please.
Well good morning Jodie.
Yeah, I'm just a private is a longterm share holder I'm not an analyst and.
Great report [laughter].
1 of his pretty technical I, just wondered if you can maybe simplify it a little bit for me and it's sort of lame in language and.
In regard to this big decision on.
Mhm immediate Luna I I think I understand it aches ship just just summarize it for me simply it's for US what are the what are the downsides and not going through with a monorail at this point I mean, obviously, there's probably.
Wonderful technology, an exciting but.
During the conventional way.
I I can see his list for <unk> for the company the share holders, but what are you what are you, giving up with a decision what's the downside of it.
So first of all set for thank you for dialing in and thank you for your holdings. We always appreciate our long term shareholders cause types of the kind of company that has a long term view driving business value over the long term. So thanks for that quite frankly, I don't see any real downside and non complain on the high technology at many alana.
Like any decision in business or in life, it's a risk versus reward decision and given the maturity of the technology. The rewards that maybe would have been available. If the technology had been a couple of years advanced were readily available to us and so we were looking at a lot more risks.
Then potential upsides, so on that basis that decision was taken it's really.
The stakes consideration for Torres.
Alright, what once you once you do the congenital okay could you do the monorail in the future.
Yeah, Yeah, I mean interesting that you raise that and so we haven't done a lot of down deep drilling below the menu lunar deposits and so if for example, we wrapped in conventionally around that deposits mine conventionally around that deposit do some further exploration work down did get some interesting drill holes down there.
We could definitely do with deep red down under that deposit into play the marker high technology, there on a smaller scale.
Gotcha, Okay here, a great balance sheet, Oh, what's what's the increase cash in on what what is the what is the current books out of your equity for sure.
June 30th.
Uh-huh.
<unk> I don't have access to to have an expense.
But we can circle back with you on on that well.
Well I think it was 11.70 or something you know.
<unk> would you say it's up to.
Ooh Ooh up a little bit more.
In terms of our of book value.
Relatively consistent with water aerobics.
Q wanted cash balance of inquiries about being on set.
From a volume basis 5 for some depreciation during the quarter.
Okay.
Sorry, what on it'll be on when you get when we all get all the final.
Yeah, it's an old fashioned index, but it's always interesting to know what the book value is.
But I'm 85 years old. So I you know some of these things are a little fashion.
The old fashioned stuff that goes fast and because it's works better Sir so we come back to get back to you on that for sure.
Alright, okay. Thank you.
Thank you.
This concludes today's conference call you may disconnect. Your lines. Thank you for participating and have a pleasant day.
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