Q2 2021 Kirkland Lake Gold Ltd Earnings Call
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Good afternoon, ladies and gentlemen, my name is Brandi.
On top of your conference operator today I would like to welcome everyone to be Kirkland Lake Gold conference call and webcast to discuss the company's second quarter 2021 financial and operating results.
All lines have been placed on mute to prevent any background noise.
After the Speakers' remarks, there will be a question.
And the answer session, if you'd like to ask a question. During this time simply press Star then the number 1 on your telephone keypad.
If you would like to withdraw your question press the pound key.
With that I would now like to turn the call over to your senior Vice President Investor Relations Mark adding.
Thank you.
And then would you operator and good morning, everyone.
Welcome to our second quarter 2021 conference call and webcast.
With me today are most members of Kirkland Lake Gold senior executive team.
And speaking.
During the presentation will be Toni <unk>, our president and Chief Executive Officer.
David <unk>, our Chief Financial Officer.
And Hans Vice President of Australian operations.
Larry <unk>, our general manager for Detour Lake mine.
Evan Pelletier <unk>, Vice President mining for Kirkland Lake and.
And Eric Kallio, our senior Vice President of exploration.
As mentioned.
Mentioned there are also several other members of the executive team participating on the line as well.
After our presentation. We will then open up the call to questions.
We ask each person to limit themselves to 2 questions today.
A slide deck that we'll be referring to is on our website both on the homepage and the events.
Okay.
Before I get started I would like to direct you to the slides on the show and on the website.
Relating to forward looking statements.
Our remarks and answers to questions may contain and likely will contain forward looking information about future events relating to our company. Please refer to <unk>.
<unk> as well as forward looking information section of our MD&A dated July 28, 2021 for the 3 and 6 months ended June 32021.
Also during today's call, we'll be making reference to non <unk> performance measures. A reconciliation of these measures is available.
And our.
Q2, and 6 months press release, and and DNA <unk>.
Finally, I will just emphasize that all dollars mentioned.
I mentioned today will be and U S dollars, unless otherwise stated and with that I'll turn the call over to Tony Macoute, President and CEO of Kirker and mindful.
Hey, Thanks, Mark and thanks, everybody for.
Slide being on the phone and though a nice nice.
Summer day, and Canada here and your week.
You know, we don't get a lot of these basically got London gardens. So we'll try to be efficient and appreciate you guys being on the call and.
Give me some time the assets.
And we will get through this presentation and.
And of course and answered at least enjoy some of the Sun.
On China, and you've seen out there anyway before they start on slide doors for but no I think no and no.
And we did put on our press release, you do look at the results.
For the quarter.
And then a very very solid quarter with record record record results and earnings and throughput of detour et cetera.
And we'll get more detail on that later, but we again we are on this call and we get the.
Benefit of being able to talk about both of these results, but it's really you know.
The results and the work of a lot of people.
Within Kirk and I go all day, and our suppliers and and their efforts and the communities that support system.
We would be remiss, if we didn't say thanks, everybody for your hard work, it's not easy on a business that we do and 1 of the board recognizes some defined.
And all the all the challenges that we that we face in terms of trying to mine gold at depth and.
Or if you extract.
Gold and other other rockets.
It's not an easy business, but you've got a lot of people that are working hard and that makes it look and.
And can make it look easy and so anyway, thank for their efforts.
And the part of it and.
Again and acknowledging that.
Within that within our operations, both in Canada, and Australia, where our mines are located on non traditional lands of.
Numerous indigenous communities and.
And Kirkland Lake and.
And we have an IPA and Carson Lake or index agreement and and.
And very good working relationship with both the Walgreens and Kirk Nathan and.
And the attach 1 first nations and public outside of Coke and Mike over and deeper and we.
And we occupy the traditional land and stuff that loose Cree based off the new factory Island on this on the James Bay Coast.
And as well as the Equifax and with first nation basin.
Outside of Cochrane, Ontario, and the and.
And the.
Walgreens and first nations as well.
And similarly.
Similarly, and all we do have exploration agreements, we are working sort of open and correct border and and and the land there it's.
So that's.
It's part of the traditional and the creation of Quebec and and.
And over and Australia, whether it's on it down and Victoria Fosterville with and you always have more wrong as well as up and.
And up in the northern territory and Australia.
And we're working on some key links to the land.
On the log on and that you all and group and <unk>.
So we have lots of respect.
And we really appreciate the opportunity to be partners and to.
And you're able to.
Operating on these traditional lands and we're just going through a period of time here in Canada, and a lot of developments in terms of.
Of.
And then the truth and reconciliation happening in Canada and.
And I guess from our perspective.
As a company.
And we support people.
And is you know what I'm, saying.
Sometimes you have to whole recognize the truth.
Things that happened in the past, we can't we can't do things too.
In the past, but we can we can demonstrate as we go forward, what we think what we do and how we want and work on these lands and and work with our partners and.
And this area.
Anyway, maybe I'll get into our results and before I do that.
And again that slide 4 talks about to give you an update on our COVID-19 response and you know.
And this is COVID-19, we were talking about here, but it's in 2020, 1 and will ultimately doesn't become a COVID-19.2021 or Covid 2022.
But we are in.
And I encourage by the developments on Ontario.
We do know that and now there's some new lockdowns on Australia, but.
In terms of everything happening from a COVID-19 perspective, and and the impact on our sites and it has minimal impact.
This point and time.
And maybe you know over the last year and a half 2 years and people.
People and Kirkland Lake Gold.
And I'm exceptionally well in terms of putting and good policies and procedures and how we work convincing people adopting.
Wait to protect each other and worked together and we've.
And we've had a lot of success and we have had some outbreaks as defined by public health at both what's out there and.
And Ontario during the during the second quarter.
But you know the company and people were very proactive and responding and the situations were quickly resolved and.
Actually in fact in both cases, we were recognized for the local health units brokerage might help you and it puts on it.
The success of the detour and the commissioning.
It related.
And for PERC and microwave and in terms of what we what we did was take on transmission and protect our people and they can describe from these assets. So thanks, everybody for continuing to.
And 2 who work hard and these areas and look.
Towards staying safe.
Turning to slide 5.
And I'll give you an update on our responsible mining efforts, we are a signatory to the world Gold Council responsible mining principles and we're working to achieve compliance to these objectives and our business and at the same time, we're working to also support the industry as a whole to achieve these objectives as well and fundamentally for us the response and wisely and ventricle.
With everything we do and it's part of our culture and and we believe that it's not just good enough for us to do it.
Cook and my goal and we want to make sure that day.
Rest of the industry is there with us and we think we can we can demonstrate leadership with the rest of the rest of the industry and not just the gold mining companies that but on.
And all the mining companies.
A month and the region.
And also additionally, as you may recall in Q1, and we pledged to achieve net zero carbon emissions by 2050 on earlier moving.
Working towards that and establishing a and that your task.
Task Force. So we've been working on trying to identify what our carbon footprint is at this point in time and and.
And all different areas and.
And then broke out waste.
What does it mean and how does how do we do it and look on waste to communicated internally, there's lots and lots to do there.
Also made a pledge, where we made a commitment to invest $75 million per year over the next 5 years.
Simply on.
And the supporting and a number of efforts 1 is.
Reducing.
And greenhouse gas footprint and and the impact on us.
From our sites so looking at ways to have that day.
And to reduce.
Our use of carbon also looking at you know a big area of investing in technology and innovation to support a safer more productive workplace and.
Digitization and automation.
Automation and working towards creating smart mindset and at our mindful feature and Mckesson, Canada as well as on Fosterville on Australia, and we've also committed to providing support to our local communities and regions, where people live where people work to support these areas makes it makes them more livable.
For our people and for the people and those.
Okay.
Who host us.
During Q2.2021, we achieved it.
And number of treatments and these key areas and you made it.
Significant donation on the area of community support over and thought identical and.
Next the Fosterville and <unk> in Victoria, Australia, we need to $12 million and community partnership front.
We also made a major commitment and Kirk and like hospital.
And providing financing for a complete redevelopment of the emergency departments at the hospital building.
Moving on also on our leadership and minimizing and reduce carbon emissions, we took additional steps and keep through 2021 through it towards further reductions and some of these examples would be the.
And part of our new fleet of the Z 50 trucks out and the cancer, which are the world's first 50 ton underground haul trucks.
Now I'll go and turn it over to our financial and operating results on slide 6 as I mentioned, we had an excellent quarter and Q2 highlighted by record net record met earnings of $244 million or <unk> 90.
The rollout of share I think cash.
Pretty much industry, leading by the way a solid increase in quarterly production and with a 50, 50% higher than Q2, 2020, and 15% from Q1 'twenty 'twenty 1.
Revenue growth and significant increases in both operating and free cash flow on.
All 3 of our other mines increased production.
And 1 center in Q2, 2020, 1 with fossil is having a particularly successful quarter and cash.
Canada, both detour Lake and the cancer achieved solid production growth from both part relates to both prior periods.
Looking at our unit costs in Q2, we beat our full year guidance ranges as we have been and we are being impacted by the FX rates.
So our operations and very well managing costs and we continue to target our existing guidance.
In terms of cash flow, we had operating cash flow of $330 million and and.
Free cash flow of $131 million operating cash flow trends and are translating into free cash flow per share.
Cash flow per share of $1.65.
<unk>.
Turning to slide 7.
Our financial strength continued to improve and again, we think we have and industry leading financial strength.
Cash increased to almost $860 million and again with no debt. We also continued our very successful track record around capital allocation and we made significant.
Investments for future value creation into our assets, while also returning capital to shareholders.
And so what it would've been doing though during Q2, we returned nearly $62 million, giving shareholders $50 million for our Q1 dividend in April and 12 million also reported.
Repurchase of 300 balance.
And chairs.
We.
Demonstrating our commitment to the convenient and.
Continuing to repurchase offer and renewed our ntis and early June.
And net new and revised and and CIB now for the next 12 months, giving us the right price break your ability to repurchase up to 27 million and chairs.
All of that up by introducing and automatic share purchase plan.
We also used to announce a buyback of 300000 additional 300000 shares in June and we're making good use of the automatic share purchase plan in July.
To date in July we purchased about 945 shares.
And that's an additional $38 million. So in total we're you know.
Right.
Output to.
Repurchase 5 million shares.
On her and automatic share purchase on.
Turning to slide 8.
And when we talk about investing and investing for growth for shareholders and providing value for shareholders first part is definitely we invest.
Which will give me some money back to shareholders through our through our dividend policy through our share.
And CIB truth, and and those wait to make allocation back to shareholders.
Thing is through and through exploration and investing and our assets in terms of.
Moving the value of these assets and and.
And another 1 and a third way we create value.
E shareholders is through <unk>.
Investing in capital investment into our assets.
You know what.
And we continue to have.
And and successful track record on that.
And future lately, we're generating it.
Very encouraging exploration results, Eric will talk about them and local later on.
And.
And I think for the results continue to point to the conclusion that we talked about when we originally did day deeper transaction that theirs is an extremely large deposit along the beach and mine trend.
And that's near surface search and much much larger than is included in the current reserves and I would I would say that.
Central but and it's just the beginning and he might not be and foundry.
Terry do you want and we think we could cover this.
We're also making good progress on multiple growth projects, including optimizing deeper and mining.
<unk> throughput and the mill and we did have some record throughput.
During the Korean core and during the period.
And both.
From a day perspective and for the period.
And improvements and great management and <unk>.
Coming with a new apps and lab and and and you know looking at change and some of our processes that site as well as the other infrastructure to support and.
Improvements in terms of mill throughput.
And that's such as you know and.
And we're looking at putting such.
And frankly in front of the cone crushers and the revenue seat system support and the down for maintenance.
There's a lot of a lot of projects and it.
Investing that over and above.
Assets and number 4 shaft and the number 4 shaft. The significant project. It currently and it continues to remain ahead of schedule and on and on track for completion and that late net.
Next year.
We also had debt and the cash that has continued to have a significant exploration success and we issued a press release couple of weeks school, which felt the results continue to show that the South mine complex is going to keep growing and it also highlights a potential does them on both the amalgamated break and the main break for new mineralization.
And.
And and potential mining areas and future and and.
At Fosterville and we've already talked about the strong results and Q2, and 2021, but basically phosphorus hospitals, having a tremendous and guarantee and Hong will discuss that more shortly.
Apart from the results. We have also made progress with key underground development critical pretty picture on EXPAREL.
Great up on future exploration.
And and.
And sustainability across your Bill and.
Got up and to swap the Robin's Hill, and a second mining front, but also.
Looking for cheap you're down plunge extension to meet needs.
New discoveries such as this 1 zone.
Now on slide 9 and this is looking at and year to date results and to better than expected production of 682000 ounces for the first half of the year game.
And you do the Kosovo and keep very solid unit cost performance you had record.
Earnings and earnings per share and very strong cash flow.
You can also see on the slide that so far this year, we have repurchased $2.3 million share for coastal and $100 million that includes 945000 shares were bought back in March.
And in total we have returned around $1.1 billion to shareholders since the beginning of last year.
I think that very importantly.
Additionally talk to on top.
Top of the strong results. We are also poised for poised for a very strong second half of 2021 and for the strong value creation going forward and to have a lot of catalysts coming up and the company and main catalyst being low.
Ill fated and resource reserve estimate that Peter was talking about into Q1, and finishing for this year and effective December.
So on that 2021, but coming out in Q1, 'twenty 'twenty, 2 and and we talked about with the completion and and and.
And the use of their numbers and the number 4 shaft and government and combined with cash flow.
Looking at Slide 10, and this shows our performance against guidance and you can see we're very well.
<unk> to achieve our guidance entering the second half of the year.
And our Q2 results and press release, we discussed FX rates and the fact that stronger than budgeted Canadian and Australian dollars.
Saturday and impact on our cost and expenditure performance relative to guidance relative to.
The unit cost guidance non <unk>.
Dollar dollar spend offsetting that impact.
And the third is half of the year were higher than planned sales and and effective cost management and on SSA and all.
And on all 3 of our operations.
And as it is if we continue to see the rates prices like we have and the first half of the year, we will likely come in and right around their offerings for unit cost and capital spending, but just wrapping that up what I want to emphasize that is that.
And on operations with our offerings performed very well our financial results are strong and continue to have very encouraging exploration results and we are making excellent progress with all of our key projects and value creation initiatives anyway with that maybe I'll turn it over to the call over to David <unk>, Our Chief Financial Officer, and and give you some highlights from our financial results. Thanks, David.
And the Frank and Tony and good morning, everyone. I'll begin on slide 11, and Q2, 2020..1 we achieved record net earnings of $244 million or <unk> 91 per share.
This represented a 63% increase from $150.2 million and Q2.2020 and 51.
Percentage increase from $161.2 million the previous quarter.
The increase from both prior quarter and prior year resulted mainly from higher revenues and lower effective tax rate and.
And 2.2020 also saw a sizable foreign exchange loss of $72.8 million.
Compared against Q2.2000.
David 1 foreign exchange gain of $2.6 million.
Adjusted net earnings totaled $246.9 million or <unk> 92.
Sure.
The difference between adjusted net earnings per share of <unk> 92.
And net earnings per share of 91, and Q2.2021 was mainly related to the removal.
And $25 million net mark to market gain recognized on warrant liability care and maintenance costs incurred at our non operating site.
Holt and cope complex and E&P and other items that were not reflective of our operations like COVID-19 costs and other restructuring charges.
Turning to slide 12 in Q2.2021 total revenue.
Is $662.7 million the change from Q1.2021 is mainly impacted by increased sales volume and a $26 per ounce increase and average gold price.
Paired with Q2.2020.
100.
And $11 per ounce increase and average gold price from 1007 hundred $16. The 1008 hundred $14 accounted for $36 million of the revenue growth year over year.
Looking at EBITDA.
As shown on slide 13 into 2020.1 EBITDA.
With $451.3 million or <unk>.
And from Q1, 2021, primarily related to a 20% increase and revenues driven by higher volume and gold price.
Compared with Q2, 2020 change and EBITDA was due to a 15% increase and revenues and a large foreign exchange loss impacting.
Total 2020 EBITDA.
And to 2021 also saw higher depletion and depreciation expense of $111.3 million, but.
The change from Q1.
And in 'twenty, 1 primarily due to higher sales volume.
Deferred tax expense was higher in Q2.2012.
But overall the effective tax rate for Q2, 2021 was lower reflecting favorable tax adjustments during the quarter, resulting from reassessment of income taxes paid in prior years.
Looking at.
The next slide turning to slide 14.
1 we looked at our cash balance and cash flow.
On the slides, you'll see that our operating cash flow was strong.
Generated $487.5 million of operating cash flow and the quarter before $157 million and cash taxes paid and the quarter.
During the quarter on <unk>.
$98 million tax.
<unk> payment was made in Australia, representing the final tax installment for the 2020 Act here.
During the quarter, we invested in our key assets spending $199 million and capital.
Cash used for financing activities of $64.3 million reflected the $11.9 million.
And to purchase shares in Q2.
As well as.
51.
1 million used for payment of the dividend.
Turning to the next slide slide 15 looks at the change in cash and a different way you can see that the largest contributor to growth and cash flows.
And from our operations, which generated about $395 million of cash which is before income tax paid of $157 million growth capital investment of $82.5 million exploration spending of $46.6 million.
Other cash outflows include.
<unk> costs incurred at our non operating sites.
BNP and Holt complex a $14 million.
And corporate G&A and $17 million.
As noted in the previous slide during the quarter 62 million was returned to shareholders, including $11.9 million used.
Switching gears.
The company's and CIB and.
And $50.1 million of dividend payments.
Next I'll turn it over to eat and harm to discuss operating results at Fosterville.
Thanks, David.
And I'm starting on slide 16.
And you are.
And also had a very strong quarter and Q2 and for that matter for the <unk> of the first.
6 months.
Talk to you produced a 100 and did get dads and answers and Q2.2021.
And on processing of 170000 tons and an average growth of 29, 2 grams per ton and average mill recoveries of non.
3.7%.
For the year to date.
<unk> 266 J.
Jay on the <unk>, Sydney has and answers Dan.
And for last year, but consistent with our plan to reduce production and this one's on to jewelry at and 1 law and most sustainable levels.
The $266.7 day as Nancy.
And yet we're approximately 60 day has and answers about planed levels sort of hockey.
<unk> 9 expected he drove the miss on the mindset of being very strong.
And performance in several.
<unk> zone starts and those on.
And our federal team re sequencing that beginning Q2.
Looking at already taken thing.
And it involved and area and Swan code audits.
And to start of section of starts and talking with our again, however, once optimized we change that sequence and let me flip it on its head and.
And did it from bottom up as a result of that was bringing some higher growth starts from Q4 into Q2 on Tumblr.
Turning to costs, a guy and very strong for both Q2 and year to date.
For Q2, we had operating cash costs of bond and $62 and apps and all in sustaining cost of $353 and dance.
I believe the date.
Alright, and cash costs averaged $192 and hence with all in sustaining.
So its $395.
And these are very low numbers.
And during the second half of the year, we're very well positioned to achieve their production volumes and potential and could be better.
Also well positioned relative to your cost guidance.
On aircraft presentation and outer layer it on.
Non general manager.
And here for the Detour Lake mine.
Hey, Larry just before you come on here and I don't know if you could quantify I don't think that was a Friday and slip at the beginning it wasn't just the first 6 months of solid performance and possibility to solve it.
On a track record of 6 years of solid performance and I think there's a point in time and it.
And costs all have to believe that day.
It's a very good mine very well run and led by led by exceptional people and and and.
And the people working there.
It's been exceptional work force and exceptional area to be and and we just lucky to have it and our portfolios or anyway. Thanks.
And when we have and sorry about that Larry and John.
Hello problems and.
Thanks Ian.
Starting on slide 17.
Detour Lake achieved as Tony mentioned record quarterly production and quarter 2 of 21.
166000 ounces based on processing.
8 million copies and leveraged degree reported 96 grams per tonne.
Coverage with 91%.
This is an increase of 26% from quarter, 2 last year, and an increase of 13% from the previous quarter.
The quarter over quarter increase was largely due to significant improvement in EBITDA.
Average grade for the.
Sequencing into higher grade areas as part of our phase III money from.
We had indicated to the market that you would start to see the ramp up and grade starting in quarter, 2 and we certainly did.
The average of 96 grams per tonne was in line with our reserve grade.
We also had and increases in tons.
This process since the first quarter throughput is typically the lowest of the year, having said that you may recall in Q1. This year was a record for first quarter throughput levels.
So year to date, we produced 312000 ounces was 40% higher than the 5 months after the acquisition last year and 16.
16% increase for the full 6 months.
Year to date 2020.
Looking at our operating cash costs, and your average $610 notes and quarter 2 and.
$674, an ounce for the year to date.
Excluding the impact of.
FX rates for Q2.
Weight and cost per ounce improved from last year's second quarter with much of the increase reflecting higher grades and increased sales volume.
All in sustaining cost per ounce sold average $996 per ounce with quarter, 2 and $1090 per ounce for the year to date.
Looking ahead and be.
And 2 opportunity and improvement in grade.
For the remainder of the year above the Q2 level and are well positioned to achieve our full year 2000, and 'twenty 1 guidance.
Moving to slide 18.
And as Tony had mentioned earlier, we have a significant number of project total north Detour Lake.
Our growth capital expenditures of detour.
And for the first half of the year for total of $80 million of.
That amount and $44 million was for deferred stripping.
$37 million was to support ongoing work to expand capacity.
We've continued processing plant expansion is on track with good progress on the crusher improvements.
Good day.
Further capacity.
Air strip had significant progress.
And we anticipate that being complete by the end of Q3.
The tailings facility is progressing well with the favorable weather conditions and and early startup.
Hold on a maintenance facility expansion is nearing completion for the field.
Maintenance area.
And finally as pictured, we're expanding our camp, which will be completed by the end of quarter 3 and it's just just to note the current discount.
Once complete will be the largest hotel and we've been on turnover.
And managing the size of it.
With that.
I will turn the call over to have and country President mining for Crimson Lake.
Thanks, Larry.
Im starting on slide 19 production that and the cash and Q2 totaled 55300 ounces added operating cash cost of 586 and all in sustaining cost of 848.
Q2, 2021 production was 32% higher from Q2, 2020 and increased 17% from the previous quarter.
Higher tonnes were processed in Q2, 2021, mainly due to better than anticipated, which and strike lengths from stopes on the South mine complex.
Operating cash cost per ounce sold average 5.
And $86 million versus 547 for the same period, and 2020 and 699 for the previous quarter.
With the increase from Q2, and 2020, and reflecting a stronger Canadian dollar and Q2.2021.
The 16% improvement from Q1, and 2021, largely reflecting the favorable impact of higher ounces.
And sold.
As well as lower maintenance costs and reduce expenditures related to operating development compared to the previous quarter.
All in sustaining per <unk>.
Cost per ounce sold was largely unchanged in Q2.2020 as the impact of a stronger Canadian dollar was offset by higher sales volumes.
When you include the impact of <unk>.
100, and its all in sustaining cost per ounce sold improved from Q2, 2020, reflecting the favorable impact of higher sales volumes as well as lower operating cash costs and sustaining capital expenditures.
Moving on to year to date production out of cash a total of $103 and analysis based on processing of 167000 tons and that on average grade.
And your 8.5 grams per ton with recoveries and the 97.9.
9%.
Year to date production increased 11% for the same period and 2020, reflecting a higher average grade and increased tonnes processed.
Turning to slide 20.
And we'll look at our growth.
<unk> 1000, and that are helping us build a new and the cash in minds and the future growth.
Growth capital expenditure for the first half of the year was $43 million $30 million and Q2.2021.
Of total growth Thats been expenditure, so far and $2021.22 million were related to the 4 shaft project.
During the quarter the shafts advanced approximately 6.
Both project and had reached a depth of 5600 feet as of June 32021.
The project and in Q2.2020 months ahead of schedule and on track for completion in late 2022.
And additional 10 million $4.7 million and Q2, 'twenty 1 of growth capital expenditure and year to date.
Date of 21 were related to the ventilation expansion project involving the development of 2 new ventilation raises.
The 2 new raises will add significant.
2 our ventilation into the mines, which have already improved from the level. This time last year.
The remaining growth capital expenditure and Q2.2021, mainly relates to.
<unk> hundred 5 underground projects, including lateral development from the mine towards portion.
I'll now pass the presentation over to Eric Kallio, Senior Vice President of exploration.
Thanks, Kevin and good morning, everyone.
My first slide today, and that number 21 and related to detour, where we're continuing to advance the large scale.
And the number and commenced in 2020 evaluate the potential surrounding the name and future website.
As previously and now the program includes a minimum 250000 meters and aiming for an updated resource and potentially extended mine plan for announcement in early 'twenty 2.
And in terms of progress to date and believe it is still continuing to track very well.
The 64000 meters and Q2 and now close to 200000 meters and starting in early 2020.
Additionally, we have now already seen quite a large number of assets and had 6 press releases.
Including the 1 in July.
Results continue to look very very encouraging.
Summarizing some of the results.
And the French slide which is the long section, primarily as Felipe and containing color coded peers point to highlight holes from different areas.
And also shown on the image is a series of black dots rich.
Our it appears point for all wholesale since the start of drilling and early 2020.
As indicated now study.
And really still on the page, especially and the central and east part of the saddle.
Syndicated on image results from and new work continues to look very promising and all areas with some of the best continuing to come from the central part of the saddle.
Delighted by Pink and Green Dot and recruiting related steps such as $1.7 over 80 meters.
And $1.31 over a 7 and.
And in addition to several other good interest that we've already reported.
And in the same area.
Additionally, there is however, we also had some very good results from below into the west to the future. What we're drilling today is much more limited.
Key intercept and the west pit.
And with Blue and Orange Dot and include 1 <unk> over 75 and $1.6 to over 77, 8 premier the lower limit of the disaster.
As well as 6 grams over 14 meters, including 25 grams over 3 near the 5.
550 meter level.
Key intercepts to the west include.
Include 163 over 32, including $13.3.5 over 2 meters permit from approximately 250 meters below and to the west of the current resource pit <unk>.
And to demonstrate substantial potential in that direction and.
And some rework at work to date at Detour continues.
Along very well.
So turning now to my next slide number 22.
We've seen and it's for Mckesson, where we continued to advance our large.
Our large exploration program.
And confirm and expand resources.
Key targets for the program includes a direct extension of the SMC amalgamated and main.
And break between the 53 and 50 level.
Additional work now on progress DOCSIS targets below into the west and the main break on 51 and <unk>.
<unk> 8 as well as on the FMC on 34.
So.
In terms of their drilling.
Our aim for the year is about 200.
And meters and tracking a little bit lower at this time, but and RV and still achieving some good success with the main highlights being shown on the screen at the time from the east part of the 53 level.
As shown on the image.
We work with focus mainly on testing of areas along strike to the east.
1000 of the SMT as well as up and down depth of the current resource and reserves.
And there are a number of good intercepts and they're really.
Looking at the area to the east we saw drilling reaching almost 180 meters and this.
And distraction and then and affecting a number of good values, including a highlight.
589 grams per tonne.
On over 2 meters and they're quite place near the limit of drilling.
And looking to the areas up and down dip we saw on intercept almost 100 meters and.
Each of these directions with toned down debt being near the injunction on the SMT with the amalgamated where we've announced success and other areas before and those drilled up Jeff identify.
Identify and with significant new block.
And with very low testing and.
And which we will continue to try and expand on from platforms on 53 and 58.
Additionally, we saw some good advancement of the exploration drifts towards the new targets on 34, 51, and 58, keeping us on track for drilling to start on these.
Most likely later this year.
As mentioned earlier these interest nutrients will provide access to areas.
Deep and west parts of the main break and is well above the SMC.
We have not really worked on before but we think have a lot of potential.
And now turning to my next slide which is number 23.
And we see and image outlining exploration plan and recent progress at Fosterville, whereas in the cash flow.
We have a very large exploration program in place.
And with the vast majority being directed towards lower part of the festival mine and raw material areas and the remainder towards a series of promising targets both of which are mainly.
On the my property.
As indicated on the image work at Fosterville is designed to focus pretty much entirely on the area down plunge of the current reserves and Swan Zone includes both development and drilling to convert and extend mineralization to depth.
The vast majority of drilling deep.
And from the new 39, and 12 hanging on here, which is shown.
We are small deadline.
Which we have been working on over the first half of this year.
And now and having said that the depth and.
And completed in June and we have drilled and progress.
5 and total and situated along the zone.
Although certainly still working.
On fairly early and this program, we can say that things are proceeding very well and we would expect to have a lot of new drilling done and information to talk about.
As we proceed later into this year and into early 'twenty 2.
Turning to Robin and Phil the plan here again is to focus on the areas downtime of the existing reserves and continue to believe.
So they cannot only extend utilization, but we have the potential and to identify a high grade zone similar to this 1 zone.
And so achieved we've.
And we put together and what we think is a very good program, including continued advancement of the Robin's Hill decline and drilling from both surface and underground.
Nevertheless, as with data and Nick.
Rick.
And that we continue to progress very well with significant advancements and achieve them and the duty and decline, bringing it to more than halfway to Robyn till now and a substantial amount of surface drilling preparations in place for underground drilling to start in Q3 to test the various outside of the Robin sales structure.
From all indications to date project, advancing very well and look forward to delivering and increasing amount of information on this and the near future.
And with that I'll pass the call back to Tony.
Alright, Thanks, Eric.
And.
And thanks to David Larry and Evan and Ian for your presentations as you can see are correct and my goal is really and very strong awesome company and had.
A significant success this year, but if you.
And really break it down, though as I mentioned possibility 6 years of industry, leading and bolt on and lowest cost gold mines, and the world and the profit and gold mines and the world significant exploration success and significant.
Innovation and our people going forward and we continue to continue on that track record.
And our cash and.
And its current forms and subsequent.
And produce them on 1 of the once a day for free.
And from the historical Kirkman Lake camp to be to be continuing to deliver the solid production results. It is and where it can be and and it's not quite where we wanted it to be yet, but we've got a and we're investing and a new shaft and investing and ventilation systems.
And typically improved Mckesson, and we're patient and and diligent working forward, there and and once Makassar is and by 2023 into 'twenty 'twenty 4 we expect and count to be 1 of the largest underground and most profitable mines in Canada, and you know as we see with detail on the growth coming a detour and Victor has potential.
Most of it and it'll be the largest gold mining in Canada, and then growing from that to be on among the largest school mines and in North America, and low loan that definitely and in the top quartile and the world. So a very solid company.
And then if you if you go by that can be tied into excellent results and Q2 'twenty 'twenty.
1 we had record earnings and earnings per share strong revenue growth cash flow generation and and as we've talked about their progress with both our exploration programs and and our investment into our assets and by the way and when we talk about record earnings and earnings per share not only record or anything to share, but industry leading earnings and.
And the industry leading earnings per share.
And.
And we're committed to responsible mining we're committed to.
To recognize and rising and the supporting the communities, where we R&D.
And <unk>.
And doing what we can to ensure the sustainability and the regions.
And and that we can make things better for the and within the local.
Local communities and price of the local indigenous communities and the areas, where we are and we recognize and and support a strong and honorable and trusting partnership as we move forward into the future and as.
And also as we look ahead.
And helpful and from 2021 and are well positioned to achieve our guidance and we're and again when you look going out and coming out of 2021 and 2022, we expect to it and see some very important value, creating catalysts and <unk>.
All 3 of our mines, and there's still lots of exciting things coming up and.
And ahead for us or anybody.
Great. Thanks, everybody for listening and are happy to take any questions.
And at this time they seem if I could ask a question. Please press Star then the number 1 on your telephone keypad again and that is starts and the number 1.
Your first question comes from the line of Fahad Tariq with credit Suisse.
Hi, Good morning, Thanks for taking my question just going back to the 2021 guidance you mentioned and now expect them to high end of the production guide can you talk a bit about just the puts and takes on the cost side because on the 1 hand, the higher production, presumably would lead to lower cost per.
Per ounce, but at the same time, we're hearing about and.
And inflation expectations from some of your peers and.
For you specifically more of and FX impacts I, just wanted to get kind of a net effect on costs. This year.
Well I mean, I'll, let David kind of answer the question, but on.
We've got FX rates that are having an impact, but that's an impact on unit costs.
And we spend a lot of our money and Canadian and Australian dollars, and I think and Canadian and Australian dollar terms, where we are seeing some inflation and such as and fuel prices and steel and that's it.
And things, but you know what.
And I think the biggest impact is on FX, but David and maybe you can give a little bit of color to this yeah no problem, Tony Yes, we are seeing inflation.
<unk> subsidiaries as Tony mentioned diesel and steel for example, but overall costs and local currencies are pretty much in line with what we had in the budget and what.
What we were seeing even even last year.
And Thats really due in part to a very good cost management.
From the tight on.
And our VSAT our operations.
Youre absolutely right. Obviously, there is offsets there higher production and will lead to lower costs and some of these.
Precious that Tony mentioned with regards to FX.
<unk> are offset by some of that but basically on a full year.
Cash and expenditure are.
And our guidance based on.
Canadian U S exchange rates of 131, and Australian to U S exchange of 1 point behind fixtures and what we currently see.
To date, which is exchange rates of approximately.
And 81 to 5 in Australia, and 135 and Euro day, 1 to 5.
130.
No.
Current exchange.
If the current exchange rates continue to remainder of the year that we.
The expected impact over that period would be.
And to see a bit of an increase and cash costs and.
And but having said that were well below the budget.
And on both measures and the first half of the year and and based on strong cost performance and each of our 3 operating operations and.
And.
And if we achieve higher than planned production and sales were going to work hard to continue that trend and and.
And based on that we're continuing to target our existing guidance right. So we've done well.
And so far and.
And we plan on continuing that trend through to the end of the year.
Okay. So it sounds it sounds like the midpoint and that's still feel kind of achievable on the cost side.
And my only other question just on Fosterville exploration and of course, we've received pretty detailed updates on <unk> and detour Lake.
<unk>.
Just wondering on Fosterville is it just a function of.
And the drilling is more second half weighted or and I'm, just wondering if and when.
And to really expect more detailed results from Fosterville.
Eric There Ian.
I wanted to answer that.
Yes.
Okay great.
And I'll hop on.
Oh, Oh, Oh go and you can have a.
And looked at the exploration efforts at Fosterville, but certainly benefits that we have been doing some drilling and how.
And the fact, it's really has been on a development on the exploration drifts.
Phoenix 31 sitting on 12.
And.
And again I've been feeling for the second half of the year and into allow US 1 area and we and we expect and yet we've got Fob drills on it now and we've taken a lot of results to come should it back up and.
And likewise with the relevant sales whenever we've had excellent project and price.
Advance on the on between.
It's actually on the way towards Robin's Hill, and and we'll start to see.
And some cooling in Q3 and channel into Q4.
They're really suddenly and and and at depth on the on the revenue and.
And trying to really expand net resource.
But that's really been our practice for the first half has been and development side of things.
Eric If you wanted to add on any more color day.
So I just think we.
We have to keep in mind.
Since the low surface that Robyn <unk> target do you know if they were aiming for areas that are up to 1000.
Meters on strike and to depth.
Very hard to drill from surface with any detail and now as we get the new platform.
And on the decline.
We're going to start to get into a lot more information quickly.
And from that area.
And thats like an ad.
Okay, great that's it from and thank you.
Your next question comes from the.
The line of Josh Wilson with RBC capital markets.
Thanks, and just sort of continuing some of the questions on foster growth.
Obviously, the quarter was very strong partially from that.
And that positive reconciliation and partially from sequencing is there any sort of ability to give us some better insight.
Right on to what the what the sort of what the outlook is for the second half year on and specifically the resequencing changes that impacted fourth quarter on out.
And I'm sure I mean, the cash.
Sure Ian.
And I think that could be up to you guys.
Sure.
I'll start and Ian and then we can we can fill in.
Hi, Josh so effectively removed.
The higher grade stopes from Q4, and 2 it into Q2 zone.
I'd say that and move about 20 or 30000 ounces forward into Q2, so it will affect our Q4 and.
You will see that we have maintained our guidance for 4 months.
420000 ounces and began but having said that.
And then looking at our price.
Well positioned to potentially do better than that.
But 1 of them.
And just.
And how the group performed and in that form.
And I think Q3, and we discussed in our results we had a significant green.
Our performance I'll talk to them on the first 6 months.
We're not going to assume that that will continue.
And as possible with a very complex ore body.
When you have some stopes outperform day and also on call set somewhere down the line.
And so we just wanted to see how the mine performs over the next few months simple.
And we look at our guidance.
But the things and we're.
And we're very comfortable with the $400 behind and 25000 ounces that we provide them.
Okay. Thank you and then 1 other question for detour.
For the or guidance this year.
I guess and implied improvement and both grade, which it sounds like youre pretty comfortable on.
As well as an improvement and throughput.
Probably towards that.
And 70000 ton a day rate Thats expected next year.
Is there any sort of detail that can provide and in terms of how.
And how that GAAP can be bridge from that 64, and a half that youre running it today.
To that 7000 tonnes a day towards year end.
Alright.
Larry.
2 questions.
Question on fairly quickly.
Yes for sure.
And really it's just that.
And just focus on the things that we've been working low we're going to see.
By September we'll see.
The bypass system and received the system in place so that'll allow us to continue.
And can you continue to keep the Sag mill.
Capacity and ecommerce.
Ernie and downtime.
It continued and the crushing circuits and.
And with the initiatives that we've already had in place.
And we're changing changing the year.
On vertex.
Cheers.
We're showing promise and.
And really focusing on.
And on fragmentation, and then getting the right.
<unk>.
And the feed so and.
And as far as and buying goes.
We're really starting to get to the heart of the ore body.
And as phase II develops.
At depth.
We are working more and more on the other income net.
We're in a better creatives.
We do anticipate could agree there we also.
And a more top tier 2 which helps with throughput and have a common extra muscle.
So just to your comment about the September delivery on some of those processing items should we see the bigger step.
Step up and throughput more geared towards the fourth quarter and that case.
Yes, it would be a gradual ramp up throughout the year for sure.
Okay.
And that's all my questions. Thank you.
<unk> had some significant.
We've been setting throughput.
And kind of all the time and.
Keeping higher levels on consistently right Larry.
Yes, and you need.
And even in July here.
Already.
Since that.
Our limit of 75000 tonnes a day has been removed.
For 11.
11 days this month, we've already accretive balance.
And beverages.
So when when we're adding things are going quite well.
And then any more questions on.
Certainly your next question comes from the line of from obese habit with Scotiabank.
Thanks, Operator, hi, Tony and team and congrats on a strong quarter and thanks for taking my questions.
Couple of my questions have already been answered.
But just a quick follow up on <unk>.
Josh is question regarding.
The changes and mine sequencing at Fosterville.
You talked about.
What the grade is kind of looking towards like going into the second half.
And does this kind of bottom approach a sequence and change and back to the sort of longer term guidance.
All right.
Okay.
And if you've got that Ian.
Yeah, I can take that 1 Toni.
And a quick question I'm sorry.
Fortunately.
Yes.
And that parts of those constantly optimizing them on and we plan to share situation weighted with the.
Development ahead of ourselves and and.
And.
And we would anticipate it gives them on some flexibility side. So we're not seeing any and Dan sorry to the Chinese and English and.
On the estate and part of the Avia and <unk> done in the on X area.
When I was standing dance at changing the sequence and in fact, we've seen some upside, particularly when it comes to you and.
Italy, and and a few things like that so.
And it's been a really good down sequence change and net part of them on and from the money and to me.
And just and it was just kind of in the works for a while now or this is just a decision that you've taken just recently and and made those changes.
Yes.
And.
Airplanes are wrong.
As you can appreciate.
The engineering teams are constantly looking at and what we've got day and add new commodity and comes in as we say have the grand behind and stuffing at bankers and.
And we adjusted and on our <unk> debt.
And just fortunate position, we find ourselves and use it.
Yeah on top of that development, and and and that gives us the flexibility there might be adjusting and says we got and analyst and and this particular catching on and it's part of the Odette and yeah. It was saying that.
We we stood 2 had a bid on them.
Italy of that part of the of that part of the on X box.
Standing allowed dams and it regionally client site and.
And so that was a decision that was not.
Perfect.
Guys. That's it for me and thanks, so much.
Your next question comes from the line of John Tumazos.
And please state your company name.
Thank you, it's John Tumazos very independent research.
Graduations on the Bill.
Big upturn.
And results both from the Swan Zone, and the Harrier Simon at Fosterville.
Could you just refresh us.
And as to how tightly.
Okay.
Drill hole patterns are.
For those reserves and.
The issue.
Now on some and mined stopes.
And the potential for variances, which were so wonderful this current quarter.
And how about a go ahead there in that.
And you know Eric.
And can maybe start on that day.
Okay.
Thanks, Eric.
And and another good question I looked at the drill spiking and and you have to appreciate that yeah.
Hot day extremely high grade areas of the Swan zone.
And then.
And and yet.
And you can draw that down to the degree and steel and.
And still get a proper handle on it.
Al and drilling use day in 2 at <unk>.
Tom's 12, total about 24 hours, so to say and into.
While about 25.
And and a broad range.
We have and very good handle.
And very good reconciliation each day.
And models, which we are constantly updating.
But thereafter there are specific.
Extreme high grade areas of that of that.
And 20 plates.
Swann and buying itself that is is very deep and narrow them and.
We have been accused of possibly being slightly conservative at times and to be fair.
Yeah.
Yeah, 1 of the world cash by the ore bodies.
It is tough to not be making start and containment and at times that we face and swing to random and however.
On the on a on a long run average.
A reconciliation against model is.
He is pretty good and in fact and carry good and now we get very close to the Max.
And it's accurate.
And I can ask 1 more on the detour.
West for us.
Saddles on extensions.
And I know all of the technical studies aren't on.
The current reserves.
Appeared a carrier production Tuesday.
Forward.
And the trend near 800000 ounces expanded a few years.
Sure and the Big picture, we be thinking of these new drills successes.
As a surge decade of 800000 ounces, a year or possibly a fourth decade of 800000.
It's a year.
Or do you think it's possible that the output.
Could be expanded above a million ounces.
I would say you have both of those scenarios I'm, sorry and the.
So your number 2 and number 3 I think for a decade.
Decade, and another decade of 800000 on so I think it's easy to see that there's potential to add you know and.
And on growth for another potential 2 decades and or at those levels and or you know work towards <unk>.
Increasing.
And production and again further at Detour. If you do look at the plant that show and <unk> growing up to 900000.
[noise] announces and year.
As we progress so.
There is that to look at that but at the same time, there's a lot of moving parts at Nucor and we have a lot of things to work on that.
Mhm, and we've talked about initiatives gained and 28 million tons per year, but also putting and assay lab change and some of the process.
Internally combine that we're trying to understand the size of the mineralized mineralized envelope, there and that.
Resource and then how are you going to mine it right I think the the thing that we should all take away is the mind that detour is today is gonna be much.
It is a much better mind and it was a few years ago.
It's going to be a much better mine and this couple of years now and potentially tends to be on much better mind, even beyond that and a very long life mine and then I'll, even say when we're talking about saddle and west extension.
And the west it doesn't stop and we just there is a line there for this and western drilling so it could go further to the west.
And we haven't even drilled any any holes and buffalo 700 meters and and.
And the current main pit Theres indicated resource at the bottom of the pit so the big and the other part is we really.
And focus on getting costs down as you can.
Increase the overall.
Sites and Theres lots of exciting catalysts that could come out of detour over there and extra meters.
Oh and.
And congratulations.
Your next question comes on the line of Cosmos <unk> with CIBC.
Hi, Thanks, Tony and team.
And I guess I can ask a question on the cost side here.
Good to see that you're transitioning.
Initially.
And we're adding even more battery powered trucks to your fleet.
You remind me how much more can you transition over.
And from diesel powered equipment to a battery powered equipment and what percentage is that right now in terms of.
The total fleet in terms of battery powered.
On the equipment.
And I think everything that gets goodbye.
And that's exactly right and I'll leave it up and you know tasha and and evidence.
Sure I can speak to it and Cosmo.
And you prefer.
Currently and where we're sitting around 75% of our fleet at the battery equipment and the plan is definitely.
And you can increase that moving forward.
And for numerous reasons.
On the trucking fleet has improved tremendously as well and regardless of some of the ventilation and the improvements we still plan on moving forward with the carrying on with the battery and the battery.
Yeah and that was the purpose for my.
My question.
And I know that you're adding the 2 ventilation raises which will add about 200000 and CFO of capacity, but could you remind me in terms of going on with a battery powered equipment with our current fleet right now what's your draw on the ventilation and what's the capacity there.
So the current draw on ventilation.
And that we're pulling from surface cargo.
Yes.
So the plan is to have about 300000 come down 3 shop and then.
And 230 of that.
And I'm, sorry, 200, and that is going to go towards the FMC with the current ventilation plan and 30000 and from 1 of the raise Morris and 100.
<unk> that 300000, Boe and get a lower north.
And obviously as we move ahead things youre going to improve with the second raise bore theres 1 more lake where on the last leg of the 4 legs of the range more breakthrough on surface and obviously with 4 shaft, reaching at depth and commissioning that will improve things.
Drastically and.
And as part of the mine.
And the temperatures pretty well down.
Cooling off the mine as well and if we if you think about it you main arteries right now are feeding and ventilation. If you start putting diesel gear and the main arteries youre just going to keep the mine back up right. So the point is and the plan is to stick with the battery it's much more healthier for our employees.
On the lower back and for the environment.
And then yes.
Yes, I don't know.
Clarify so it would be a doubling or more than doubled and light and.
Air to the mine.
Which is a big part of it but we wanted to reduce the heat.
And the humidity and the mine and improve working conditions and workplace.
And you would have some flexibility for diesel gear, because we are working at the leading edge on battery powered equipment underground, but our commitment and it's the battery powered equipment and on the fund meant the big part of the increase and ventilation that was was not.
And I think the largest percentage go battery powered equipment. So we don't have to ventilate to the same.
Level I think it's wrong, we should we need to ventilate.
The level, whether it was these are equivalent of battery equipment in order to deal with he and another conditions and the workplace that affect people and.
That's our main motivation here.
Yes.
And you brought up Tony and and.
And I seem to recall last year, there were some issues in terms of heat during the summer months and its been fairly hard on Ontario. Once again this year.
And okay, so far and the summer of 2020.1.
Go ahead David.
Yes, so absolutely, yes, we've definitely seen.
And.
And positive.
Positive impact on the ventilation upgrades.
And the FMC alone you are looking at a drop of $3 to 4 degrees from current the current year and.
And.
And so things are definitely improving throughout the mine on the ventilation aspect. So yes. It is on cooler down there compared to what it was and.
And your summer was rather quite harder than this year.
And so yes.
Great and on 1 last question just a follow up.
And not Ontario, we've seen some.
Forest fires I track it I think there's and Ontario website that tracks. It I don't think Theres anything.
Lateral.
Kirkland Lake or Tim and our Costco and or anything like that.
Is that could you confirm that and.
And you at all worried about.
What is happening.
So I can speak to that too, yes, we do track it daily and cargo, we have and App called Wendy Dot com.
Those 2 it helps us out and attractive to your levels and forest fires and wind directions. So we're in pretty good shape here, so far and and we've been getting quite a bit arena north so.
Things are looking good.
Great that was all the questions have thanks again.
Yeah.
And there are no further questions.
At this time.
Great and it's Mark here and thanks, everybody for participating in the call as you heard we had a record quarter in terms of earnings not just record we had industry, leading earnings and very strong cash flow to things we've been known for for.
Over the last several years as being at the forefront of the industry.
And we're making a lot of progress.
Moving towards some pretty big catalyst for our company and a value creation standpoint.
And we will.
Look forward to our next quarterly call to update you on how much more progress with me and thanks, a lot and have a.
Great.
Take care.
This concludes today's conference call you may now disconnect.
Yes.
And.
Yes.
And.
Yes.
And then.
And.
And.
Yes.
And.
Yes.
And.
And then.
[music] zone.