Q2 2021 Osisko Development Corp Earnings Call
Good morning, ladies and gentlemen, and welcome to day After school development Q2, 2021activities conference call.
After the presentation, we'll conduct a question and answer session if you'd like to ask a question. Please press star followed by the number 1 and your telephone keypad.
Please note that this call is being recorded today August and when she wants you want at 9 am eastern time.
Good day on the call we have Mr. Sean Roosen chair of the board of Directors and Chief Executive Officer, Mr. Alex Dawn, Chief Financial Officer, and Vice President Finance, Mr. Chris Lodder President and.
And Mr. Nick <unk>, Chief operating officer, and Mr. Salchow for minimum Vice President Investor Relations.
I'd like to turn the meeting over to your host for todays call Mr shouldn't Rooster and.
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For they left out of a call Mr. Sean Roosen.
Operator.
And then 2 levels for diabetics.
You have to be met.
Cisco Development Corporation.
Welcome to the Cisco developments first analyst call.
Since we relaunched this company and not in Q1 of this year.
And we're coming to you today from Sunny Montreal, and we have quite a few things.
Go over this morning.
And it's been very.
Operator are we clear our weird lives.
Yes, you're live.
Thank you very much.
And quite a few things to go through this morning, it's been a very busy quarter.
With the capital raise that we executed earlier in the year, we've been able to bring a significant amount of intensity for the work.
With that the Cariboo gold project as well as the.
San Antonio project in Mexico.
Please note that throughout the call I'll refer to old Dev meaningless as good of Op and Corporation.
And we will be working on the management and press release results that went out last night.
Before I discuss our results I'd like to remind participants that all amounts are discussed and the domination and Canadian dollars. Please also note that statements made during this call include forward looking information and future oriented financial information regarding Odessa, and its business and disclosure regarding possible events conditions or results that are based on information currently.
I'll be available to management, which indicate managements' expectations of future growth results of operations business performance and business prospects and opportunities.
Statements.
Are made and the date hereof and the company assumes no obligation to update or revise them to reflect events disclosures or circumstances, and except as required by applicable securities laws such statements.
Significant risks and.
The uncertainties that are that are not guarantees for future performance or results as a number of these risks and uncertainties could cause results to differ to differ materially from the results discussed today.
And the risks and uncertainties, 1 should not place undue reliance on these statements and information. Please refer to the risk factors forward looking information and future oriented financial information sections, and our public filings, including without limitation. Our recent Q2.2021 financial statements and MD&A as well as for Q2, 2020.1 earnings earning.
Earnings press release for additional information, which are now filed on SEDAR.
Yesterday, we released our second quarter 2021 results and they were and to the financial results I want to provide an update of the company's main achievements and milestones just go public you launch in 2000 late 2020.
Here are a few of the highlights Oh Dev has raised over $253 million.
We have private placement and making it 1 of the better financed development companies in the space.
With no debt and these capital raises were accomplished with the back for a strong management team and a reputation for building world class mines for funds, enabling Cisco development Corporation to accomplish its goals and mining and exploration development and.
Both of our projects and Cariboo gold projects and not in British Columbia, and the San Antonio projected sooner and Mexico will start with the Cariboo Gold project.
Extraordinary project and the more that we worked on it.
Our extraordinary and it's begun.
Certainly and seeing some very exciting results are and we announced Chris loader to speak about and the regional and and the larger concept of what's going on.
Within this 2000 square kilometer land package for the first 6 months ending June 30, approximately 93000 meters of exploration and infill drilling occurred at the Caribbean project.
Salaries over hundred thousand meters and as of today and we expect to meet our planned target of 200000 meters before the end of the year. The results have been extremely successful and.
Delineated and converting results and very encouraging and turn.
Terms of our extensions and mineralized zones at depth.
And continues to demonstrate significant growth potential and the resort and the mineral resource.
As we as we see and understand more and more.
About how these systems are working.
The encouraging drilling and results from our opinion and hence the results feasibility study, which is currently underway.
Led by Luke sorry for asphalt as non owner and our team and local maker.
So at the end as well as to how we're going there.
<unk>, 50% of that completed to date and we're on track to complete that infill drilling.
And the feasibility study completed and the first quarter of 2022.
At this point in time with the caveat that.
That assumes that the current condition and availability of consultants and people are not constricted by anything to do with the current COVID-19 pandemic.
Which as we all know as a backdrop to everything we're all doing today.
Well drilling activities continue with up to 10 drill rigs at a time is currently operating at 10.
The operations commenced and Bonanza ledge as well.
And we filed the BC vein project with 43000 tons.
Mined during the test mining so far.
And this is to enable us to begin stoping operations.
And within the next few weeks.
Recommissioned and the mill at the Cornell River plant.
Which if you will recall, we have lost operating in 2018.
Produced 22000 ounces and <unk>.
First mining during that cycle, and we're looking to use that mill.
And as we continue to do our R&D beyond me.
And the ability of the BC vein structure.
And it runs for length of the main structure.
We also realized our first gold pour and the second quarter and generated modest revenues.
And while it continues to optimize the mill and the mining and milling infrastructure, but we shouldnt see.
Gold gold production and start to strengthen here in Q3 and into Q4.
As we settle into less of a development cycle and <unk> and more into a stoping cycle.
And we see this information gathering through this test mining project is very significant.
In terms of understanding and potential upside of the project.
Outside of what we've already delineated and the feasibility of space.
And as well as getting a lot of training and good.
Good information on the road header and other things as we go forward.
Significant expenditures were made during the year of a new water treatment plant at the mine sites and the Cornell River.
The new concentrator equipment with a 7500 ton a day.
The combination circuit that we purchased and has now delivered dinner for and storage warehouse facility.
That includes both the crushing and and ball.
Sag and ball mills.
And so that's quite a bit more than what we need to begin with and we're currently and feasibility work is for 4700.50.
But we do like the plan for the future and where.
We're very optimistic that we will continue to expand this project as we get further into the piece.
And then as alleged mining site allowed for some lifting amount of training and the workforce.
As well, which is key to our approach to the world.
We want to make sure that we're building not only.
A good project, but also people and capacity within our community.
And we take these things quite seriously.
And we've we've enjoyed quite a bit of success in terms of using this this bonanza ledge project to initiate those efforts as we move forward.
The mine life at Bonanza ledge that we had delineated was relatively short and that we were going to mine a bonanza ledge.
And until the time that we.
We received the caribou.
Gold project main permit for construction release construction.
Please hopefully and the second half of 2022.
So we didnt plan to be for debate be a big project at this point and time.
Set and done and we're very encouraged by what we see and that BC vein structure and.
And the potential for that to be a continuous.
Contributor throughout the life of mine and the larger project.
And more to come on that as we as we get further into it.
In addition, and Bonanza ledge to mine and also allows the appropriate reclamation of some of the historic materials that were left on site by previous operators.
And we will be putting that material back underground as as peg, which will eliminate some of the.
And the issues that we're dealing with in terms of managing the site and I think it's they're.
It goes to our ESG strategy of always leave everything better than we found it.
And we're quite happy.
It's the way that that part of the project is progressing and certainly sets the stage.
And for us to be a top tier operator.
And taking our environmental responsibility and above and beyond the call of duty and.
And we will make sure that that those.
Projects continue on as we do some reclamation on the site and take advantage of the work that the BC vein project brings to us.
In terms of other things within our community, we're pretty quite happy and obviously the pandemic aside and effect on a lot of different businesses not the least of which is the Barker Bill historic site.
Located in the <unk>.
And our partner will just beside wells.
And we contributed to that effort and the community Center has been open and all summer. It's 1 of the more extraordinary Canadian.
Historic sites with over 120.
Character actors and period dress.
And a small mining town setup and preserve since the AT&T <unk> and.
And if anybody ever gets a chance to visit as well doing it and we've enjoyed for the supporting the community on that.
We've also worked pretty hard with our low tech with Donny partners sites all of them and it seems like first nations.
Throughout the pandemic to provide as much support and.
We've enjoyed the work with our partners there and certainly.
They've been very supportive of our efforts.
As we go forward, we've initiated 2 legacy projects, which we think.
Pretty important and being in and outdoors and then myself as is most of that most of the people that work at Cisco.
Were extraordinary and happy to support the Southern Mountain Caribou legacy initiative.
And there will be providing a land and <unk>.
Nation as well as contributions to manage.
Charles and counting.
Operations to protect accounts and caps during the early years, when they're vulnerable to predators.
We've also secured and Bauer and river salmon and enhancement project.
Our first nations partners.
2 to increase the amount of gross salmon.
It's released into the headwaters of the Fraser River.
And as what we believe is a significant contribution.
2 preserving.
Salmon and the Fraser.
Water system as.
As we go forward, we'll be working with specialists and both the provincial and federal governments on that and I'm pretty excited about that being a sandwich with Sam and fisherman mice.
Myself and.
And I think that when.
And when we talk about ESG. These are the kinds of efforts that the accounts and the long term.
We have progressed, well and last 6 months and it's worth saying that we've had.
As has everyone significant amount of challenges.
And with the with the pandemic.
And we have.
We initiated onsite testing early on and purchase allowed and invested more than $500000.
That testing equipment available not only to our employees, but also to our community.
And to try and run and safe site and make sure that if we did encounter any COVID-19.
We did.
And that our employees and everybody, we're protected and we had the best system and possible and Canada and place.
To manage that aspect of it.
Set and done a significant amount of of effect on both the supply chain.
And our talent pool.
Our people have.
<unk> delays and we've had to just like everybody else.
So we are we have seen some lags and the out of stock items and certainly the supply chain management.
As well as the stress that's been placed on our people and our community.
Come to bear in terms of creating and some delays, but we've done a pretty good job and my tip My hat for the on site management team.
And at Caribou and in terms of all the efforts and extraordinary work that's been done with the leadership of Chris and Maggie.
And I think Chris far enough on site.
And as well as Paul rotate as our operations manager there they've done an extraordinary job too.
And to keep us well on track as we possibly could be.
And we still have some challenges as we go forward and we're initiating a small scale mining.
RPC vein.
Small scale mining always has its challenges.
Feel very good about where we are and.
And we've also been and the permitting cycle, which as we all know it is.
It's quite a complex event and the mining space any day, and a week, but with the backdrop for COVID-19.
It's been extraordinary outcomes for the management team here, having achieved and <unk>.
Received a 10000 tonne bulk sample underground permit which allows us to initiate and underground ramp of $2..1 kilometers, we're using our sandburg road header, which we commissioned earlier and the Bonanza ledge.
2 project and that will be driving that drift and and that's going to do a very good job in terms of establishing based cost for our feasibility and 1.
The keys of this project as we have discussed in the past.
And the development costs and this road header that we commissioned earlier and is now executing a large a large project with this ramp.
And there's a long way to do that we've also received a shipment of steinhardt optical <unk> ore sorter, which is on the <unk> technology that we need to demonstrate.
For this project and its.
<unk> on site now and we're in a process of commissioning that piece.
There'd be installation should be completed in September and we will be able just and test work on some of the material that we're generating from BC vein, but.
The ore sorter.
Florida is really dedicated to that style of mineralization that we see.
At Cal Mountain and and the main project area.
That project and that I think is a big confidence builder.
And we will be able to show.
And the shareholders continued progress on that work.
We'll move on to Mexico, right now and.
And what we've done there is we've initiated.
45000 meter drill program or just under 10000 meters of that is complete and the first 6 months.
Very good results.
From what we see so far and.
And we will be putting together a technical update on this project to give you an overview of the resource.
We also have initiated the transport.
A significant amount of the equipment and if you remember correctly, we purchased a 15000 ton a day crushing and screening plant from the <unk> mine in Nevada.
And Thats Recommissioned and refurbished and its portion of it's been shipped to Mexico to begin heap leach treatment of the stockpile that we have variable over 1 million tonnes.
And to be ready to go and the first part of 2000.2022 for the larger so Pucci project, which we're currently and the permitting cycle, along with our partners and <unk>.
And more to come on that as we get further into the third quarter and early fourth quarter in terms of updating where we are on the resource confirmation drill work that we're carrying out right now.
And as well as the planned development.
For the <unk>.
Project that we see right now we have about 250 to 350000 ounces of oxide material overall resources over 1 million ounces.
And since you're a resource there.
And with this confirmation drilling will.
And we'll be able to give you a better plan and how we see that but this is a relatively low capex and.
Certainly 1 of the catalyst I think for shareholders.
We'll benefit from us and it allows us to get into early stage production later this year with the.
The heap Leach and that also and we get further into next year the launching of the larger project. So Gucci.
And pit that will start with oxides and.
And take advantage of that and we see a signal.
And if again.
Non of recovery and the Sulphides that are applicable here as well.
And I'm going to turn it over to Alex Dan who have to tip My hat to Alex has joined US with the go public.
Cisco development. So this is his first quarter.
Quarterly call with Us Cisco CFO monitor monitor.
And he and the financial team have done an extraordinary job to get us not only.
On the exchange, but also moving us towards.
The next step on our journey with this company.
Making it into a mid tier producer.
As we go through.
And at work here.
And Alex's team has put in a lot of effort to get our financial statements and shape for you and set the stage for the next the next step as we advanced this project to where we think it should be.
It is a multi mine multi generational asset to be here for a long time after were gone and.
Building something of significance for the future Alex I'll hand, it over to you.
To take us through the financial numbers as we stand so far this quarter.
Thanks, Sean and Bondholder and morning, everyone.
And touched upon we made significant progress towards our goals and the first 6 months.
And realized our first revenues from the sale of gold and silver and the second quarter.
Gross revenue was approximately $775000 for the quarter and.
The sale of 315 ounces of gold and 104 ounces of silver.
The company had approximately 360 ounces of gold available for sale as of June 30.
And these ounces combined with additional gold produce will be recognized in revenue and the third quarter.
And the second quarter and the company incurred a net loss of approximately $41.4 million or <unk> 31 per share.
The main driver for the losses, the impairment of assets totaling $45 million, which is comprised of 2 amounts for <unk>.
And the amount of $36.1 million related to the Bonanza ledge to project.
And as Sean indicated some operational challenges and occurred during the year, which caused delays and increased costs and.
Management also deemed prudent to revisit its mining and milling assumptions for the short term 18 month life of the Bonanza ledge too Matt.
The second amounted for $4 million is related to the reevaluation of the stockpile and Mexico due to the decline in gold price as of June 30, compared to March 31.2021.
G&A expenses for the quarter were approximately $3.8 million compared to $1 million and the prior year quarter.
The increase and expenditures is due to the ramp up activities and workforce at all projects and the head office.
Other income net of other expenses and the second quarter were $2.2 million compared to $1.5 million and the same quarter last year.
The increase and other income is mainly due to the recognition of a premium on the flow through and charitable flow through share issuances that occurred earlier in the year.
Our cash and cash equivalents balance at the end of the second quarter was approximately $144.6 million.
The main drivers affecting cash and the quarter were as follows.
Cash flow was used in operating activities for the 3 months was approximately $6.4 million compared to $1.4 million and the prior year.
Once again, the increase and is mostly due to the ramp up and buildup of inventories at the Cariboo Gold project.
Cash flows used in investing activities totaled $47.5 million and the second quarter compared to $11.5 million and the prior year quarter.
The increase was reflected and the ramp up and the Cariboo Gold project, Bonanza, ledge, too and San Antonio and projects, partially offset by proceeds of $8.3 million and.
And the disposition of investment holdings.
And I will now turn the call back to Sean for closing remarks.
Thank you Alex and <unk>.
Before I close out didn't want to touch on a couple of points. So these are non cash impairments.
And related to.
Some of the valuations that were in place.
From from accounting worked and was done on Bonanza ledge.
So we look forward to hopefully continue to develop for Bonanza ledge and bring some of those ounces.
And of the mine plan.
And as we work forward.
We think that the BC vein and the rest of those things.
And I consider them to be.
R&D tools that develop some of the skills that we need.
To unlock further value to the project and 1 of the things and I'm going to ask Chris Lauder and speak about a bit is what the upside for BC vein is.
On the overall trend that we have not included any previous work for the feasibility study does offer a significant opportunity and upside now that we've been there and we understood it and you know.
And roughly what the cost to mine and that kind of type of rock and that type of environment or.
Also in terms of where we are and the overall project I think the vision for this project as I have said to many of you and the past.
And we think that this is a 2000 square kilometer land package with over 83 kilometers of mineralized trend identified we've only explored on roughly 7% of that mineralized trend and with drilling.
And this is an extraordinarily large project by by exploration standards and offers the opportunity.
And that we don't really see and Mexican mining camps and this is a world class event, but we need to start someplace and that some places the per.
Permitting for the Cariboo Gold project that we had deposits.
A description it was over 16000 page document.
Congratulations for Francois, there's now with Lazard and the technical team for having concluded that and.
And that documents sets the stage for what we believe is phase 1 of the larger vision.
Scott and that mine plan and we've we've asked for to ramp access points.
<unk> sample.
And will allow for a third ramp access and that sets the stage for what we believe is a very large underground mine and <unk>.
Phase 1 and starting at 4700.50 tons a day, but certainly.
As we go through the evolution of that project, we'll be looking to add more and more of these ramp access lines up and down the trend.
In terms of progress on the on the mine itself with the purchase of the economy issue circuit that allows us to set the table for detailed engineering and because we have our crushers, our sag mill and our ball mills.
And hands and we have.
And extra capacity within that zone.
And we'll be able to push this project once we get it up and running we're not we're not building something thats just about going to work, we're going to go and with.
With more capacity than we need them and then work to fill that mill.
I'll ask Luke to give us a quick remark on on.
And how you see that the technical.
Technical work evolving and.
And what we see for the next 12 to 24 months.
Coming out shareholders from the tactical section.
Thank you Sean So as you know, Sean I know and mine builders, So big achievement to advance the bulk project <unk> will nonetheless, I won't say few months. So basically all of the technical teams are working right know the difference.
And I will take that goes for these do we improve the <unk>.
A bulk project.
Basically we are working right now.
The themes to initiate the deep data engineering pool that day, we project that meaningful all the items, including the power lines and Substations the mill for Cds that games and services. So the main goal is definitely to initiate the detailed engineering on the Cariboo project.
Right now to be ready day, 1 following the permitting approval from for from.
And from the government. So it seems that means gain for the MX web months. So on the boutique project again, we are looking to finalize we called that.
Daily Bulbous studies and.
And basically the intentions and received the final low government permits to be bolt and ship construction.
And on 2022 early 2022, so technically we have good advance days of crushing for <unk> over the purchase we have also.
And although it would be in <unk>.
<unk> from U S to Mexico to initiate the oxide program. So the essential needs to do we see some good news on <unk> in 2022 pronged that oxide program and basically funneling that projections, the intentions and continuing with the SAP, which you projected.
And so too.
To achieve.
The projections for.
The bigger projects, the <unk> and the main game again.
2 main <unk> the first 2.3 years.
With the oxide and material from the subgroup to project that we create.
Yes, we'd see processing.
These leaching and the existing oxide will create share.
A lot of opportunity to increase the capacity of projections.
Achieved a good level of projects and the answers.
And the next the next 2 years for the.
This is the main things.
Thanks, very much look at NAV.
I'll also ask Chris load or to get more of an overview on the big picture about where we are.
And the understanding and the exploration of this project and what our upsides are looking like.
Okay.
Thanks, Sean.
And everybody right.
Yes. This is concentrated mainly on infill drilling, but we have been doing exploration at depth and and immediate extensions to the Illinois bodies and filling in between and we've had success on all those fronts.
And that depth shopped and valley.
As well as between shaft and mosquito and.
At low heat. So it was a wildly successful and meantime, we've continued to develop our regional targets.
Last year, we had about 8.8% and now we're up to about 25 targets, we are getting to the drill stage.
New targets along.
And the BC vein structure, which runs for about 3 kilometers per.
Parallel to the existing and come out and Iron Mountain the type of mineralization and that makes up the main debate and 83 kilometers of trend.
So that's exciting and we're seeing that potential for what we're seeing there is really combination and a multi generational potential that we have and that we've been talking about and the ability to expand production.
Yes.
Thanks, Chris.
And in terms of the execution on this we have 10 drills turning today.
More if we had personnel for them.
And we're sitting right now at the end of Q1 with $140 million and cash of $100 million and.
And third party equity is making our cash and equity availability of just over $240 million per day at the end of Q1 Q2.
So well financed and no debt.
And firing in all cylinders and there was some.
Cash gold production coming on.
And from BC vein as well.
And the stockpile at <unk> and San Antonio.
Getting ready to go out and the pads and hopefully we'll see some some leaching going on this year and Ah.
And have some goes to show you from Mexico, and the not too distant future.
In terms of how we see the and the market obviously, we are not.
We're not.
Immune to the market conditions and the company is relatively low float.
And with 25% of the <unk>.
<unk> being free traded right now.
And we would tell you we're.
We're working hard to.
To bring investor awareness to the project and to the companies.
And the best way to do that of course is with positive results, which we continue to deliver here.
And as we.
Go forward.
We feel like our partnership with the BC government is stronger than it's ever been.
Premium.
Oregon's projects and his dedication to the mining sector and development sector and the creation of jobs.
Is real.
Come out with some very strong quotes about how we approach things.
And we certainly feel like D. C is a great place to be invested.
For the future and the.
Caribou project is 1 of the top 10 projects and British Columbia, and the government has been giving and the resources and attention to the permitting cycle.
And then we can wish for and we are very happy with the way that that has gone and we think.
The government of BC for their support in terms of.
Making resources available during the COVID-19 to support our permitting process.
At this point and time.
We are continuing to develop our company and as we said to create the next mid tier.
With significant generational assets and the Canadian asset base with.
And with projects that we believe are relatively simple with low capital intensity, considering the size of them.
As I like to say we have.
We have small capex projects for for cornerstone assets for Big Company type.
Type developments and outcomes and we believe this ends up being a multi multi mine operator for many years income on that note I'll open it up for questions and.
Please proceed with any questions you may have operator.
Thank you as a reminder, if you'd like to ask a question press star followed by the number 1 on your telephone keypad.
And your first question comes from Rob property with 8 capital. Please go ahead.
Hi, Good morning, Thanks for taking my question Sean.
2 questions for me firstly.
Yes.
There was a second ore sorting tests that was.
Supposed to be done and I was wondering are you still going through with that.
To test out some of the parameters on SRT or is that sort of foregone given that youre moving to equipment.
Decided and you'll be able to be up and running shortly.
We are continuing on with that task work, Ralph and thanks for bringing it up.
The Steinhardt machine is on site and.
The <unk> work is pending.
We see.
As the technology on the <unk> and with the combined optical sorter.
<unk> continues to deliver we see that adopting that technology is going to allow us.
Quite a bit of flexibility and operating and certainly.
The technology on this ore body.
The Cariboo gold project and consider completely Cal Mount and style mineralization looks like the poster child for for our sorting and especially with the optical optimization and what that optical optimization doesn't allows you to Miss your size volume as.
And as well as the <unk> intensity of sulfide detection.
So you can make decisions based on the ratios between the volume of the piece of rock Youre seeing.
And as well as the XR T response intensity, which allows you to sort of decide whether a piece of rock as ore and waste and.
And real time, and make a selection with evolves and I think the big progress Thats been made on <unk>.
And it's not only the CPU computing power, but also the pneumatic valves speed.
And that that allows easy these pieces of equipment to work for a better than it did in the past we continue to optimize.
Good to hear good to hear.
I've got a follow up just on a few of your comments regarding supply chain and just wondering <unk> been successful and the combination circuit for caribou, just wondering where we stand now on critical path items as it pertains to delivery if there are any such.
I think certainly the 1 that's the 1 that's front and foremost for US is the access for the road headers.
We received our first delivery of our road headers and Sandvik Road area, which is 140 ton and machine.
Latest greatest technologies and very very impressive.
The change from the old 1 we had to the new 1.
We want to make sure that we have enough of them to really affect all the lateral development at this mine requires.
And so we will be focused on that and we're working with sandvik right now to confirm.
The delivery of what we believe is probably 2 more and maybe 3 more pieces.
So we see those as critical.
Luke and his team are filling out in terms of all the electrical equipment that we need for the power lines and Substations.
And the management of that critical path analysis.
That's got to make sure that we don't get left short.
And we've been securing the necessary material for that work, especially apparel and equipment and the rest of it so.
It's an active file and.
And from past movies.
Ralph we're used to having to operate and these and these changing cycles. So we're aware of it and.
We have our own strategy and has to do it and the purchase of that 7500 ton a day combination circuit.
Last year was 1 of those things and we saw this this challenge coming.
And we wanted to make sure we had all of our unique pieces.
Secure we also secured the.
For the full plant.
For 3.5 and $3.9 million U S dollars for <unk>. So that's a complete plant, including all the conveyors.
Screens and and everything it was and operating plant that was processing and 15000 tons a day, we sent that for refurbishment.
So we have the complete so pucci circuit and hand, as we speak today.
And in terms of rolling stock that will be another challenge in terms of trucks and.
And excavators and that sort of thing right now and a small fleet that we purchase for some pucci.
And Thats onsite and.
Contractor rental equipment is readily available for.
For the San Antonio Project is moving forward. So I think we're in pretty good shape, but that set and done it the supply chain does require significant.
And amount of vigilance on our part.
Yep understood excellent update thanks, Sean.
Thanks, a lot.
And your next question comes from Don Demarco with National Bank Financial. Please go ahead.
Okay. Thank you operator, hi.
Hi, guys good progress in Q2.
How should we think about the PPA estimate of Capex on caribou does to some of the spend in Q2 provide an offset for that.
Some of it does on NAV.
We will be taking advantage of as much as we can.
A lot of the mine and that's been than that's been spent on the Cariboo Gold project has been on the conversion drilling.
So there's definitely.
Taking out.
The convertible you there and we had 200000 meters and our budget.
Which was fully funded through our flow through financing.
That's the bulk of the work that will go forward in terms of infrastructure spending obviously, we purchased the milling equipment.
And the bulk sample development route will.
It will contribute.
And we think that the underground development that we have and BC vein.
We will allow us to look at and opportunity there to keep the BC vein mining activities on the go after we commission <unk> and half contribution as.
And as perhaps our third access point for that we hadn't considered and the feasibility study and we're working on.
On that threat from now to the end of the year to look at what we might do in terms of extending IPC mine plan.
We had 18 months on to see if we can keep that as a contributor on a go forward basis.
Okay. Thanks.
Thanks for that.
And regarding the Bonanza ledge impairment.
Can you tell me like.
Where those ounces were and the mine plan and I know you want to get them back in all likelihood might but maybe just a little bit more color on.
And how should we should think about and that in terms of modeling and presumably these are lower grade ounces to does it have much impact on economics or any any additional color would be appreciated. Thanks.
I think we were.
Received the permit for BC vein, a little later than we had originally anticipated. So we started up the mine life and when we did that.
We did eliminate some of the lower grade material and was around there.
We also tried to simplify the development and as much as we could given the constraints that we had and the assumption that we will have the <unk> mountain.
Mine plan and ready to go and we would probably want to use the ore sorter.
And come out in order to feed the QR mill.
And the construction period.
Most of those impairments came from the changes around the economics.
And as you say lower grade as well and eliminating some of the material that we would have time demand before we get to count on project up and running.
Okay. So.
And is there and what about the magnitude of the ounces.
And any numbers to quantify greater ore tonnes or ounces.
We're looking at right now.
Probably and we'd originally had.
And about 62000 ounces recovered will probably come in a little bit below that.
But I'll come back to you with the number once we get going on the stoping and we want to shoot a couple of stopes are over the next few weeks and.
And we will give you an updated number on ounces recovered.
At BC vein as we get to get those stope results back and just looking at right now simplifying and high and putting the highest grade we can to the QR mill and.
And the interim before channel mountain kicks in.
Okay, great. Thanks, so much guys I appreciate it and just to be clear I mean I qualified.
<unk> and was there was there was there a lot of things to learn there whether we could actually minus structure.
And the long term and also to create the boys that we needed to dispose of the peg file that we inherited on the.
<unk> and clean that up.
And to take advantage of the infrastructure of the underground infrastructure that was there.
Some of these days and reductions that we took for legacy.
Work that day, when we looked at it from a mine plan standpoint, and the short term under the financial current financial optics.
Couldnt include is economic, but we do believe and the long term that those those development works will be economic but we've taken the write down now.
To remain conservative in terms of what we're showing and we'll work hard.
And to bring the value back to those those departments.
Thank you.
And again, if you'd like to ask a question. Please press star followed by the number 1 on your telephone keypad and your next question comes from John Slop, Nick for Vishal Day. Please go ahead.
Hey, Thanks for taking my call My question, guys and hosting this call clearly been a busy first half of the year.
Not to dwell and the impairment of Bonanza ledge, not too concerned on Bonanza ledge itself, but you Didnt mentioned that there's higher cost ensured there and just wondering if thats inflationary pressures.
And I guess really what I'm getting at is whether you expect some of this to be impacting caribou and once that goes into production.
And the and the overall project I don't think that we'll see any particular aerie.
From this and the larger Caribou project, we will see and the fact of the general inflation within the space that we're seeing in terms of input costs from.
From from equipment and from.
And from talent and.
Labor costs.
<unk> and I think that we had some delays obviously had COVID-19 backdrop.
For example, a couple of shutdowns at the mill, where we had tested positive and we had to quarantine for 2 weeks.
And same thing happened at the mine during the early days and.
And we had some some permitting delays.
Don't really think that they have any effect on the <unk> project and it was just the.
The current and the last 18 months I think everybody has had their challenges and I don't attribute them to too much more than that at this point and time.
As we adjust for Capex.
And post <unk>.
COVID-19 world.
And the inflation that's there I think it's just going to be normal course industry standard.
Right, Okay, no I appreciate that color there.
And I guess moving to San Antonio.
Wanted to clarify so we can expect to see some of that stockpiled material.
Potentially get production by the end of the year and then through 2022, and then on the back and that you'd get the means of Pucci project into production maybe the start of 2023 are those fair timelines.
Yes, I think that you're going to try and work hard to deliver on those as quickly as we can and we can't guarantee permitting and shrunk.
We are and we're pretty optimistic that that those timelines are maintained.
As we go for it and we certainly we have everything we need to do the stockpile.
Processing and stacking as we speak because theres no mining required.
And we're actively prepping the pad right now and as Luc said.
We've shipped the bulk of the equipment that we need for that stockpiled projected for most of its on site as we speak and some of them and we'll be there next week.
And our construction is ongoing with them 3 onsite and I think.
<unk> and.
And his team have done a great job.
Manage the expectations on that process and our community relations there.
And with the REIT.
Status is has worked out well.
So we're firing on all cylinders and certainly.
We have big expectations for 2022 tenants.
San Antonio.
Okay nice and.
I mean, 1 thing that and I guess.
Just briefly before just wondering if youre looking at maybe testing some of the sulphide material for heap Leach Recoverability and.
Yes, the timing on getting to net testing.
Yes that testing is actually initiated and now we should have results for you sometime during Q3 early Q4.
The test work that we've initiated is.
And we've obviously done a significant amount of bottle rolling and.
And the past and present, but we have some column testing underway right now and.
And with the current drill core that we're generating we're.
We're making sure that those.
Those results are going to be representative of a fresh rock.
Carried out test results on historic.
Drilling and why we wanted to make sure that especially helps our real thing.
And we will bring those to you as soon as they're available.
They are on and should have been initiated and are annoying.
Okay perfect. That's all the questions for me and I appreciate guys thinking and time and I guess.
CSD and busy day.
Yes, it's been a busy time and we really appreciate everybody's coverage and thank you for the diligent work that you guys have been doing on us.
Yes.
And your next question comes from Kerry Smith with Haywood Securities. Please go ahead.
Hi, Sean just on the feasibility for Caribbean, you had always talked about having that feasibility done sometime in the back half of this year and announced pushed out.
I guess 3 or 6 months.
Is that delay only related to.
And our ability to get the drilling down on the and fill and that gas is back or are there any other factors that has delayed that feasibility.
Really carry its just been the drilling and and net.
Turnaround at the labs.
We've got for example, we have 12 rigs onsite today, we have 2 with no crew.
Which is not uncommon and drilling space right now and.
These and these are the and then some of these groups and were down and we had a pretty big fresh at.
For a period or a spring break up period, and we were down to for drill.
We had so much rain and snow and obviously BC would be begging for rain and snow right now so we kind of went from.
From rain and snow overload.
And dust and smoke.
And then obviously with the current fire season and that and BC.
A lot of resource and dedicated to firefighting and infill drilling.
And is subordinate to saving People's homes. So.
We've had we've adjusted our program accordingly, and.
And we want to make sure that.
And that we can deliver what we say, we can deliver and but those are the main driving effects and that.
And then multiplied by the availability of <unk>.
Our laboratories and crew and people during the COVID-19 period, we think that it's we've kept up with it pretty well and we.
We'll do our best to catch up on it Gary but allow us and a little more time to deliver those results.
Alright, okay. Okay. That's good thank you Sean.
Okay.
And there are no further question and at this time I will turn the call back over to the presenters for closing remarks.
Well. Thank you very much everybody for taking the time tomorrow and this morning, I know, it's a busy time and.
Do you have any further calls or questions comment would be always much appreciate it and you can give me a call anytime.
Any time or anybody on the team and thanks very much and good luck with your work today and.
Stacy and attributable and thank you.
This concludes today's conference call you may now disconnect.
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The host has ended this call Goodbye Lenny meta has a question.