Q3 2021 Eldorado Gold Corp Earnings Call
Thank you for standing by this is the conference operator.
Welcome to the Eldorado Gold Corporation, Q3, 'twenty 'twenty line of financial and operational results Conference call.
As a reminder, all participants are in listen only mode and the conference is being recorded.
After the presentation, there will be an opportunity to ask questions.
To join the question queue you May Press Star then one on your telephone keypad.
Do you need assistance during the conference call. He makes it known operator by pressing star zero.
I would now like to turn the conference over to Lisa Wilkinson, Vice President Investor Relations.
Please go ahead Mr Wilkinson.
Thank you operator, and good morning, everyone I'd like to welcome you to our third quarter 2021 conference call.
Before we begin I would like to remind you that we will be making forward looking statements. During the call. Please refer to the cautionary statement included in the presentation as well as the risk factors set out in our annual information form.
Joining me on the call today, we have George Burns, President and Chief Executive Officer, Philly Executive Vice President and Chief Financial Officer.
Joe <expletive> Executive Vice President and Chief operating Officer, and Jason Cho Executive Vice President and Chief strategy Officer.
Our release yesterday details, our 2021 third quarter financial and operating results.
This should be read in conjunction with our third quarter financial statements and management's discussion and analysis, both of which are available on our website.
They have also been filed on SEDAR and Edgar.
All dollar figures discussed today are U S dollars unless otherwise stated.
We will be speaking to the slides that accompany this webcast you can download a copy of these slides from our web from our website.
After the prepared remarks, we will open the call for Q&A at this time, we will invite analysts to queue for questions.
I'll now turn the call over to George.
Thanks, Lisa and good day everyone.
Here's the outline for today's call.
Ill provide a brief overview of Q3 results and highlights before passing it to Phil to go through the financials.
Joe will follow by reviewing operational performance and then we'll open it up for questions from analysts.
I am very pleased with our.
Our third quarter results production in Q3 was 8% higher than last quarter based on strong production at <unk> and we are.
Increased our full year 2021 production guidance by approximately 6% to 460 to 480000 ounces up from 430 to 460000 ounces previously.
We are working through our budgets right now and we are comfortable with our 2022 production guidance range, which takes into account commissioning of the H P. G. R. In Q4.
We will update the market on 2022 guidance in the new year.
Joe will speak more about our operational performance later in the call.
I'm very proud of the operational teams for working safely and effectively to achieve robust production in the first nine months of the year.
Specifically I would like to contract congratulate kisser log team for delivering strong production year to date and successfully completing several operational improvements at the mine.
During the quarter, we refinanced our senior secured notes bill.
Bill will speak to this later in the call.
Not only were we able to lower the cost of debt, but certain eldorado subsidiaries in Greece were removed as guarantors, which will allow us to pursue a broader range of funding alternatives for the development of the Cassandra assets.
We continue to see strong support in Greece for the <unk> project.
The support from the Greek government has allowed us to sign an amendment investment agreement and obtain the approval for dry stack tailings permit early in the year.
We're also seeing strong interest from Greek banks, and EU Covid relief fund.
This is a very encouraging as we accelerate the process of finalizing and funding and financing for the World Class project.
In October we made the decision to suspend mining operations at our noncore strict Tony May have his petrus mining, Greece and focus on exploration.
The mountains Petrus mine currently lacks reserves to support sustained operations and we expect to continue our exploration program in this highly prospective area aiming at identifying and verifying new reserves.
During this phase the mine will be transitioned to care and maintenance operations could resume upon positive results for our future technical and economic review.
We will strive to either relocate employees to other Cassandra operations are offered training programs at a new technical training Center underdevelopment ads for Tony.
This was a difficult decision but necessary.
The decision to ensure the viability of Cassandra assets and allow El Dorado to continue to invest in the region for the long term.
We continue to monitor cost and capex inflation across our operations.
In Turkey inflationary pressures have been mostly offset by the weakening lira in Canada mining project activity has picked up in the Val d'or region, which is putting pressure on our contractor labor rates and COVID-19 has impacted the supply chain, causing minor shipment delays.
Based on Q3 and year to date cost performance, we are not seeing any notable impact of inflation.
At the end of October we closed the previously announced sale of the <unk> project in Brazil to G mining ventures.
This sale provides eldorado with immediate value for T Z and allows us to meet retaining meaningful exposure to future value creation through our equity stake in G mining.
T Z will be a cornerstone asset for G mining the team with a strong track record of building mines on time and on budget, we believe that G mining, which now includes our local Brazilian team are the right group to responsibly advanced the asset and we look forward to following and supporting their success.
Shifting over to ESG I wanted to update you on the global sustainable integrated management system that we launched in Q1.
Sims integrates sustainability responsibility and accountability across Eldorado's core business functions at all levels of the organization.
This internal management system is a set of performance standards addressing occupational health and safety environment, social and security by which we will be able to better measure track and driver ESG performance in Q3, we completed since self assessments at our operating sites with positive results.
We are now focused on creating action plans that will support our commitment to continuous improvement.
Yeah.
One of the key pillars of our sustainability framework is to engage collaboratively with stakeholders to build positive relations and uphold our social license to operate for example, during the quarter our team in Quebec announced a partnership with the waxy Moen and as snobby nation to develop an adult education center in <unk>.
<unk> to support skills and sustainable development of the community.
We are also continuing discussions to work towards our long term collaborative and sustainable development agreement with the waxing elimination in Q3 in Greece. We continued a comprehensive stakeholder engagement process in preparation for environmental social impact studies with the goal to build a mutual <unk>.
Understanding and support of a positive shared future in the region.
With that I'll turn the call over to Phil to review, our third quarter financial results.
Yeah.
Thank you George and good day, everyone.
Starting with slide four we had another strong quarter of operational results.
Production at Casa de <unk> was higher than planned, which led us to revise and increase our 2021 production guidance by 6% our costs remain in line with our 2021 annual guidance.
Revenues were consistent with plan and expectations supported by strong sales at an average realized gold price of 1700 to $69 per ounce.
Free cash flow was $29 million in the quarter and we are forecasting continued free cash flow generation through to the remainder of the year.
Eldorado reported net earnings attributable to shareholders from continuing operations in Q3 2021.
$8 5 million or <unk> <unk> per share compared to net earnings attributable to shareholders of $46 million or 26% per share in the third quarter of 2020.
After adjusting for onetime nonrecurring items, including $31 million of financing costs related to the debt refinancing in Q3 among other things.
Adjusted net earnings attributable to shareholders for Q3, 2021 increased to $40 million or 22 per share up from $29 3 million or <unk> 16 per share last quarter.
Cash operating costs in Q3, 2021 average $646 per ounce sold an increase from $537 per ounce in Q3 2020.
The increase was primarily due to lower grade ore mined and processed at <unk> and the Mark.
Resulting in fewer ounces produced and sold compared to Q3 of 2020.
These increases were partially offset by a modest reduction in cash operating cost per ounce sold at olympias.
As a result of higher grades combined with higher silver and base metal sales, which reduced cash operating costs as a byproduct credit.
All in sustaining cost per ounce sold averaged 1100 $33 per ounce in Q3 2021 and.
An increase from $918 per ounce in Q3 2020.
Primarily due to the increase in average cash operating cost per ounce sold and higher sustaining capex.
Capital expenditures in Q3, 2021 were $77 million compared to $52 million in Q3, 2020 and $72 million last quarter.
This reflects a planned increase in growth capital spending at <unk> with a new <unk> project and Attila Marc with the underground decline project.
Tax expense decreased to $5 6 million in Q3 2020, So our Q3 2021 from $40 million in Q3 2020.
Mainly driven by the investment tax credit received in Turkey in Q3, 2021 related to <unk> heap Leach capital improvements.
Along with significantly lower FX and withholding taxes in the quarter.
Depreciation expense totaled $50 million in Q3, 2021 compared to $57 million in Q3 of 2020.
The decrease in depreciation this quarter reflects lower sales volumes. We continue to expect full year 2021, depreciation expense to be in the range of $200 million to $215 million.
Eldorado's, Brazil segment has been presented as a discontinued operation in Q3 2021, following the sale of the token Casino project, which closed this week.
Net loss from discontinued operations of $60 million in Q3, 2021 reflects a reduction in fair value to the value of the upfront consideration only.
Less estimated cost of disposal.
Deferred consideration of $60 million in cash is payable on the first anniversary of commercial production.
At the end of Q3.
We voluntarily changed our accounting policy.
To reclassify cash paid for interest on the statement of cash flows.
Reclassified as a financing activity rather than as an operating activity.
Following the refinancing of our debt in August of 2021, the policy change more accurately reflects the nature of these cash flows resulting in more relevant information to the financial statement users.
The consolidated statements of cash flows reflect the retrospective application of this change in accounting policy.
Turning to slide five we continue to focus on maintaining a solid financial position, which provides increased flexibility to unlock value for our Cassandra assets in Greece at quarter end, we had unrestricted cash and cash equivalents of $439 million.
On August 26, we completed an offering of 500 million senior notes with a coupon rate of 6.25% due September one 2029.
Net proceeds from the senior notes were used in part to redeem the outstanding nine 5% senior secured second lien notes due 2024 and to repay the outstanding amounts under both the term loan facility and the revolving credit facility.
On October 15, we executed a $250 million amended and restated senior secured credit facility that we are referring to is the fourth Arca.
It provides an option to increase the available credit by $100 million through an accordion feature and has a maturity date of October 15th 2025 under.
Under the fourth Arca the revolving credit facility bears interest at LIBOR, plus a margin of 212, 5% to three 5% depending on the on our net leverage ratio pricing grid.
Both the senior notes issued in August and the fourth Arca remove certain El Dorado subsidiaries in Greece, as guarantors, which will allow us to pursue a broader range of funding alternatives for the development of the Cassandra assets.
Our net leverage ratio is at 0.16 times as of September 32021, compared to 0.89 times at the end of Q1 2020.
This reflects a much improved credit profile for the company over the last year and a half.
With that I will now turn it over to Joe to go through the operational highlights.
Thanks, Phil and good day, everyone.
I'd like to start by highlighting an important health and safety milestone for our operations.
In September we achieved a triple zero months with no recordable incidents in three key areas medical treatment modified work and lost time.
This is the first time, we have reported a triple zero months since 2012, and I'm extremely proud of the team for this accomplishment.
We produced 125000.
459 ounces of gold in the third quarter.
An 8% increase from Q2 production of 116066 ounces.
Our third quarter operating performance continued to be strong and as George mentioned, we have increased our 2021 production guidance range to between 460, and 480000 ounces of gold up from between 430 and 460000 ounces of gold.
This was driven by stronger than planned performance at Kessler that.
We remain focused on disciplined capital allocation across our operations.
Specifically, we have been looking at the capital allocation more closely at our Cassandra minds in Greece as our transformation efforts continue to progress as a result, we expect both sustaining and growth capital expenditures to be at the low end of guidance range for the year.
Slide seven looks at our operations in more detail.
Starting in Turkey, with <unk>, our third quarter gold production totaled 51040 ounces, a 16% increase over last quarter cash operating costs were $612 per ounce.
We achieved increased throughput at Kessler that in the third quarter related to several operational improvements that were implemented in the mine Leach pad solution handling and carbon regeneration earlier this year.
The commissioning of the high pressure grinding roll circuit is underway and nearing completion, we expect the <unk> to increase gold recovery by approximately 4% and enhance the already positive results achieved from the CIC trains and the new carbon regeneration kiln completed in the first half of the year.
Our multiyear pre stripping campaign continues to progress and studies are actively underway to assess the potential for accelerating this work to bring forward value at kissing debt.
We're continues on the north heap Leach pad construction.
We continue to be on track for phase one completion in stacking to begin in mid 2022.
Over to you.
Okay.
<unk>.
Third quarter gold production totaled 23305 ounces at cash operating cost of $552 per ounce.
At <unk>, we have a strong track record of extending mine life through exploration success.
And in September our exploration news release included drove results that <unk> focused on both.
The conversion drilling with inferred resources and testing of the previously drilled northwest splay. The results of the resource drilling were encouraging and have the potential to significantly extend the current reserve base and mine life of the asset.
Turning to our Canadian operations.
Third quarter gold production at Lemont totaled 37369 ounces, a 5% increase over last quarter.
Cash operating costs were $646 per ounce.
The decline between triangle and the Sigma mill is on schedule and will complete in the fourth quarter. The decline will replace the current route with the straight line haulage to the Sigma mill, eliminating surface haulage cost.
At the end of September we published an exciting exploration update which included recent results from warmack infield drilling.
<unk> confirmed high grade continuity within oral lenses of the maiden inferred.
Inferred resource and expanded several lenses laterally.
Drill holes testing deeper levels identified new mineralized zones.
These results showcase the high quality and strong growth potential at our Mac.
Preliminary mine planning studies are underway to assess the initial scope of the <unk> resource within the La <unk> operation.
Once completed the underground decline will enable the team to drift over to the deposit and gain additional information to integrate a promising new discovery and our future mine plans.
Over to Greece.
At Olympias third quarter gold production totaled 13745 ounces, a 6% increase over last quarter cash operating costs were $952 per ounce.
Third quarter production at Olympias reflects some initiatives that were implemented in relation to the transformation efforts of the Cassandra assets as.
As we discussed on the <unk> conference call, we are implementing a wide ranging sustained effort to optimize the grease operations that touches on every part of the business.
I would like to end with a brief update on our technical studies.
The updated feasibility study for <unk> remains on track for completion in the fourth quarter.
At this point the study has not been complete so we are not in a position to disclose any details.
<unk> is expected to be completed in the first quarter of 2022 and an updated technical study at Perama Hill remains on track for completion in early 2022.
With that I will turn it back to George for closing remarks.
Thanks, Phil and Joe.
With continued strong operational results.
Our solid financial position and numerous upcoming catalysts Eldorado remains well positioned to provide additional growth and value creation.
Thank you for your time will allow I'll turn it over to the operator for questions.
Thank you.
We will now begin the question and answer session.
Joining the question queue you May Press Star then one on your telephone keypad.
Sure Tom acknowledging your request.
You are using a speakerphone please pick up your handset before pressing any keys.
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We will pause for a moment of callers join the queue.
The first question comes from Cosmos <unk> with CIBC.
Please go ahead.
Hi, Thanks, George So Joe and team.
Thanks for the color and good to see that you've increased your production guidance for the year.
Maybe my first question is on cost pressures in the industry and inflation.
George as you mentioned you haven't seen you haven't really been impacted yet.
However, clearly when I go to grocery store when I go and all costs are.
Or higher.
So in that case, George as you said.
Youre working through your budget for 2022, right now and as Joe mentioned the feasible.
Usability study are scary is being finalized.
Anything you can share with us in terms of how you're looking at or how are you factoring in maybe not so much what has happened so far but as you foresee.
Our next year.
Core, causing any kind of cost pressure into.
We are forecasting to your budget and tears curious technical report anything that you can share with us.
Yes cosmos. Thanks for the question so yeah.
Yes at a detailed level for sure there are some cost pressures that we're recognizing so cost of steel is up and when you look at our business. We've got grinding media. We are aware materials on all of our equipment that we have to replace periodically and so if you looked at that particular item there is definitely some.
Cost pressure and we will anticipate that as we will look at budgets and our longer term plans.
And when you when you talk about <unk> and one of the nice things about the project as the main body of the plants constructed so we've got lots of wiring and building to put up.
Much of the remaining construction materials from a steel perspective, our on the ground. The exception would be the filter for dry stack tailings, we need to purchase the filters, we need to purchase the building materials and there is definitely going to be some cost pressure just due to the cost of steel. So thats in a specific example.
The energy costs are up globally around the planet and we're seeing some pressure on our on our fuel costs.
But in the end when we look at our overall cost structure. So if you looked at mining and processing quarter over quarter. This year, our spend is not up.
Tells us refining other areas of improvement that are counteracting, so far the impact from inflationary things like steel and fuel so bottom line for us.
A fact and if you look at Q3.
I think we've seen some comments about yes, production's up but we haven't changed our guidance or outlook on the year on our unit cost.
A couple of things I would mention there one.
When you look at La <unk> remarks.
Going to have a stronger fourth quarter and it has to do with grade we're moving more tonnes through the plant as expected and out of the underground, but from a grade perspective, we're going to have a stronger fourth quarter and so year to date.
There are not.
Our year to date performance is below what we expect their annual performance to end up on a unit cost basis.
And then when you talk about <unk> there.
The reason why we've been able to increase our guidance on kiss of that largely has to do with we're moving more tons.
With the existing plan, we've been debottlenecking that plant and delivering increased ore through the plant and that set us up for a better year until you see that in our guidance, but the fact the matter is we still have to mine the <unk> crush the ore and so.
On that particular site, it's not free ounces, we have a new work to get them, it's going to it's going to create similar margins at a higher volume and deliver additional cash too. So the corporation. So.
I would answer it yes were seeing some cost pressure, but we can't really.
Talk to the fact that impacted our year to date performance and as we work through our budgets in the fourth quarter on land on.
Final decisions on budget, we will bake in any of these cost pressures, but we remain pretty confident we've put out five year guidance at the beginning of the year. We're still feeling good about next year's guidance and we had a solid year and we're going to work really hard to be able to sustain higher throughput through <unk> and I think that can have a meaningful impact.
On our five year guidance over time, so I'm.
And all I can tell you is we're doing everything we can to mitigate the inflationary reality thats hitting the planet and so far so good for us.
Oh, great. Thanks, George.
Maybe diving deeper into the operations at <unk>.
<unk>.
<unk> almost completed commit.
Commissioning in November 2021 by as you mentioned in the MD&A.
The impact on production.
It sounds like Theres going to be some down days in Q1 2022.
Can you walk me through that is it.
The impact are we talking about days or weeks and.
In Q1, and then as Joe mentioned at a 4% increase in recovery is that 4% increase.
And I was going to come over time, how long is that going to take in terms of improving on that recovery.
So maybe I'll speak high level.
The impact of the HP, Jr, and Joel can talk a little bit about the commissioning detail that might bring some clarity here. So.
Where I'd start is that when you look at the new Kiss Ladakh.
Our lead cycle from historic the first say.
Decade, and a half of operations, we have roughly a 90 day lead cycle and we've got roughly 60% recovery.
Looking forward with the new <unk>.
We're getting with the <unk> around 56% recovery.
But we get that goal over a one year period. So it's a much slower leach cycle in the bottom part of this deposit and Thats, what all of the drilling of network. We did over the last couple of years led us to these conclusions in a robust mine plant and so this year.
Our production is doing better than planned largely driven by tonnage, but the recoveries are as expected so.
This is good news for us.
So in terms of the detail when you think about alright, we were we were at the beginning of the year.
<unk> to be in commissioning in the third quarter and that slipped a little bit to the first quarter first thing I'd say is that's not too bad and when you look at the impact Covid has had on the planet.
We've delivered a number of projects across our portfolio and dominantly a kiss of the AG on budget and on schedule and so the HP Jr. Is on budget. There was a slight slip in schedule due to delivery, but to me that's not bad news and the impact on production over 2021 and 2022.
There is no impact and we put that into our plan. So there is a slight shift quarter over quarter, but its a one year lead cycle. So yes, I mean the impact.
I'll begin late Q4 and into next year in terms of the downtime required to connect the HP, Jr. And commission it but overall there is no negative impact here, we had a great year with <unk>. So far we're going to finish strong we're beating our guidance and we're set up to deliver what we promised for 2022.
So high level. This is all positive and maybe Joe can give a little color around the commissioning detail.
Yes.
Thanks, George so the.
Any impacts were.
Due to commissioning were when we took the circuit offline to tie in or switch over to the HP, Jr, which started.
In.
Early October in ended in later October and Thats, when we werent, placing tons and it's the timing of when those tons. We didn't place shows up is.
Where we will see impacting production that as George said Thats, just a matter of the schedule moving not a change.
So it goes it goes a little later as far as overall recoveries we are.
We were in wet commissioning on the <unk> now and we're running a series.
Metallurgical tests as we go we set up a <unk>.
Portion on the South heap Leach pad on clean plastic.
To test various size fractions various.
Potential agglomeration tests other things to kind of dial in over the next couple of months as we as we bring the <unk> online we want to do kind of a lot of call. It.
Metallurgical framing so that we see which recipes work the best.
And then we transfer all of that knowledge when we go on to the <unk>.
<unk> heap Leach pad midyear next year. So this this this time period.
Placement now gives us the information of how we want to start that new pad.
And I don't think George George in many ways. We're also separating the solutions from those two pads so any of the.
Solution issues, we talked about in the past.
Our solution contamination or complex solutions, we start clean on the north Leach pad with the best metallurgical data that we can gather over the next six months and early placement.
And we'll be doing all of that in Poland proxies as well as pad as we go so well.
We're pretty optimistic cosmos that we'll dial that recovery in over the first six months and as George said, we dialogue.
The production from mine through the whole circuit.
Highly likely that we will see more tonnes placed in 2022% in 2021.
Oh, great. Thanks, Joe.
You brought up the north Leach pad.
It sounds like it is on track, which is good as well.
I would imagine as we talk about recovery I kissed a dog.
Part of the impact on recovery as the current niche pads are getting pretty high.
Could you remind us how high are the current leach pads right now and to be honest its been a while since I've been to <unk>, it's been a while since I've been to anywhere to be honest.
Can you remind us at some point in time.
Stocking at the North Leach five mid 2022 is there at some point, where auto stocking will be at the north Leach pad or warehouses, how is that going to work.
Well.
The vast majority of stacking.
The more leach pad middle of next year.
May be instances, where we still use the south.
As you recall Cosmos, we put in our lift miners.
On the South Leach pads, so we are alright.
I don't have the numbers right in front of it but basically second lift off of the inner lift liner that was replaced.
Or the space because we were so high so we have the opportunity. After we after we stopped placing their to go or.
Not only clean up the inventory.
Maybe.
But also below.
So.
We can peer set liner we can do lots of things to take any.
The residual inventory from the South Leach pad.
<unk>.
So again to answer your question, because I don't know, but I think it lifts.
Above the inner lift at present across the whole pad.
Okay sounds good and then maybe one last question for Phil.
With the refinancing of the debt.
And they.
Also.
Kind of the.
The refinancing of the debt it sounds like you're going to have different alternatives that will be opened to you as a result of some of the Greek assets now not connected to the new debt.
Phil I guess two questions number one could you maybe give us I don't know if you can give US. An example of like an alternative that wouldn't have been possible in the past.
Number two as we.
Heard securities feasibility study, while the new technical reports coming out in Q4 in terms of timing for finding a partner or some looking at financing options are we still looking at Q1 2022 core to get a bit more clarity to get a final agreement.
Is that.
Not the case.
Yes, Hi Cosmos.
Sure.
Good questions I think I think the key here with the refinancing timing wise. It was part of the strategy really.
Geared towards de risking.
R R.
Our strategy towards the Greek assets.
I think overall I mean, there is we continue to look at all different.
Alternatives that are available to us.
We've talked in the past for financing scary as we've talked in the past about potential JV partners.
I have a strategic view on that.
Having having a partner alongside El Dorado that would be potentially.
Potentially beneficial moving forward.
It is a multi decade project.
And we've talked in the past potentially for example of that.
Example of that would be would be the <unk>, which we've we've talked with for quite a while.
There are other alternatives as well I mean, we are.
I think.
Other alternatives that have that have come to light.
There is the increase has been approved for European Union Covid relief funding for example.
<unk>.
The some of the financial institutions in Europe in Greece are also interested as well so we're looking at at all different avenues.
The avenues.
I don't want to make sure that.
We've considered all of them and then we'll make the Wil.
We will make a choice as to which fits the strategy for <unk>.
For the Cassandra assets going forward, and which is the best solution for El Dorado and the shareholders.
I might supplement that Cosmos for my perspective, you've got.
On the one hand, as Phil said, we've solidified our balance sheet.
We set up our debt and our revolver and relationship with a new bank syndicate in a way.
But we have lots more flexibility and really the last deliverable that we're completely under control in control of is getting that feasibility study out that's on track to come out.
And be completed in November.
And that really sets the stage for us to pursue all these various alternatives and land on something so we're we're still aggressively targeting targeting a solution in Q1, but its a negotiation and we're trying to make the best decision for the corporation in terms of that financing and so.
Full speed ahead, we're on track with our objectives.
And Cosmos, it's Jason the other thing I mentioned here and Im sure Youre asking a question about.
What do the amendments or the refinancing allows us to do effectively.
Didn't do before.
The amendments to the covenants and to the credit agreement effectively allows us to carve out Kris and.
Sell equity to potential partners and to consider credit related alternatives to potential lenders. So project financing would be one.
And again, the ability to sell equity to potential partners.
Alright, without having to seek consent from either bondholders or the senior lenders to the company that was all effectively done with the refinancing.
Great. Those are the questions I have thanks, George and team have a good weekend and happy Halloween not sure if you're going to go trick or treating George but I am sure youll be dress as usual is a gold's CEO.
Better looking than me I'll be dressed as a gold analysts so.
Once again, thanks a lot.
Thanks Cosmos.
The next question comes from Kerry Smith with Haywood Securities.
Please go ahead.
Thanks, operator.
So perhaps you could.
Put a little bit more color around stroke, telling me just in terms of the holding costs now I mean, you've.
Got it I guess.
Three or 400 employees, there and youre going to try and retrained some re higher than to some of your other operations, but I presume at some point there will be redundancies there.
Just trying to understand what the holding costs might be for that October basis per quarter or per year on a go forward basis, while you're pursuing exploration strategy.
Okay.
Hi, Gary if you can take.
I can tell you want to start off with that.
Sure go ahead.
So certainly.
<unk>.
As we look to care and maintenance.
Those numbers are in the.
Three five to $4 $5 million annual range.
We're still preliminary on finalizing and then so that's after we've reached full care and maintenance and we'll look to optimize those certainly beyond that.
Okay.
Ken.
Transitional costs.
From a to b or from full operation to transition or to care and maintenance.
Still working on it but we're generally in the.
$10 million range with some production offsets that we will see between now and then so those numbers are still very preliminary but but thats. The order of magnitude that we're moving to is three five to $4 5 million care and maintenance with the transition.
Cost.
And that $10 million cost Joe would include all costs like retraining and severance redundancy whatever the numbers are.
Total loaded cost.
We're in that range right right. Okay. Okay, perfect and then while I got you Joe maybe just one second question on <unk> I mean.
I know you were just starting to run that but can you make any commentary at all about the size fractions that we're delivering is at delivering the product that you expected from that piece of equipment or is.
Is that still need to need some tinkering to fluctuate we'd like to be.
We actually got wet commissioning started on Monday and things.
Things went pretty well kind of the customary.
Okay.
Software glitches and things to get going and we've done a couple of runs going.
As of Tuesday Wednesday.
Early on size fraction looks good and then.
Some unfortunate news.
Last night, one of our key commissioning people from we're had a family member killed in a car accident and had to pull out. So we're kind of regrouping and waiting till we are to get another commissioning person on site, but but early indications are size fraction pretty good.
We haven't even really gotten to the point, where we are seeing how to manage re circulating load that kind of thing but.
But happy with the initial paas fracture at least at this point.
Probably too early to give you any kind of indication of how long it will take us to dial that in at reasonable throughput rates, but I would expect another week or so we will have.
Pretty reasonable numbers on initial run report.
And are you thinking the wet commissioning I'll just only quote another week or two that is not going to be that long.
That basically through the end of November we will ramp up and then we will continue ramping up from that point, but but it's pretty early on.
To start getting any analytical data as yet, but I think by the end of the month, we will have that and we will be at some level for turnover to operations around that time, Jerry but.
But I think what we wanted to wait.
Certainly in this wet commissioning period that we get reasonable operating parameters set in those early metallurgical guideposts established so we don't run too fast to handover, we hand over with.
Metallurgical guidance and operating parameters.
Right right Okay.
That's helpful. Thank you very much Joe and Joe.
Sure George and Jason I appreciate it.
And the next question comes from Tanya you disconnect with Scotia Bank.
Please go ahead.
Great Pat Good morning, everyone. Thank you for taking my questions two questions. The first one I just wanted to come back to something that you had in the MD&A.
The changes to the concentrate sales.
October.
Can you talk about what those changes are and sort of what impact on the share count and the olympias cost are you still get projecting percentage wise.
Hi, Tanya it's Phil.
I think what's being alluded there is really the way some of the concentrate sales are being structured.
In the past.
The payable 80.
On the concentrate was separate from from refining and.
And transport costs and now those costs are blended in as part of the effective rate.
So you're basically seeing the revenue side slightly lower because its incorporating costs and that you see the costs.
In the past the cost have been reported separately. It now they are blended so I think thats the change that's being referred to.
I think structurally is just how youre allocating.
Exactly it's part of the negotiation of the new contracts.
No real impact on the bottom line is just revenues will be slightly lower because its incorporating costs and costs would be lower because there are no longer reflected as part of.
The effective cost.
Perfect. Thank you and then I just wanted to check with you on your reserves and resources.
Program up to September and sort of what Youre doing in terms of calculating the reserve and resource program, you'll be releasing those I think excuse me early December can you talk about number one the pricing we have.
We're seeing inflationary pressures.
Number one are you changing any price forecasting for your pet.
Our other for reserve and resource assumptions and number two what are you looking at like what mines can we expect additions in wireless struggling. Thank you.
You want to take that Joe.
I can take it for Jim So.
Thank you, Tony where we're sitting right now it is.
We are working through final numbers for MRO MRO release, and Youre right, we will have the numbers.
Calculated.
Or ready for presentation of elite.
Early December.
The ups and downs.
Our.
Relatively modest.
We are.
Are you expecting.
Some improvements.
In.
In.
Okay.
Lamont and.
And or Mac.
Drilling cut offs go back all the way to end of March or this release so.
The ups and downs of relatively modest across the board. So we'll give you more information at the time of the release, but.
Nothing major and either in either direction.
But good news.
Generally.
Okay.
The reserving these are spaces generally not been a change too much just want to yes, that's correct yes.
And can I, just confirm that you're not really changing how the parameters in terms of how youre calculating our reserves and resources.
I would say, it's a cutoff grades and ore Ida.
Not significantly no no no major cost changes due to price changes and no major changes on commodity prices from our long term views.
Okay.
Great. Thank you so much.
Thanks Tanya.
That is all the time, we have for today and this concludes our question and answer session and today's conference call you.
You may disconnect. Your lines. Thank you for participating and have a pleasant day.
Okay.
Yeah.
Okay.
Yes.