Q3 2021 Agnico Eagle Mines Ltd Earnings Call
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Good morning, My name is grants and I'll be the operator for today's conference at this time I would like to welcome everyone to the Agnico Eagle third quarter results 2021 conference call all lines and placed on mute to prevent any background noise.
All of the speakers remarks, there will be a question and answer session. If you would like to ask a question. During this time simply press Star then the number one on your telephone keypad, if you'd like to withdraw your question. Please press star followed by two.
Thank you Mr. Boyd you May now begin your conference.
Thank you operator, and good morning, everyone and thank you for joining us for our third quarter 2021 conference call.
Just to take note of the fact that this presentation will include.
Certain forward looking statements.
Just like to start off with a summary, and a bit of an overview a very strong quarter from.
From a production perspective cost perspective from a cash generation perspective, as well we had record.
Quarterly production as expected.
In the third quarter are producing over 520000 ounces.
Excluding production from the Holt Bay mine, there was a big part of this.
Our performance was really driven by the performance of our Abitibi mines and our melee in mind, if you look at the Abitibi platform.
Gold X Canadian melodic and Lauren those three mines collectively produced in the quarter 222000 ounces of gold.
Total cash cost below $600 an ounce.
If you look at Mali, Dan will get into that in a minute had a record quarter from a production standpoint, producing about 97000 ounces of gold at total cash costs of $6 34, So really strong performance from that base.
Producing almost two thirds of the production ounces for the company in the quarter as a result of the strong production and cost performance in the quarter.
<unk> maintained our 2021 guidance, we did provide commentary.
In the press release on cost inflation as we said in the press release, we are seeing.
Cost inflation on consumables and supplies in the order of about 5% to 7% going into next year, that's roughly half of our cost structure.
The other half would be largely labor.
And our labor expected increase would be less than that that we're seeing in our consumables and our reagents. So we're not seeing any abnormal pressure on the on the wage side and we thought it was important to give you our sense. We did update you last quarter.
And we wanted to give you what we're seeing.
In the current environment.
Also.
Of note as you know on.
Timber the 28, a month ago, both agnico and Kirkland Lake announced a merger of equals that would combine and create the best in class Gold company operating in pro mining jurisdictions.
Unlocking significant synergies. So this is really a transaction to unlock value amounting to about $2 billion over over 10 years.
This is basically done to take advantage of what is really a regional consolidation opportunity.
Which drives a lot of those synergies and as we've said before when you look at.
From detour down to Kirkland Lake across the Val d'or that relatively small geographical footprint. The combined company will produce annually almost 2 million ounces of gold with a combined reserve and resource of almost 70 million ounces. If you look at the combined Canadian production.
From this company as we've said before over two and a half million ounces with the potential to get to about 3 million ounces. So this is the major building block of this.
Company going forward, not only unlocking value through synergies, but creating the highest quality platform for creating additional value going forward.
We continue to work with our partners at Kirkland Lake Gold continue to discuss and plan.
For a successful integration of the two businesses, making good progress we have been asked.
How about the combination of these two businesses as well as we've said.
In the past and sat on September the 28, I think the magic of this combination is the fact that we're taking to high quality businesses, one with nine mines, one with three mines.
And kirkland's two of their three mines are on the same rough geological belt as our business.
In Quebec, and we do have development projects in Ontario, So from an integration standpoint from a manageability standpoint from a cultural standpoint.
These line up extremely well and we're highly confident that we'll have a successful integration.
These two high quality businesses are big part of our story has.
<unk> has been the exploration success over our long history, but more recently over the last year or so we're seeing significant exploration results at many of our largest <unk>.
Cash flow generators, and our largest producers, including at three of our largest gold mines.
And we'll talk about that as well as we've you've heard US say before this is the largest exploration budget in the history of the Pico around $160 million and I think it is important to note that Kirkland Lake gold actually spends more than we do.
And so when you think about that combination again, it will be a company that actually has the best upside potential in terms of adding value through the drill bit and that will be a core part of the strategy given that it's been a core part of the strategy and a big part of the success of both companies individually over the last couple of years, we will have a more detailed.
Date.
Of the exploration story of Agnico on November the second and so were still compiling that information around this but some of the highlights were included.
In our press release, our Lauren.
Continues to be a major focus for exploration, even after being in production for over 30 years because we.
We do have a lot of undrawn.
Ground to the west of La Ronde on the old Barrick Bousquet property.
That's going to require access to drill so we're extending three exploration dress.
Into the <unk> five property the former bousquet property that will be a big part of the exploration story over the next two to three years and we also continue to see them.
Good promise to the east of the mine and we put in a recent drill hole that was encountered on the 20, north zinc South zone and the <unk> of these intersections are several hundreds of dollars so highly valued rock.
In the lower part of the mine, which is not inconsistent with what we've seen over the 30 year history of this mine, where we've seen poly metallic zones that run.
Hi, MSR value. So we're going to also as well as the focus on the west part of Lauren to also focus on the east part of the round at <unk>.
We continue to drill.
<unk> that deposit as we go deeper continued to encounter higher grade over a meaningful witts.
Which is important and again reinforcing.
The concept that we first understood very early on as we were looking at this opportunity and after we bought it doing a bulk sample we found that that bulk sample returned more gold than was indicated in the block models. So we continue to see a lot of visible gold in the drill holes.
Suggesting that this deposit not only continues.
And gets bigger it's also retaining.
It's high quality nature in terms of grade.
And we will get to in a minute and you can see that that translates into higher production and very good cash generation coming out of <unk> at <unk> as you know that's a focus for us.
In the region of the Amor deposit we continue to drill.
Largely to the west where drilling also between whale tail and IV are but of note in the quarter was in the Mammoth area. That's about 600 meters west of the whale tail pit.
Oh, we're encountering good thicknesses.
Decent grades.
Within 250 meters of surface. So it's early but potentially significant and that'll be a focus as we move into next year to continue to follow up.
Our drilling in that area, because that's what we're looking for a near surface mineralization.
Close to our existing infrastructure the Odyssey project.
Continues to have tremendous potential we continue to get as we drilled the core of east Goldie as <unk> said many times, it's very consistent very tabular.
Almost like what Ron when you drill a hole within the envelope or within the outline youre hitting gold very consistent and the excitement is really what do we see as we move to the east and that favorable geological pattern and what we've seen as we've drilled in between that wide step out that we talked about.
Over the last few months as we continue to see the potential to maybe add additional.
Additional zones in that gap again early but it's a real focus for exploration.
At Canadian <unk>, Arctic and upper Beaver.
We're seeing the potential to add additional mineralization as we drill deeper hi.
High gold grades very good copper grades over very good thicknesses.
And a potential.
New zone.
So we're focused on that.
As we move forward and that will be an important part of extracting additional value out of the combination of agnico in kirklin because of the proximity of upper Beaver to Kirkland's Makassar mine and in addition to that we've got a sizable resource right on the boundary in the 8-K zone, which is easily accessible with a tunnel.
Drift from the Makassar operation, So we'll be able to provide more clarity on that as we move through the <unk>.
Next couple of months on ESG, we continue to rank very high in ESG ratings, it's a focus for us it will be a focus in the combined company as we put those two businesses together, we see lots of opportunities, particularly in communities, particularly on renewable energy and the combined company. So that'll be an important focus for highlights in the <unk>.
<unk> was really the reintegration of the none of Omi at workforce and none of it both at <unk> and Meadowbank.
We've been able to do that successfully we are happy to have them back we missed them while they were away.
And Thats an important step.
In building the business and building the platform.
And none of it on climate change.
We announced recently our commitment to net zero by 2050 and also recently.
Committed to implement the task force on climate related financial disclosure, we talked about that at our health and safety Committee yesterday at the board level.
So that's our primary focus in our Mexican mines continue to win awards in terms of safety and corporate and social responsibility. So that was a big highlight in the quarter.
I'll spend a little time on the next page, mostly just to go down some of our assets and talk about some of the highlights and I'll. Just use this page is a bit of a guide and a reference before getting into the individual mines.
Just want to highlight the strong operating margin in the quarter coming off of that record production and really looking at particularly from the big three mines looking at <unk> continues to be.
Our biggest cash flow generator, almost $150 million of operating margin in the quarter Canadian melodic at $93 million in melee Dean.
Sort of entering into that group of the big three mines with record production, but also strong cash flow generation at $85 million. So that cash flow is a significant part of our overall cash margin in the quarter of over $500 million, just starting with La Ronde.
A very strong quarter, we had very good grades in the West mine, we set a new quarterly tonnage record at <unk>, five which is important in terms of continuing to optimize that asset a lot of that productivity comes from using automated equipment, where we continue to be well advanced there with sandvik.
And sandvik well acknowledged that la Ronde is one of the mines.
That they deal with which is further ahead than most mines in terms of integrating and utilizing automated equipment. Our board was just at site. This week at gold X at Canadian Mill Arctic at La Ronde in.
And we're able to see.
Some of that automation.
In progress.
Continue to focus on exploration as we said as we move to the west and really what we're looking at is.
As part of the full potential exercise here Lorenz.
Strong production.
We think will be bolstered going forward and an ability to extend the mine life as we drill out both the western and eastern side of that deposit and that trend.
Good performance there it belonged at Canadian Mill Arctic.
Again record quarterly tonnage mined and record quarterly tonnage milled in.
In the quarter, resulting in strong gold production and very good cash generation. The focus continues to be on optimizing the Odyssey project, we got to see the new concrete headframe I think it's it's completed in terms of the form it's up about 97 meters. So it extremely big headframe to match.
The big underground opportunity that exists there.
And you need the big Headframe is this is going to become which it is the largest underground gold mine in the country in Canada as we build it up but as we said the focus is.
We're on target in terms of development there on budget in terms of development, but the focus is also on exploration and how big is that structure and how do we integrate that into the mine plan and improving the economics of that project, which we believe we can continue to do as we look to optimize that project kits.
Quarterly record in terms of mill feed and quarterly record gold production. So a lot of records in the quarter, which is I think is a testament to the ability now once we've expanded some of these mines now to focus on optimizing the assets in Kettle is certainly one of those although we're already working on the next phase of expansion at that mine.
Continue to get good drill results there as we drill deeper that deposit continues at depth continues to be wide open it's already a very large mine in terms of mine life.
And again, another optimization opportunity and expansion opportunity there at Meadowbank.
Good production coming out of the <unk> deposit 90000 ounces in September was over 30000 ounces in September 34000 ounces. The focus now is really on optimization really on cost reduction as we go forward.
We need to get the costs down we have a definite plan in terms of optimizing that asset as we move forward, but the key for us is to get the tonnage.
The long haul truck performance, which we've been getting.
That's allowed us to process.
Good tonnage, which has resulted in good production.
Going forward. So there is still work to do there.
Our goal is is to make it as higher quality mine as we haven't <unk>. It shows you that can be done in Nunavut.
But as we move into the fourth quarter, we did have a one week shutdown.
In early October and that was really to do some tie in work in the mill as we add.
New circuit.
There to improve.
The.
Recoveries in that plant.
So with that one week shutdown will have lower production in the fourth quarter at Meadowbank and <unk> I'll just finish with <unk> on this page as we said.
Record quarterly production of 97000 ounces heading commercial production at the <unk> open pit in August.
We're progressing on our phase two expansion, which is important to continue to optimize this asset and we know from exploration that this asset will continue to grow.
<unk> had a successful sealift, we discharged the saline water too.
See almost call completed.
At this point.
And the nerve has reviewed the permit application the nerve recommendation for the water line project was positive and we're just waiting for the approval from the federal government.
As they review the nerve report and we expect to receive that before the end of this year.
So just.
Wrapping up here before we open it up for questions just on financial highlights.
Normalized earnings of <unk> 60.
Our work our operating cash flow before working capital a very strong result at $1 69, again, that's driven by a record production.
Strong cash position.
But we should note.
Post the merger announcement with Kirkland Lake all of our rating agencies.
Put agnico Eagle on a positive ratings watch so that's a positive sign on the merger from the rating agencies. So just in conclusion, a good strong quarter record production very good cash generation lots of good exploration results that we'll be able to spend more time on.
Next week with a more fulsome release and another call to have <unk> and his team go through them.
With those that are interested.
And we're all focused now on.
Getting to the vote November 26, so.
We were asked those shareholders of both Kirkland Nico to get out and vote for the merger we're excited about it.
Look forward to the combined platform and working with our partners at Kirkland Lake to continue to deliver the type of value that both companies have delivered individually to do it together in a lower risk higher quality platform. So thanks for your attention on that and we'll be happy to take questions operator.
Thank you ladies and gentlemen, we will now begin the question and answer session should you have a question. Please press the star followed by the one on your Touchtone phone, you'll hear three tone prompt acknowledging your request your questions will be pulled in the order that they are received.
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If you're using a speaker phone please lift the handset before pressing any keys. Thank you.
Your first question comes from Tyler Langton from Jpmorgan. Please go ahead.
My questions.
And maybe just to start appreciate your answer the details on the inflationary pressures.
I guess can you talk a little bit about sort of the actions that you're taking to offset some of the pressures on consumables and then just labor and kind of I guess, you know sort of with those efforts and is it something where you just sort of overall inflation might be up sort of in the low single digit range. When you kind of sort of lump everything together.
Yes that was the reason.
That may be in two one is the on the procurement what we're looking at we call it the strategic sourcing.
About two.
What we see in the Crystal ball coming with the inflation and to do the timing of buying stuff in the quantity based on that thing and this is with going with communication with the externally and internally, but we have a good procurement team on top of it to seeker to price I wouldn't say other than that it is.
Mainly all about productivity, how could we be better at that.
Maintenance at the operation using a donation to at the end of the day.
Use less material.
Maybe on the workforce.
We do every year a nickel.
Negotiation with our employees. This is a year after year. The same thing and we don't expect to something very exceptional this year might have a bit of pressure higher but this will not.
And two it too much.
Inflation on that part so overall it has continued to improve what we do we have a plan in place on the cost side and on the workforce.
Management as well as their procurement strategy.
So do those I mean the.
I guess, the five 7% increase in consumables, and then labor costs up less of those sort of net of the efforts you're.
You're making or.
Is that something where those efforts gets kind of sort of sort of lead to lower costs.
Those are individuals so consumables going up.
<unk>, 5% to 7%, obviously, it's hard to predict labor less than that and then all of those efforts that Dominic is talking about.
Are going to work to offset as much of that as we possibly can.
Okay. That's helpful. And then just final question on your cost guidance for the year I guess to kind of hit.
The higher end for the year, it looks like cost to come down a little bit in Q4 could you just I guess.
Give us some details on what might be driving lower costs in the quarter.
But as Dominic said really it's it's.
Mostly to do with mine sequencing and.
The grades that youre going to get.
<unk>.
Within the year, that's the key driver, it's really it's hard to make a big difference within a year. So usually tyler within a year. It's just a function of where you are in the mine sequence.
Got it okay perfect I think there has been pressure this year no doubt about it.
Great. Thanks.
Your next.
<unk> comes from Fahad Tariq from Credit Suisse. Please go ahead.
Hi, Good morning, Thanks for taking my question just on the a follow up on some of the things you're doing to mitigate can you talk about you know once the merger is complete with a larger platform in Canada.
With some of the mitigation from an inflation perspective, maybe bigger purchases greater scale of procurement et cetera.
Absolutely.
Absolutely it will one of the big advantages of this.
Merger vehicles as the opportunity on the synergies and let's be honest most.
Most of the synergies will be operational and.
Associated with a bigger footprint in a particular platform. So it does of course give you better purchasing power. It does of course give you better negotiating power.
But it's more than that it's also logistics warehousing.
It's a number of things and then of course above and beyond that opportunities to share infrastructure. So.
Absolutely a bigger position in a region, where you have more influence.
Is a competitive advantage.
Okay, Great and my only other question one of your competitors that also have.
Large Canadian platform talked about absenteeism at mines because of Covid can.
Can you talk a little bit about like are you seeing that in your minds hope excluded.
And maybe some of the measures we're taking to come.
Infections onsite.
Yeah, No we don't have significant absenteeism nishu.
Some action that we took.
Just two for our employees and for their business to have mandatory vaccination in Nunavut, which is let's say more.
Sensitive with the camco probation into flight. So since October 15, everybody need to have one shot to take the plane and November 15, it is going to be to shut so far we have a good response good conversion with the employees and there is no. There is no issue on that.
One of the other things that we.
Have noted as we've looked at.
Theres no doubt that.
Attracting skilled work workers his heart is getting harder.
What we've been able to do and what our focus has been in the last little while is transitioning some of our higher quality contract workforce into agnico Eagle direct employment.
And that's just to give them certainty.
To give us more certainty and to ensure that we maintain that scale level not ultimately gets reflected into productivity and costs et cetera. So that's one of the things that we've done.
Specifically to try to manage.
That situation.
Okay, great. Yeah. That's helpful color. Thank you.
Your next question comes from Ralph <unk> from eight capital. Please go ahead.
Thanks for taking my questions, Sean I wanted to come back to this cost reduction at Meadowbank.
Because you put it in the context of <unk> as the target in.
I'm wondering is the goal here to get that cash structure down into that sort of $700 an ounce range or were you talking about more sort of generic terms about productivity maintenance automation and <unk> sort of the.
The benchmark.
I think that.
As we've been saying over the last few quarters.
This set <unk> is as far as unit costs is sequencing and so the next couple of years sequencing in the pet moving to higher grade a couple of years after that.
Where that will lower the unit cost dramatically from what they will be over the next couple of years. So part of that is as sequencing, but part of that is.
Just fitting the cost structure to the asset into the mine and the opportunity one of the things that.
Is different clearly at <unk> versus <unk>, because lower grade.
<unk> is also more remote relative to major infrastructure <unk> has the advantage of being closer to rank in inland. So.
Built in <unk>, certainly has an advantage. So I think the concept that I was referring to is more in terms of.
The cash generation potential of <unk>.
As a mine while we continue to explore for other assets is to ensure that we're generating maximum cash from that asset.
The one thing to remember about <unk>, because it's a satellite deposit.
It is a higher cash cost and melia, Deane, but it's leveraging off existing infrastructure at Meadowbank.
And our our primary objective is to get the best return on capital on our shareholders' capital. So that is something to keep in mind. It is it is it will be a structurally higher cost.
Then melia Deane, but it'll be a very good mine because it had a lot less capital because it's using an existing mill.
Yes got it.
Okay.
My follow up Sean as I don't want to come back to.
Inflation mitigation, right and presumably that means hedging supply chain management inventory, but I'm wondering about the interrelationship between some of the hedging strategy and the currency hedging strategy right are those independent of each other because in this cycle, we have rising fuel prices, but we also do not have Canadian dollar rising at the <unk>.
Right, which is actually coming in as a net benefit so how is <unk> thinking about.
Hedging raw materials versus hedging currency.
Well, we don't have any hedges on.
Raw materials be on fuel.
Of course, we do diesel we do currency as well and I don't think our strategy is particularly changing on how we hedge those things they are fairly independent of what's going on.
At any given moment.
We look at the sentiment in the market, where we think things are going and that could cause us to do larger or smaller quantities of hedging at any given moment, but basically what we're trying to do is to make sure that we deliver.
Better than budget levels to try and make sure that we can do what we said we were going to do in our February guidance annually. That's really the line in the sand is.
And governs how how we hedged the win is quite honestly very opportunistic.
Over the years its worked out but as you well know past performance does not guarantee future success, but.
No change to the strategy overall, I think we will still get our opportunities because volatility seems to be.
Existing still and I don't think it's going to go away. So we kind of feed off the volatility.
Got it understood thanks for that.
Your next question comes from John Tumazos from John Tumazos, very independent research. Please go ahead.
Okay.
Good morning, good morning, and congratulations on all the good things. Thank you John.
Usually when large companies merge exploration.
So far half of the geologists or something like that my sense is that.
Your team and the correct one team are going to be very smart and not do that.
Okay.
Maybe you're going to eliminate administrative duplication.
And get more drilling for the same money or something smart IR solid Bill there was with Santa Fe I'd go with Newmont bought Santa Fe I know people juniors that are hiring newmont people from the Barrick Newmont consolidations.
I'm sure that you thought this through meticulously because that's an important part of the company, yes, that's a big part a good point, Jon that's a big part of.
The historical value creation of both companies is that like Nico has been around as you know for a long time and we've generally just followed geological potential and found our way into Finland, and Mexico and throughout the Abitibi belt and in Nunavut.
Kirkland as everybody knows has created a lot of value.
Just on.
Making geological assessments that others were also making and they came up with a different view and through.
Determined drilling and focused drilling and fairly aggressive budgets create.
Created a lot of value so that won't change actually we see this as a big differentiator between Barrick Newmont and the new <unk> would be not just the focus on exploration, but the ability to actually add value through exploration and that's because if you look at the combined asset base is a lot of the exploration.
News is coming at some of our biggest assets with the biggest NAV is the biggest production the biggest cash flow generation and that gives us an opportunity to turn that into brownfield development opportunities, which creates value sooner than I think we've also are making the assumption, which I think it is fair is that.
Certainly we know that from <unk> perspective that.
The market has tended to pay us.
Earlier than most when we have exploration success.
Would suggest that's probably the same with Kirkland. So this will be a big part of our focus and geologists will be important and I think the constraint will be as we look at combining two big budgets as a constraint that everybody is feeling right now is to get quality drillers and quality drills. So in that context, we will have to.
Make sure that we get.
Best drills and the best Drillers at the right projects that are going to drive the most value of that will really be the exercise I don't know if <unk> has anything to add there.
No I think you can add in downtown I think that Theres a lot of complementary of the land package.
Both driven by all of us.
Near term potential to grow around need to where a lot of synergies potential in and Kirkman Lake obviously, we'll need to wrap our heads around how do we realign priorities after but certainly no change in the big <unk> game plan to create a lot of value around existing operation.
Can I ask a follow up on hope.
Sure <unk> had it almost a year.
I know the costs are a little high and it's not consolidated with <unk>. It's not described was to continuing operations.
You probably know more now than you did at the.
Beginning.
Yes, maybe <unk> can start and then Dominic will sort of roll into some of the thinking because the thinking now will be driven off of what defines from the drill. This is a large exploration play.
And then what <unk> is able to do.
Determined in terms of upside and potential will flow into how Dominic and his team look at what we need from a processing standpoint, and where that processing.
Capacity should be on that large land package. So <unk>, maybe you could start I think from an exploration standpoint to start with I know, we certainly confirm you know what we stock meaning that all of the zone that Dorris remains open both the bdd data is currently being mined in the in the central.
<unk> Valley, we're confirming that we can expand those zones. We've also resumed drilling more aggressively on the Madrid confirming that we can identify additional parallel zone or extension of the of the unknown.
The known zone into deposit to the north so lots of positive resolved from that standpoint, so confirming that we'll be able to significantly grow the resources and more importantly, I think we're taking a.
Step back no.
Nothing wrong about what's been done over the last five years, but they were mostly focused on putting the mine into production and we can now take let's take a look back at what was done previously and the time of newmont that bigger scale at that at property scale go back into the bigger.
Large land position and about all of the huge amount of that.
<unk> said that were collected at the time and really look at the entire land package as a whole and re initiate exploration at property scale.
And maybe on being do you think it will take before you know whether it's part of it.
Long term team or not is this is for your effort or a one year effort or.
Excuse me for Interjecting, Sean Yeah, maybe starting with the again.
At Madrid, which we know we can extend the rest, but the bigger prize is at Madrid, where their core.
Currently the center of gravity, So we will certainly need.
As you mentioned a couple of year I mean kind of how is it one is at 2% and we certainly want to ramp up drilling the sooner the better that we can make.
Make our mind about the center of gravity grow the deposit that Madrid put our hands around Boston and and we certainly want to do it right and and more and we know we can continue to grow. So it's all about defining the center of gravity debating. So let me make an overall dominik on that.
He has done me back to your question, what's new since were there other than the geologists that they are more and more excited.
What with what we saw at the mill the team did a good word to do some improvement and we are currently doing a tradeoff should we look to extend expand that meal to bring it to a higher throughput while minimizing the capital or should we just go to a bigger mill when we started and when.
First visit that did there with with EMR and my thing.
My first visit to the mill was not very positive, but now the team are improving it.
It gradually so that's the tradeoff is ongoing.
That's going to be a compare to should.
Should we do a new mill maybe at Madrid.
This is Phil study ongoing.
There's huge geological potential is just a question of time.
Is exactly that timing that's going to depend on the results.
Merci Beaucoup bookshelves.
Thank you.
Your next question comes from Mike <unk> from Bank of America. Please go ahead.
Hi, Sean.
Other question.
I'll start.
<unk> been discussing with Kirkland Lake kind of a plan for a successful integration.
Yes keep thinking about.
Upper Beaver Upper Canada, those projects to the 19 kilometers from our Casa mill.
And I know, there's copper to per Beaver, but.
Is there any thought there ill put the copper circuit matassa at all that we have to build a mill tailings impoundment nothing.
Yes.
Speed that thinking that production to me that's a huge.
Synergy that's not really being talked about much. Thanks, yes, yes that's.
Certainly part of the discussions and was also a big part of the thinking as we were doing sort of reciprocal due diligence.
That was the one connection.
Which was probably one of the things that started the discussions a couple of years ago as we were thinking about.
Upper Beaver, what we're going to do there as we continue to get good results. It was clear that upper Beaver was a mine and was going to be an attractive mine with low unit cost once it got built our question was when to build at what to actually build.
And so that was one of the.
Things that were driving.
Our desire to talk to Kirkland about these types of opportunities. The other thing that accelerated some of that thinking.
The camp is the fact that he and his team were drilling on the boundary.
Of our property package in Kirkland Lake and started to grow a deposit called the 8-K deposit which is about at this point I think about 700000 ounces.
180, or something like that and.
And that project.
As we looked at it.
Certainly.
Much better from a return perspective, and risk perspective, and low capex by extending adrift.
From the Makassar property.
To access in mind that so that's part of the synergies as well. So we also have that whole sort of concept of how do we process it where do we process it.
What should be done at the Makassar mill.
That stuff is ongoing now in terms of even looking at taking samples of our doing tests on some ideas that.
The teams have so we're looking at that inside out they also have the Holt.
Processing facility, we are not sure whether that fits but we're looking at this as a collection of assets in the area and I think this just sort of reinforces this concept of regional consolidation that's how we've approached this.
This wouldn't have been announced we wouldn't have done. This if this didn't provide the synergy and optimization benefits from the regional proximity of these assets to be able to move collective skills around and to take advantage of physical infrastructure, but also to ramp up exploration. We know that <unk> had some good results on the amalgamated.
<unk>.
We have the upper Canada, a property, which we don't talk much about.
So theres lots of opportunities here that.
Our collective teams are working through and we'll be thinking more on as we move through the next several weeks and into next year and we'll be able to provide a lot more color on that.
Early in the new year as we get more clarity on some of these slots but.
That work is ongoing and was ongoing even during the due diligence.
Along with this trip hop.
We can call it at the 8-K.
<unk>, maybe you can sort of update Mike, yes, exactly the AK currently sits within 300 meters from the property bundle <unk> from the shallow infrastructure and the Ram that Kirkland Lake already as on their nearest surface resources at Mckesson. So all of that could quickly be connected and make you know that serve phase.
<unk>.
Zone costs, along with the eight key as an interesting supplemental source award to maximize the processing facility at Mckesson and provide flexibility for the operation.
I think also some of the old mines to the east of our Casa.
So yes also yet on the tool burn and the rest of the break to the east So youre right.
At the same time until that date the entire they already controls a character in the currently control that already three quarter of the old break we were already sitting on that coal burn and lend go Rob to the extreme east So all of that former main break.
At Kirkland Lake will <unk> now part of one entity, which removing all of those property bunda re constrained will create a lot of opportunity moving forward.
Okay, great. Thanks.
Good to see how it shakes out.
Thank you.
Your next question comes from Tanya Jack Disco Nick. Please go ahead.
Hi, Good morning, everyone. Thank you Andrew.
And my question.
Wanted to ask Dominic turnkey some question next.
And just on that can connect to the Meadowbank complex and I just wanted to have a better understanding of what.
What's happening in the pet Amazon I understand about the rain in Texas really sticking down there, but just want to understand what exactly has happened change your mining sequencing.
These lower grades and more dilution what are we doing to get back to the <unk>.
Hi.
And I want to be doing 10% dilution. Thank you.
Yes, maybe I could start back with the rain challenges.
We get more rain and planet in fact by September It was more rain that we receive.
Tier 2019 in 2019 with.
And on a.
Year, what's happening is as we're drilling into the permit for us when there is rain in your old filled with water.
Freezing so you need to do the the HUD loading to be able to avoid that you have issue. So that create us challenges in doing that it was more of a July and August where we drill and blast challenges plus in addition of that some drillers.
Where had difficulty to staff at that time.
The decrease of the inventory broken inventory. So we were in <unk>.
Build to deploy.
The shovels and the trucks to move the tons.
But this is back on track now the inventories $1 5 million ton since at the end of September. So this is behind.
Behind us.
The other also aspect.
We talked about last quarter, we had some.
Whoa stability patterns that were looking forward to see more still working on how we're going to mitigate that so that that postpone some higher grade material, but that material is going to be back. So this is let's say <unk> with the operation on the good side maintenance or beating <unk>.
Availability. This is a very good news long haul trucks are also doing their targets. This is also very good good news and on the grade side I will let.
Talk about the dilution.
It's happening a bit.
Yes, so over let's say the last couple of year or since the startup BCP as we are narrowing down the drill spacing in some portion of that of the deposit while in some area. We were pleasantly surprised in the whale tail, where great as better than expected, but in some other area. There is some more.
Complex holding pattern to what wasn't counter with the with the larger drill spacing, but overall the ounces are there and we still we see.
Unfortunately that then some area well, we need to mind wider and currently there is a team on site that looked at okay, even with that more complex holding pattern and some portion of the pit.
Can we get ripped out of that additional internal dilution that we have to integrate which because bottom line. We see that the ounces are there we just need actually in some of those more complex portion to take more external and internal dilution when mining knows which impacts the costs. Obviously, because we are integrating a little bit more dilution, but theres a deemed <unk>.
We are working on it to see how we can improve moving forward.
And but in some portion.
Or will they reward pleasantly surprised for example in September where we got our good production months, because the grade was higher than expected.
Okay are you comfortable with your dilution factor that you've incorporated into your reserve mine plan right now.
While it will <unk>.
Run multiple assumption over the last year and a half and at year end. This year, what youll see in our reserve will be that the adjusted adjustment with all of that being being factor, but I would say bottom line answer is are the same we may see some portion that will added some more internal dilution.
Okay, and maybe do that I have.
It's good to see some exploration results coming out of Amyris has been trying to extend the open pit mine life.
I know you're going to have a detailed.
Have you with us on November 2nd can you talk a little bit about what you're finding and how you see the <unk> mine life extending.
We're looking at all sorts of opportunity as you're alluding to it because we can we are looking at ways could we.
<unk> optimize the ultimate bit that when they look at that what was left open in the Mammoth area, where we're getting results. We're also looking at all of the residual inventory as well that were left behind around vault and port down show. There is a an intense effort currently being put that's looking in <unk>.
In order to continue underground, we would benefit from and are a source of open pit and we're actively working on it that on on all aspect on dusting, all residual mineral inventory at any of the previous pit and also what that can scale.
Larger property scale with regional exploration at generating new drill targets and we've been getting some some narrow but good grade.
With that we'll talk about next week so.
But still.
It's it's always on where we're at.
We're facing into some some.
The pressure is always on exploration to find and find new bits and find new resources and the team is good at it and I invite roles that will be successful.
Again, the drilling that you put out yesterday continues to show really good grades in <unk>.
Catherine.
It's happening.
Deposit what do you need to see before you think that year.
Yes, Catherine factor.
Conservative like what do you mean like when do you change yes.
It's an ongoing effort and it's not unlike what we were seeing at Lorain and what we did at La Ronde as well same thing is happening at <unk>, we knew for a fact.
Charlie alluded to previously when we did the bulk sample the only way we can get to the ounces. We got in the bulk sample wise by not putting any capping obviously when you're at <unk> you look at the rule the rule of thumb that way you do with you you need to put a reasonable camping, but as your processing and azure reconciler over several quarter.
Then you asked too you can relax, you're capping, which we have been addressing in some zone. When we got enough experience, we're increasing the capex just as the ongoing exercise a reconciliation between the mill and the mono, but currently were presently surprise because you know the additional launches we're getting our a lot.
Due to the fact that we're getting more gold and the mud oldest garanti are predicting so we're working on it some on some deposit it is slightly more challenging on semi there we're seeing some plus.
Thank you.
Yeah.
Ladies and gentlemen, as a reminder, should you have a question. Please press star followed by one.
Okay.
There are no further questions at this time. Please proceed yes. Thank you operator and thank you everyone for your attention. Thank you for the questions and interest in <unk>.
As we noted please.
Watch for the exploration update release on November the second and I believe Theres a call. We've set up there. So if you need details on that please reach out to the IR Department on November 3rd look for the circular for the merger of Eco Eagle in Kirkland.
That's out as we said on November 3rd in November the first so our in House Counsel just held up one finger.
It's November the first that wasn't the finger you think it was the index finger.
We're still all good and we look forward to.
Your vote to approve what we're very excited about which is the combination of agnico Eagle and Kirkland Lake. So thanks again.
Yes.
Ladies and gentlemen, this concludes your conference call for today, we thank you for participating and ask you. Please disconnect your lines.
Okay.