Q3 2021 Yamana Gold Inc Earnings Call
This conference is being recorded.
It's gonna stay home if they told US you see.
All participants please standby your conference is ready to begin.
You all for joining us this morning before I turn the call over I need to advise that certain statements made during this call today may contain forward looking information and actual results could differ from the conclusions or projections in that forward looking information, which include but are not limited to statements with respect to the estimation of mineral reserves and resources.
Just the timing and amount of estimated future production cost of production capital expenditures future metal prices and the cost and timing of the development of new projects.
For a complete discussion of the risks uncertainties and factors, which may lead to actual financial results and performance being different from the estimates contained in the forward looking statements. Please refer to Yamana press release issued yesterday announcing third quarter 2021 results as well as the management's discussion and analysis for the same period and other.
Regulatory filings in Canada, and the United States I would like to remind everyone that this conference call is being recorded and will be available for replay today at 12 P. M Eastern time.
Replay information and the presentation slides accompanying this conference call and webcast are available on Yamana as website at Yamana dotcom.
I will now turn the call over to Mr. Daniel Racine, President and C E O.
Thank you operator, thank you all for joining us and welcome to our third quarter 2021 conference call and webcast.
Presenting with me today is Jason Leblanc, our CFO Jan <unk>.
Our our Chief operating officer are also a friend of mine.
The senior VP corporate development, and Henry Marsden Senior VP exploration.
It will be available to answer questions during the Q&A portion of the call.
I will start as always with health and safety.
Our total recordable engineer injury rates, what's the point 68 for the first nine months of 2021.
The health and safety of our employees always come first and it's something we have always trying to improve.
Since the beginning of the pandemic, we have taken quick action to limit the impact of COVID-19 on our operations and the communities in which we operate.
We've put in place.
Across the company to minimize the spread of COVID-19.
We are happy to report that we expect over 90% of our employees to be fully vaccinated before the end of the fourth quarter.
During the course of the third quarter, we completed a human rights risk assessment at all of our sites in line with the voluntary principles on security and human rights.
We also approved a responsibility policy covering all aspect of health and safety and something that all development.
This is available to view on our website.
Earlier this year, we introduced our climate strategy in Q3, we performed workshops with each operation to establish roadmaps for each operation that describe project cost and schedule. These.
These actions will help ensure that is along our.
Long range Ghd reduction efforts are supported by practical and operationally focused short medium and long term action to achieve the targets.
Moving onto our third quarter results, Jason will review our quarter in more detail, but I want to spend a moment to recognize the strong performance.
Of our mine our minds deliberate.
Can he didn't want Arctic check will be not an opinion on.
Oh that standout quarter.
And so I'll also produced excellent results in total from our five operating mines, we achieved our second highest quarterly gold production ever in Q3 with record breaking gold production expected in Q4.
As previously guided we mentioned production was weighted at 53% for the second half of the year with the fourth quarter being the strongest quarter, we did better than planned in the first half of the year. So don't be surprised if we do the same in the second half.
We are in a very very good position strong position to achieve or exceed our production guidance of 1 million Geo ounces.
<unk> mentioned that September was the lowest cost month of the quarter and we expect this trend to continue into Q4, where we expect to deliver many many formerly at lower costs.
Okay.
Before talking about August the Odyssey project, let me congratulate our exploration team that they can't eat in monarch take general partnership they have been awarded discovery of the year by the Quebec Mineral exploration Association for East Goldie, what unimportant discovery for the underground mine assuring multi decades.
Production, we are very proud of them at Yamana.
At Odyssey development of the underground ramp continued to perform well.
Framed slipped form poor started in September and 93 meter was completed October 19 in 21 days.
Structural steel installation expected to start next is expecting expected to start in November and being company that during Q4.
Infill drilling from underground as defendant the finding the Odyssey internal zone, which are not currently included in the life of mine plan, but that potential to add underground production within the next five years.
Exploration continues to deliver exciting results at Odyssey and something we will continue to provide updates on.
Turning now to Jacobina and our exploration project expansion project, which continues to exceed our expectations. The mine has delivered significant progress on the phase two expansion a new daily throughput of over 8800 tonnes per day was achieved in September during our.
Try it first to test the plant capacity.
But the potential that we see for jacobina extend well beyond phase two as we have mentioned in the past we will advance work towards our phase III expansion, but the true potential lies even beyond this.
Jacoby nice located in the mining jurisdiction with huge potential at share similar geology to the gold district in the West and South Africa that almost massive gold deposit we are seeing the potential for the drug will be not belt to become an entire gold mining district, which we own 100%.
The Jack will be not mine has produced over 2 million ounces and that's over 8 million more ounces in mineral inventory and this is all within a smaller portion of our land package, which is over 150 kilometer.
And the future jacobina could very well be a complex of mine producing at this scale of over 400000 ounces and continuing to be one of the lowest cost mines in the Americas.
That's all we're at Wassa mine project permitting and engineering are continuing to advance.
And as you may have seen from our press release during the quarter exploration is already beginning to deliver some exciting results, especially at the Wildcat started yet.
The Wildcats zone is located 300 meters south of there was last year.
And this shows that the step out drilling.
<unk> expanded that don't deep contingency of the known historic zones that are not included in the current mineral reserve or mineral resources, highlighting the potential for zone with higher grade to increase production and extend mine life.
Our plan infill and exploration drilling has the potential to generate additional mining mineral reserves that will sustain a 200000 ounces production level for an extended period and support our strategic mine life of more than 15 years.
I also want to take a moment to speak about Mara.
Other I quality asset in our portfolio with huge potential.
<unk> is one of the words lowest capital intensity copper projects and we are working to advance it in the quarter at work progressed on the engineering design drilling outside and furthering studies and permitting.
We are at a very important moment moment for this asset and there are multiple that forwards all of which are to deliver value for our shareholders.
And that that value is huge as you can see on this slide that.
At $4 per pound copper and a 1700 per ounces Mara as an NPV of over 4 billion and we own 50, 625% of that.
We will evaluate all possible avenues to deliver the most value to our controlling interest.
The opportunity we have to deliver value from this project that is not currently captured in our share price is truly exciting.
And I will now pass the call over to Jason who can go over our quarterly results in more detail.
Thank you Daniel and good morning, everyone I'll now provide a brief overview of our third quarter results as Daniel mentioned.
We recorded net earnings of $27 million or <unk> <unk> per share.
Adjusted basis, $69 $7 million or seven cents per share with the manager I think item relating to our early note redemption premium.
We also saw strong cash flows in the third quarter with a step change increase quarter over quarter, which I'll come back to you in more detail in a moment, but its profile of a strong third quarter as what we had expected at the start of the year.
If you recall at the beginning of the year, we guided that production would be weighted 47% in the first half and 53% to the back half of the year.
And at the fourth quarter would be our strongest our results through nine months attractive profile and we expect Q4 production to exceed 270000, G O which positions us to achieve our annual guidance of 1 million Geo production for the year.
On costs for call in the second quarter, we had indicated that we were seeing some inflationary pressures from certain consumables with an impact of approximately $20 per ounce above our planning assumptions at the start of the year.
Still our expectation.
But with our planned ramp up in sequential quarterly production our unit costs had been decreasing since earlier. This year, we really started seeing some of that better cost performance. Later in Q3 in September we had meaningful meaningfully lower cost of several mine and they gave some gauge of that on a consolidated basis ACI for September was about 10% lower than our <unk>.
Average Q3 costs.
We expect that trend to continue into Q4, where along with the increase in production or ASIC for Q4 should be between 5% and 10% lower than our ASIC for Q3, which will translate to our strongest cash flows for the year.
Moving onto results from reminds me a bit more detail titanium mill Arctic followed its exceptional second quarter with another strong quarter in Q3 benefiting from higher grade and recoveries compared to last year.
Jakob you know also followed its strong performance in Q2 with another solid quarter in Q3.
Production in the quarter was close to the record setting production established in Q2 with mill throughput above plan and with recovery and grade as expected the.
The mine is on track to sustain 7500 tons per day of ore to the mill by the end of the year, which will support our path to the phase two expansion at jacobina.
Cerro Moro also had an exceptional third quarter with production, increasing 50% from the second quarter.
More mining faces continued to be opened up in the quarter with more mill feed coming from the higher grade underground ore. This trend will continue in the fourth quarter.
Expect it to be the strongest production of the year with stable throughput higher grades.
With stronger production expected in Q4, Cerro Moros costs are expected to be lower as well.
Shifting over to operations in Chile.
<unk> delivered solid results with Geo production, increasing 19% quarter over quarter recall, we had indicated that opinion on with one of the mine that would contribute to a back end weighted production profile.
The higher grade zones that contributed to that profile came in to the mine sequencing. During Q3, and we expect this will continue through the remainder of the year with a further increase in silver production for Q4.
Our Florida production was just under 22000 ounces, but we are expecting a strong fourth quarter. Both in terms of higher production and lower costs and the mine is off to a great start so far in October.
Now onto our financial performance for the third quarter.
Continue to generate robust cash flows with cash flows from operating activities and cash flows from operating activities before working capital increasing from the second quarter by 24% and 21% respectively.
We also generated great free cash flow during the quarter, which increased 59% to $81 $6 million up.
From Q2.
There were some other notable events during the quarter, we further strengthened our financial position by repaying $720 million of existing debt and completing an offering of $500 million in senior notes due 2031 with a net impact reducing our gross debt by about $220 million.
Aside from increasing our average tenor on debt our interest costs were reduced by approximately $20 million annually, which provides further flexibility for capital allocation.
We also repurchased three 3 million shares during the quarter since we initiated our share repurchase program.
We will remain opportunistic with our N tid and continue to use it at the further tool and delivering returns.
To wrap up I want to come back to the strong Q4, we expect with the highest production and lowest costs for the year by extension, we will see our strongest cash flow and free cash flow generation of the year as well.
With that I'll now turn the call back over to Daniel.
Thank you Jayson and with that I will turn it back over to the operator for questions operator.
Thank you we will now take questions from the telephone lines. If you have a question and you're using a speaker phone. Please lift your handset prior to making your selection.
If you have a question. Please press star one on your devices keypad.
You may cancel your question at any time by pressing star two.
Please press star one at this time, if you have a question there will be a brief possible. Other participants register thank you for your patience.
Okay.
The first question is from Fahad Tariq with credit Suisse. Please go ahead.
Hi, Good morning, Thanks for taking my question, maybe first just to clarify.
I thought I heard you say, 5% to 10% lower ethic a quarter over quarter in Q4 can you just confirm that.
Yeah, Yeah, right right Okay.
Okay, Great and then my second question, maybe just extending that can you talk a little bit about like 'twenty 'twenty. Two I know Q4 gets your benefits from the higher production, but what about going into next year, how does the inflation ankle playing them.
Our first I'd say, we're obviously, we're going through our planning process right now will deliver a full update on our guidance early next year Directionally, though there's some inflation impact that will you know little carryover to next year, we're trying to keep a lid on that we we saw most of the inflation.
Coming to cost later this year, that's the most of the impact that that had mentioned so we expend expect that to continue over to next year as well, but we will be taking other you know other efforts to try to offset that but we do think it's a it's here for the shorter term. We don't think this is something that's going to continue on for three years in the Pan.
It does look like its you know basically some dislocations on the supply side impact some commodity.
Inputs are hurting us as well, but you know where we're doing our best offset it.
Okay, and then just maybe as a quick follow up can you talk a bit about some of the measures you're taking to mitigate the inflation because it sounds like from your comments that.
It's actually a bit more muted for for Ya man it than it is for some of your peers that are talking about.
5% to 7% inflation on consumables are even higher than that you know, 3% to 4%, maybe 5% labor inflation. It sounds like if I'm, if I'm hearing correctly it sounds like it's a bit more muted for humana. So I'm just trying to get a sense of what are the measures you're taking that that's allowing you to kind of see less of an impact on inflation.
Well good morning side Youre right. You know we have already said in Q2 that we're seeing at the maximum $20 per ounces. So that's 2% in our case. So what we did this early in the pandemic. We have increased our inventory we have continued to maintain our inventory a lot higher than they are usually.
The car and the fact that we bought some of them the materials, we need to work with our minds you know sooner. So that that's why is it that this wide this year that wasn't nuts.
No no idea impacted maybe compare it to two others. So there's some measures like that then on continuous basis. You know we will review our contract we we try.
No goods from other companies that taught us auto suppliers and then if they can provide the same quality with a better cost than we are going to take advantage of this so and then we mentioned many time all our minds of operational next sentence, we called it in the company. So there's many project each year at each of the mine that are there too.
No reduce costs mitigate costs improve cost because we we have inflation on a normal basis with manpower and and and materials. So that's part of our culture. That's part of what we do all the time to find ideas and it's coming from from everybody in the organization from from the miners having ideas for men.
In years from from people of technical service from all across the company and then we're sharing in between so you wanted the team they meet they meet each mine meets together on a monthly basis or quarterly basis to share you know what they're doing to improve their cost and then they found other mine can do the same we do it we haven't.
S. Yates you know global procurement many years ago. So when we go on tender for globally with you you can assume we have a lot better price than mine by mine. So that's a few of the things we're doing but we're doing a lot to mitigate costs and then we've been successful doing it.
Okay, great. Thank you that's it for me.
Thank you.
The next question is from Mike <unk> with Bank of America. Please go ahead.
Oh, good morning, Dan Jason Johan although in Henry hub.
Just had a couple of questions Dan you mentioned earlier.
But they don't think Mara is being valued in your share price correct me. If I'm Misquoting you I was just wondering what was your basis for that assumption and what steps are you taking to enhance the value maybe a joint venture.
All the assets are Mara.
Longer days and my second question I shall come back to that was a long one to start off with.
Okay I will start and then they're also can complement but you know this.
There's many that are carrying no value for merrell. After we we even published a strong proof visibility study last year. The numbers. We showed on our side are speaking for themselves. You know that that mine is F. Built when we have integrated that umbrella and Agua Rica together to form Mara you know theres always risk too.
Spend $2 five $2 8 billion dollar in a project a $5 billion you have to build the mill. This is behind us the meal. This bill we have the permits for the tailing facilities, we have all the infrastructure in place at umbrella to operate the mill, we have the permit to do it we have.
Uhm been bit too, even dispose, stating in the future we have pipelines to transport the concentrate to the port so that all exists what we need to do it tomorrow is to strip the big open pit and install that conveyors overland to the to the mill. So that's something very simple to do so this is why.
We see and then when we look at the valuation that's put on the market compared to the numbers you saw on the slide at 1300 dollar and $3 copper that's not the price of the dog doesn't go the gold is today and copper so theres a lot of value. There. We're working to 222 to show you the value are we going to publish.
First the ability to find out if his ability study next year, we're in the permitting phase.
There's a lot of interest on that project and then our goal that you might notice to to demonstrate the potential of tomorrow I don't know Roger if you want to add something on this but we see huge potential with with tomorrow in the future.
Thank you then maybe just to add Mike from from a region perspective, Danny was saying there are a few points there that had zero value for the assets.
I would say, maybe others have multiples of metal content, but if you look at what is the consensus.
This is what a similar asset based on the development stage and the value I think you can see that it would be a significantly higher value.
Even with where the most people for a feasibility stage right that that's that's the reason behind that and it's a high quality asset with a profile for developing I think it was saying that if it's a lot lower risk than a comparable asset.
In terms of our path to unlock value at main pass is to advance. The project. We are doing the facility. We are advancing the permitting but I've seen the social engagement social license, we have good progress there with the local team.
Good progress on the technical side or cells, leading to the study, but also with our partners.
Are there other parts that are there alternatives.
Some history, there to see to it for four corporate assets in the industry.
We consider all options as we progress on the project is obviously the more we advance it the more the risk becomes the more value has.
Well, we have great partner, Mike with with.
With Glencore and Newmont and then the three companies were fully aligned and were working together enough over two years too on the projects. So I think this big value creation for the three companies are in this project.
Okay, great. Thanks for that comprehensive answer.
The second question is on your London listing.
It was a lot of fanfare about this last year.
And early this year and I noticed the volumes have been very very low on London still very high in Toronto and New York. So just wondering is.
You want a happiest a London listing again achieved what you wanted just just curious thanks.
Yeah. Thank you for the question, Mike Yeah, I think as he stepped process he's on a one day event.
Event, its a process and we understand our investors in the UK and in Europe and value relationship and long term relationship and.
We started traveling now the restrictions are lifted and.
Starting with having a face to face meeting. So it is a it's a long term commitment from our part on and we're going to put the effort to to go there and took them face to face and tell our story and shoulder were supposed to do investors.
Well, we had already a good base shareholders in in in Europe, and in London, specifically.
No. We were we're meeting a lot of new potential shareholders like Colorado mentioned.
Mike It's it's not a one day situation, it's a longterm establishing you know.
Partnership or meeting new people in the future. So we're there for long.
Okay, well, thanks for that and good luck.
Thank you.
Thank you. The next question is fan-tan, yet chicken disconnect with Scotiabank. Please go ahead.
Hi, Good morning, everyone. Thank you for taking my questions.
Just wanted to circle back to Jason I mean inflation question for 2022.
As we go through the inventory that you purchased earlier this year.
On the labor side, you've got all of your agreements.
Just wanted to check with you if we look at 2022.
Would it be fair to assume that inflationary pressures are coming from buying additional female consumables et cetera, and therefore, something in the 3% range would be appropriate over 700 dollar per ounce sort of.
Comp this year.
Yeah, Danny I think that's the way you laid it out there that's a reasonable thesis as we worked through lower cost inventory.
There's more and more upmarket than you would have call. It a cost plus compared to what we saw this year, but I think that the jewelry celeb for us and we're still through a planning process and.
They got less exposure on some of the items that you mentioned there you know.
Obviously, we've got exposure to fuel, but with you know predominantly underground mines were just not consuming as as much as as other operations. We've got power locked up at all of our operations through next year at well better than market rates I think there's a few other things going in our favor and to the extent we've had any.
Inflation in region I think you see the kind of the natural hedge of currency is working out here as well in Canadian dollar I guess being the Oh.
Liar and in that regard so again that was there an impact this year that was for a partial year. So I think it's fair to say bye bye extension that got inkjet Pat could be.
Impact this year, plus a little bit more for next year, but you know the final numbers will roll out into next year with our guidance okay.
And just wanted to understand also as we look at some of your catalyst coming that's really not in the next few mine. We didn't have we had an exploration update in September one gig when we would get next exploration update them or any other studies or other things from now until.
Q4 financial.
I think the next the next big.
Catalysts update the tenure is going to be in February February we're going to have our new R&R.
The Q4 result, we're going to talk about the Cerro Moro EPA each and then a mill expansion. We said we were doing studies on boats are we going to talk about it short can you didnt melt Arctic with the Odyssey project the advance maybe.
Maybe some more exploration results we have very good result.
Ah you know after we we did release a.
News that I laid out earlier this year. So you can assume that early next year, we will probably have an exploration update also check will be no you know.
Hopefully you will get the permit but we of the 8500 tonnes per day. The mine is already adjusting for that you know we.
We said 57 million at the beginning and all were talking 15 to 20 in that numbers is still going down as you have seen in Q3.
Three we have achieved.
We're able to achieve with the actual mail 8800 tons per day, so even better than what our phase two plans. So there's a lot of catalysts knew was coming.
Early in the year until then I think it's gonna be quiet in November and December and January but February will be there will be a lot of news we will try to.
Not to have all of them at the same time I would say, maybe a week or two apart, but there's there's many news coming early into next year.
Yeah. That's that's good and then maybe just on your reserves and resources I just wanted to confirm with you.
On your pricing and are we looking at keeping the same pricing we are seeing a bit of inflationary pressures through the cost. So I'm just trying to understand whether the pricing you will keep that constant as you had in 2020 and then that's the first question and secondly, Hal.
How do you feel about replacing your production and your reserve base. This year are growing we enjoyed kidding, what mine should I talk to us.
The price won't change, we we have 12 15 off for many years that the wall fifties there to stay.
For many more years, so that's that.
Inflation doesn't have any impact on this so 12 15 is our number.
And what is it the 18 or 17.
For cop four silver that's the two numbers that are constant for many years. That's the one that we that the one that we're going to keep on all of the mines are and we can put collars, but we see very good. The result, as you can imagine my opinion monarch take when you mine close to 700000 ounces of your reserve each year. The reserve will go down but there.
Resources will continue to go up with the the undergone check will be no. We are already you know.
I said earlier this year that we have more than replace for our final phone ounces to replace what we got in the mine. We had very good success at upheld opinion like usable.
Some very good news this year, we didn't really speak a lot about it but you're going to see so all in all in general we're very confident that we will do like in the past few years. So replace depletion and then maybe add some ounces at some of the operation I don't know Andrew if you want to see.
Something else, but we're very confident.
Yeah.
Yes.
Just Daniel covered it really well we've had this very strong targets for the last few years are always replacing depletion sites are performing very well.
We're fairly confident we will make that target.
Over the last few years, we've seen consistent growth in check will be none.
We'll see that again this year.
And then obviously, a Canadian monarch to kind of we're going to see some some growth in resources, there and perhaps that conversion of some of that inferred to indicated for that February release system.
Okay. So like so when I kind of take them that if you've got a good chance of at least you're replacing pig option in your reserves and growing New Orleans, So I guess yeah.
Yes, hi.
Precisely yes.
And just maybe one last one on Santa Mara.
Okay, and I guess.
Have a feel for how much additional material you could unlock if you decide to expand them now.
Yeah. It's it's it's basically you know our cut off 10 yards that sell them all was very high because it's a very high grade mine. So you know when you have a cut off on their growing up six gram per tonne in.
And the open pit three grams per tonne so.
You know that May otherwise bill expandable, we know the front end of the meal, so crushing and grinding it's already above 2000 ton per day or processing either no 1000 to 700 tonnes per day right now that's the Max but we know the front end can be able to do more than that so you'll see in this study what's our thing.
King and then sure with expanding the mill, we can expand the resources and reserve because we can mine lower grade lower grade we have huge potential on the heap Leach you know we have mentioned earlier.
Earlier that that heap leach can can bring us a 40 to 50000 ounces per year more because we're not mining any no one gram type material and then huge land position. There you would start to get them. This is where Andrea and the team are going to focus by the end of this year and early next year or two to bring resources.
The lower grade that will justify D to E Beach option and then the meal option to be to upgrade the mill its not very costly because like I said, it's already a plan like that you just add thanks on the flotation circuit in the.
You know the signed editions or it could also a tool to increase capacity so.
Unlocking that will permit to mine zone, that's right now we're mining right next to it the underground we have the development done, but because they're lower than cutoff grade. We we don't mind them you have already paid for all the infrastructure are ramping down and then getting access so it will have but what's the amount of ounces.
Right now all of that let us finish the study.
Then we will see what we can bring into the the mineral inventory.
Okay that sounds good great. Thanks, a lot for taking my questions. Thanks Daniel.
Thank you.
Once again, please press star one on your device keypad. If you have a question. The next question is from Mike Parkin with National Bank. Please go ahead.
Hi, guys. Thanks for taking my question I'll follow up on the inventory comment that you've you've got excessive inventory now what's the thought about going into 2022 is that something that you would be looking to maintain levels at or dropped down.
To more normalized levels.
Oh, good morning, Mike we're still in a pandemic. So there's no. There's no reason for us to reduce our inventory for now in the plan right now is to continue and that things will change in our in our planning for I'll say at least next year and probably the next three years forecast that we're going to really see the inventories are I, but.
The benefits of having our inventory there was a price to be in 2020 to do that but now we're benefiting of having done that's right away when the pandemic started last year.
Okay.
And then.
Has there been any discussion with Tony Macoute should Kirkland now that the merger of equals with like Nikos that had been announced in terms of like what the vision is on Canadian alert ticket seems like possibly we might be seeing some expansion in budgets for exploration and certainly with that asset.
Showing quite a bit of upside so maybe that's something that you guys would be welcoming.
The answer is no Mike that's them do their deal closed their deal together later. This month later in November that I said that I'm, assuming are the management coming to your level. Then then we're going to have a discussion so we'll speak with with Tony at the time when the deal is closed.
And then I think on the management coming to your level, where the mine is our manage and where you are in and this is gunther protest at agnico than you like Nicole will continue to be the same day I don't we don't see any changes and we'll be very happy to provide more money into the exploration as we generate as you know.
Good strong free cash flow might uptick has been an amazing on exploration I mentioned, what they wanted to do the discovery of the year with the east Goldie and that that East Goldie East, It's always continuing to grow so we'll be happy to speak with Tony you went into the time.
Okay.
And then just last one question for me, there's been a lot of chatter around labor tightness in Ontario, and Quebec.
For Quebec operations are you seeing much in the way of price pressures to.
Attracts people to the West monarch project maintain staffing at Canadian Mill Arctic.
I'll start with was that Mac the answer is no.
We're able to attract very good people so far for them was that Mac project. We are building. The team there were close to avoid an odd to us. So that helps a lot I think to attract people there's many.
We're working in the mining industry the kosher from AUM.
So we've been able to attract good people that might uptick.
The underground project because basically you know are mostly a contractor a.
Thing, we're going to switch to our own employees in April next year, we have started to to hire people I mean on this stuff side point of view, where we are hiring right now we had no issues. So far but we will see when it comes to time to to go with the underground, but you know the open pit will.
It will go down in the future of this people that I've already mentioned they want to be transitioned from the open pit mining to the underground. So we have already these employees, they're working at the mine for many years they want to stay in zone from the underground. So we got to start training also some of our actual manpower at the site. So.
We have not seen that pressure at that these two.
Operation, but we will see what happen to happen in the future, but so far no problem Mike.
Great.
One last question.
South America has obviously been a bit of a COVID-19 hotspot through the pandemic that seems to be turning a corner here with Q3.
Little bit of color in terms of employee availability, how do you guys see that kind of today is that you kind of best it's been in.
What kind of year to date and the supporting further that call for a very strong fourth quarter coming.
Yeah like I mentioned, you know Julie to give you. An example that we have a 100% of vaccination rates at the two mines.
Chuck will be now is getting close is above 80% now and the same at several mobile for first dose.
And then that the vaccine is getting more available than they're getting vaccine either sell them or it was back in full production in all four.
The last quarter and this quarter. The other three mines, we had no issue since the beginning we have no cases at any of our mine so.
We've put protocols in place at the beginning and then they are bearing fruit, because where we're running the mines at full capacity.
Before the pandemic, we still have the same protocol that site, but the mines are running like normal.
Okay Alright. Thanks, that's it for me guys. Thanks, very much congrats on mine good quarter. Thank you.
Thank you.
Our next question is from Ralph for Phoebe with eight capital. Please go ahead.
Yeah.
Well thanks, everyone. Good morning.
Daniel Mike My first question is on Jacobina.
Phase three permitting them by your own account a phase II permitting has gone very well tracking ahead.
When it comes to Phase III do you think it's probably going to go as smoothly and I'm specifically talking about.
Incremental issues, such as tailings and use of the rail there.
That's going to produce any more sort of scrutiny on more difficulties in getting the permitting for phase III.
Well I think you were off to a good morning, So we're going to get permits for phase III.
When we get the permit next year so.
Tonnage at 10000.
10, or 10000 ton per day, that's the permits are we going to get so we need 8500 tonnes per day for the second phase, but we have asked the permits like we were doing phase III.
So it's not the permits to 85 and then another and then to increase that permit to 10000, we have decided to wait to go directly to the 10000.
Oh.
Understood Okay.
And my second question is going back to the earlier comment about incremental Canadian melodic investment now that we have sort of a new one bigger player.
Is that changing your thinking on the pace of potential dividend bumps the pace at which we get and CIP action.
Just don't order for Ya man, it to sort of build up that balance sheet.
For maybe bigger capital commitments.
No our balance sheet and express team so we can afford.
Giving more dividends buying back more shares and then continue to invest if needed more and Canadian Arctic we're going out to a very high speed based there too you know I mentioned the upstream its ahead of plan our working on the auto infrastructure. So if we need to spend more and more money on the ground. That's one point.
You know, we have I think 12 or 14 drills that might uptick right now can we go to a more drills, yes, we can but that's not an issue for for us to continue to have the same priorities no. We had three before.
Our balance sheet that's fees, that's fixed so we're focusing on returning to shareholders and reinvesting in the.
In the a and the in the in the mine and then in the project but.
That's not unusual for us to put more money that might uptick or any of the other mines. We have increased budget internally to all our mines exploration budget. This year, because it's going well and then they have been successful to to find more ounces.
So that's not an issue, which we shouldn't that here that's a problem for Yamato even if the partner is a bigger partner whatever we decided we have always decided since day, one that what we want to do it might uptick I'm, assuming it will continue to be to be the same for both partners. We're 50 50 and there and then it's gone.
Extremely well I don't see any any changes we at the mine level, we're going to deal with the same same people and then maybe on the corporate level would be a bit different but like I've mentioned, many time and I think both companies you mentioned on my side and then on Sean sign in and Tony I know in the future.
We nothing has ever come to the the higher management of the two company because there was.
No problem at the mine level that the the management Committee with the board of director of the the partnership never.
No. The two groups together disagree on on anything so now it's going to be on more states watch seven and a half years that we were in a partnership that is gonna be eight here in June next year, it's been a great partnership and it will continue to be like that in the future.
Yeah, that's really good news thank you Daniel.
Thank you Ralph.
Okay.
Thank you.
There are no further questions registered at this time I will turn the meeting back over to Mr. Missing.
Well. Thank you operator, and thank you all for joining us on our third quarter 2021 conference call and webcast, we'll look forward to sharing more a recap of our full year performance in February please take care and stay safe Bye for now.
Thank you.
The conference has now ended please disconnect your lines at this time and we thank you for your participation.