Q3 2021 Yamana Gold Inc Earnings Call
This conference is being recorded.
It's going to stay home if they don't have as 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.
Is 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 them at 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 your minutes website at Yamana dotcom.
I will now turn the call over to Mr. Daniel Racine, President and CEO.
Thank you operator, and 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.
Bush our Chief operating officer are also finding that there's a senior VP corporate development and then read Marsden senior VP exploration 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 there'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, that's all of our sites in line with the voluntary principles on security and human rights.
We also approved a responsibility bus policy covering all aspect of health and safety and sustainable 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 G. H D 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 mines, all our mines delivered.
Can you didn't meet Arctic jacobina and El opinion.
Oh that standout quarter.
And so I'm also produced excellent results in total from our four five operating mines, we achieved the 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.
Yeah.
We are in a very very good position strong position to achieve or exceed our production guidance of 1 million Geo ounces.
So I 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.
Before talking about August the Odyssey project, let me congratulate our exploration team at the Canadian Arctic 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.
That's throwing multi decades of production, we are very proud of them at Yamana.
At Odyssey development of the underground Trump continued to perform well.
Its framed slipped form poor started in September and Ninety-three 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's 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.
Yeah.
Turning now to Jacobina, and our exploration project expansion project, which continuous 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 a trial.
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.
So it will be 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 a mine that's produced over 2 million ounces and that's over 8 million more ounces in mineral inventory and this is all the way to end a small portion of our land package, which is over 150 kilometer.
And the future jacobina could very well be a complex of mines producing at the scale of over 400000 ounces and continuing to be one of the lowest cost mines in the Americas.
That's all where it wasn't Mac 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 target.
The Wildcats zone is located 300 meters south of there was a share.
And it shows that step out drilling.
<unk> expanded that don't deep contingency of the known historic zones that are not included in the current mineral reserve are I mean, they're all resources highlighting the potential for zone with higher grade to increase production and extend mine life.
Our planned 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 tomorrow, another I quality assets in our portfolio with huge potential. The project is one of the words lowest capital intensity copper projects and we are working to advance it.
In the quarter 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's forwards all of which to deliver value for our shareholders.
And that that value is huge as you can see on this slide that at.
At $4 per pound copper in the 1700 per ounces matter 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.
We recorded net earnings of $27 million or three cents 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, CEO, which positions us to achieve our annual guidance of 1 million Geo production for the year.
On costs recall 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 costs at several mines and to give some gauge of that on a consolidated basis ACI for September was about 10% lower than our.
Average Q3 costs.
We expect that trend to continue into Q4, where along with the increase in production our 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 Canadian mill Arctic followed its exceptional second quarter with another strong quarter in Q3 benefiting from higher grade and recoveries compared to last year.
Jakob do you 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 CEO 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.
China will continue in the fourth quarter.
<unk> to be the strongest production of the year with stable throughput higher grades.
With stronger production expected in Q4, Cerro Moro as costs are expected to be lower as well.
Shifting over to operations in Chile.
<unk> delivered solid results with G O production, increasing 19% quarter over quarter.
Recall, we had indicated that opinion was one of the mines 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.
And onto our financial performance for the third quarter.
We 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.
Also generated great free cash flow during the quarter, which increased 59% to $81 6 million up from Q2.
There was 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.
Sorry 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 as a further tool and delivering returns.
But to wrap up I wanted to come back to the strong Q4, we expect with the highest production and lowest cost 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, Jason 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 are 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 pause from other participants register thank you for your patience.
Yeah.
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 ASIC 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, that's your benefits from the higher production.
But what about going into next year, how does the inflation ankle playing them.
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 yes, there is some inflation impact that will 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.
Most of the impact that I mentioned, so we 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 there. It is here for the shorter term. We don't think this is something that's going to continue on for three years in the past. It does look like its you know basically some dislocations.
There you know supply side impacts from commodity.
Inputs are hurting us as well, but you know where we're doing our best to 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, 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.
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 <unk>.
Sure.
The fact that we bought some of them the materials, we need to operate our mines 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 those other 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 mines are operational next sentence, we call. It in the company. So theres many project each year at each of the mine that are there too.
No reduce costs mitigate cost improved cost because we we have inflation on a normal basis with 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 the miners having ideas from engine.
And here's from from people of technical service from all across the company and then we're sharing in between so you wanted the team to 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 find out their minds 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. You can assume we have a lot better priced than 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.
They don't think tomorrow is being valued in your share price correct me if I'm misquoting you I'm just wondering what was your basis for that assumption.
What steps, you're taking to enhance the value of maybe a joint venture.
Sally asset or is it more.
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 there's.
There's many that are carrying no value for merrell. After we we even publish 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 to 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 permit for the tailing facilities, we have all the infrastructure in place at a umbrella to operate the mill, we have the permit to do it we have huge open 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 installer 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.
A dollar and $3 copper that is not the price of the dog doesn't go the goal 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 our first ability a final feasibility study next year or in the permitting phase.
There's a lot of interest on that project and then our goal that yamana has to to demonstrate the potential off tomorrow I don't know Roger if you want to add something on this but we see huge potential with with merrell 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 have zero value for the asset.
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 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 facility at this 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 it is a lot lower risk than a comparable asset.
In terms of our paths to unlock value. Our main passes to advance. The project. We are doing the visibility we're 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.
So let me try.
Try 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 wood with Glencore and Newmont and then the three companies were fully aligned we're 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.
Second question is on your London listing.
It was a lot of fanfare about this last year.
And early this year and but I noticed the volumes have been very very low on London still very high in Toronto and New York. So just wondering is.
As you monitor happiest along the listing has achieved what you wanted just just curious thanks.
Yeah. Thank you for the Great question, Mike Yeah, I think he's a process is going to Oh, one day.
Event, its a process and we understand.
Investors in the U K, and Europe and value of a relationship and a long term relationship and.
We started traveling now the restrictions are lifted and it starts 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 their effort to to go there and took them face to face and tell our story and shoulder were supposed to and to the investors what.
Well, we had already a good base shareholders in in in Europe, and in London, specifically.
We were we're meeting a lot of new potential shareholders like Colorado mentioned.
Mike It's it's not the one day situation, it's a long term establishing you know.
Partnership or more meeting new people in the future. So we're there for long.
Okay, well, thanks, a lot 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.
Wanted to circle back to Jason.
<unk> question for 2022.
As we go through the inventory that you purchased earlier this year.
On the labor side, you've got all of the areas.
Just wanted to check with you if we look at 2022.
Would it be fair to assume that.
Now the pressure is coming from buying additional CMO consumables et cetera, and therefore, our staffing in the 3% range would be appropriate over $700 per ounce.
Comp this year.
Yeah, I think that's the way you laid it out that it's a reasonable thesis as we worked through lower cost inventory purchases more more up market 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 our planning process and.
They have less exposure on some of the items that you mentioned there you know.
Obviously, we've got exposure to fuel, but with 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 it as a kind of a natural hedge of currency is working out here as well in Canadian dollar I guess being the.
And in that regard so again that was an impact this year that was for a partial year. So I think it's fair to say bye.
By extension that got inkjet.
Pat could be you know an impact this year plus a little bit more for for next year, but you know the final numbers will roll out into next year with our guidance.
Okay.
Thank you.
And just wanted to understand also as we look at some of your catalyst coming that's really not in the next.
A few months, we didn't have we had an exploration update in September one when we would get next exploration update.
Any other studies or other things from now until Q.
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 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 about Arctic with the Odyssey project the advance maybe.
Maybe some more exploration result, we have very good result.
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.
Also check will be now you know.
Hopefully you will get the permit but we of the 8500 tonnes per day. The mine is already adjusting to 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 Q.
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 newest 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 will try to.
Not to have all of them at the same time I would say, maybe a week or two apart, but that's that's many news coming early into next year.
That's good and then maybe just on your reserves and resources I just wanted to confirm with you.
On your pricing.
Looking at keeping the same pricing, we are seeing a bit of inflationary pressures through cost I'm, just trying to understand whether the pricing.
We will keep that constant as you had in 2020 and then that's the first question and secondly, how do you feel about replacing your production and your reserve base. This year are growing reasonably.
What mine should I focus on.
The price won't change, we we have 12 15 off for many years that wall fifties, they're thirsty for for many more years, so that that inflation.
Inflation doesn't have any impact on this so 12 15 is our number.
And what is it the 18 or 17.
For copper for silver that's the two numbers that are constant for many years. That's the one that's the one that we're going to keep.
On all of the mines are and we can put collars, but we see very good results as you can imagine met Canyon mill Arctic when you mine close to 700000 ounces of your reserve each year. The reserve would go down but the resources will continue to go up with the the undergone check will be now we are already you know a Saturday.
This year that we have more than replaced for our final phone ounces to replace what we got in our mind and we had very good success at upheld opinion like usable.
Or 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.
Yeah.
Go ahead.
Alright.
Daniel covered it really well.
Had this very strong targets for the last few years are always replacing depletion.
Sites are performing very well.
Uh huh.
We're fairly confident we will make that target.
You know over the last few years, we've seen consistent growth in check will be none.
You'll see that again this year.
And then obviously a Canadian mill Arctic, we're going to see some some growth in resources, there and perhaps a conversion of some of that inferred to indicated for that February release as well.
Okay. So like so what I kind of take on that is you've got a good chance of at least replacing pig option in your reserves and growing New Orleans licenses here.
Yes precisely.
And just maybe one last one on Cerro Moro.
Have a feel for how much additional material.
Unlock if you decide to expand them now.
Yeah. It's it's it's basically our you know our cutoff 10 yard that sell them all was very high because it's a very high grade mine. So.
When you have a high cut off on their grown up six gram per tonne.
And the open pit three grams per tonne so.
You know what that mill was built expandable we know the front end of the meal, so crushing and grinding it's already above 2000 ton per day or processing, either 1200 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 <unk>.
And then sure with expanding the mill, we can expand our resources and reserve because we can mine lower grade and lower grade we have huge potential on the heap Leach you know we have mentioned.
Earlier that that eat but each 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 uhm position their huge started yet and 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 that will justify D. The eat beach option and then the meal option to be to upgrade the mill its not very costly like I said, it's already planned like that you just add thanks on the flotation circuit in the U.
The signed editions or it could also tool to increase capacity so.
Unlocking that will permit to mine zones that right now we're mining right next to it the underground we have the development done, but because they're lower than cut off grade. We don't mind them you have already paid for all the infrastructure.
Ramping down and then getting access so it will have but what's the amount of ounces right and 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 Danielle.
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.
You've got excessive inventory now whats the thought of that going into 2022 is that something that you would be looking to maintain levels at or dropped down to more normalized levels.
Good morning, Mike Oh, 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 on that thing it 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 inventories our eye, but we.
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 kirklin now that the merger of equals with agnico have 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 that's showing quite a bit of upside. So maybe that's something that you guys would be welcoming.
The answer is no and 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 at the management coming to you leveled and then we're going to have a discussion so well.
We will speak with with Tony at the time when the deal is closed.
And then I think on the management committee level, where the mines are manage and where you are and then there's his counterpart at Agnico then you Ike 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 towards 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 East Goldie and that that's east Goldie East, It's always continuing to grow so we'll be happy to speak with Tony when it's at a 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 too.
Attract people to the WAF Smack project maintain staffing at Canadian Mill Arctic.
I'll start with was that Mac. The answer is no. We are able to attract very good people. So far for them was that Mac project. We are building the team there.
We're close to what went on there also that helps a lot I think to attract people. There's many that are working in the mining industry. The work closer from AUM.
So we've been able to attract good people that might uptick.
The underground project is basically now are mostly a contractor.
The thing we're going to switch to our own employees in April of next year. We have started to to hire people I mean on the staff side point of view, where we are hiring right now we had no issues. So far well, we will see when it comes to time to.
To go with the underground, but you.
You know the open pit will will go down in the future. There's 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 are 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 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.
A little bit of color in terms of employee availability, how do you guys see that kind of today is that you've kind of best it's been in you know kind of year to date and the supporting further that call for a very strong fourth quarter coming.
Yeah like I mentioned, you know Chile to give you. An example that we have a 100% vaccination rates at the two mines.
Check will be now is getting close is above 80% now and the same at several mobile for first dose.
That's D. The vaccine is getting more available than they're getting vaccinated. So several mobile was back in full production now for that.
The last quarter and then this quarter the other tree minds, we had no issue since the beginning we have no cases at any of our minds. 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 will still have the same protocol that site, but the mines are running like normal.
Great Alright. Thanks, that's it for me guys. Thanks, very much congrats on a good quarter. Thank you.
Thank you. The next question is from Ralph <unk> with eight capital. Please go ahead.
Yeah.
Thanks, everyone. Good morning, Daniel.
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.
If 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.
Morning, So we're going to get permits for phase III.
When we get the permit next year, so the tonnage up 10000.
10, or 10000 ton per day, that's the permits we're 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 permit to 85 to one another and then to increase that permit to 10000, we have decided to wait to go directly to the 10000.
Understood. Okay and my second question is you know going back to the earlier comment about incremental Canadian melodic investment now that we have sort of a new and bigger player is.
Is that changing your thinking on the pace at potential dividend bumps the pace at which we get and CIB action. You know just in order for you managed to sort of build up that balance sheet for what may be 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 pace. There too you know I mentioned the upstream its ahead of plan our working on the other end.
The restructure so if we need to spend more and more money underground at one point you know we have I think 12 thrills or 14 drills at minimum take right now can we go to a more drills, yes, we can but that's less of an issue for for us to continue to have the same priorities no. We had three before.
You know balance sheet that speaks that's fixed so we're focusing on returning to shareholders and reinvesting in the in.
In the a and the in the in the minds and then in the project but.
You know that's not unusual for us to put more money at 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 tool to find more ounces.
So that's not an issue it's we shouldn't nut 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 and 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.
Going 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 will 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 site and Tony I know in the future.
We nothing has ever come to the the higher management of the two companies because there was.
No problem at the mine level that 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 partnership it's going to be eight here in June next year, it's been a great partnership and it will continue to be like that and 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. Racine.
Well. Thank you operator, and thank you all for joining us on our third quarter of 2021 conference call and webcast. We 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.
Thank you the conference has now ended please.
Your lines at this time and we thank you for your participation.