Q3 2021 Hycroft Mining Holding Corporation Earnings Call
Good day and welcome to the Hi crops Q3 results call. Today's conference is being recorded at this time I would like to turn the conference over to you Tracey Tom. Please go ahead.
Thank you good morning, and thank you for joining US today, we will be discussing the business update and third quarter operating results that we issued a press release this morning, which can be found on our website.
On or about November 11, 2021, we plan to file our 10-Q for the period ended September 32021, which will include our financial disclosures for the third quarter. Please read the press release and listen to this call in conjunction with reviewing the Form 10-Q, which will contain additional disclosures.
So please note that some information provided during this call may include forward looking statements that involve risks uncertainties and assumptions, even if these restaurants certainties have been materialized or the assumptions prove incorrect.
These results may differ materially from those expressed or implied by such forward looking statements. All statements other than statements of historical fact are statements that could be deemed forward looking a discussion of some of the risks uncertainties and assumptions will be set forth in more detail in our press releases and SEC filings, including the anticipated 10-Q, we assume no obligation and do not catch.
Update any such forward looking statements.
I'll now turn the call over to Diane Garrett.
Yes.
Thank you Tracy appreciate that good morning, everyone and thank you for participating today on our call to discuss the business and operating update for the third quarter of 2021, and Brian Garrett <unk>, President and CEO of high Cross mining and with me today are stand right out our executive Vice President and Chief Financial Officer, and Tracy <unk>, Vice President corporate Communications.
And Investor Relations.
Once I deliver my initial comments on the news release that we issued today. We will then open the call for questions and as a reminder, as Tracy just noted that we do intend to file our third quarter financial results on Form 10-Q. After the market closes Tomorrow November 11th.
This new management team that's been in place with high cross or just over a year and while all of US joined this company in anticipation of quickly ramping up production.
Full scale commercial sulfide operations under the novel process.
We identified and subsequently disclosed to the market a number of items that must be addressed before any application that this process could be successful.
Our economic on a commercial basis.
What we've been working diligently over the past many months performing the necessary review of that process conducting additional test work, which actually is ongoing and continuing.
And engaging three independent consultants with expertise in the field of laboratory testing and metallurgy to review and peer reviewed this work independently.
Our team is extremely conscientious about derisking the project upfront in order to mitigate execution risk as much as possible.
Big part of that Derisking involves the ongoing variability in metrology work across all of the domains with the hycroft ore body because that is absolutely critical to any mining operation and must be completed before commercial start up again.
And today, we announced the following key items first of all we are ceasing the mining operations at high crop mine effective immediately this is why in my eyes align our general manager at Jack Henry.
Not on this call with US today is they are meeting with our team at site. However.
However, we will continue processing metal inventory off the leach pads until it's no longer economic to do so.
But the operation, which started up back in 2019 mining of these oxide and transition ore allowed the company to pre strip the overburden.
With some revenue offsets as they were working to expose commercial scale sulfide ore.
Through our Derisking of that novel process. There are a number of findings from our work then indicate capital costs will be materially higher for that process operating costs will be significantly higher we have noted that some of the or is not amenable to this process and its sub or is likely to perform below what was previously.
<unk>. So at this point based on what we now know the economics will be challenging for the novel process.
We do know however that the chemistry of this process works, but if the application on a large commercial scale at high cross will require more work well not be applicable to the entire deposit and also will be higher cost. So.
With our change in focus from the Tuesday, cheap oxidation of Leach to a milling operation we have ample time to align the remaining pre stripping at the oxide and transition.
And have that coincide with the startup of commercial scale sulfide operation.
Secondly, as we announced today with respect to the technical studies that are currently underway and expected to be completed in the first quarter of 'twenty two.
We have run a number of pit optimization in order to analyze the in pit value of the ore body under various sulphide processing scenarios without exception the pressure oxidation or pox process generates significantly higher relative economic value at high crop.
Moreover, that value is highly leverage to even modest increases in gold and silver prices.
There were studies of test work in the past that also demonstrated mailing was a viable option for high Cross and walk construction began by your predecessor company. There were a number of factors that precluded the implementation of our mail, including lower gold prices and financial struggles by that predecessor company at the time, So we do.
No.
<unk> works at high crop.
Hi, Kraft after it is truly world class I mean, I don't think anybody denies it is a significant mineral endowment with hundreds of millions of dollars in infrastructure that exists on the site today and mine is permitted for about the heap Leach and a milling operation and is situated in one of the very best mining jurisdictions.
And I felt like Hycroft deserves a thoughtful care and attention to not be driven by market expectations or commodity prices, but to be looked at through the lens of what it is it isn't the top five largest primary gold projects in the world with a significant silver component, having the largest silver resource in the U S.
And our task is to unlock and deliver that value to the shareholders and the best way possible and how do we do that.
From all of our analysis to date, we believe that the mailing operation using the pox process is the right approach hycroft or is very amenable to this process and with the higher recoveries from Pax over all the other options we have reviewed including the novel process. We believe that this is the right path for high crop it is.
Proven it is reliable and it has much less risk.
While the capital that's required for the mill, maybe more than originally anticipated for the novel process. Once you factor in the agglomeration circuit in the materials handling system, the on off pads and solutions management systems.
The expected economic return and reduced execution risk far outweigh that incremental capital requirement. So our focus going forward is solely on the Pax pre feasibility study.
We also want to follow up on many of the areas that we've identified that are perspective for higher grade ore with a targeted exploration drilling program.
Any of the mines in Nevada started up at the low grade oxide heap Leach operations not unlike high cross dead in its long history of heap Leach operations Ultra.
Ultimately many of these mines have transition to underground mines, when the feeder system to the near surface low grade ore was discovered through drilling.
It was postulated by many geologist if there was potential theater systems for both gold and silver at high Cross.
However, the focus in the early 20 times and up until recently was on step out drilling to expand the pit.
It is well known that Hycroft hosts banded base similar to other high grade projects and mines in northern Nevada, and we have actually seen evidence that these banded fades as we mine through or.
In the southern part of our claims also we found placer styled visible gold that has not been followed up on its drilling.
In short there was minimal effort in resources at Hycroft, a follow up on these opportunities or to work to identify the theatres of this enormous system.
Timber, we announced that we had conducted some limited exploration drilling to follow up on perspective higher grade areas and we encountered some buzz worthy intercepts, which we disclosed to the marketing can be found on our website of particular interest was the 52 meter intercept and the board textile under returned 2.47 grams per tonne of gold and 24.
Five and a half grams per ton silver and this is some of the highest grade gold intercepts, we've seen at high Kraft and it warrants additional attention.
We invite you to look at our most recent presentation on our website, which detailed some of the target areas that we've been reviewing and that we have identified that we would like to follow up on with the drill program.
With respect to our stock price.
No opinion, it sorry in an hour.
Our opinion in no way reflects the value of this asset and by the way many of US in management and board are very engaged shareholders and we're committed to realizing the value inherent in this asset we can certainly appreciate the disappointment when we communicated that there was more work required to do at high cross before reaching commercial scale self.
Slide operation.
We also believe that the decisions to narrow our focus on the Pax PFS.
These mining to preserve our cash, but your ongoing development programs.
By some level of comfort that this team is ready to take the right steps and is extremely capable and highly qualified and operational execution and is mitigating risks, which all translate into shareholder value.
But related to high crop.
We had two large shareholders, who closed funds were required to liquidate all holdings in those funds, which also share held shares of high cross. So for approximately four months nearly 8 million shares of high crop or sold which put significant pressure on our share price and I think everybody's aware of of that it won't be seen over the last several months.
We believe the future of Hycroft as compelling as we complete the Pax PFS in the first quarter of next year and also engage in a robust exploration program designed to target these perspective higher grade areas.
<unk> has established a strong culture with a focus on safety and environmental compliance.
And we continue to see incredible improvements in our triple rate with another decrease to 0.41 at the end of September and that's an 82% reduction over September of 2020, So very very pleased with the focus on not only operational efficiencies and improvements but definitely on.
On the safety side, which is number one for us.
Our cost control measures and improvements in these efficiencies will benefit the ongoing process of the leach pads and the Merrill Crowe plant operation as we continue to leach material off the pad.
We'll continue to provide periodic updates on the development of the pox PFS and we look forward to presenting a path forward once that PFS is completed early in the new year.
In closing I am very grateful for this team and the amazing work that they've done in the past year going forward I am confident that we can create a long life mine that will benefit generations of miners.
With that I would like to open it up to Q&A.
And then I'll make some closing comments before we end the call today.
Thank you if you would like to ask a question. Please signal by pressing star one on your telephone keypad.
If you're using a speaker phone. Please make sure. Your mute function is turned off to allow your signal to reach our equipment again press star one to ask a question, we'll pause for just a few moments to allow everyone an opportunity to signal for questions.
And I'm showing we have no questions in the queue at this time.
Okay. Thank you operator, well that's amazing we've either answered everybody's questions are with our comments because we do have quite a number of people on the call today and I want to thank you all for joining us.
If you would like to follow up Oh, I think everybody's got our contact information can be found on the press release, please reach out to us and we'd be more than happy to answer any questions you have.
So as I mentioned earlier, we are hard at work conducting all the necessary work to develop the best long term plan for Hycroft and we really appreciate the support and patience of all of our shareholders and stakeholders as we look forward to delivering this plan to provide that value for our shareholders.
Speaker 1: of this plan that provides that value for our shareholders.
Speaker 1: Before I say goodbye to everybody and let you get on with your day, I also want to thank the entire team at the High Cross Mine for their hard work.
Before I say goodbye to everybody I'd like to get on with your day I also want to thank the entire team at the Hycroft mine for their hard work as we could not have made the significant improvements at side without their commitment and dedication to safety and operational improvements while at the same time navigating through the challenges of the novel process.
Speaker 1: as we could not have made the significant improvements at site without their commitment and dedication to safety and operational improvement while at the same time navigating through the challenges of the novel process.
Speaker 1: I'd also like to thank Jack Henrys for his guidance on the mining, and Mr. David Kirsch for his leadership of Chairman of Highcroft. Thank you very much for joining us today, and please do visit our website and reach out to us with any questions that you may have. Have a wonderful day.
Also like to thank Jack headmistress guidance on the mining and Mr. David Kirsch for his leadership as chairman of high Cross, but thank you very much for joining us today and please do visit our website and reach out to us with any questions that you may have have a wonderful day everybody. Thank you.
Speaker 1: This concludes today's call. Thank you for your participation. You may now disconnect. Good night.
This concludes today's call. Thank you for your participation you may now disconnect.
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