Q4 2021 New Gold Inc Earnings Call
Okay.
Good morning, My name is Chris and I'll be your conference operator today welcome to the New Gold's fourth quarter 2021 earnings conference call. All lines have been placed on mute to prevent any background noise. Please be advised that today's conference call and webcast is being recorded after the Speakers' remarks, there will be a question and answer session. If.
If you would like to ask a question. During this time simply press Star then the number one on your telephone keypad, if you'd like to withdraw your question. Please press Star then the number two.
I would now like to hand, the conference over to Ankur Shah VP of strategy and business development. Thank you.
Thank you, Chris and good morning, everyone. We appreciate you joining us today for new Gold's fourth quarter and full year 2021 earnings conference call and webcast on the line today, we have Renaud Adams, President and CEO and Rob <unk>, our CFO should.
Should you wish to follow along with the webcast. Please sign in from our homepage at <unk> Dot com.
Before the team begins the presentation I'd like to direct your attention to our cautionary language related to forward looking statements found on slides two and three of the presentation.
Today's commentary includes forward looking statements relating to new gold in this respect.
This respect we refer you to our detailed cautionary note regarding forward looking statements in the presentation.
You are cautioned that actual results and future events could differ materially from those expressed or implied in forward looking statements slide two and three provide additional information and should be reviewed we also refer you to the section entitled risk factors in new Gold's latest MD&A and other filings available on SEDAR, which set out certain material factors that could cause actual results to differ.
In addition at the conclusion of the presentation. There are a number of end notes that provide important information should be reviewed in conjunction with the material presented.
With that I'll now turn the call over to Renaud.
Thanks Jakob.
Thanks, everyone for joining us today for our 2021 review and 2022 outlook and reserve and resource of phosphate.
2021 sure Brock.
As a as part of challenges, but I am extremely proud of our <unk> team and the way we ended the year.
On the operational side, both assets achieved a consolidated updated production and cost guidance.
Q4 delivered the strongest productions in our lowest cost quarter of the year at rainy River mine and the mine achieved its updated 2021 guidance.
I will execute extremely well on this capital project, achieving some savings in the tailings execution. We've also continued to advance the <unk> zone with the view to bring some of the production. The first production in the second half of 2022.
The highlight of the year was that the year end update and reserve and resources, while we've seen a meaningful conversion mineral resource system mineral reserve.
Leading in a year over year increase in our gold mineral reserve for golf.
At New Afton mine had the asset to achieve its 2021 production guidance slightly a higher cost.
And considering all the challenges that the mine has to navigate through 2021.
Our next challenge execution at new Afton, while we continue as well to advance our fees and.
In advance on planned for delivery and start of production in the second half of 2023.
The <unk> III zone initiated with the with the delayed in and the permitting and continue to advance and ramp up during the second half of 2021.
And we have Samsung very encouraging exploration results has one in 'twenty, one and we will follow up and into 'twenty two.
At year end the company concluded.
Sale of the Blackwater Gulfstream Park.
Receipt of $300 million, bringing.
Bringing our cash balance to $482 million, while combined to our increase in extended credit facility.
Our position our liquidity conditions meaningful mark of $850 million, so to crystallize value for the Blackwater as share position, our company with a peer leading balance sheet and the financial capacity to execute on our strategy.
On that I'll turn it over to Rob <unk>, our CFO for Q4 and 2021 review.
Thanks, Renaud and good morning, everyone Slide six provides our operating highlights.
Details are consistent with our January production press release.
During Q4, the company produced 111500 gold equivalent ounces. The amount consisted of $14 2 million pounds of copper approximately 68000 gold ounces from rainy River and approximately 13000 gold ounces from new Afton, giving us a total of 81000 gold ounces, the lower equivalent gold production.
As compared to the prior year quarter is primarily due to lower tonnes processed at both assets are operating expense per equivalent ounce was higher than the prior year quarter due to the strengthening Canadian dollar lower sales volume in the Canadian wage subsidy received in the prior period.
Consolidated all in sustaining costs for the quarter were $13 55 per equivalent ounce higher than the prior year quarter, primarily due to higher operating expense. As previously noted this was partially offset by lower sustaining capital.
Turning to slide seven for our financial results and capital.
Fourth quarter revenue was $202 million driven by sales of about 78.
Gold ounces at an average price of $17 98 per ounce and sales of $14 2 million pounds of copper at $4 37 per pound on our.
Q4 revenue was 2% higher than the prior year quarter, primarily due to higher metal prices, partially offset by lower sales volume our operating cash flow before working capital adjustments was $93 million or <unk> 14 per share for the quarter in line with the prior year quarter. The company recorded net earnings of approximately $151 million.
R 22 per share during Q4 compared to a <unk> loss of the prior quarter.
After adjusting for certain charges net earnings were $24 7 million or <unk> <unk> per share in the quarter.
Equal to the prior prior year quarter.
Our Q4 adjusted earnings includes adjustments related to our gain on the Blackwater stream sale.
And unrealized judgments on the rainy river Mark to market and free cash flow royalty at new Afton. Our MD&A has additional details on the non-GAAP measures that we've discussed here.
I'm still on slide seven our total capital expenditures and leases for the quarter were $60 5 million $33 6 million was spent on sustaining capital and $26 9 million on growth capital.
Excuse me sustaining capital is primarily related to plant tailings work at both operating assets capital strip at rainy River and B three mine development at New Afton are.
Our growth capital was focused on project development, specifically the C zone, and the thickened and amended tailings project at new Afton and the underground Intrepid zone at rainy River.
Slide eight provides details on our capital structure.
During the quarter, we extended our credit facility, realizing lower interest rates going forward on that cash on hand at the end of the year as Murdo noted was $482 million.
As a result of primarily as a result of the proceeds received from the sale of Blackwater.
Slide nine moving onto our guidance.
2022, we expect to produce on a consolidated basis 300 between 380 and 440000 gold ounces at an all in sustaining costs of between $14 70, and <unk> 70 per ounce, 55% of the annual production is expected to come in the second half of the year with all in sustaining cost trending lower.
Through the year sustaining capital, which is primarily made up of capital of waste tailings management and B. Three activities is estimated to be between 180 and $225 million in 'twenty two growth capital, which will be focused on CS on development and underground development at Intrepid is expected to be between <unk>.
115, and $155 million in the coming year.
With that I'll turn the call back to Renaud.
Thanks, Ralph I'm on slide 11.
Mineral reserve and mineral resources update.
As mentioned in my opening comment year over year net increase in mineral reserve for new golf to three 7 million ounces up from $3 6 million of Chicago 20. This was led by a meaningful conversion of approximately 569000 ounces.
And our resources to mineral reserve in the on the ground.
Sure.
Leading to a net increase or four to 100000 ounces of gold ounces for the year. This is including all deflations.
That took place from the mining to the negative rate counts affiliation and mine ability. So a net increase of 200000 ounces.
Our goals.
I'll reserve at the rainy River.
<unk>, which was the E slope area, which was really responsible for most of the of the addition on deflation will be mine now, it's our IBM if 2023.
At New Afton I mean, our reserve decreased by approximately 75000 ounces of gold and 78 million pounds of copper.
Mostly due to the mine depletion, but also reflecting the closure of the list one case asphalt.
At rainy River on slide 13.
The mine delivered its highest production and lowest cost quarter of the year achieving.
The updated 2021 production and cost guidance.
The mine performed slightly below the declined at nearly a 130000 tonnes a day are mostly as a result.
Of some material availability issue, but also has a we adapted the plan at the year end to accommodate more 433 zone and and move.
Our need for the smell as we are we were working on optimization. The mail delivered approximately 2000 and 4500 tonnes a day lower our 2007 thousand tons a day, but as I mentioned with more four out of 33 zone of harder ore process and also were three day shutdown there.
As originally planned for early 'twenty two that was advantage ended December overall strip ratio for the path to a tier one in the fourth quarter and in line with our overall year plan of $2 seven a year.
And the average gold grade at one and ground net improvement over the previous slaughter Ah gold recovery up at 92%. So a lot of very good things happened in Q4 of <unk> and we're going to build on gas on optimization.
And operational excellence as we continue in 2022.
The asset delivered in very interesting free cash flow of $36 million in the fourth quarter $46 million in 'twenty. One this was net of 20.
27 million payment stream payments.
The exploration activity resumed in the northeast trend all.
I will discuss more on that in the following slides. So looking forward really it's all about continuing to optimize the asset and the cost optimization and further de risked a great control, while we continue to execute on our <unk> and our capital plan.
As I look on the slide 14 that the operation all outlook. The gold equivalent production is estimated expected of $2 765 to $2 95000 ounces of gold equivalent.
This is an increase over the prior year, mostly as a result of better grade better.
Some mines and process as well as the commencing the extractions of the Amtrak bid underground zone in the second half of the year.
They will be just like last year, a slightly higher productions, a ton ton mined and processed in the second half of the year as we will continue to take advantage of the winter for most of our stripping activity.
They are from the east lobby is expected to contribute to only 25% of the product trends in 2022.
And to be higher in the second half of the year as I mentioned due to stripping prioritization in the first half of the year.
The all in sustaining costs are expected to be in a 12, 7% to $30 $70 per gold ounce equivalent. This is a net decrease over the prior year and it's mostly due to higher production, but also.
As <unk>.
On the optimization and the last six tons from the east and the better productivity in the mine.
The sustaining capital is expected to be in the 125 to $1 55 million are very similar to last year, three main areas of execution, including to capital waste in the pit and the annual tailings dam raise and a maintenance program and other sustaining capital that would complete.
The targeted execution.
Gulf's capital expected to be in a $15 million to $25 million. This fall are combined with the IRA.
Roughly $12 million spent in 2021 will contribute and a very low.
Production cost to bring <unk> into production.
On slide 15, as a highlight of the year so the mansion.
There's been a significant increase.
Total mineral reserve on the ground the overall underground mineral reserves grew year over year.
672000 ounces in 2020 20.
Two over one 2 million ounces Ibms 2021, and this was this was the result of adding nearly 569000 ounces of mineral reserve from the Central zone.
Bringing bringing a net increase of over 200000 ounces of mineral reserve for the year.
The Intrepid zone remain roughly up to 100000 ounces.
I'll reserve.
So as we as we advance and you could appreciate on this and the picture shown on the Slide 15. This is a significant improvement in the central zone. The lower cutoff as also contributed to improve significantly the community on the lateral and vertical.
And there is tail of one 3 million ounces of measured and indicated.
And the measure indicated resources category, providing the asset with further potential of conversion as we continue to optimize and execute on our on the ground plan.
There'll be a 43 101 that technical report that would be that would be filed at the end of the quarter that would incorporate the new central zone in Amsterdam.
And the integrated life of mine and.
Looking forward to discuss further details of our plan as we file the 43 101.
On to slide 16.
So the second phase of exploration drilling started at the end of 2021 and plan to continue through Q1.
Two there were roughly <unk> 50.
100 theater.
Drill in the Q4, and we will continue to.
Towards that Q1 of 2022 and at which point some additional exploration activities. Also also plan includes the above.
Chemical survey, Joe Joe, Joe Newco mapping and trenching.
To validate and NSS.
First the result of that.
First <unk>.
The face program a total of $5 million is planned for the year and again, mostly focused on assessment and the.
In enterprise patient and Gerald <unk>, Carl and then Jill chemical executed.
On the new Afton on slide 18.
On our Q4 highlight a great great quarter for our new Afton.
Levered to production and cost to two achieved our production.
Gold equivalent in range of 165 to 195000 ounces equivalent right.
As I mentioned slide eight.
Above the range of the cost within the 5%.
Martin acceptable considering all the challenges that we had to face in 2021. The C Zone development continues to advance well and we are still expected to begin production in the second half of 'twenty three.
And as we are as you can imagine as you can appreciate the copper was great was slightly below the previous quarters at six 7%.
Golar remains good upfront 41 grams, a tonne bolus recovery.
Even though were increasing on the surf bridging our remain above the 80%, but it has we are prepared for the completions of the left one some mining activities and ramp up the <unk> III.
We have seen now are a slight slightly lower productions as we continued to ask two entered 2022.
I'll talk more on the guidance on it.
So we've seen as well I'll, let the completions of five.
Five Hollywood on the Cherry Creek completed three haul to trailing 12.
To 100 meters of testing artificial intelligence targets. So a very encouraging result in 2021 and are really looking forward for the plan in 2022, we've seen that as well on the ESG five the introductions of the battery electric truck Freddie underground is combined with already.
Electric Scoop and we'll continue to assess the use of electrical equipment for the C zone.
With the objective to contribute to the reduction of carbon emission.
On new often when it comes to operational outlook.
<unk> that the production guidance.
LOL worthy originally planned for.
For 2022.
The original plan and as we continue to execute on the B three NCS was sure youre not too.
Exhaust and eventually close the lift one cage and then 2000 in the first half of 2022 and this remains the case. So nothing has changed in this aspect.
The transition to the in pit tailing in 2022 was obviously, forcing us to complete all activities and elect one before we would start depositing tailings.
Been capable and continues to stretch to use a deterrent of tailing, allowing us to recover the remaining a recovery level.
So the contribution in 2022.
Will it be on the recovery level and the completions of the lift one case before on the.
With the near near term closure of Dennis one Cape.
The plan was originally focused on bringing bringing the <unk> zone to a full capacity fully David lap at the end of 'twenty, one, but as <unk> mentioned the delays in <unk>.
The delays in the permitting and some moderate issues that we had to face in 2021 has not allowed us to achieve our original objective as a result of adapt there'll be last time from the B III than originally planned for 2022.
But but looking forward theres been no change in the <unk> zone in term of total tonnes and the grade and met all of them.
Available to us as we continued to execute but he is there'll be an impact on the total gold production.
Lower than our original plan to productions for 'twenty, two mostly as I said as a result of the delay and the beat <unk> execution.
The all in sustaining costs are expected to be at that 16, 95% to 17 95 again higher than originally planned but also.
Ah reflect reflecting the lower production for the year.
And also in our higher sustaining cost spend.
For the <unk> for the <unk> Creek, which we plan at $7 $55 million to $70 million with the objective to really complete the development of the B three bringing the <unk> III at its Max capacity towards the end of the year and allowing 2023 contribution for <unk>.
<unk> III at its next month capacity.
The growth capital for the year is expected to be in $100 million to $130 million related to advancing to seize on projects as I mentioned.
With the objective to deliver on time and on budget. This season in the second half of 2023, mostly.
Split of the investments between underground activities development infrastructure and surface.
That facility.
Our commissioning completing the commissioning, but also continuing to progress on stabilization.
So on the exploration.
Our new Afton.
So we have now completed on the surface side. We've now completed two phase a fair recognize central drilling within the Cherry Creek area.
Geology called mineralization in alteration interpretation deprecation defined the patterns and we continue to see significant potential for porphyry system.
But the source has not yet been intercepted so more work and more interpretation assessment and eventually more drilling required in the Cherry Creek.
The high grade gold was intercepted as well and one of the target.
The interpretation of the alteration in the hosting structure defined as well a potential target.
For high grade gold system.
Within the Cherry Creek Cashier zone.
What I, a very encouraging of us are.
Very interesting result.
Underground drilling in 2021.
Particularity the underground drilling that commencing March 21, two explored for addition of copper and gold mineralization within the new Afton underground footprint with three main priority target generated by our artificial intelligence and has already shown some varying.
Encouraging results and we are going to follow up in 2022 with the objective to locate and unlocks some potential potential higher grade that could contribute events relate to two improving in our mine plan as we execute.
Our drilling program as well on the offer eastern expansion located below the SLC zone.
Been planned for early 'twenty two to define the extensions of the gold and copper mineralization discovered in 2019. So a lot of focus will be gave them and beyond the ground. While we continue as well in the Cherry Creek a regional.
But a lot of focus will be on an underground with the view to.
To accelerate and our potential.
And corporations.
Your grade mineralization in our mine plan of $15 million budget is planned for 2022, a new asset.
So on that and as we continue to focus on operational excellence and delivered on our all support tinnitus, showing a 30% potential growth from the $23 26 compared to 22.
We have an extra month position now for the <unk>.
On the on our financial flexibility, we're capable to execute our plan we see.
Definitely a lot of potential and unlocking values at new Afton that continued to deliver on a G III and initiate the season, which will bring significant free cash flow down the road.
Rainy River has already generated free cash flow in 2021, and we see an improved plan year over year as we continue to.
To unlock the maximum value of the remaining ounces in the pet with the with the plan with the plants capitalized strip and ought to be completed by end of 'twenty three lowering our sustaining capital lowering forward moving forward incorporation of the underground with potential for more hours.
So.
So operational excellence will be our.
Mantra in 2022, while we continue to work hard and unlocking the full value. So on that this complaint.
The presentation part of the call and.
I will turn it back to the operator for the Q&A portion of the call.
Thank you ladies and gentlemen, we will now begin the question and answer session should you have a question. Please press star followed by one on your Touchtone phone, you'll hear three telling prompt acknowledging your request and your questions will be pulled in the order they are received.
Do you wish to decline from the polling process. Please press star followed by two if you are using a speaker phone. Please lift the handset before pressing any keys.
Your first question comes from Josh Wolfson RBC capital markets. Josh. Please go ahead.
Thank you very much.
First off for the rainy River reserves updates.
Previously there was some discussion about an optimized mine plan that would incorporate.
Some ability I guess to extend the mine life.
I guess by supplementing the underground ore with additional material given the difference between the plant throughput.
Is high and the underground throughput at low with the updated reserve, though it looks like.
That kind of.
Duration for the open pit versus the underground has sort of been.
EBIT or even larger in terms of its.
Different so how should we think about the mine life. After the stockpiles are depleted for the open pit.
I think Josh the upcoming 43 101 will clarify.
What we are doing now is we're currently in.
Incorporating this new central zone from the as I mentioned that grew by 569000 ounces and has been incorporated into a fully integrated mine plan together with the default interest <unk> zone.
This will clarify on a year by year.
On the ton grade zones are mined metal production.
And but the plan hasnt really changed in a way that the.
If you Laura if you remember the current 43 101 has already incorporated the upper part of the Central zone and the <unk>.
And the increase of the are up to the the completions of the stockpile has you mention the increase in the total ounces and the mineral reserve.
With a loud with allowed the mind to extend beyond the 2028 and again all the details will be provided in the upcoming 43 101.
Okay should we should we think about the underground throughput is something that could be.
Increase from its current level.
Given I guess, the great changes year over year.
And maybe as a larger ore body. If you can have more mining faces or is that.
Throughput sort of more stable.
Yeah, well clarify of course on the details of the throughput, but as you as you pointed out if you compare the central zone.
Year over year, you've seen a reduction that the cutoff for reductions in overall way, but a significant increase in total tons targeting volumes over.
Over selectivity and providing with the more or two to increase on that throughput as you mentioned, but again the details on a year over year an impact of it.
It will be in our upcoming plan, but that was the strategy behind the re looking at 1400, having a solution for the mailing to support the conversion of their of their reserve post stockpile targeting volume.
In the Central zone.
Got it Okay, and then moving on to new Afton.
What are the key aspects for for the seasonal project still is permitting.
Hard for us to project or <unk>.
Estimate when these when these deliverables are going to be achieved.
So thinking about how permitting has affected the <unk> zone.
What would be the effect if you were to look at seasonal permitting timelines be slightly adjusted.
Yeah that would be the case I think the the risks will be to a certain degree you know similar they wouldn't be no impact on the total tonnes grade you know minor ball on the life of mine, but there will be a shift.
And the overall could auctions and in the short term pushing you know the.
The recovery of those in metal.
The law.
Our highest.
Deferred to stage, if you will.
Now on the permitting side understanding that the B three.
There was a delay in the <unk>.
First in pit tailings, you know operational in pit tailings was permitted a stabilization allowing for.
<unk> War subsidence and all has we mined all those aspect we're addressing the beat <unk> on a pure technicality. If you will of the C zone. There is really nothing new more than more stabilization more in pit tailing and a bit more of subsidence, but all of which you know were very well address into.
B through permitting as well and and again 21 was a very challenging year, while in BC and including for our host.
Community and a tremendous wake up for Canada as well so there's been a there's been a lot of things and all of that happens in 'twenty, one on the technical side of addressing the permitting.
That led to believe that to the CS on permitting will be on time.
Okay, and then last question in terms of the C zone.
Deliverables in terms of overall spend and timelines I noticed the numbers were reiterated when I look at what the original projections were for 2021 in terms of its development rates and overall spending versus what was achieved there was a slight variance and then.
Yes.
Industry wide, we're obviously seeing a huge degree of inflation. So how comfortable are you with the existing timelines a capital numbers or how much.
Let's call it.
We'll go room, our buffer is there for these items.
We felt very good and we appreciate that in 'twenty, one was a challenging year and somewhat you know like complicated mine plan.
As you exhaust the lift one cave.
And.
And their rehabilitations and their play lower recoveries in all of those activities at a very low productivity and the events relation.
Our fight if you held between the different activities and if you look at it now I think our mine plan and significantly.
Amplified.
With the recovery level I've been in the Sop gave.
Fully remote.
With the closing of the <unk> the lift one as well significantly improving the vans halation down so there'll be a lot of focus in 'twenty, one to really execute on the C zone, and then to be three at the optimal.
Capacity possible. So on that we come to need to be to be very confident to delivered on the productivity of our plants. As you mentioned, there's been some challenges on the cost side, but I think overall, if you look at our execution.
In 2021, including a rainy river, where we actually saw some savings on the execution.
At rainy River the adjustment in the capitals for the <unk> III as a much more to do with.
With extra development cost.
Experience of the lift one of exhausting lift one and the impact at the end of the cycle.
<unk> seen the impact on their rehab and the pillar recovery and the inability or not to go back in some zones. So we've we've made more effort and are at the early stage to improve on that ground control to avoid those situations down the road.
Very few of the capital increase.
A result.
Inflation, if you will so we feel very strong.
Okay, Great. Those are all my questions. Thank you very much.
Thank you your direct question comes from Fahad Tariq Credit Suisse Fahad. Please go ahead.
Hi, good morning, Thanks for taking my questions.
On rainy River can you just give us some more guidance on the grades for this year is it right to think that grades will be lower in the second half.
Tonnage will be higher in the second half versus the first half.
Yes.
Yeah I appreciate you and all of that we're still closing unaltered afford it through 100 once a while of course their first year of the 43, one and will be updated but roughly if you look at our guidance of $2 60 to 290000 ounces of gold.
It's basically reflect a.
They're all great at 27000 tons a day now between 90 and one grant that's basically the.
The way to look at our guidance.
And as you mentioned with slightly higher in the second half as we prioritized as steel pipelines in the wintertime.
Stripping.
So about 55% of the.
The ounces in the second half and 45% in the first half.
Roughly.
On the cost optimization at rainy River can you just give us more details on where you're seeing opportunities to lower the costs.
Yeah. The biggest supports and it is the target of course, where you spend the most money which is in the pit and so if you look at our overall OE.
Efficiencies you know in our execution in the pit from 2019 to 2020 remembered that late 2018, we were mining still and a $3 plus dollars a ton mined and we've managed to reduce debt significantly.
And the $2 50 to $270 a ton mine as we.
Improved our cycle, but nonetheless, even though we've seen some improvement in the OE from 19 to 'twenty to 'twenty. One we still believe that there is some room for optimizing our O N E.
Which will automatically contributor of course at the slide better productivity. It's like if you want to do your 150000 tons a day, but with less.
Less equipment and effort if you will in reducing your cost to achieve the same production. So OE is a target number one there's still some cost.
Cost drivers such as tires and others, you know that still could be improved to meet to meet the best in class. If you will for that kind of operations.
The 27000 tons, a day will bring as well on a per ton basis of reductions in the mailing in the G&A.
The improvement of the OE should you can achieve a significant improvement in OE could lead you know too.
And then parking some equipment, which also will have an impact on the maintenance costs as the U and overhauls are required.
It's a complete you know eggs.
Exercise and now we're using of course external resources as well and we're in a phase now to complete.
Towers planned for it but.
We're still see some good opportunity here.
Yes.
Okay, and then just maybe just one for Rob can you just remind us on gold hedges are there any hedges in place for 2022.
On the gold price no.
No we're on Hudson on metals.
Okay fantastic. Thanks, so much.
Thank you. Your next question comes from Trevor Turnbull Scotiabank Trevor. Please go ahead.
Thanks for now.
Just a little bit of a follow on I guess to the last question about the grades at rainy River.
I can appreciate you've got a new technical report coming and I was just looking back at the old Technical report I think it was from 2020.
And it indicated that the grades from the open pit would really start to pick up starting this year.
On the order of.
1.2, or something like that grams relative to say the one gram that youre talking about for this year and I just wondered if.
If you could give us a bit of color on why the great. So much lower than the original Tech report.
And perhaps when we would expect that open pit grade to start to come back towards those levels. Originally envisioned a couple of years ago.
The.
Going back to the mineral reserves update the slide there's a comment that they're looking forward. So one contribution to a contributor to it is the the applying a factor of 85% for the remaining E slow our ounces.
As a result of the experience of 2021.
The mineral resources and reserve for the remaining East Loaf open pit has been applied a factor of 85%. So that's one.
The timing and the execution and the contribution of the underground ounces as we incorporate.
And underground from 22 to 26, and the timing of that and the amount of pounds. So as to the plant is also somewhat.
A contributor to it so other than that if you compare the the the plan the original plan with that one the slope has been incorporate into factor.
And they are there is in 2022 less slightly or who are around 10000 ounces from the Intrepid zone.
There was also some more ounces originated plan. So it's not about rushing their gun, but doing the right things and really control the execution of it so.
As we continue.
Gone are complete the slope in 'twenty three.
The 433 zone, as well, which has been a.
Heavily use the law.
Last year would eventually also be completed in 'twenty. Two so has you at vans. Most of your open pit will be focus on the main zone, which will bring better better efficiencies in our mining and also the overall.
Reconciliations and performance and the ODM main zone was the best and remain the best.
So theres still some are some optimization, if you will and but you know in chunks as we execute our 'twenty two but as we advance in 'twenty three deflating towards the 20th fixed.
The plan gets a simpler and more focused on the main as you say the main higher grade zone, and more underground as well and make its way to the mill.
Okay.
That's great I appreciate it thanks for now.
Thank you gentlemen, as a reminder, should you have a question. Please press star one on your Touchtone phone. Your next question comes from Anita Soni CIBC World market. Anita. Please go ahead.
Hi, Good morning, guys. Thanks for taking my call I have some more questions about grades and tonnage at new Afton, if you could give us some clarity on what.
What we would be seeing there.
It'd be great I appreciate it.
Yes.
Sure.
We did not provide.
The breakdown by basically.
So what are what you should be expecting is because of the delays in the <unk> zone saw they are they use of the stockpile of course.
Contributes to a higher proportion.
Of the mine.
The total tonnes all SaaS. So if you look at the overall productions.
<unk>.
B the <unk> will be the main lead targeting about like the 4000 tonnes a day.
Grades are provided you know when their reserve resource is stable that would be the main lead.
Completing the recovery level as well.
B.
The second lead and the and the overall a year, but there'll be as well the use of the low grade stockpile on surface as well to supplement the mill, which also is that is the biggest impact.
There was always.
The use of the stockpiling within the plant, but the difference that would be three was supposed to be at basically double the tonnes compared to what its planned for so that is the main contributor here.
But to be three debates.
<unk> would fall, though you know as our as the mineral reserve.
Average grade, but what basically less half ton and higher contribution from the stockpile.
Yes.
And would you still be expecting.
<unk>.
Tonnage I guess.
Yes.
<unk> 15000 tonne per day, Mark why is that.
No we are that would be less than that if you recall the original plan even on the original plan. It was always a.
While we are showing that in the transitions once you close the cable one there was there was a clear depth and all like in the lower production as we transition that it sees on so that was always even in the original plan that was one of the highlight that the plan that at some point in time, you would use the stockpile to <unk>.
Transition.
What happened in <unk> now in 'twenty, two is just the transitions between dmitry and fees and considering the delays and the decrease has lowered even further to productions for 'twenty two hasnt change at total metal recoveries of the plan, but it has differed and creating even more so.
But even in the original plan there was always a dip in production as we transition and close the cave, one and 'twenty two.
Okay. So what I was driving outlets just how full enrollment.
Yes.
Okay.
The overall will be I haven't we.
<unk> will be.
Between the eight 910000, depending on how good we're going to do with whether it be tricky.
Okay.
And then just in terms of the.
Rainy river in a little bit more detail Pete you mentioned, what your strip ratio is.
Overall, but can you give us the operating number the operating strip numbers, if I can try to reconcile the cash costs that would be about three two or three to plan for 2022 and that compares to about.
Two of about $2 seven overall for 2021.
Okay. So what does all of that said the 3.2 is the.
What gets the 3.2, the operating strip that contributes to the cash cost or it does.
Okay.
Yes, some some some of the way so the way I look at it is on the total execution. So some of the 55 million tonnes. Some of the ways are considered operating waste and formal capital wise and quite frankly, it's only an accounting here.
And Rob here, it's only an accounting situation here. So I'll look at it as a global execution Cisco five Melbourne strip ratio overall of three two.
Of the plan and some as I said, depending on the specific water or the water somebody's got to lifestyle means as the operations, but doesn't really change your gateway Houston globally upswing too.
Yeah.
Paul will take it offline with Rob So I don't want it.
$60 million in waste stripping, so I don't want to be double counting that that's what I'm trying to write it out here.
No.
And cash costs are nowhere as a result of that as well. So that's why you know looking at as an all in sustaining cost approach and sometimes and you've seen it in the past as well there is some shift you know depending on the execution of work, but then the global.
At La plan declines is 55 million tons or so at the three two.
Okay.
But yes, please reach out to Rob a few.
Sure, Yes, I don't want to penalize you twice there okay.
And then lastly, I'll please.
I'm trying not to.
Yes.
The last question I have is with respect to the.
The tons that were added at rainy.
Rainy River.
Josh this is driving up that a little bit but.
When do you expect like how.
<unk> do you expect the mill to be when you're when you probably saw from the underground material.
It's going to go with the C zone, I mean tool radio have rainy.
Sorry, sorry about that.
Okay.
Yeah.
I want to really put you know like any details on this let's let's wait for the update and so everything that has to do with the on the ground.
The as I mentioned in all we are in the process to integrate all of this.
It's going to be a full details on a year by year, you know zone by zone and the ramp up in total tons and tons of mail and so forth but.
But I can already tell you that to achieve that you have them mailed that could be a use as batch you have.
A lot of capacity, so youre targeting a much higher volume that originally planned in the original 43 101.
And that was that was the whole.
Purpose of free doing this at a lower cutoff is to target volume.
But I'll I'll leave the details to a later in March and well.
Definitely engaged with to the market once we have all the numbers.
Okay and last question briefly I Didnt catch exactly what you said about the tailings capacity at new Afton can you just quickly summarize again, what what you did there.
Yes.
As a as a safety aspect you know like if you look at the lift one into proximity with underneath the pit. So the original plan was by summer too.
Transitions from conventional tailing into in Pip tailing and and as a result of the fatality lasted a we know we are the opportunity here is to not leave any recovery level behind and the team has been capable to optimize the use of the conventional <unk>.
Tailings and we see probably you know late in the year now we've extended months and I think we'll be capable to accommodate them.
Most of 2022, if not all into the conventional tailings and.
And not rushing the transition into in pit, which would limit our ability to to mine the remaining.
Recovery level one.
Okay. Thank you.
Thank you your next.
Question comes from Mike Parkin National Bank of Canada, Mike. Please go ahead.
Thanks, guys.
Just a couple of questions, you're obviously sitting on a fair bit of cash and then.
The sale of the gold stream brings in a lot more.
What's your thoughts in terms of like you've got some good notes there in terms of you know.
What your premium is on the senior notes if you call them seems quite reasonable should we kind of expect a potential calling of those notes.
Yes, listen I think that our current balance sheet provides significant optionality. So as we work through 'twenty two.
In the near term our focus will be to deliver on our business plans at both specifically with C zone and the underground, but beyond that we will be looking at debt repayment, specifically the 20 fives and then other other shareholder initiatives.
We're looking at that.
Alright. Thanks.
And then on the underground at.
At rainy you've got you know, obviously, a pretty impressive reserve update this.
This morning.
Where is it in terms of the deposit.
In terms of being open at depth and what kind of deaths due to the reserves kind of terminate now where do you kind of see the potential of being able to push deeper using a ramp.
Yes.
I was just looking at the slight to bring back you too.
Sorry about that slide 15. So you appreciate you know like the 43, one on well provide way more but if you look if you compared to adapt the depth sorry, the depth of the total resources the total resources <unk> and.
And inferred as shown on the top figure compared to the bottom figure, which is the end of 'twenty one.
It remains pretty much the same and it's mostly data constraint as you can imagine as you go deeper you know you lose you lose the.
The drilling spacing is and the tightness of the drilling, allowing you to really appreciate and convert so it's remains open at depth, but but as you could appreciate in the pictures a round or a neighborhood of the one to under 1 million ounces.
Of the Central Zone, you still have some some are very close by and so there is not a one 3 million ounces in the <unk> category and that is not a result of having extend into that more than we've converted a significant amount, but there are still a lot of ounces to remain.
Meaning that with optimization maybe.
It may be more drilling more tightness optimization of the plant could lead to eventually.
More as you go deeper as you execute your plan and as you.
Lower over time, there is no doubt in my mind, it would be a tremendous opportunity to continue you not to look at.
A dipping in all of the.
And.
At the depth of the mineralization and potential extension has basically the whole central zone is it datacom stream.
Okay.
And then I remember from chatting with you in the past that in terms of the tailings facility at rainy River you remember the old design used I think it was 11 to one.
Width versus hate ratio.
Slide it across the entire length of the dam.
From our past conversations you've got there is optimization potential there where there are parts that come into bedrock, which could use them much.
Kind of more normal ratio, which could obviously save a lot of material movement is that something that has been factored in or is that something that's still some upside to what the latest numbers that are publicly available.
Based on.
Yes.
The answer to that is our plan continue to be used at the full 11 to one.
There is a there is definitely some potential optimization down the road, but we prefer to look at still look at this you know in the 11% to one with some buttresses the differences over the last couple.
A couple of years Theres been a significant advance in instrumentation.
And monitoring.
On a basically a 100 meter basis, allowing us to as we advance and we see proper dissipation of the pressure that could be a potential down the road or it is subsequent phases to optimize but as we speak.
The plan still reflect on reflecting the 11 to one.
Building.
Hey.
Oh, that's it for me thanks, very much guys.
It was the case for 'twenty one by the way 21 was fully executed on 11 to one this strategy.
Thank you there are no further questions at this time I would now like to turn it back to your hosts for closing remarks.
Thanks, Chris and thanks to everybody who joined US today as always should you have any additional questions. Please don't hesitate to reach out to us by phone or email. Thanks, very much guys have a great day.
Thank you ladies and gentlemen. This concludes your conference call for today, we thank you for participating and ask that you. Please disconnect your lines.