Q4 2021 New Gold Inc Earnings Call
Good morning, My name is Chris and I'll be your conference operator today welcome to the New Gold 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 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 anchor 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 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 would 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 split in 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 slides two and three provide additional information and should be reviewed we also refer you to the section entitled risk factors in new both 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 Roland.
Okay.
Thanks, everyone for joining us today for 2021 review and 2022 outlook and reserve and resources off date.
2021 sure Brock.
Is is part of challenges, but I am extremely proud of our <unk> team and the way we ended the year.
On the operational side, both asset achieved a consolidated updated production and cost guidance.
Q4 delivered the strongest productions in our lowest cost quarter of the year and.
The rainy River mine and the mine achieved its updated 2021 guidance, while executing 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 at the year and updated reserve and the resources, while we've seen a meaningful conversion of mineral resources to mineral reserve, leading in a year over year increase in our gold mineral reserve.
No.
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.
'twenty one.
Our next fall and execution at new Afton, while we continue as well to advance our C zone and advance on plan for our delivery and start of production in the second half of 2023.
<unk> zone initiated with the with the delayed in <unk>.
Our M&A and continue to advance and ramp up during the second half of 2021.
And we've seen some very encouraging exploration results has one in 'twenty, one and will follow up and into 'twenty two.
At year end the company concluded as a sale of the Blackwater Gulfstream for total proceeds of $300 million, bringing.
Bringing our cash balance to $482 million, while combined to our increase in extended credit facility.
Our position our liquidity.
Meaningful mark of $850 million, so to crystallize value for our Blackwater as share position, our company with a peer leading balance sheet and the financial capacity to execute on our strategy on.
With 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.
Tales 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.
Indian or 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.
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.
<unk> 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.
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 in $2006 9 million on growth capital.
Sustaining capital is primarily related to planned tailings work at both operating assets capital strip that rainy River and B three mine development at New Afton are.
Our growth capital was focused on project development, specifically the <unk> and.
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.
<unk> lower interest rates going forward on that cash on hand at the end of the year I don't know noted was $482 million.
As a result, primarily as a result of the proceeds received from the sale of Blackwater.
Slide nine moving onto our guidance.
In 2022, we expect to produce on a consolidated basis 300 between 380 and 440000 gold ounces at an all in sustaining cost 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 waste tailings management and B three activities is estimated to be between 180 and $225 million in 'twenty two.
Capital, which will be focused on <unk> on development and underground development at Intrepid is expected to be between $1 15, and $155 million in the coming year.
With that I'll turn the call back to Rick Thanks.
Thanks, Ralph I'm on slide 11.
Mineral reserves and mineral resources update.
As I mentioned in my opening comment year over year net increase in mineral reserve for new Gulf to three 7 million ounces up from $3 6 million. The end of 2020. This was led by a meaningful conversion of approximately 569000 ounces.
And our resources to mineral reserve in the on the ground at rainy River.
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 alleviation and mine ability. So a net increase of 200000 ounces.
Our goals.
I'll reserve at the rainy River.
<unk>, which was the <unk> area, which was really responsible for most of the of the additional deflation will be mine now.
At the end of 2023.
New Afton mineral 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 cake aspirin.
Yeah.
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, mostly as a result.
Of some material availability issue, but also has a we adapted the plan at year end to accommodate more 430, <unk> zone and adjusting.
Adjusting our need for the small 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 for 30 threes are on the harder ore process and also we have three day shut.
Down there was originally planned for early 'twenty, two that was an advantage and the December overall strip ratio for the path to a tier one in the fourth quarter and in line with our overall year plan of two seven for the year Andy.
And the average gold grade, one and ground net improvement over the previous quarter, our gold recovery up at 92%. So a lot of very good things happening in <unk>.
Q4 of <unk>, and we're going to build on that on the optimization.
And operational excellence as we continue into 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 $27 million payment stream payment.
The exploration activity resume in the.
North East trend and I'll discuss more in depth on the following slides. So looking forward really it's all about continuing to optimize the asset and the cost optimization and further de risked our grade control, while we continue to execute on our <unk> and our capital plan.
As I look on the slide 14 that the operational outlook. The gold equivalent production is estimated expected $2 765 to $2 95000 ounces of gold equivalent.
This is an increase over the prior year, mostly as a result of better grade betterton tons mine and process as well as the commencing the extractions of the Intrepid underground zone in the second half of the year.
They will be just like last year, and 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 a malls so far stripping activity.
They are from the east lobby is expected to contribute to only 25% of the product trends in 2022.
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 $2 $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 of.
On the optimization and the last September 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 the 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.
And gross capital expected to be in effect into $25 million. This will combine with the IRA.
By roughly $12 million spent in 2021 will contribute and a very low production.
Production cost to bring <unk> into production.
Yes.
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 at <unk> 2021, and this was this was the result of adding nearly 569000 ounces of mineral reserve from the Central zone.
<unk> <unk>.
Bringing a net increase of over 200000 ounces of mineral reserve for the year.
The Intrepid zone remained roughly up to 100000 ounces of mineral reserves.
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 consumer need to 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.
Further potential of conversion as we continue to optimize and execute on our underground plan.
There'll be a 43 101 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.
Okay.
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 leader.
Drill in the Q4, and we will continue to.
Towards that Q1 of 2022.
At which point some additional exploration activities also also plan includes the above.
Kevin Geochemical survey, Joe Joe Geological mapping and trenching to validate and.
NSS the result.
First the first phase program, a total of $5 million is planned for the year and again, mostly focused on assessment.
<unk>.
And <unk> and Gerald <unk>, Carl and then Jill chemical exited.
On the new Afton on slide 18.
On our Q4 highlight great.
Great great quarter for our new Afton delay.
<unk> delivered the production and cost to achieve our production.
Gold equivalent.
Range of 165 to 195000 ounces equivalent.
As I mentioned slightly above the range of the cost within the 5%.
Martin acceptable considering all the challenges that we had to face in 2021.
These on development continued 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. We're slightly below the previous quarter is at 167%.
Golar remains good at 41 grams, a tonne bolus recovery.
Even though were increasing on the surf bridging or remain above the 80%, but 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 continue to add to enter into 2022.
I'll talk more on the guidance product.
So we've seen as well I'll, let the completions of five five Hollywood on the Cherry Creek completed three holes totaling 12.
To a 100 meters of testing artificial intelligence target, so very encouraging results and 2021 and really looking forward for decline in 2022, we've seen that as well on the ESG side the introductions of the battery electric truck Freddie underground this combined with already.
The electric Scoop, and we will continue to assess the use of electrical equipment for the C zone.
With the objective to contribute to the reduction of carbon emissions.
Our new often when it comes to operational outlook.
<unk> that the production guidance.
Lower would be originally plan.
For 2022.
The original plan and as we continue to execute on the <unk> zone.
Sure Youre not too big.
Loss and eventually close the lift one cave and then 2000 in the first half of 2022 and this remains the case so nothing has changed in the SaaS back.
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 continue to stretch to use a deterrent of tailing, allowing us to recover the remaining recovery level.
So the contribution in 2022.
Will it be on a recovery level and the completions of the lift one cave.
And with that with the near near term closure of the <unk> cave.
The plan was originally focused on bringing bringing the <unk> zone to a full capacity fully develop at the end of 'twenty, one, but as I mentioned the delays in that.
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 that 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 there'll be an impact on the total garden production.
Lower than originally planned to productions for 'twenty, two mostly as I said as a result of the delay and the <unk> execution.
The all in sustaining costs are expected to be at the $16, 95% to 17 95 again higher than originally planned but also.
It reflects the reflecting the lower production for the year and also in our higher sustaining cost spend.
For the <unk> for the <unk> Creek, which we planned at $7 $55 million to $70 million with the objective to really complete that.
<unk>, bringing the <unk> III at its Max capacity towards the end of the year and allowing 2023 contribution for <unk> III at its maximum capacity.
Gross capital for the year is expected to be in $100 million to $130 million.
Later 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.
To facility.
Our commissioning completing the commissioning, but also continuing to progress on stabilization.
Yeah.
So on the exploration.
New Afton.
So we have now completed on the surface side, we have now completed two phase I recognize <unk> drilling within the Cherry Creek area.
Geology call mineralization in alteration interpretation deprecation defined the patterns and we continue to see significant potential for Crawford system, but but the source has not yet been intercepted so more work and more interpretation and 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 in a potential target.
For high grade gold system within the Cherry Creek Cashier zone.
Very encouraging of us are.
Very interesting result underground.
Underground drilling in 2021.
Particularity the underground drilling that commenced in 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 variant.
<unk> result, and we are going to follow up in 2022 with the objective to locate and unlocks some potential potential higher grade that could contribute eventually to two improving on our mine plan as we execute.
Our drilling program as well on the offer eastern extension located below the <unk> 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 gavan 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 <unk> 22.
We have an external position now for the <unk>.
On the on our financial flexibility.
Capable to execute our plan we see.
Definitely a lot of potential and unlocking values at new Afton has continued to deliver on our Q3 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 has we continue to.
To unlock the maximum value of the remaining ounces in the pit 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 and cooperation of the underground with potential for more hours.
Okay.
So operational excellence will be our mantra and 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 telecom technology and your request and your questions will be pulled in the order. They are received should 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 update.
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.
Incorporating this new central zone from the as I mentioned that grew by 569000 ounces and has been incorporated in our fully integrated mine plan together with the default Intrepid zone.
And this will clarify on a year by year.
On the ton grade zones are mined metal production.
And but the plan Hasnt really change in a way that the.
<unk> 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 completions of the stockpile as you mentioned the increase in the total ounces and the mineral reserve.
With allowed with the allowed the mind to extend beyond the 2028 and again all the details will be provided in the upcoming 43 101.
Yes.
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.
Yes, well clarify of course on the details of the throughput, but as you as you pointed out if you compare the central zone.
All of the year, you have 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 and impact of it will.
We will be in our upcoming plan, but that was the strategy behind the re looking at 1400, having a solution for the milling to support the conversion of the of the reserve post stockpile targeting volume.
In the Central zone.
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.
Yes that would be the case I think the.
There are risks will be to a certain degree in are similar they wouldn't be no impact on the total tonnes grade mine a ball on the life of mine, but there will be a shift in the overall could auctions and in the short term pushing the.
The recovery of those in metal.
Sure.
At the highest.
Sure.
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're now operational in pit tailings was permitted stabilization, allowing for <unk>.
<unk> <unk> has we mined all those aspect were addressed in the <unk> on the pure technicality. If you will of the C zone. There is really nothing new more than more stabilization more in Pip tailing and a.
A bit more of a <unk>, but all of which were very well addressed in the beef through permitting as well and.
And again 21 was a very challenging year, while in BC and including for our wholesale.
Community and a tremendous wake up for Canada as well. So there has been there's been a lot of things 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 that the numbers were reiterated when I look at what the original projections were for 2021 in terms of the development rates and an overall spending versus what was achieved there was a slight variance and then.
Industry wide rothesay seeing a huge degree of inflation.
How comfortable are you with the existing timelines a capital numbers or how much.
Let's call it.
Wiggle 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 like complicated mine plan.
As you exhaust the lift one cave.
And.
And the rehabilitation and the play lower recoveries in all of those activities at a very low productivity than the ventilation.
Fight if you will help between the different activities and if you look at it now I think our mine plan has significantly simplified.
With the recovery level <unk> been in the Sop gave.
Fully remote.
<unk>.
With the closing of the <unk> the lift one as well significantly improving da Vinci relation down so there'll be a lot of focus in 'twenty, one to really execute on the C zone and then the <unk> III 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 <unk> and.
In 2021, including rainy River, where we actually saw some savings on the execution.
At the 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.
We're seeing the impact on their rehab and the pillar recovery and the inability to go back in some zones. So we've we've made more effort in.
At the early stage to improve on the ground control to avoid those situations down the road.
So very few of the capital increase.
Result.
Inflation, if you will so we are feel very strong.
Okay, Great. Those are all my questions. Thank you very much.
Thank you our question comes from Fahad Tariq Credit Suisse Fahad. Please go ahead.
Hi, good morning, Thanks for taking my question.
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.
<unk> will be higher in the second half versus the first half.
Thanks.
Yes, I appreciate you and all of that we're still closing unaltered afforded through 100 once in a while of course their first year of the 43, one will be updated but roughly if you look at our guidance of $2 60 to $2 98000 ounces of gold.
It's basically reflect a.
Overall, great at 27000 tons, a day now between 90 and one grant that's basically the.
A way to look at our guidance.
And how did you mention with slightly higher in the second half as we prioritized as steel pipelines in the wintertime.
Roughly.
Okay. Thank you and just on.
On the cost optimization at rainy River can you just give us more details on where you're seeing opportunities to lower the cost.
Yes. The biggest supports entity is to target of course, where you spend the most money which is in the pit and so if you look at our overall OE.
Efficiencies.
Execution and a bit from 2019 to 2020 remember that late 2018, we were mining still and a $3 plus dollars.
A top of mind, 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 20% to 21, we still believe that there is some room for optimizing our OE.
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 reductions in the mailing in the G&A.
The improvement of the OE should you can achieve a significant improvement in OE could lead the amount to <unk>.
Parking some equipment, which also will have an impact on our maintenance cost.
And overhauls are required.
It's a complete.
Exercise and we're using of course external resources as well and we're in the phase now to complete details of the plan for it but.
We're still see some good opportunity here.
Okay, and then 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 are not hesitant on metals.
Okay fantastic. Thanks, so much.
Thank you. Your next question comes from Trevor Turnbull Scotiabank Treasurer. 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 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 is 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. So 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 them.
Underground from 22 to 26, and the timing of that and the amount of ounces to the plant has is also somewhat.
Uh huh.
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 incorporated.
Incorporating the factor.
And there is 2022 less slightly we're around that 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 we're going to complete the east lobe in 'twenty three.
The <unk> zone, as well, which has been a.
Heavily use the <unk>.
Last year would eventually also be completed in 'twenty two so as you advance most of your open pit will be focus on the main zone, which will bring better and.
Better efficiencies in the mining and also the overall.
Reconciliations and performance and the ODM main zone was the best and remain the best.
So there is still some.
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 26.
The plan gets 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 grade and tonnage.
And if you could give us some clarity on.
What we would be seeing there.
That would be greatly appreciated.
Yes.
We did not provide the.
The breakdown by basically.
I mean, what what you should be expecting is because of the delays in the <unk> zone saw the use of the stockpile of course.
Contributes to a higher proportion.
Of the mine.
The total tonnes all SaaS.
If you look at the overall production's up for in the guidance.
<unk> be the <unk> will be the main lead targeting about like the 4000 tonnes a day.
Grades are provided Youll know when their reserve resource are stable that would be the main lead.
Completing the recovery level as well.
We'll be at the <unk>.
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 has the biggest impact.
There was always.
The use of the stockpiling within the plan, but the difference that <unk> was supposed to be at basically doubled the tonnes compared to what its planned for so that is the main contributor here, but.
But the <unk> III.
The <unk> III would follow you now.
The mineral reserve.
Average grade, but what basically less half a ton and higher contribution from the stockpile.
Yes.
And would you still be expecting.
Alright tonnage I guess, yes.
$14 15000 tonne per day, Mark why is that.
No.
That would be less than that if you recall the original plan even on the original plan. It was always a.
Huawei is showing that and transitions once you close the cave one there was there was a clear depth and all like in the lower productions as we transition to the <unk> zones. 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.
Transition.
What happened and now in 'twenty two is just the transitions between the <unk> and fees on considering the delays and the deep sleep 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.
But even in the original plan there was always a dip in the production as we transition and close the cave, one and 'twenty two.
Okay. So what I was driving outlets just how Paul will milby.
Yes.
Okay.
The overall will be I have them.
We'll be we'll be between the eight 910000, depending on how good we are going to do with with Dmitry.
Okay.
And then just in terms of the.
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.
To about $2 seven.
Overall.
And then in 'twenty one.
Okay.
All of that said the 3.2 is the.
In what.
The $3 to the operating platform contributes to the cash cost or it does.
Yes.
Okay.
Some some some of the way so the way I look at it is on the total execution. So from 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, just with five strip ratio overall at three two.
Of the plant and some as I said depending on the.
Specific quarter over quarter some capitalized.
The operations, but doesn't really change a houston globally upswing too.
Yeah.
Ill take it offline with Rob its I don't want you guided to $60 million in waste stripping. So I don't want to be double counting that that's what I'm trying to write that here.
No.
And cash costs are all where as a result of that as well. So that's why looking at the 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 aware, but on the global.
Is the plan declines is 55 million tons or so at the $3 two.
But yes, please reach out to Rob a few.
Sure Yeah.
When it penalize you twice there okay.
And then last one please.
Triangle or is that too.
The last question I have is with respect to <unk>.
The tons that were added at.
Rainy River.
Jocelyn is driving at that a little bit.
When do you expect like how.
Household 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.
Yeah.
I want to really put in a like a details on this.
Let's wait for the updated 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 millions so far but.
I can already tell you that to achieve that you have them mailed that could be a 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.
Perfect suffered 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 I say.
Aspect you know like if you look at the lift one and the proximity with underneath the pit. So the original plan was by summer two.
<unk> transitions from conventional tailing into failing and and as a result of the fatality last year.
We 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 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.
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.
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.
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 worked 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 rainy you've got you know, obviously, a pretty impressive reserve update this.
Good 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.
If.
Just looking at the slides to bring back you too.
Sorry about that slide 15. So you appreciate you not like the 43, one on well provide way more but if you look if you compared the depth the depth sorry, the depth of the total resources, the total resources <unk> 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.
Lose the.
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 are round.
Our in neighborhood of the one two.
The 1 million ounces of the Central Zone, you still have some some very close by Alan So there is not a one 3 million ounces in the <unk> category and that is not a result of having extended adapt more than we've converted a significant amount, but there are still a lot.
Lot of ounces remaining debt with optimization.
May be more drilling mark tightness optimization of the plant could lead to eventually.
Or 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 to look at.
A dipping.
And.
The depth of the mineralization and potential extension has basically the whole central zone is a 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 high 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.
A 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 are based on.
Yes.
The answer to that is our plan continue to be used at the full 11 to one.
There is 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.
Patients.
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.
Plans still reflect on reflecting the 11 to one.
Building.
Okay.
That's it for me thanks, very much guys, which 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.
Questions at this time I would now like to turn it back to your host for closing remarks.
Thanks, Chris and thanks to everybody who joined us today.
So do you have any additional questions. Please don't hesitate to reach out to us by phone or email. Thank you very much guys have a great day.
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