Q4 2021 B2Gold Corp Earnings Call

[music].

Good afternoon. My name is Pam and I will be your conference operator today at this time I would like to welcome everyone to the Beecher, both fourth quarter and year end 2021 financial results Conference call. All lines have been placed on mute to prevent any background noise.

After the Speakers' remarks, there will be a question and answer session. If you'd 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 followed by two thank you. Mr. Johnson you may begin your conference.

Thanks, operator.

Thanks for joining us.

As the operator said to report on the.

Fourth quarter 2021, and year end results for 2020.

Financial results.

We have as initially syndicates, we had another very strong quarter and year.

Ending up with a very strong cash position our costs were in good shape.

We were pleased with those results and I think are well positioned.

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Continue with our responsible mining is of all of our sites and also continue to push to grow the company and we'll talk about that as well. So we've got to keep it pretty brief in terms of the presentation side and then open it up.

All of your <unk>.

<unk> turnover that makes sense.

Talk to you through.

Highlights of the financial results and then I'll come back on it.

A little bit about them perhaps.

And what do we see ourselves going.

And we'll open it up to questions you've got the whole team.

Team, mostly in the opposite.

And some of the fold as well so we will be happy to take.

The cost to the presentation. Thank you okay. Thank.

Thanks, Paul.

I'm going to talk about the quarter and then the full year and then all of a brief comment on on the budget guidance. So we already put out a separate release, but reiterated in this news release.

Firstly for the quarter gold revenue for Q4 was 526 million. So that was still a 292000 ounces at an average price of $800 per ounce.

The gold price pretty much average for the quarter and for the full year effect.

Where we thought it would when we put out our cash flow guidance at the start of the year, which is remarkable in a year, where it bounced up and down but.

Obviously now we're seeing it at $9800 an ounce this Ukrainian crisis.

So.

The prospects for wholesale so good we're currently selling into those higher prices.

Production Wise consolidated production was 305000 ounces for the quarter and that includes our share of calibers production pretty much on budget, just slightly slightly over 2000 ounces over budget.

From our mines for cohort 164000 ounces that was 4000 ounces ahead of budget for coal up through the quarter and for full year. Its the same story, we've talked about already.

Here.

Just high higher throughput than we thought we averaged over 9 million tonnes. This year, which is remarkable.

Budgeted $7 75 for this year.

So averaged over 9 million tonnes throughput and that was partially offset by lower recoveries from lower grade stockpile material that we put through the milk to feed that throughput.

Is that 47000 ounces that was 5000 ounces.

With the budget.

If you recall in Q3, we had already indicated that Ms. Danny actually mine sequence at mind some of the higher grade main vein material in Q3 that was budgeted for Q4. So we thought in Q4, we probably get back about 10000 ounces of his daddy, but in yet.

We only gave back <unk> actually performed a little better than we thought it would at the end of Q3.

And then what your code of 79000 ounces, just 1000 ounces over budget in Jakarta bowling along its pretty much everything.

On budget or better than budget.

Recoveries for the <unk> actually 99% so pretty remarkable there.

In terms of what that meant for cash costs and all in sustaining cost for cash cost produced consolidated $484 an ounce.

Nine higher than dollar higher than budget.

Kind of reflected what we thought we would see in Q4.

Impacted by inflationary pressures.

All lines have seen inflation on higher fuel.

Fuel cost and stronger local currencies, particularly in Namibia, where the Namibian dollar was fairly strong.

By site for coal over $379, an ounce produced 60 higher than budget.

Matt, adding $952, an ounce, which is over 300 higher than budget and Saudi in particular experienced.

Higher inflation in terms of the fuel prices in the fourth quarter and also it had slightly lower production as I mentioned already than was originally budgeted so that contribute to that overall higher.

Cash customers body or <unk> to $3 38 $19.

So pretty close.

Overall, so overall just under $80 an ounce higher than we thought.

Budgeted, but kind of what we expected at the end of Q3.

All in sustaining cost for the <unk>.

<unk> consolidated for Q were $860.

That was $82 an ounce higher than budget and that's that.

That really reflects the flow through those higher cash costs.

Some higher sustaining capex, we had some catch up we were slightly behind at the end of Q3.

But then that was offset by <unk>.

Higher ounces sold than we forecast and budgeted so what we found on the sales side was that we.

We actually had an extra shipment or two that we were able to sell by the end of the fourth quarter before Christmas.

Higher than we thought we would so that actually contributed slightly to higher ounces sold in the period.

So overall all in sustaining costs of $860, an ounce very 80 $82 higher than budget.

Comment on fuel.

As one of the main inflationary factors.

Rounds.

30% total cost deals around 14%. So that's the fleet nature foe on average is around 17% just for your <unk>.

Formation.

And just some commentary on the full year results now so revenue.

Just under a $1 8 billion.

For the Q gain averaged 796 droughts are very close at 8800 bark.

Production for the year, including our share of caliber.

$1 million of 47000 ounces.

So.

Excellent and then Thats really up at the high end of that.

They are at the higher end of that we get a production rates that we put out in Q3.

All of this for cohort 560000 ounces that was 25000 ounces ahead of budget and that was near the top end of our revised guidance range for for cohort $5 60 to 570000 ounces and exceeded the upper end of our original guidance range of between 500 and 560 same story as it was for Q higher throughput.

Lower grade material from the stockpile is all here.

<unk> was 222000 ounces. So thats 15000 ounces ahead of budget.

And again near the top end of our revised guidance range of between $2 15, and $2 25 and.

And exceeding the upper end of our original guidance range of between 202 10.

So I think.

Body, we saw.

Greater metal recoveries.

Metallurgical recoveries more oxide than was modeled partially offset but it's a little lower than budgeted throughput, but it's still overall a significant beat from his body.

And I know what your code of 198000 ounces for the G. 7000 ounces ahead of budget and that was actually a quarterly so I should have mentioned before which was a quarterly record and annual gold production record.

The 198000 ounces that was near the top end of its guidance range between 190 to 200000 ounces.

Like you mentioned.

How would you sort of pretty much everything on budget or slightly better than budget.

In terms of consolidated cash costs and all in results for the year consolidated cash cost per ounce produced came in at $5 35 per ounce that was just $15 ahead of budget.

Our overall guidance range for the year of 500 to $540, so pretty pleased with that.

We did see those higher costs in Q4, but when you take it in the context of the whole year, we came in within our guidance range.

<unk> was $449 transferred used that was just 24 ounces ahead of budget numbers. It was in at the upper end of our guidance range of 405 to $4 45.

Is that a 680 to $12.

Over budget and within our guidance range of $6 50 to $6 90 per ounce for the year.

And then what's your code of 493, perhaps produced which was actually $6 under budget and within our guidance range of between four and 520. So overall very solid good good production, where we actually we guided earlier in the year and we came in.

Within our range for the cash cost per ounce produced.

All in sustaining costs consolidated per ounce sold $888 per ounce that was actually $6 less than budget overall, and so there was sort of inline with budget all in sustaining cost for the year reflect higher than budgeted gold ounces sold some higher than budget gains in fuel derivatives.

So as we saw fuel prices increase through the year and that was partially offset by slightly higher than budget. Its the same sustaining capex of about $10 million.

And overall that we came in at $888 profit that came in within our range. Our original guidance range of 879 to 910 per ounce.

And of that call. It 765, so right on budget and value 914 that was actually $64 under budget.

So Ms Patty.

It was below the low end of guidance range of between $9 55 to 995.

And that was a result of higher than budgeted gold ounces sold higher there.

It was higher than budgeted fuel derivative gains, partially offset by some higher costs.

Our Dakota was $908 tranches about $58 per ounce over budget. So it was above the high end of its guidance range of between $8 70, but overall all in sustaining cost consolidated were within the range.

I mean, a couple of other comments just on the operations as for a run through maybe couple of income statement items and cash flow.

For color like you said had that excellent annualized throughput rate of over 9 million tonnes per annum, and we actually budgeted 9 million tons for 2022.

We've now got the Cardinal zone.

Permanent we began production there later in 2021, and we're ramping up production from Cardinal.

In 2022.

And we did recently just put out a new Cardinal resource.

For 2022, this 50000 ounces in the budget that relate to Cardinal.

And that are included in for calls overall guidance and we think based on current studies.

Engineering studies at Cardinal has the potential to add somewhere between.

Around 60000 ounces for Colas annual production for the next six to eight years.

For coal again, the solar plant came online it's the largest off grid hybrid solar <unk> solar plant in the World We think.

It contributed about seven.

7% reduction to our processing costs and that sort of.

Equates to approximately 3%.

Sure.

Cash costs as a result of.

Utilizing that solar energy.

And reducing our Gen set spending reserve.

So we're pleased with that.

And as we announced I guess just early in the new year.

We've now got the macro to permit back and we're making plans now to start in fact that we have started drilling exploration drills are now active on Mankato and we intend to put out an updated resource for venting quarter by the end of this quarter.

What would you call out his comments walnuts Chicago, we had development. It will check from mine continues we expect to see first ore produced in the first half of 2022 of them are really ramp up that higher grade will check underground production.

And.

In the second half of the year for 2022.

And we did exit for <unk>.

Donna.

We had we did the disposal of our interest in jackets way against you in 2021.

In both transactions with.

West Africa resources.

Okay. So let me make a couple of comments just on the income statement for the quarter was saw gain on sale of Burkina Faso assets $22 million.

So as I mentioned that the disposal of <unk>.

There was there was an impairment charge in there for about 6 billion and that relates to the sale of our interest in them to do that as an exploration asset that we had in Namibia.

And we've been did that out to senior resources.

Taking a mixture of cash and shares and return.

Year to date.

I think just maybe to comment on.

The losses gains on derivative instruments with $24 million gain on derivatives.

Reflecting the income statement and that that's driven by fuel those are all.

Fuel gains so theres, approximately 14 and realized gains and another 10 and unrealized gains for the period.

And year on year.

Tax charge for the full year to $170 million, so pretty significant tax at all sites now as we've seen revenues increase over the last few years and the mine is really ramping up and producing well we're paying.

A full slate of taxes in all locations.

When you look at what the.

In terms of earnings.

So GAAP.

For the quarter was 13 and GAAP earnings for the full year.

We're at <unk> 40 per.

Sure.

An adjusted EPS basis, adjusted EPS per share was <unk> 11 for the quarter.

<unk> 36.

For the year.

And then maybe just.

Round out the financial results with just some comments on the cash flow so.

From operating activity generated $267 million for the Q, So very solid based on those.

<unk> thousand $800 gold price and good results from the sites and that translated into cash flow per share from operations operating cash flow per share by about 25.

And again in.

Q4, we paid the same level of dividend of <unk> <unk> per share as we have the other quarters in the year.

When I look at overall cash flow results for the year 724 million cash flow from operations, which again is a cash it's approximately 69 per share.

Actually higher than we guided at Q3, we guided about $650 million.

Q3, so what we saw in Q4, which is.

It's a good variance was.

About 13000 ounces more shipped and sold and we expect to set out about $25 million roughly.

Our cash flows and then we will.

Approximately $40 million.

Tax payments, we expect it to make in the fourth quarter.

That didn't get made for mainly for timing reasons, there were about $20 million related to Mali, which will actually going to be early in the first quarter of 2022.

And then for O Jakarta was probably about $10 million lower tax exposure than we thought for the year and then the other variances.

Between the guidance of 650, <unk> 794 were really related to working capital.

Comment on taxes for the full year, we thought we paid $380 million in cash for taxes during the year.

In the end, we paid $3 40 so.

Main reasons for that or I, just elaborated slightly lower tax payments in Q4 than we anticipated but.

Some of that is just going to roll in and tend to be settled in Q.

Q1 of this year Q2 this year.

We ended the year with taxes payable of about $71 million and not inclusive for call it priority dividend for 2021.

About $38 million.

And for 2022, just for your for the analysts.

Total budgeted cash tax payments are about we think it's somewhere around $290 million and that includes settlement of that $71 million.

That we're carrying in.

Accrued taxes payable at December 31, 2021.

Total dividends for the year $168 million, so for SaaS for sure use each.

Each quarter. So that's one of the highest dividend you also I think in the Gulf space somewhere around 4% yield.

And then on the investing side.

Used by investing activities for the year of $286 million.

Overall full year, it's about $10 million under budget from where we thought just a couple of offsetting factors in there of sustaining capex for the year was about $10 million more.

Than originally budgeted some unplanned mobile purchases and some TSS work done at Kola.

And then offsetting that we had some unreached so Graham a lot T spot.

But $11 million less than we budgeted for the year just based on timing as we work our way through to feasibility at Grandma Auntie Anne's.

And then exploration so some of the Greenfield exploration costs that is expected to incur.

'twenty one we didn't some for some various reasons some of which couldn't get access to some of the properties through about $10 million under for the year.

So overall with $10 million on Capex in the scheme of things very close.

And we ended the year with cash and cash equivalents of $673 million and.

And the bank plus and <unk>.

Liquidity terms, we've also got 600 million Undrawn. So we got a full amount of our revolver to 600 million, which is undrawn and also $200 million available on the accordion feature of the revolver. So liquidity wise, we're in good shape.

So last thing I was just going to highlight some of the budget guidance, we put out.

So for the year for 2022, we've got.

Total gold production include nutshell caliber of between 990000 and 1.050 million ounces.

Consolidate cash cost forecast to be in the range of six 5% to 660 <unk>.

All in all in cost forecast to be somewhere just over 1050 per ounce.

She'd comment as wallet based on very similar to 2021, just based on some of the stripping campaigns in the development of some of the higher grade material.

From the wall Shake underground in the second half of 2022, our results are definitely weighted.

More production wise to the second half of the year in the first half of the year and.

Due to that production weighting, you'll also see an offsetting waiting where costs are higher in the first half than the second half of cash flows are lower in the first half and higher in the second half. So again, a very similar story in 2022 I think then we saw that we saw in 2021.

And a final comment on the budget numbers.

To reflect the fact.

Our costs are a bit higher in 2022 than we had guided for 2021, So we're up a boat.

Cash costs were up about 120, bucks, an ounce or 24% compared to 2021 guidance.

And just over half of that is inflation that we've.

We've seen increases in fuel costs mechanical parts labor costs, and the continued stronger foreign exchange rate for the Namibian dollar all of which contributed to some of them more than half of that cash cost increase.

And then the remainder of that cash cost increase is really coming from operational related items. We've got continue to ramp up that sort of higher strip in the early stages of Cardinal and so ramping that up in 2022, which is a little higher cost.

And then.

For we'll check.

So.

Commencing operations in both Shanghai underground mine in the second half of 2022.

The other the other factor will Chegg is in 2021, we had the benefit of higher grade material from the <unk> phase III open pit.

Flowing through for certainly.

Significantly in the second half of 2021, but that it's going to be mined out in the first half or in the first quarter of 2022 and therefore.

It impacts cost per ounce.

And consolidated all in costs also budget has increased by about 18% half of that inflationary factors as noted above.

And then there's also some higher sustaining capital.

We do some planning plant tailings.

Facility raises up for coal in this body.

So let's just very.

Very high level, how the budget looks for 2022 again, we're in that million ounce.

Per ounce range.

Got good good cost a little higher than the current year, but.

Assuming a gold price of <unk> thousand $800, an ounce were still forecasting.

Operating consolidated cash cash flow to come in somewhere.

Around the $625 million Mark so so very solid.

And that concludes the remarks I was going to be.

Okay, Thanks, Mike position before.

The fixed cost outlook looking forward.

Yep.

Good questions.

We're talking about Molly first and foremost.

See our largest month.

As in Mali, and obviously not as much in the news these days, but I wanted to talk about the reality of knowledge from the gourmet perspective, why BJ randgold with it with great success in the early nineties.

And many other companies international companies to Mali.

For its tremendous well globally, our position at a government historically coming out of the government believes in the importance of mining and their economy is supported for divestment of coal mining I think that gets lost sometimes in the noise of what our what our real sort of issues that we deal with they are dealing with the modeling that the super funds.

Mental issue there we've spent a long time.

Some of his 35 years scouring the globe looking for great opportunities to go and offer they didn't fit necessarily everyone else's model risk profile, we've done remarkably well.

<unk> many many different places all over the world. So one of our pieces due diligence two deals. This is just about resources and potential mining costs and permitting and all of those it's also about <unk>.

Some countries being the places where they want us to come in the welcome has to be partners with government.

Create jobs into all the great things, we do produce economies around the world, It's probably never been more evidence that it has been a genco, but what we contribute and how we do it and not just us of course, maybe other sponsored by the company's done a great job of that so with the context about why are we there and why are we now looking at expanding in Mali, which includes phase one and a carpet, which we used to call me.

<unk> tackle that we bought anymore. The other licenses that we'll call. It in the call that Kent, just tremendous potential there I think <unk> seen reduced lease for phase, one which is short term.

Trucking some separately.

Material.

Potentially.

A year and then beyond that we've had some great exploration results.

Last time, we reported the results from that at a club areas based on 2016 drilling and that was about 770000 ounces it looks quite attractive because it was odd surface most of it whether material that can be trucked out of the Midland runs through the mill.

But beyond that we've had some good results will come out the door source in March for setting is very important for the future of.

This company in terms of growth because we think there is a much could be much larger resource there potentially leading to not only phase one that provided the separately mature trucking gets starting as early as late this year in partnership with governments, but then also looking at the bigger picture, which is phase III. If we're successful and continued success in some of the initiatives we've dealt with so much below.

Below the saprolite material, which averages 50 meter steps via blowout. The sulfides. We had some good results to we have another multimillion ounce potential here, which could could lead us to phase III, which could be another mill.

And the other corporate areas sharing some some some facilities with Cola mill as it exists today.

So we see lots of potential upside at valley, specifically in the belt. We're at right now we have the Cardona and Cardona discovery, which is adding production right now.

Abuse of weight prototypical mill and of course, we have this very sort of which is almost a necessity for cohort.

It remains open to depth and we think we may end up as an underground mines are actually in the not too distant future comparable I think open pit and then of course, we have the whole situation of the avocado, which we haven't been able to talk much about or in fact drove in the quarter because of the license dispute.

Dispute.

We're very comfortable there we're very good at problem solving this what we've done for 35 years of our business groups. They are still together and Thats what were the keys to our success.

Crisis management, whether it be.

Jim equipment or be typhoons earthquakes or.

Political coups or whatever else, we don't pretty much all over the world that we have done consistently been successful with that and the reason for that is for a middle of us delivering on the promises you make around the world.

Life's not just in mining you could deliver the promises you make cubic where for instance entities. So we have really great social culture and I think this is why I'm, saying, but this is to understand really dig a little deeper or at least listen to the idea of why we and others are at Valeant, What's your reward Mali, because he believes the government today and the government is going forward. We will continue to honor their losses have continued to support.

Florida that sort of go away post COVID-19 in many many countries of the world.

These forward investment gold mining and mining has shown itself to be at the last couple of years.

Really good foreign Investor Patricia job creation, obviously revenue accretion job creation.

Responsible riding health of safety, which we lead the world.

And then just critical piece of economies and all the positive ways education Agriculture, you name. It we do around the around the world. So we have a great social license in both years, we work it and that's fair.

Many years of deliberate entry promising People's fairness respect.

And transparency, so I think today the disputes over Minnesota was a very specific issue.

It's considered an anomaly.

Picture of our relationship at the end of the day, we were able to work with the government.

And we were able to deliver proceeds to realize that the best way forward with this was with us as the partner driving and especially given the proximity where we are with <unk>, but also the governor is going to be a terrific partner. There. So if you look at the benefit to the government and we've got to start somewhere but Goldman has meant to the people of Mali the government.

And they get them. So it's not as if it were a bit of work with the government so easier to put headlights out there or where people can make hospital.

What we're seeing way because of this valley problems bulk of the issue. We have is very specific and we did resolved amicably with the government. So they are very supportive of going forward with that content.

In fact that you'd ask is win win.

Do you start reducing okay, so that will create more jobs.

I just want checks in the air a little bit or at least until you why we are still there.

And I think profitably in partnership with government takes a great things in the country.

Because of credit because were remarkable exploration team with Tom <unk> and his team.

We have been able to adapt to what we've done in many places subscriber level.

If you look at the proposed story if you look at our content you see some similarities and see some rest of the things that we've done at the end of the day, we've always been prepared to go where other street a trend whether you don't think the timing is right et cetera. That's one of the reasons. We have had success in Africa, and North Dakota that also Petra.

It wasn't popular suit M&A back that we did a crutch sandwich, where total ARPA as well for our shareholders.

We will always be disciplined about what we do in terms of growth or what we do in terms of M&A robust 13 years. We've taken this company from Xerox is a year or $2 billion. This year with a number of accretive acquisitions that we've done a great job of building adviser or making that better.

Also had analysis everywhere we are.

Our doing having some great exploration success beyond that as well. So so I just wanted to spend a lot of time on that because.

I think now it's a little bit misunderstood that yes. There is some serious issues that the government situation at the moment. It is the government going to commit to election, we hope that we'll soon to go back to what it is a different kind of history, but bottom line is the importance of what we're doing in that country. That's not lost on anyone including the current government. So I just wanted to touch on that because you're going to see us doing more Maui and we will continue to shoot.

<unk> diversified through exploration.

All the projects that also perhaps M&A if it makes sense to do anything that so.

Sure.

We will continue to work with the government.

To make it.

We're successful country and ourselves and we're successful world production from from a couple of things that I think are topical that I'll touch on briefly Graham latte.

We're looking to have the results of the feasibility study available are internally at the end of the second quarter of this year with the <unk>.

Duty to release those results shortly thereafter.

As everyone's aware I won't reiterate that Newsweek screen, particularly the number of steps over the last while.

Later that our engineering teams have to actually go back and look back at the work that had been done earlier interest of engineering. So the bottom line is the capital cost of course estimated at around 900 million to build comparable Lockheed Martin, which could produce for our customers last year, the operating costs and all sustaining cost supposedly pretty attractive the big that's the capital So how do you parlay.

Prove your IRR, how do you improve your project well two weeks to do that or to increase.

The capital costs, and then divided by more houses. So we've had some success, reducing the capital cost inflation will be a factor there. So that will be interesting to come out of the study, but also we have just come in here.

We have just completed a lot more drilling to go with a new resource we will see what the ultimate size of the resource to being so we're quite optimistic about that but we don't know really soon and we will continue the discipline. The short for years in terms of what we do is very likely we will not build it.

Simply because we put a lot of money into it.

When we do build it if it's economically attractive to our shareholders. It makes sense in our world. There are not many grip on what is in the world is a significant asset <unk>, our partner for 50% and we're working very closely with them or they are a good partner.

Both companies Board of directors will Havent assumed to make in the third quarter I would think about the development platform.

The governor wants us to go.

Duffy permits et cetera, we have one or we didn't have a roughly that permits. Some changes we've made that the government is very supportive locally and federally perfect.

So what happens well theres going to be decisions made that both parties.

I can't speak for them with Egypt will evaluate and decided to pitch their growth.

A couple of quarter with <unk>.

Based on the economics based on what else, we've got Florida et cetera, but you have to think if we're going to do the heavy lifting and be the operator to open mind, which is you wanted us to do that if you like 50% or something.

A good part of it is tissue I think 100% desktop for sure. There is not a significant gold producers that have already approached us to say well. If you decide not to go forward, we'd be interested in coming in and partnering with you. Our groundwater. So a number of alternatives. There. One is to not go ahead I wanted to go ahead with EG as partners and that has the gold production to our account.

Got you understood.

Another part of your global vehicle the financial strength, we have right now today, we can clearly take us into that kind of a lot of it for 100% we chose to do that.

A lot of things that will factor into that decision and not just because we have cash available. So.

So we'll see very shortly as Graham latte.

We're hopeful that it can become approaching specific industry. So it is one of those projects, where I would consider for US was to say this was waiting on events over time, if you do any hedging at all.

It's a situation where.

It has to make sense.

That sort of lower coal prices are today, but if you could lock in some of your gold production.

Back on them I think that that's pretty demonstrated I think our shareholders can see the logic to that if you can increase your production by two a quarter caps a year of low cost relatively low cost production.

So thats <unk>.

<unk>.

Touched on content, which I think is.

Huge asset of changing the company that is yet.

To be put into context at least publicly what that new resource might be.

Phase one phase two being there.

As well in terms of exploration has always been one of our strengths and.

<unk> will start with SG&A excretion companies Gerald So this unusual story and taking the company from exploration through development production and being good at all.

Most of those if you look at People's cycles in that kind of a quarter. It still produces it shouldnt issued about a particular companies that know what they're doing and production of oil.

Production companies are not going to exploration because they don't have the entrepreneurial hunger to go out and actually find things are go sometimes.

So I think thats one of the big savings of what we've done.

So it doesn't greatest friction purchase were wrong, but should I think of $67 million of shared exploration.

Well that's.

That's a lot of money Michael Great isn't it great because if you look at occur what we've discovered and toured spouses at existing mines with new opportunities over the years of future growth I think you get calculated somewhere around $50 an ounce cost through exploration two.

Burnouts, that's money well spent so about 65% of that budget is brownfields exploration around existing sites and the rest which is a substantial amount of square so really exciting greenfield. So I don't want to diminish detailed that we can put you together with the <unk>.

<unk> geology team if you were to take geology, and you want to hear about about Finland.

Our partner to US again today on our behalf.

Exciting results there thanks to a major discovery.

Sources, good for that with major news coming here, but it's early days for us, but we're seeing some interesting organization. So that's exciting are also Pakistan speaking of outside the box and have some very exciting field targets, there and a number of other.

Locations as well so we will continue to try and find the cheapest festival.

Generally that she was absolutely what which are the ones you've.

Always with numerous high quality exploration targets.

Finally on M&A.

I think the best way to describe our attitude towards M&A right now is ambivalent.

And potentially disappointing.

In doing so we don't need when you look at the potential of the unrealized potential in the marketplace.

It could be and you look at his grandmother's should go if you look at those two opportunities there's a lot of growth in those.

Those two dramatic growth.

This company barring any further.

Further exploration success.

So we're our job is to realize value for shareholders and the sovereign realized so far because we have.

Other numbers and also got mortgage is still a question Mark obviously, so in the meantime, though our stock's been hammered over the last year now starting to recover now partly because it's been a COVID-19 situation in the knee jerk reaction to that.

Which I understand but you always get a little bit of a reaction to the downside on the upside so much sometimes but that's the nature of our business, perhaps but.

So when it comes to M&A, we are only going to do what we've done for the last 30 years, which is accretive deals that makes sense for our shareholders. We havent been about growth for the sake of growth I think that's one reason we've been successful is highly disciplined due diligence and accretive deals that we then turned into.

Great minds.

That made us successful so we're not going to suddenly change that approach so with M&A.

We're looking at some opportunities out there, but I think if we do something thats going to make sense to our board executive over it and it's going to ultimately makes sense for our shareholders. Because we will be continuing on the discipline. We've shown for a long time, sometimes you sometimes people think because we are very aggressive company, though what's happened that theyre somehow, let's say negative I always say, there's a huge difference between being aggressive be reckless.

Never reckless but were.

<unk> successful seizing opportunities and going forward, but also some of the highest standards in our industry, but we were able to maintain so we're ambivalent necessity opportunity Scott makes sense in the context of our shareholders, where our share price is trading at for the first time in my career, perhaps we have the opportunity to use not only shares but cash.

<unk> because of the extraordinary financial Pacific Pride ourselves. So if there's something out there that makes sense. It's an existing producer perhaps has had struggles et cetera, and maybe there is some synergies there for us so much at all approached opportunity. If you look at the disappointment potential for discipline comes in because of a drop might be in for a long time and it will be there to that today, but it's one of the biggest.

The two biggest problems with M&A and the reason, we're not seeing it despite a lot of institutions wanting it.

Do need more better outgo many companies.

As we go forward and everyone says they are anticipating.

Welcome to mergers for sure will come to a deal at the level. We're telling you the truth that share was because they work for you, but they are actually entrenched management are entrenched because they wanted to keep their jobs and they don't theyre not acting their citizens shows at all who they work for they have a fiduciary duty as directors of these companies to build shareholder value. We've got a couple of situations.

Numerous situations over the years, where companies are not telling the truth management, they will keep their jobs to simply right. We know what we speak.

<unk> was approached by Kinross in 2006 about a potential merger, we said we're not interested.

<unk> was not interested at all but we said you know what.

It's about the show so why don't you sell side of CA building one of the greatest moments in the World who provides the forest, Russia, we launched the company, but it's up to us so we.

Torture us to put forward their best offer that asking for another one and then we decided it was on our right to decide that we went to the shareholders and our board of directors immediately set to affected to date.

You said that the board takes the shareholders. It was so obvious that's the responsible gold mining company does for any public company desk with their faces our chief of Sharps that may hurt their pocketbook Arthur Eagle.

So at the end of the day, we will see what happens, but the two big disappointments potentially M&A our ship projects because there aren't many vendors in the world and the second is in transformation.

I just find it offensive and on behalf of shareholders.

Want to talk on the other side. So at the end of the day World to do accretive acquisitions for us and there are some deals out there.

But a few that might make losses for both sets of shareholders. In these situations. There are shareholders out there that are not hearing about opportunities because management.

To put into themselves ahead of shows and not taking decisions not management's decisions not the board of Directors' decision.

Situations or potential M&A is the shareholders.

The institutional shareholders out there that may have a few words to share with us the Nemo next week, but join us join us slightly over half over how many years of directors should be allowed to be a director of the company.

Throughout the business, we do it Robert will help us help us, but fortunately the shareholders of companies that are not chargers forced them to do the right thing for you that shows the cup, let's grow this business we have to grow this business by having people accident year just at a show is not itself interest so.

Aspen speech for today.

So we are open for business don't run around saying, Oh, My God, they're going to go into personal thing Thats stupid.

No were very discipline, we've got a great growth profile.

Germany threshold strength will use it to build the company.

Got it wrong so far.

We will continue to do that so.

That's most of what I wanted to say.

I think it was that.

Let's open it up for questions.

Thank you ladies and gentlemen, we will now begin the question and answer session.

Question. Please press star followed by one on your Touchtone phone Youll hear three ton promptly acknowledging your request and your questions will be pulled in the order.

Should you wish to decline from the polling process. Please press star followed by Q and if you're using a speaker phone. Please lift your handset before pressing.

One moment for your first question.

Your first question comes from obese Habib with Scotiabank. Please go ahead.

Thanks, operator.

Video game and congrats on a solid 2021.

Just a couple of questions for me.

<unk>.

My first question is on.

On Anaconda.

Now you're expecting at least a resource update in Q1 and then.

You are looking to have a phase II drilling.

Is the plan to complete.

On standalone versus trucking ore down to pick one I'm trying to figure out.

What are the parameters, how large you need and the content to become the <unk>.

You can consider that.

As a standalone project.

Sure well I guess in terms of the El Paso or bill in terms of the PPA or the.

What we're doing there in terms of working with.

The new resources.

Coming off of working on it right now.

Phase, one which is a separately with a material tracking that down as we talked about the potential of ourselves now some additional production at year, starting as early as <unk>.

She late this year early next year $1 billion to talk about the timing of that study.

Yeah for sure. Thanks, Thanks for the question on this.

I think you remember when we talked before we already have a study based on the previous.

Resource.

It was announced.

What's really shows economically that trucking is a viable option.

So as you pointed out we're coming out with a new resource right now which will be out by the end of Q1.

Our plan is to take that resource and look at it and really kind of expand on the trucking concept for 2022.

Basically once we get that we've already done all the environmental work, we've already done all of that all of the Permian or all the feasibility work on that will be going to the Mali government with that concept for a truck a phase one tracking study as they continue to expand the resource then we'll look at the next iteration of what does it look like.

For a standalone mill I mean, knowing knowing that it would take a couple of years in any case to get the equipment in order to get to get it built up there if that was the choice.

There is some time on that but in the meantime, we think there's real value in trucking down to for color.

So from what I understand is phase one is the trucking situation. That's that's likely happening starting in 2022, then you increase your resource then you can start looking at the stand alone and then you require additional permits and obviously additional studies for that.

Yes for sure I mean, you made it maybe more simplistic than it is knowing that we haven't seen the resource size at the end of March I mean, maybe maybe those studies happened starting to happen in the phase II starts happen immediately but in the meantime, we still we still would have to look at trucking, while we're getting everything set up for the phase III.

Yes, I think the.

Our <unk> business.

I think it fits really well.

We are permitting and then don't forget permitting of the saprolite, we're just talking about both.

<unk> is basically taking this out of the ground, but the trucks and taken it out so theres no milk. So theres nothing when it comes to permitting and should be pretty straightforward. The government is very very key to within the laws within the rules to up to to get that permit in our heads.

As soon as possible basically we're obviously pace there so we're not <unk>.

Process and we've been through it before but we're not that concerned about that because of that stage, but while we're while we're tracking to materials out.

Production through difficult Bill the saprolite with you we're going to be extensive drilling what's the request the budget this year for medical that we hadn't gone here.

$12 million.

Sure.

Got it.

So that's a lot of drilling its not expensive Julian because you're drilling from surface and is basically the ore body in the separately comes to surface in many places. So we're going to find out a lot more by the end of this year with all of his extensive Julien.

So the separately resource currently resource in March, but we don't think that would be the end of it but good potential euro based basically is for another multimillion ounce discovery now between this separately.

The sulfide.

Ed.

That's not something we see likely so thats one of the reasons are so attracted to us.

That together in the near term phase whether that ultimately phase II, but I would suggest you by the end of this year with Australia.

We're not going to happen.

Indicated resource on the huge amounts of those shops, the sulphide material, but we're going to have real indication of how big this thing might be.

Yes.

Betsy approach.

Gladly.

Sure.

India Dakota areas, the upside could difficult complex if.

If we dare to project ahead, a little bit pretty submitted that school year.

We think it has to that kind of potential subject too.

Drilling in and what we're seeing becoming reality.

Got it okay. Thanks, thanks for that.

And then just quickly moving on to that.

Towards ask Nicola.

Last time, we talked and this is maybe a question for Tom.

Update you can provide on the <unk> zone, which is adjacent to the Cardinal zone, how thats shaping up it is looking like another cardinal or.

How should we proceed with <unk>.

I assume you mean, the <unk> zone.

Perfect that's great.

Yes, it's a parallel zone that hasnt been drilled to the same extent as cardinal although part of the <unk> zone is included within the card more resource.

Exploration this year will.

We're spending most of our not most of a good significant part of our exploration dollars are going to be in the in the mamba area for sulfide in the down plunge extension.

Underground potential for Nicola, but we will do.

We'll be doing some drilling in <unk> and also in Cardinal Cardinal is open.

Down plunge also theres two significant looking or should we say we see that.

Potential future underground also so we will be looking at that so yes that will be part of our program.

Thanks, Tom.

And that's.

Thats It from me for right now I'll get back in the queue.

Okay. Thanks.

Your next question comes from Josh Josh Wilson with RBC. Please go ahead.

Thanks, operator.

Looking at the upside from the various sources if you call. Our prior guidance was that Anaconda could add 800 to 100000 ounces in any critical Cardinal could add.

60000 ounces I guess I'm just wondering.

What that baseline is and then if we think about what the net result is from those additions cannot sustain the mine at 600000 ounces and I guess for how long.

No.

Well for the hardware.

Yes.

Right. So yes, so just starting let's go back to what you got to step back a little bit further than what your question is remember last year. We were operating at 775 million tonnes per annum. This year, we've increased to 9 million tonnes per annum and as part of that the Cardinal resource is already in there.

So that kind of 60 to 80.

It's already kind of baked into what we're talking about for 2022 and going forward now with the additional million tons, what you're really talking about is how much can you additional can you add from Anaconda.

And quite frankly at this point without getting a full a full mine plan together I don't want to put a hard number on it what I will tell you is that we've been kind of very public in the short term, we're looking at 80 to 100000 ounces.

The next couple of years.

Per year, that's correct.

Per year.

Long term, we kind of see that 600000 ounces plus minus how many.

The plus minus hand wave a little bit.

Achievable certainly in the near in the near term ethical.

Okay.

Okay. So I guess in other words.

What point.

Would you start to see some pressure materialize from maybe the great profile of that.

Is that after a year.

<unk> four 5% just wondering how much visibility we have today.

Yes.

First of all should go all the way back to when we did the feasibility study put it out.

And then look then look at what the kind of overall profile wise for Coca Cola.

And then.

And then take a look at what we updated.

I can say is really I think really out to 2026, we feel pretty good about where we're at and then of course, we have no. We havent even talked at all about what could be the potential for koala underground.

That looks like so theres a lot of things still in the works. So what I can tell you is in the short term 600. It sounds great. In 2026, we really have to look at how we're going to supplement that grade.

In terms of the ultimate.

As I said, we're gonna offer by the end of the year as well as exploration drilling going on.

It feels really good.

And a coffee.

The normalized business.

But as well so we'll have a pretty good idea will go under this Wilson with resources that comes out in March.

<unk> has an interest in terms of the sulphide portion of that.

We will be very well.

That territory start to kick off pivoting for something.

For our mill to get that process started.

If the planets align youll progress will walk us once a year, which I believe you've progressed into.

Two substantially larger production potentially with the mill subject to all the drilling we're doing in <unk>.

Reversals.

So that's that.

As we see it right now and the timing could rather well because you have discrete source initially of saprolite material, which you can sharpen cheaply to the mill because of soft you can actually add it on top of the $9 million and.

Maybe just to expand on that one of the things. We're looking at we did this when we did call out we kind of looked at this optimization.

Optimization, and we see that as a very real project coming up what we've really got and I'll look at Cardinal.

Cardinal you've got an economy, you've got the underground you've got <unk>, you've got a mill now that runs at 9 million 9 million tonnes per annum at least so we really want to take a look at kind of optimizing all the sources and that's a study that we're going to start this year and of course that will be ongoing as the resource gets updated so.

I don't want to be too cagy, but I, just think projecting too far out there is really not appropriate at this time, because I don't I don't think we know how good it can actually get yet between March new resource at the end of the year Julian we're doing it.

Those are those are the important things, we can fill and hopefully this will give us a flavor that detail. If you want to look back for a reference point, we look back at work for both of US when we acquired the formerly announced resources treatment rather than reserves and liquid for call it became $7 million to $8 million.

These these situations can grow rapidly as we did it for Colo bye.

By seizing the opportunity to drill with two construction recover much luxury to parcel that we acquired.

A highly accretive we did in 2000.

Okay, we'll stay tuned then.

And then moving over to grant to let's say for a second.

We've seen commentary from some of your peers.

Inflation for capital running at right at least year over year.

Consistent I guess in the 10% to 20% range most of them are towards the upper end of that.

Ignoring the potential impact from the optimization is there any sort of reason we should not apply the same sort of thinking to what the base case would be for kind of let's say.

Yes, so remember the last feasibility was based on Q1 2021.

Cost. So we don't have to have costs haven't come in yet, but we do believe there is going to be an increase.

I would say.

It's not going to be that different than what youre seeing in industry.

So remember we are working hard to significant changes real realistic changes in engineering design et cetera, Roes et cetera tunnels and stuff to bring that capital costs down because we thought it was a better project.

Basically we were basically was before worked on a long time ago, but it could work, but that's where we decided that this could be a better project by some fundamental changes to the approach that's where the capital is potential to reduce so if the capital comes down from the 900 million, which it is and the question is how does this can download then is there a portion of that you lose back because of inflation.

That's going to be the issue.

Good news is we won't have to respectfully for too much longer here.

The study.

Available results of the study in the second quarter and sustained itself through the quarter.

And that will lead to more development decision or not.

Yes.

Perfect.

Also stay tuned to that those are all my questions. Thank you.

Okay.

Thanks.

Ladies and gentlemen, as a reminder, if you do have any questions. Please press star one.

Next question comes from Don Demarco with National Bank Financial Please go ahead.

Alright, Thank you operator, and good afternoon, gentlemen, first question for Mike.

Like what is the quarterly waiting at the $290 million in cash taxes.

I mean, I believe Mike similar to last year like heavier in each one.

I think.

<unk>.

Give me a second there and I'll tell you okay.

No.

It's probably.

Pretty even through the year I would say.

Okay.

It's fine.

Big Bird.

2021, we had that big catch up.

Because we hit that bump for a year.

20.

We had to pay higher taxes on in 2021.

Yes.

What you saw through the current year.

Remember like I said, we've got about 70 million to pay at the end of 2021 more than half of that.

The dividend so really there's not that much outstanding tax related the 'twenty one to be settled up in 'twenty. Two so I would say, it's more evenly distributed in the Qs next year.

Okay. Good.

So you guys have had a couple of years now where production costs are backend loaded would you expect recurring backend loaded years going forward.

And then after after 'twenty, two or just for 'twenty two.

After 'twenty two.

Yes, no that's kind of the beauty of some of the things we're doing the <unk> with the underground coming online.

Think of that house profile is going to kind of level itself up same thing if the caller now with Cardinal and everything we've got we've got additional sources. It was really related to the way the ore body was laid out around <unk>, and <unk>, where youre kind of working up and down within the zone to the high grade material. So I think that that will.

Level itself out.

Okay, I figured that might be the case.

Now just shifting over to call out we see that you're forecasting potential cardinal production of about 60000 ounces over the next six to eight years.

Even if you hit 60 over eight years.

Total production less than 500000 ounces versus a total resource of $1 2 million.

Can you comment on that that differential it seems to me at face value that.

Upside at Cardinal beyond what this preliminary forecast is.

Yes.

I think you answered your question there is a lot of upside I mean once again on the operational side. We've just kind of looked at what we can put into a reserve based on the drilling this error, but of course, they continue to drill and explore that and turn that inferred into indicated so the answer is yes, there is upside.

Beyond that for sure.

We're open to that.

Depth is straightforward.

It's open open to the north.

So more to come there both the choosing as npls.

Turning inferred into indicated we're also still open but can we add more.

Okay and just finally.

For 2021.

Call it throughput around 775, you hit 914.

Two very nice to see 9 million, but does that all things equal.

I mean for higher than nine months.

Yeah.

Okay.

Yeah.

It's one of these is what have you done for us lately questions.

So.

The answer as you remember we started at four and went to five and then went to six to seven and a half and now we're at nine we did originally maybe.

Maybe John should weigh in here, but we did do a study where we looked at 10 go into 10, and we've got the capacity to do that will be tight.

But it's also it will also be our expensive because it's not just.

Upgrading the pumps the motors and everything it's actually adding an additional line. So we certainly think that there is some.

I would say incremental upside, but we don't we don't see that operating this thing at full on all the time. It is in the best interest to make sure as far as the maintenance goes. So I think <unk> is probably the right number plus minus given given the 10% to 15% saprolite.

Alright, okay. Thanks for that Bill.

And congratulations again on a strong finish to the year. Good luck guys.

Yes. Thanks.

Ladies and gentlemen, as a final reminder, if you do you have any questions. Please press star one.

There are no further questions at this time. Please proceed.

Okay. Thanks, Thanks, operator thanks.

Thanks, everyone for your good questions.

Your attention and we look forward to.

With a positive reporting.

As we go forward. 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 have a great day.