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.
Thanks for joining us.
As the operator said to report on the fourth.
Fourth quarter 2021, and year end results for 2020.
Financial results.
We have as initially syndicates, we had another very strong quarter and year 2020.
Ending up with a very strong cash position our costs were in good shape.
Yes.
We were pleased with those results.
I think we're well positioned.
Continue with our responsible mining.
<unk> of all of our sites have also continued to push to grow the company and we'll talk about that as well. So we're going to keep it pretty brief in terms of the presentation and then open it up for all of Europe .
Two questions the turn over now to Mike sentiment.
You too.
Highlights of the financial results and then I'll come back on it a little bit about them perhaps.
We see ourselves going.
Yeah, let's 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.
Thanks, guys.
So I'm going to talk about the quarter and then the full year and then all of a brief comment on on budget guidance. So we already put out a separate release, but reiterated in this news release.
So firstly for the quarter gold revenue for Q4 was 526 million. So that was still a 392000 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 all of 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 with 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. It's the same story, we've talked about already all year.
Hi, higher throughput than we thought we averaged over 9 million tonnes. This year, which is remarkable.
We budgeted $7 75 for this year.
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 lower than budget, but 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 that was bad.
But in the yet.
We only give back five soma, Bonnie actually performed a little better than we thought it would at the end of Q3.
And then what's your code of 79000 ounces, just 1000 ounces over budget in Jakarta.
<unk>, it's 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.
79 higher than dollar higher than budget.
Kind of reflected what we thought would see in Q4.
Impacted by inflationary pressures as I think all mines have seen inflation on higher fuel reagents fuel cost and stronger local currencies, particularly in India, where the Namibian.
Or at least dropped.
By site for <unk> $379, an ounce produced 60 higher than budget.
Massive adding $952, an ounce, which is over 300 higher than budget.
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 value <unk> to $3 38, $19 higher that budgets are pretty close.
Overall, so overall, just under $80 an ounce higher than budgeted.
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 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 and that 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 cost of $860, an ounce very 80 $82 higher than budget.
Comment on fuel.
As one of the main inflationary factors.
Rounds.
30% of total cost deals around 14%. So that's the fleet nature foe on average was around 17% just for your information.
And just some commentary on the full year results now so revenue.
Under a $1 8 billion.
For the Q gain averaged 796 drafts at very close at 8800 Mark.
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.
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 $5 30, and $5 60 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 tab.
So I think.
We saw.
Greater metal recoveries.
Metallurgical recoveries more oxide than was modeled partially offset by a little lower than budgeted throughput, but still overall a significant beat from his body.
And I know what your code 198000 ounces for the <unk> 7000 ounces ahead of budget and that was actually a quarterly so I should have mentioned before which occurred it 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 place.
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 I was just $15 ahead of budget.
Our overall guidance range for the year of 500 to $540. So we're 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.
Coal was $449 transferred used that was just 24 ounces ahead of budget.
It was at the upper end of our guidance range of 405 to $4 45.
As value 680 to $12.
Over budget and within our guidance range of $6 50 to $6 90 per ounce for the year.
North Dakota, 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 when 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 increased 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 per ounce 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 <unk> 90, <unk> that was actually $64 under budget.
And so that's about it.
That was below the low end of guidance range of between $9 55 to 995.
That was a result of higher than budgeted gold ounces sold.
There was higher than budgeted fuel derivative gains, partially offset by some higher costs.
Our Dakota was $908 tranches of up $58 per ounce over budget. So it was above the high end of its guidance range of between $830 70, but overall all in sustaining cost consolidated were within the range.
Couple other comments just on the operations as for a run through maybe couple of income statement items and cash flow. So.
Like you said had that excellent annualized throughput rate of over 90 million tons 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.
So for 2022, those 50000 ounces in the budget that relate to Cardinal.
That are included in our calls overall guidance and we think based on current studies.
Engineering studies that Cardinal has the potential to add somewhere between.
Round 60000 ounces to put 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.
The 7% reduction to our processing costs and that sort of.
Equates to approximately 3%.
Lower.
Cash cost is 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 early in the new year.
We've now got the amount total 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 preventive quarter by the end of this quarter.
Our Dakota Commons Walnut Wood, Chicago, we had development.
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 Burkina.
We had we did.
Both of our interests in jackets way against you in 2021.
Both transactions with.
West African 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> into Asia.
There was there was an impairment charge in there for about $6 million and that relates to the sale of our interest in and do that as an exploration asset that we had in Namibia.
And we've been to 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, only $24 million gain on derivatives.
Reflecting the income statement and that that's driven by fuel those are.
Fuel gains so theres, approximately 14 and realized gains and another 10 and unrealized gains for the period.
And year to 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.
GAAP earnings for the full year.
We're at <unk> 40 per.
Sure.
On an adjusted EPS basis, adjusted EPS per share was <unk> 11 for the quarter and <unk> 36.
For the year.
And then maybe just.
Rounding out the financials also with just some comments on the cash flow so.
From operating activities, we generated $267 million for the Q. So so very solid based on those.
<unk> thousand $800 gold price and good results from our sites and that translated into cash flow per share from operations operating cash flow for share of 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 were 724 million cash flow from operations, which again is a cash flow 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 shifts 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 pay early in the first quarter of 2022.
And then for <unk>, probably about $10 million lower tax exposure than we thought for the year and then the other variances.
Between the guidance of 650, and the actual 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 elaborate a slightly lower tax payments in Q4 than we anticipated but.
Some of Thats, just going to roll in and 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 Cola priority dividend for 2021 of 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, 2020 plan.
Total dividends for the year 168 million, so <unk> per share each.
Each quarter. So that's one of the highest dividend yields I think in the golf space somewhere around 4% yield.
And then on the investing side.
She is by investing activities for the year of $286 million.
Overall full year, it's about $10 million under budget from where we thought there's a couple of offsetting factors in there of sustaining capex for the year was about $10 million more than.
Than originally budgeted some unplanned mobile purchases and some TSS.
<unk> done it for Colette.
And then offsetting that we had some unreached so grandma Lockheed we spent.
I think the $11 million less than we budgeted for the year just based on timing as we work our way through to feasibility at Grandma Lathi.
And then exploration so some of the Greenfield exploration cost expected to incur in 2021, we didn't some for some various reasons some of which couldnt get access to some of the properties through about $10 million under for the year.
So overall with $10 million on the Capex, but in the scheme of things very cost.
And we ended the year with cash and cash equivalents of $673 million in the bank plus.
Liquidity terms, we've also got 600 million Undrawn. So we got a full amount of our revolver and 600 millimeters Undrawn and also $200 million available on the accordion feature of the revolver. So liquidity wise, we're in good shape.
So one 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 nausea caliber of between 990000 and 1.050 million ounces.
Consolidated cash cost forecast to be in the range six 5% to 660 <unk>.
All in all in cost forecast to be somewhere just over 1050 per ounce.
She comment as well and 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 Wolf Chegg 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 2020.
One.
And a final comment on our budget numbers.
To reflect the fact.
Our costs are a bit higher in 2022 than we had guided for 2021.
We were up about.
Cash costs were up about 120, bucks, an ounce or 24% compared to 2021 guidance.
And just over half of that is inflation we.
We've seen increases in fuel cost mechanical parts labor costs, and the continued stronger foreign exchange rate for the Namibian dollar all of which contributed.
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 at Cardinal ASUR ramping that up in 2022, which is a little higher cost.
And then.
For <unk>.
So.
Commencing operations nimble Chegg underground mine in the second half of 2022.
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.
It impacts cost per ounce.
And consolidated all in costs also budget has increased by about 18% half of that is the inflationary factors as noted above.
And then there's also some higher sustaining capital.
We do some planning plant tailings.
Facility raises that for Colin and his body.
So let's just.
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 we.
Assuming a gold price of $800, an ounce were still forecasting.
Operating consolidate up cash cash flow to come in somewhere around the $625 million Mark So so very solid.
And that concludes the remarks that was going to be.
Okay. Thanks.
Before.
The next few quarters outlook looking forward.
We're looking for.
Questions.
We're talking about Molly first and foremost obviously our largest month.
Molly and obviously not as much in the news these days, but I wanted to talk about the reality of moly for Nicole My perspective, why I appreciate grappled with it with great success in the early nineties and many other companies international companies have gone to Mali.
For its tremendous well globally rotation and a government historically covered half government have fleets and the importance of mining and their economy is supported for divestment of coal mine I think that gets lost sometimes in the noise of what are what are real.
The issues that we deal with and they viewed it as a modeling sort of a fundamental issue. There we spent a long time.
Some of his 35 years scouring the globe looking for great opportunities to go buy an offer they didn't fit necessarily everyone else's model matures and risk profile.
Remarkably well.
<unk> many many different places all over the world. So one of our cases due diligence.
Josef just about resources and potential mining costs and permitting hurdles. It's also about assessing countries being in places where they want us to.
And welcome us to be partners with government.
Jobs to deliver great things, we do produce economies around the world, there's probably never been more evident than it has been a journey COVID-19 , what we contribute and how we do it or not your subsequent 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 Bali, which includes phase one and a carpet, which we used to call me Nicole.
Ill tackle that we bought anymore the other licenses back.
And.
There's tremendous potential there I think.
For phase, one which is short term.
Trucking some separately soft material.
Bill.
100000 ounces 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 very easily.
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 it be much larger resource there potentially leading to not only phase one mining separately mature trucking is 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 will continue.
The success of some of the initiatives we've had them so flex below.
Below the saprolite material, which averages 50 meter staffs via below that the sulfides. We had some good results. So we have another multimillion ounce potential here.
Could could lead us to phase III, which could be another mill.
And the other card area of sharing some some some facilities with the Coca Cola mill as it exists today.
So we see lots of potential upside at valley, specifically in the Beltway and right now we have the Carnival Cardona discovery, which is adding production right now.
If you just wait for a little cold mill and of course, we have this embarrassment of riches almost a necessity for cohort orebody remains open to depth and we think we may end up as an underground mines are actually in the not too distant future conference I think open pit and then of course, we have the whole situation at the end of cargo, which we haven't been able to talk much about or in fact drill within a quarter because of that.
License dispute.
So 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.
Yes.
Crisis management, whether it be.
Pandemic, whether it be typhoons earthquakes or.
Political coups or whatever else, we don't pretty much all over the world.
<unk> consistently been successful look out and the reason for that is for a middle of us delivering on the promises you make around the world.
The life, let's just in mining if you deliver the promises you make cubic where for instance, so.
So we have really great social culture, and I think this is why I'm, saying, but it has hampered us just understand really dig a little deeper or at least listened to the idea of why we and others are at Valeant, What's your reward Mali because he believes the government today in the coverage going forward. We will continue to honor their loss continued to support Florida vegetable way post COVID-19 in many many countries in the world.
Almost everyone needs for divestment gallbladder, combining it shows ought to be at the last couple of years.
Really good for Investor Patricia job creation, obviously revenue accretion job creation.
Responsible mining health of safety, which we lead the world.
And then just critical for these economies all deposit waste education agriculture, you name it the things we do around the around the world. So we have a great social license in both years were working and Thats hurt.
For many years.
Any promising People's fairness respect.
And transparency, so I think today the disputes over many coda was a very specific issue.
It's considered an anomaly.
Picture a relationship at the end of the day, we were able to work with the government.
And we were able to deliver was able to realize that the best way forward with this was with us as the partner driving it, especially given the proximity of where we are with <unk>, but also the governor is going to be 20% partner. There. So if you look at the benefit to the government and we've got to start somewhere but globally. It's meant to the people of Mali the government morality.
And they get them. So it sounds as if it were a bit of work with the government really it's so easier put headlines out there or where people can make hospital.
What we're seeing because of this valley problems, while the issue. We have is very specific and we didn't resolve it.
With the government. So they are very supportive going forward added content and in fact I could ask is when you can start reducing that there so thats pretty more jobs.
I just want checks in the air a little bit or at least tell you why we are still there.
And I think profitably in partnership with government takes a great things in the country.
Because of credit cost.
Arco exploration team with Tom Garrigan industry.
We have been able to adapt to what we've done in many places which is fiber overbuild.
So if you look at the proposed story that if you look at the content you see some similarities you 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 trade where they don't take the timing's right et cetera. That's one of the reasons. We have had success in Africa, and North Dakota, and also of course, because it wasn't popular suit M&A back that we do the same.
We're talking of Arthur as well for our shareholders.
We will always be disciplined about what we do which was a growth or what we do in terms of M&A robust 13 years. We've taken this company from gyro ounces, a year or $2 billion. This year with a number of accretive acquisitions that we've done a great job of building the buys or making that better and also had analysis, even when we are doing having some great exploration success beyond that as well. So so I just wanted.
It's been a lot of time on that because.
I think now it's a little bit misunderstood then yes. There is some serious issues that the government situation at the moment. It is the government going to commit to election, we hope they will soon to go back to but it's a different kind of history, but bottom line is the importance of what we're doing in that country.
Ill, let anyone including the current government. So I just wanted to touch on that because you're going to see us doing more value and we will continue to geographically diversify through exploration.
Development projects that also perhaps M&A, if it makes sense to do so.
We will continue to work with the government.
To make it.
The first successful country and ourselves and more successful company.
Production from from a couple of other things that I think are topical that I'll touch on briefly <unk> latte.
Forward looking at the results of the feasibility study available are currently at the end of the second quarter of this year with.
Ability to release those results shortly thereafter.
As everyone's aware I won't reiterate the news, we screen particular number of steps in lifestyle.
Operator that our engineering teams and 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 launch eight environments could produce for our customers obstacle here the operating cost of the all sustaining costs voice look pretty attractive the big that's the capital. So how do you how do you prove your IRR, how do you improve your projects well two weeks to do that or to increase it.
Reduced capital costs, and then divide it by more ounces. 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've just communicated.
We have just completed a lot more drilling to go with a new resource 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 of 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 <unk> 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 a development platform.
The governor wants us to go.
The permits et cetera, we have won permanent yet, but we are updating that permits. Some changes we've made that the government is very supportive locally and federally at this particular point.
So what happens is going to be a decision made by both parties.
I can't speak for them at each April evaluated decided pits growth profile going forward without the same hedging of Lucas Edwards.
Based on the economics based on what else, we've got forever et cetera, but you have to think if we're going to do the heavy lifting and be the operator to open the line, which is you wanted us to do that if you like 50% or something.
Good arguments as tissue I think 100% desktop for sure. There's a significant co producers that have already approached us to say well if HCA decided 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 fantastic oil production to our account.
Got you understood.
Other part of your global vehicle Financial District, we have right now today, we can still take lots and lots of it for 100% we chose to do that.
Lots of things that will factor into that decision and not just because we have cash available.
So so we will see that very shortly and Graham latte.
We're hopeful that it can become approaching visit of interest to our shareholders.
This is one of those places where I would consider for US was to say this was waiting on events over time, if you do any hedging at all because we have a lot.
It's a situation where.
It has to make sense.
That's at a lower gold price it today, but if you could lock in some of your gold production.
Back on them I think that I think thats pretty them attractive I think our shareholders can see the logic of 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 Anaconda in which I think is.
Huge asset of machine to a company that is yet.
To be put into context at least publicly what that new resource might mean.
Phase one phase two being there.
As well in terms of exploration has always been one of our strengths.
<unk>.
<unk> started its gene expression companies material. So this unusual story of taking the company from exploration through development production and being good at all.
Most of those if you look at People's cycles, and it kind of a quarter. It still produces it shouldnt issues you brought up I think it can be sent over to drilling and production side.
Production companies are not good at 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 savings, but what we've done.
So it doesn't greatest friction purchase went out with a bunch of adding a $67 million of shared exploration.
Well that's.
That's a lot of money great isn't it great because if you look at occur what we've discovered and tourist balances at existing mines or new opportunities over the years of future growth I think you've got calculated somewhere around $50 an ounce cost through exploration two.
That's money well spent so about 65% of that budget is brownfields exploration around existing sites. So the rest which is a substantial amount so really exciting greenfield so all of that to diminish detail on that.
We can put you together with the <unk>.
<unk> geology team if youre in a tier geology and you wanted to hear about Finland.
Our partner to US again today on our behalf.
Exciting results there next to a major discovery.
<unk> stood for that with major new discovery here, if it's early days for us, but we're seeing some interesting mineralization. So it's exciting and we're also in Pakistan and 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 asking for which other ones you've.
Always.
Exploration targets.
Finally on M&A.
I think the best way to describe our attitude towards M&A right now is ambivalent.
Potentially discipline.
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 the scramble I think should go and you look at those two opportunities there's a lot of growth in wholesale.
Dramatic growth.
This company barring any.
Exploration success.
So we're our job is to realize value for shareholders and the sovereign realized so far because we haven't been.
Other numbers and also what is still a question Mark office.
In the meantime, though our stock's been hammered over the last year and a half 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 youll get it 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 haven't 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 mines that make 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 so I think it is going to make sense to our board executive and is going to ultimately make sense for our shareholders. Because it will be continued on the discipline. We've shown for a long term, sometimes <unk>, sometimes people think because were very aggressive company, though what's happened that theyre somehow.
I always say, there's a huge difference between being aggressive be reckless we're never reckless.
Were extremely 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 opportunities got it makes sense in the context of our shareholders, where our share price is trading at now for the first time in my career, perhaps we have the opportunity to use not only shares but cash for M&A because of the extra day credentials.
Yourselves, so if there's something out there that makes sense as an existing producer perhaps has had struggles et cetera, and maybe there's some synergies there or so about development project opportunity. We look at what the disappointment potential for discipline comes in because of a drop ive been for a long time and it will keep it to that today, but it's one of the biggest two biggest risk the two biggest problems.
With M&A and the reason, we're not seeing it despite a lot of institutions wanting it and we do need more better on government companies.
As we go forward and everyone says they are anticipating.
Welcome to mergers for sure welcome to deal with the level, we're telling you the truth that shareholders because they work for you, but they are actually entrenched management are entrenched because they want to keep their jobs and they don't theyre not acting their citizens shows at all who they work for we have a fiduciary duty as directors of these companies to build shareowner value. We've got a couple of situations.
But numerous situations over the years, where companies are not telling the truth management, they will keep their jobs to somewhere right.
What we see.
<unk> was approached by Kinross in 2006 about a potential merger. We said we're not interested banjo was not interested at all but we said you know what.
Sure. So why don't you signed a CA building one of the greatest moments in the World who combines the forest, Russia, we launched the company, but it's up to us So we told.
Youll hear us to put forward their best offer that asking for another one and then we decided that it was on our right to decide that we went to the shareholders and our board of directors immediately said to us back in the day whenever you set the bar she takes the shareholders. It was so obvious.
The responsible gold mining company does for any public company does when they are faced with is our chief of the <unk> that may hurt their pocketbook Arthur Eagle.
So at the end of the day, we will see what happens but.
To be disciplined potentially M&A, our ship projects because there aren't many businesses in the world and the second is a transformation.
Just find it offensive on behalf of shareholders that we'd want to talk on the other side. So at the end of the day, we're open to do accretive acquisitions for us and there are some deals out there, but not many but a few that might make lot of sense for both sets of shareholders. In these situations. Yes. There are shareholders out there that are not hearing about opportunities because management is putting themselves.
Head of the showrooms and not take decisions not management's decisions about the board of directors' decision situations or potential M&A is the shareholders. So 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 to directors should be allowed to be director of the company.
Throughout the business, we do it Robert well help us help us by Fortunately the shareholders of companies that are not sorry, Richard 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 the show was not himself interest so.
Aspen speech for today.
So we're open for business don't run around saying, Oh, My God, they're going to go into personal thing Thats stupid.
No.
When we've got a great growth profile.
Stormy 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 see.
What we have for questions.
Thank you ladies and gentlemen, we will now begin the question and answer session. If you have a <unk>.
Please press star followed by one on your Touchtone phone you'll hear three.
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One moment for your first question.
Your first question comes from obese Habib with Scotiabank. Please go ahead.
Thanks, Operator, hi.
Video game and congrats on a solid 2021.
Just a couple of questions from me.
My first question is 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'd need.
And that would come.
Before you can consider that as a standalone project.
Sure well I guess in terms of the I'll pass it over to Bill in terms of the PPA or the what we're doing there in terms of working with the <unk>.
The new resources.
Coming off of working on it right now.
Phase, one which is the separately with a material tracking that down as we talked about potentially ourselves some additional production year, starting as early as <unk>.
She late this year early next year $1 billion type of a terminal that study yes.
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.
It's really shows economically that trucking is.
Payable 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 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 Colette.
So from what I understand is phase one is the trucking situation.
It's likely happening starting in 2022, then add you increase your resource then you can start looking at the stand alone.
Then you would 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 have started 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 II portion of that yes, I think.
Be well.
The cost of business.
It gets really well.
We are permitting and then don't forget permitting of the saprolite, we're just talking about the boat a little bit of Washington, basically taking this out of the ground, but the trucks and taken it out so theres no milka. 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 to to get that.
In our heads.
As soon as possible basically we're obviously a page there so.
It's a process 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 separately with you we're going to be doing extensive drilling what's the request the budget. This year for medical that we hadn't gone there.
$12 million.
So that's a lot of drilling its not expensive Julian because you're drilling from surface and this 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 this extensive julien below the separately.
So a couple of the resource in March, but we don't think that would be the end of it but the potential euro based basically is for another multimillion ounce discovery now between the separately.
The sulfide.
That's not something we see likely so thats one of the reasons are so attracted to us is putting that together in the near term phase one and then ultimately phase II, but I would suggest you by the end of this year with Australia.
We're not going to happen.
<unk> indicated resource on the huge amounts of the.
The sulfide material, but we're going to have real indication of how big this thing might be.
In that sense.
<unk> approach.
Got it.
Sure.
Indiana Dakota areas, the upside could difficult complex.
If we dare to project ahead, a little bit pretty submitted a school year.
We think it has to that kind of potential subject to we're drilling and what we're seeing becoming reality.
Got it okay. Thanks for that.
And just quickly moving on to the.
Towards that goal.
Last time, we talked.
And this is maybe a question for Tom.
Any 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 perceive the <unk> zone.
I assume you mean, the <unk> zone.
That's correct.
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 our significant part of our exploration dollars are going to be in the in the mamba area for sulfide in the down plunge extension.
The underground potential for Nicola well, we will do will be doing some drilling in <unk> and also with Cardinal Cardinal is open.
<unk> also theres two significant looking or should I say, we see that.
Potential for future underground also so we'll be looking at that so yes that will be part of our program.
Thanks, Tom.
And.
That's it for 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 answers 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.
Right.
Yes, so Josh stocking, let's go back and 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 right. So that kind of 60 to 80.
<unk>.
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.
Over the next couple of years.
Per year, Thats, correct, sorry, Glenn.
Per year.
Long term, we kind of see that 600000 ounces plus minus.
I think the plus minus hand wave a little bit it's pretty achievable certainly in the near in the near term ethically.
Okay.
Okay. So I guess in other words.
<unk>.
<unk> point would.
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, I think 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 profiled waste for Coca Cola and then.
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 haven't even talked at all about what could be the potential of the 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 sounds great. In 2026, we really have to look at how we're going to supplement that grade.
In terms of the ultimate.
As we said we're going to offer by the end of the year as well as exploration drilling going on.
Infill drilling.
And a coffee.
The second.
Sulfate as well so we'll have a pretty good idea will go into the specific resource that comes out in March.
<unk> has an interest in terms of the sulphide portion of that.
We will be very well.
I would like to inform you start to kick off pivoting for something.
For our mill to get that process started so.
If the clients a lot of yoga progress will walk us once a year, which I believe you've progressed into.
Two substantially larger production potentially with the mill subject to volatility.
So our smashers yourselves.
So as.
As we see it right now and the timing could rather well because you have this great source initially of saprolite material, which you can sharpen chiefly to the mill because it's soft.
<unk> added on top of the $9 million in.
And maybe just to expand on that one of the things. We're looking at we did this when we did the Cola 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 you've got.
Cardinal you've got an economy that you've got the underground you've got for Cola, 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 of the sources and Thats. 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 the important things we will fill it hopefully this will give us play with that detail. If you want to look back for reference point look back of work for both of US when we acquired the formerly announced resources rather than reserves and liquid for call it became $7 million to $8 million.
These these situations can grow rapidly as we get it for Cola Bye.
By seizing the opportunity to drill a churn construction of October much luxury to parcel that we acquired.
The highly accretive media in 2000.
Okay, we'll stay tuned then.
And then moving over to granite, let's say for a second.
We've seen commentary from some of your peers.
Inflation for capital running 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 ship 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 the 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 have been working hard at significant changes real realistic changes in engineering design et cetera, et cetera tunnels and stuff to bring that capital costs down because we thought it was a better project.
Based on this we were basically was before worked on a long time ago, but it can work, but that's where we decided that this could be a better project quite some fundamental changes to the approach that's where the capital is potential to reduce so if the capital comes down from the 90 minute, which it is and the question is how does this can download then.
Is there a portion of that you lose back because of it.
Inflation, so that's going to be the issue, but the good news is we won't have to respectfully for too much longer here.
The study.
Available results in the study with lithium in the second quarter.
Through the quarter.
That will lead to more.
But decision or not.
Yes.
Perfect.
Also stay tuned to that those are all my questions. Thank you.
Okay.
Thank you.
Ladies and gentlemen, as a reminder, if you do have any questions. Please press star one.
Your 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 Mike.
Mike 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.
Give me a second there and I'll tell you okay.
No.
It's probably.
Pretty even through the year I would say.
Okay.
That's fine.
Same big properly.
In 2021, we had that big catch up.
Because we hit that bump per 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 to the 'twenty one to be settled up in 'twenty. Two so I would say, it's more evenly distributed and accused 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 we're 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 at the core 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 for color and what Chicago, where youre kind of working up and down within the zone to the high grade material. So I think that that will.
On a level itself out.
Okay, I figured that might be the case.
Now just shifting over to call that we.
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 I mean, that's tour 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 there is some.
Some upside at Cardinal beyond what <unk>.
Preliminary forecast is.
Yeah I.
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.
But we're open to it.
The strike.
It's open open to the north.
So more to come there both the choosing as Bill said turning inferred into indicated we're also still open can we add more.
Okay and just finally.
For 2021 call.
Call it throughput around 775, you hit 914.
<unk>.
Nice to see 9 million, but does that all things equal or are you assuming for higher than nine months.
Okay.
Yes.
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 .
Pain here, but we did do a study where we looked at 10 go into 10.
We've got the capacity to do that will be tight but.
But it's also that will also be our expensive because it's not just.
Upgrading the pumps and 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 nine is probably the right number plus minus given given the 10% to 15% saprolite.
Right, Okay. Okay. Thanks for that Bill.
And congratulations again on the 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.