Q4 2021 Equinox Gold Corp Earnings Call

Thank you for standing by this is the conference operator, welcome to the Equinox Gold's fourth quarter 2021 results and corporate update conference call and webcast.

As a reminder, all participants are in listen only mode and the conference is being recorded after the presentation there'll be an opportunity to ask questions.

And the question queue. You May Press Star then one on your telephone keypad should you need assistance during the conference call you May signal, an operator by pressing Star then zero. If you are participating through the webcast you can submit a question in writing by using the text box in the lower left corner of the webcast frame.

I would now like to turn the conference over to Relent Bailey Vice President of Investor Relations for Equinox Gold. Please go ahead.

Thank you Karl and thank you everybody for joining us. This morning, we will of course be making a number of forward looking statements. Today. So please do take the time to visit our continuous disclosure documents on our website on SEDAR and Edgar I'm now going to turn the conference call over to our CEO Christian Nila.

Thank you very much and welcome everyone. This morning.

Just recapping on the business plan here on page number three when put together a collection of companies and assets over the last four years and we're excited to be at this point are our growth cycle here, where we got the diversified Americas gold producer with the seven producing mines soon to be eight one sachin loses wrapping up in quarter two.

This year and five exciting growth projects and we have an extremely large reserve and resource base 16, and 30 million ounces, which allows us to have a lot of leverage to the gold price.

As we continue to develop these assets will be moving from roughly 700000 ounces. This year in 2020 towards a million ounces plus over the next few years and our balance sheet in a strong place again in that pathway to towards a million ounces is clear and in our control and our portfolio.

And when we look at the quarter four and full year highlights Pete and Doug will walk you through more of the granularity on this but I did want to touch it high level.

As expected we had a strong Q4 as previously released we.

We tracked down the path of continuing on our two construction projects and Doug will talk about the detail on that but pleased to say, we're making good progress and as planned we're moving those forward.

You know on schedule at this stage and also we've had good results over the last year and we continue to focus on it going forward and drilling and expanding our portfolio of.

Exciting mineral reserve base are assets that are there.

It really needs some attention to continue to extend the mine life and we've also put out two expansion studies on horizontal Castle Mountain, which continue to show mine life extension and a reserve growth and the other area that we're really going to focus on this year and we've kind of put it to a little bit to the back burner as we announced on the last call, but last few Lois we're working on various sooner.

Arrows to optimize it to look to bring forward cash flows to increase production and really work on that plan as we deliver on the greenstone construction project and have this be a key contributor. So we want to reduce those costs continue to expand that production base and make plans to be able to build that CIL once we get to stability and we get green.

And up and running.

In terms of operations again pleased to report that we've had another quarter of uninterrupted operations loss Philo Smith finished last year well.

As you saw in the press release RDM did have heavy rains recently and I will touch on the details of that but we're working towards spending the plant there for a few weeks as we reduce the water level in the TSS, but we don't expect an overall material change to our guidance as a result of this we see this as a very temporary measure.

And in terms of ESG or do you want to touch on this it continues to be a focus for us and an increasing in terms of priorities. This year is as we build out our team. We got our first ESG report out last year. This year, we'll be enhancing it and we do plan to have an ESG call. That's focused on that topic for all investors to attend.

Give or take around our time of our AGM here in the second quarter.

We've been implementing that towards sustainable mining and responsible gold mining principal protocol that all mine sites. This year, we set our scope one and two emissions targets last year and an emissions in total and we also achieved our target of reducing them by 5%, which is a short term goal, we do need to set our long term targets and that's in the works this year.

Hopefully by around this year, and we'll be able to announce our long term targets.

And also just in summary, we had a good strong finish to the year overall and I want to turn it over to Pete and Doug will walk you through the granularity of that.

Thanks Christian.

With respect to our operating results I'll just touch on a few of them as Doug will go through each of the mines in just a minute.

For responsible mining in 2021, and we improved on our already good safety and environmental performance as demonstrated by our safety and environmental metrics that you see here, we especially into 2021 on a on a good note for safety and environment and our environmental stewardship.

As to Covid. It was managed well in 2021 that was led primarily by the vaccine rollouts in the countries, where we operate but.

That was also coupled with our continued rigorous screening and testing protocols.

And that led to little to no downtime at our sites in 'twenty, one due to Covid, which obviously, we're very pleased with.

As the operations are we previously announced that we produced 600 in 2000 ounces of gold.

We achieved our guidance there along with our all in sustaining cost of guidance.

With an all in sustaining cost per ounce of $1350 an ounce we were a little high on our cash cost per ounce guidance.

Just above the.

Higher end of our range.

And our next page we have our our Q4 financial results, we had our best quarter to date really from a.

Perspective, we sold 212000 ounces of gold at an average realized price of $1972 an ounce.

Our cash costs for Q4 was $1040 an ounce and our all in sustaining cost was a very respectable $1266 an ounce.

We had net income for the quarter of $111 million and adjusted net income of $76 million, which translates into basic earnings per share of <unk> 37 cents a share of 25 cents a share on an unadjusted basis.

We were also very busy on the corporate front during the year.

Which included which are the results of which are included in our net income of $557 million for the year.

We sold 10 million units of Solaris, where each unit was a share and a half want to buy more shares for proceeds of $67 million and a gain of $50 million.

Selling the shares reduced equinox is holding in Solaris to just below 20%, which resulted in a change of accounting and a gain of $186 million during the year.

And another.

The benefit of that change in accounting as it allows us to reflect the fair value of that investment. It was previously carried it at the original cost which was very very low. So we're pleased with that.

During 2021, we sold the pillar mine for a gain of $45 million.

And those items get adjusted out along with others to arrive at or near that or adjusted income for the year of $74 million. Some of those other items include an $85 million gain on the change in fair value of equinox issued warrants, which expired on exercised in October 2021, and a $58 million gain on the change in fair value of gold.

Contracts, which roll off and September of this year.

Our balance sheet remains unchanged and strong with a little over $300 million in cash and $200 million in available credit at the end of the year and in addition, we have 400 and approximately $450 million of investments are fair value.

And we've.

We've received a couple of questions about why our current assets have increased so much that's primarily due to three things first of all we announced the sale of Mercedes in December of 2021. Those assets are held for sale and are all current including the property plants and equipment.

And in addition, the Solaris warrants, we hold to be able to acquire more shares of soliris at a low cost many of which expire in Q4 of 2022 are now included as current they were previously included this long term.

And finally, the third Big reason, our current assets have increased as the fair value of the Solaris.

Shares have gone up significantly there are about $11 a share Canadian at the end of September and they've gone up to $16 a share so that increases both the fair value of course of our investment there along with the value of the of the warrants.

Okay.

With with respect to our quarterly risk with quarterly results by mine.

Previously mentioned, we had a strong quarter with a 210000 ounces of production.

Led by loss feel of castle mountain and or a zona.

Cash cost for the year in Q4 were especially low Arizona as you can see in the middle column under cash costs.

And for the year end.

And finally, our all in sustaining costs for the quarter.

Were led by mosquito to $1000 in 'twenty three all in sustaining for the quarter.

As for our guidance for the year.

Christian Ross and relented been out engaging with stakeholders quite a bit.

Since we released it earlier this year. So I'll just highlight that along as with this year much of the performance is weighted into the second half of the year. So costs will be higher as you can see at the bottom page at the bottom of the page in the first half of the year, we expect cash costs of about $200 a year a little over for the first half.

A year dropping to just you know a little over a $1000 announced towards in the second half of the year and likewise, the all in sustaining costs will be higher in the first half are in the mid five hundreds per ounce and dropping to the higher 12, hundreds or just a little under 1300 announced in the second half of the year.

And with that I'll turn the discussion of the operations themselves over to Doug.

Thanks Pete.

So as Pete noted.

In 2021 several of our open pit mines were back end weighted for the gold production, we do see that in a few of the operations in 2022 as well.

Looking first at the USA and mesquite in Q4, we produced 66870 ounces.

For the year of 100 137500 ounces.

The majority of the ounces coming at the very end of the year.

Overall production will be similar in 2022 for mesquite.

And.

I will note that in 2021, we completed the.

Stripping campaign for the Brownie pit.

The ore that is almost entirely being processed ore placed on the leach pad in 2022.

And similarly for 2022 we're doing a $44 million the stripping campaign to open up a new phase of the Vista East pit the V pit.

And that will benefit us at the very end of 2022 and into 2023.

We're also carrying on with the $5 million exploration program at Mesquite, which looks at reserve resource to reserve conversion and Brownie Avista Eastern Rainbow pits.

And I do want to underscore that this mine is a consistent producer it will be doing its 5 million pounds in 2022, so a good a good asset.

I'm very consistent.

At Castle Mountain, our Q4 production was 8357 ounces, we're looking at 25 and there was 25000 ounces for the year.

And it will be higher in 2022 and that will reflect modifications to our stacking and irrigation practices that have been implemented during 2021 and also we will be introducing crushing and agglomeration in Q1.

That should increase our recoveries avoid some of our percolation issues that we've seen with certain rock types were blending has been very important and be able to point the way forward for improving our lead times and recoveries.

We are doing.

Leach pad expansion, which is well underway already and so $7 million price tag for that but that's that's well underway.

And we are doing the phase III studies and permitting that will support the expansion to 200000 ounces a year.

<unk> to submit the permit amendment is that will go in in Q1.

So moving on to Mexico.

At Las Villas in Q4, we produced 54733 ounces.

And the total for 2021 was 144000 ounces.

It will be higher in 2022 at 160 to 180000 ounces.

We'll reflect.

A continuous mode of operations.

We have ongoing development that was done in 2021 and the Las villas open pit and Guadalupe open pit, which is a major contributor for the open pit ore going to the leach pads now.

And also development too from the Burma Hall underground deposits, where we have a small amount of contribution as we continue with the development of the per model focused on getting into the zone, five and the central and higher grade portion of Burma Hall.

Our work in 2022 includes $20 million of sustaining and $47 million of non sustaining capital principally for open pit stripping underground development with $30 million of that being carried over from 2021, where we were either delayed or interrupted and development work.

In the middle of the year.

At the Mercedes mine total contribution attributable to equinox for 2020 . One is 31800 ounces and as noted when we have an agreement in place to sell the mine to Bear Creek for $100 million with a 2% MSR and just under 25 million shares and Bear Creek.

Transactions expected to close around the end of this quarter.

In the meantime, we continue with the development into two additional deposits at Mercedes.

And.

We will both take the cost but also the benefit of the up until the point, where we are.

Until the transaction closes.

Moving on to Brazil.

Or is Ona mine Q4 production was 41258 ounces.

And the total production for the year was 135000 ounces.

We will see slightly lower production in 2022 and that reflects.

Small drop in the.

Feed grade the greater the feet to the to the plant.

And we did set a new throughput record in Q4 was 922000 ounces being process, sorry, 922000 tons being processed.

We also set a record for mining in the quarter.

In 2022.

We're moving ahead with permitting on portal locations for the underground expansion.

We've also.

The results from drilling 21000 meters of drilling come in.

Part of that focused on the underground and also on other targets in the immediate area around the <unk> pit.

That will benefit us as we move ahead with design work for the underground.

We're also doing $8 million spend on infrastructure, including a new pebble crusher, which helps us to maintain our feed to the plant as we move into a higher proportion of.

Fresh rock.

And we continue drilling within the mine area and nearby targets, we have $8 million slated for exploration on that.

Our presenter in Q4, we produced 14499 ounces.

For a total of 60000 ounces in 2021.

We should see that slightly higher in 2022.

Lee from some higher grades coming from both some underground areas and open pit production.

This mine has been operating for.

Essentially over 30 years and recoveries are now around 89%.

Big part of our work has been the underground and additional exploration on surface.

And worked on reserve replacement and we continue with that.

Yeah.

The plant set a new production throughput record of 351000 tons processed.

And in 2022, we will be doing an exploration program that know not only works or explorers immediately around presenter, but within the presenter to Santa lose district.

Very exciting numerous targets in the greenstone belt and we will ultimately look at.

Developing.

<unk> and developing resources that could either go to <unk> <unk>, depending on the metallurgy and proximity to process plants.

At <unk>, our Q4 production was 13362 ounces.

And our total production for the year was 59000 ounces, we anticipate that that will be higher in 2022 at $70 to 80000 ounces in large part coming from our new geotechnical model that enables us to access higher grades and increase our overall production.

Coming from the open pit.

We did process more stockpile material in the fourth quarter, given that we had heavy rainfall lifting some access to our open pits.

And.

And this year, we will be doing an increase on the TSS capacity and also installing a thickener.

Thickener gives us the ability to do some water conservation and it also reduces the volume of tailings going to the TSS.

Water conservation because Rd, Amazon a drought stricken area and typically we are and we are always working to maintain as much water as we can available for processing throughout the year we.

We do have ample water, we have a very full water storage them and separate to that of course as you've noted.

We have lots of water in our TSS at the moment. So in response to new guidelines, we will be suspending the plant for the next two to three weeks, while we continue pumping.

Pumping and evaporating to reduce water levels in the TSS.

During that time, we continue with mining and stockpiling of ore and we anticipate that there'll be a marginal impact to us overall as we restart and process.

Or is that we've been putting to one side during this period.

I will note that there are no issues with the psf and.

All regular internal and external and independent expects inspections of the tests confirm this.

So moving onto sad to lose.

Commissioning is underway construction is on time and on budget. The total budget was 103.

For the construction Capex.

We are at 95% complete overall.

Crushing the crushing area is close to completion.

Commissioning is underway on the Leach circuit, Sag mill ball mill and secondary grinding areas.

First or will be introduced this month and first gold is targeted for late in March.

And we'll move on to greenstone work construction is underway.

This.

Project is being developed by economics of 60% Orion as 40%.

Total reserves the project of $5 5 million ounces and it does have significant additional exploration upside.

This is a conventional open pit.

With Leach CIP plan.

The project has excellent infrastructure, it's on the Trans Canada Highway and right next to the town of Charlton.

We have Craig community and first nations support for this project.

And our initial capital is 123 billion in the U S that includes $177 million in contingency about 14% of the initial capital and also includes a $125 million for our fleet in which we could lease to reduce the upfront cash spend it does exclude preproduction.

Revenue and 80% of our initial capital is Canadian dollar based.

I will note that 'twenty 'twenty around 29% of the Capex is now fixed by virtue of our contracts are in place and about 45% of the Capex is committed so far.

We have an overall construction period of two years and six months of commissioning first Gulfport is targeted for H one of 2024.

If you go over to page 14, you can look at some of the construction progress.

And I invite you to go to our website and you can see excellent photos for both greenstone and sad to lose in time lapse photography for Santa Lucia can see how things are progressing at those sites.

The engineering for greenstone is 85% complete and one of the reasons why we're able to be advancing this project. So well is I mean, it's kudos to the team. There are project readiness has been very good going from being on standby to bringing everything up to up to speed during 2021 very quickly.

But they're very experienced team. They know this project well they've been with the project for many years and been able to have everything ready to roll.

So phase one road building and tree clearing is complete.

<unk> access road and power lines are almost complete.

Psf work is ahead of schedule and.

And highway highway relocation work is actually ahead of schedule as well.

Site Civil works in concrete foundation work is underway.

And plant worth earthworks are about 70% complete.

So that's a big Derisking thing and being able to get ahead on our Earth works.

Temporary water treatment plant is already in operation and we have a 600 person lodging facility that's in use.

All principal and critical equipment have already been ordered so very good progress at greenstone kudos to the team.

I'm going to pass it back to Christian.

And I'll just conclude on a couple of slides here on on 15, just to reiterate we're in that execution phase right now and we've got about 600000 ounces of incremental growth to our existing roughly 700000 ounce.

Production base and as you can see the sequence nicely for Santa lose coming on stream in the next few weeks greenstone. The next two years, while CLO Castle Mountain and ore zone underground will slot it in due course.

In and around the end of the timing of greenstone. So we've got one of the best growth profiles, if not the best and certainly the mid tier to larger gold space right now it's all internal.

From a valuation perspective, we are still trading on a slightly discounted multiple some of our peers as you can see versus the intermediate senior peers.

We will continue over the next two years as we execute and deliver these projects on time on budget.

To claw way it moving up that valuation curve and at the moment, it's a quite a compelling valuation for a 1 million ounce producer over the next couple of years and we've got extremely good leverage to gold and obviously in this gold environment. We are pleased to.

Have that reserve and resource base internally already owned in our portfolio.

And on <unk> 16, just to reiterate what Pete touched on earlier, it's not a lot to say on the balance sheet and continues to be the same strong cash balance.

Available debt from our global banking group.

$1 billion in investments good cash flow coming from the operating mines, we've got almost $1 billion of liquidity investments right now and we've got a funded internal growth profile. So we think we're positioned extremely well the first half of this year slightly lower cash producing from our minds, but as we hit the second half of this year.

And with sad to lose ramping up and some of the Capex coming off we're pretty excited about where we are and where we're positioned right now and obviously the gold environment. So very supportive recently as well. So on 2017, just a highlight of the overall portfolio announced diversified growth focused in all of our jurisdictions. We are an Americas focused gold producer.

Keenan. Please here to take some questions on the back of a good year and ended the year last year in 2021.

Thank you Christian operator can you please remind people how to ask a question.

Certainly.

Once again to join the question queue. You May Press Star then one on your telephone keypad.

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We will pause for a moment as callers join the queue.

Thank you, while we're waiting I'll take a question from one of our very supportive shareholders on a day to frequently talked about its on its Ron basement Youtube channel.

<unk> is a great quarter can you provide any color on how operations are performing during the first few months of 2022 and do you think that you previously released guidance is on track conservative or aggressive.

Yeah.

Maybe I'll take that and Doug. Please jump in if you have any comments I mean, as we said in the first half of this year, a slightly lower production and higher cost we're tracking along those lines.

It's sort of an annual trend it seems for us the second half of the year tends to be a bit better and I don't see any difference this year and.

I think we can provide a little more granularity and clearer guidance. This year by bifurcated into two halves and we are tracking on plan. There in the first couple of months as we move forward.

Reiterate our guidance with this release today.

Another question from online I saw that <unk> recently increased cost again at their coating project, how do we know that green dot is going to be on budget.

So.

No.

The best way to look at greenstone is that.

The team has been working on moving the project forward for many years and as we got to the end of.

2019, the greenstone team.

We're doing an update of all aspects of the project and the Capex and that's when we stepped in and it's been a continuous.

Effort, when working with greenstone to revisit and track all the costs.

Project readiness is a key item we have.

Done.

Internal and external assessments of project readiness and I would say that greenstone is right in the correct position for project readiness. When we did our construction announcement and engineering advancements being that we're 85% now we are about 80% at the time of the announcement.

All those things mean that we were actually all the capex was being.

Done on the basis of well advanced work on the site and.

And being able to immediately start with early works on tree clearing camp construction water treatment plant.

And site infrastructure means that we can move very quickly to be able to.

Derisked, especially on the earthwork side of things around the plant.

And also on the Tms so.

I think it's in part.

The opportunity that we had to work with the team to do multiple revisions and make sure that everything was.

Hum.

Correct as we move towards a construction decision.

And also ensuring the readiness and engineering were at a sufficient level for this project.

And I think we've taken the opportunity to observe the market and obviously supply chain and inflation issues and we built that into our Capex estimates, 14% contingencies, a pretty healthy number relative to ive seen a lot of projects when they start in.

I think we've looked at the foreign exchange and we've looked at inflation and other things and we've also got the firm quotes in that we've been able to build into our into our estimates yeah.

And I think.

Also we benefit by being able to see what's happening on other projects to go back and make sure are we sure about what we're doing and every single time, we see anything happen on any other project that question circulates around we double check and make sure that we have not.

Miss something in.

The team at <unk>.

At greenstone is very responsive in regards to double checking on everything and being proactive when we see potential problems.

Perfect. Thank you operator, we'll now take a few questions from the phone lines.

Certainly the next question comes from Ryan Thompson with BMO. Please go ahead.

Hey, guys. Thanks for the update just a couple of questions for me.

First one is on the corporate side of things.

Obviously, youre going to be relying on cash from operation as you got through this capital intensive period building greenstone.

Is there any thoughts or discussion of potentially hedging out some of your your gold over the next.

Little while and then the second question is more just on the operation you mentioned that mosquito.

A lot of <unk>.

Stripping and so ongoing going on and Youre also doing some exploration to converge.

Our resources potentially into reserves would there be any sort of permitting associated with trying to bring in any of these new pets any sort of color you can provide on that would be helpful. As well. Thanks.

It's Peter here I'll answer your first question on hedging gold, we do not currently plan to hedge any gold.

To provide.

Going forward, even though we're in a construction period.

As we've mentioned before we feel like we're well funded.

Heading forward with their balance sheet liquidity, so no plans to hedge gold.

Yeah, Ryan we do look at other things like the other currencies or we may look at fuel and that but Colby.

<unk> being our primary product than what most people are buying us where we do keep that is.

Open to the spot market as possible and we do believe that we've got a strong balance sheet and other leavers as Pete said, so that's not in focus right now.

In regards to mesquite, there's always permitting underway.

<unk> on what you are looking at whether its a leach pad expansion or if you're looking at doing a drill program. There's always some aspect of permitting thats underway.

I'm not sure if that answers answers your question, but it is it is part of the normal operating practice of escape.

So.

I know you have a pretty big resource base, there and you mentioned.

Trying to convert some of that into reserves would be like.

Sort of longer permitting process to accomplish that or sort of normal normal course sort of business.

Yes, I mean, essentially if we were looking at.

Large or wholesale changes so obviously it would be a longer a longer thing, but when you're when you're looking for.

Small things and let's let's say exploration programs or.

And not so small leach pad expansion.

I'll say, a shorter or more modest permitting period, but if you were looking for a wholesale change.

Obviously, it's going to be a longer term timeframe.

But that's all being managed very well at the site.

I think Ryan are a lot of the reserve and resource is sitting within and around our pits.

That's more of the routine regular permitting and I think we probably actually updated permitting.

A few times, a year and a sense on various different matters and I think across the highway and that stuff is definitely the longer term permitting which is a multi year plan. So I think a lot of stuff around the periphery and in the current resource sitting around as kind of more I'm never going to call permitting routine, but closer to routine it's across the highway and that thats, probably the multiyear plan.

Okay.

That's that's helpful and that's all I had thanks guys.

The next question comes from Kerry Smith of Haywood Securities. Please go ahead.

Thanks, Operator Christian.

If you submit the EIA Amendment for Castle Mountain Phase two sometime in March then are you still feeling like it's going to be a three year permitting cycle to get that approved.

Yes, I think we still indicate three years I mean, if all goes well it could be assured as two years, but I think it's better to aim towards three years because of the sequencing of our projects and with greenstone being give or take two years away from being completed.

Three years is probably a good amount of time.

We've had good feedback good dialogue I think the team has been able to adapt that permitting the water issue. They have been working with on our side and they've found water sources that they need so the permitting will be the key focus over the next two years.

We think minimum two years, but it could be three years.

Okay.

And maybe Doug can answer, but with RDM, it's always kind of a dry area and you're always looking for water and unfortunately youre discharging now because you've got too much is there any thought that maybe you should build a supplemental sort of water containment area. Just in case, there's ever happens again.

I think we already have a I think it's three 4 million cubic meters of water storage Tam on site. So we already won at the end of the year, we were looking at our water balance and figuring that.

For two years without any additional range so.

No you know this this is exceptional as you'll have noted in Brazil they've had.

Rains in several areas that typically don't get.

As much rain as we've been having so.

It's a we were already pumping and evaporating water out of the TSS.

We've already been working on plans to be able to conserve water I mean, that's why we're putting in the part of the reason we're putting in the thickener and at the same time, we understand this change in the regulations that came in so.

Really it just hit me.

Is that not just pumping the excess water all of the TSS, but also not adding more from our process plant during that period. So we will do that will bring it down.

Get prepared just to bring it back online and then.

Work on processing.

The orange catching back up.

And I think Terry in terms of Big picture I think.

Water and emissions are two areas and it's got an ESG focus, but two areas that we as a business are definitely focusing on because we have areas of dry dry areas and then we have these areas that have these excessive rains in.

We made some proactive measures to buy Evaporators and things like that last year, and we'll continue to look at water and water treatment as well as something that we put in place in horizontal we put the treatment planning in that so it'll be an evolving thing where we continue to look at our water excesses and deficiencies and that's the water balance and tailings side of things isn't it.

An initiative that we've been doing for over a year here.

Kelly Wojciech leads that.

MS 30, well over 30 years experience in dealing with TSS.

That's part of the work that we do on an ongoing basis to try to conserve water, but also ultimately to reduce our footprint in this.

Thickener was one of the first actions that came out of that and we continue doing test work and looking at how we can improve things overall.

In part driven by ESG, but also it's just sensible for us to reduce our TSS footprint and conserve more water.

Okay, Okay, and I know you've talked about not starting.

And they'll construction that Las Vegas, Intel greenstone completed in terms of its construction cycle.

There a scenario where you perhaps could start the mill construction earlier than that or is that kind of the plan now.

Yeah, I think I'd like everyone to assume that's the base plan.

Theres always an opportunity to start a bit earlier, but I.

I think prudence says that we should be from a stability perspective capital perspective, and all that should be planning for it after greenstone we.

We will look at scenarios to keep our optionality as open as possible, but I do want analysts to not be forecasting and a start of construction. There in the next six months kind of thing no I want it to be couple of years out that.

If we bring it forward that'll be a good news story and we will update the market at that time, but at the moment I think it's best to plan for about two years from now.

Okay.

Have you.

Have you sensed maybe at your people at site sensed any change in the attitude.

Of the communities now that they're back to work for better for worse things.

Similar to how they were when they got back to work do you think they're better do you sense. It may be getting a bit disgruntled about things and just trying to just gauge how how that has gone.

I think everybody is happy to be working.

Uh huh.

And when when we get through the cut through to the last.

Two issues and everybody is back at work and.

That's what they wanted to be doing and so.

General attitude site I'd say, that's my understanding is that.

It's better when everybody is.

Busy working.

And.

Our team management team at the site.

They're they're continuing to do everything they can to be in.

Interacting with the communities on a more day to day basis, not one we have.

The compensation of our crisis, but just about everything.

I think we're seeing more dealing with routine grievances, even if they may get elevated to the level that they shouldnt be but we're more dealing with day to day routine grievances on a regular basis in a more constructive manner building partnerships on things outside of just mining and good things in the community.

I think as Doug said, we heard from the leaders and we have hired from the workforce effectively they want to be operating and working so that's great that we're all aligned on that front and of course part of it is that with.

And COVID-19 restrictions easing off we're able to just interact face to face, it's so much better than having a more stilted conversations through through zoom.

Messaging or whatever.

We've seen COVID-19 come down very significantly we have it might be zero people off in California, right now for many absenteeism, Mexico has come down very significantly in the last couple of weeks for sure Brazil still got some fluids head around and I think it's a little bit higher than the other two countries in Canada, we've managed it very well as well so.

We're seeing very little disruption and I agree, we're starting to see more travel and face to face meetings happening, which is very positive for our business and we want to get you guys as analysts and some investors to go visit sign of losing greenstone this year to.

See the great things that are happening there.

Okay, Great. That's all my questions. Thank you.

Since we're talking about last few months I'm going to take a question from online.

So you pushed the CIL plant at a little bit, which will obviously bring costs down, but do you see costs coming down in the interim as you Recollect Burma Hall, and Guadalupe what will it take to get lots you look a bit more economical.

Yes Guadalupe.

<unk>.

Has been mostly stripping it has been contributing in.

Some ore, but it really.

Contributed in a meaningful way in the latter part of 2021 so.

That brings in some higher grade ore.

Going to the Leach pad.

But nonetheless higher grade ore, so that helps and Burma Hall underground development.

Initial development is establishing all of the infrastructure.

We get a small contribution from it.

No we were delayed in being able to do that so as we get into <unk>.

Burma Hall, more we'll end up with higher grades and that will help.

Bring more ounces to the pad, we'd love for <unk> to be there to be processing it but in the meantime, we will segregate it on the pad and be able to reprocess. It at a later day through the through the CIL and I think we're running various optimizations and mine plans that now give it you have the clarity that we're not planning to build to suit.

Oh for the next two years, we can actually plan to bring forward some high grade and not stock pilot to put through a CIL in six months time or whatever we can actually plan to make it more cash generative as well as hopefully lower costs along the way.

I'd say thats going to be gradual changes the step change comes when you get a CIL plant in place.

Thank you operator, well go to the phone lines. Please.

Certainly the next question comes from Mike Parkin of National Bank. Please go ahead.

Hi, guys. Thanks for taking my question you.

You mentioned, you're adding agglomeration I think you said that castle mountain when could we expect that to.

Kind of kick in in terms of results.

Well, we're going to be doing the crushing and agglomeration starting in the tail end of Q1 and given the heap Leach youll start to see the impact in Q2.

And is that factored into guidance.

Yes.

Okay.

<unk>.

Then in terms of.

When do you have to kind of make a go no go decision on leasing the fleet for greenstone.

Yes, Hey, Mike its Peter.

We've already primarily made that decision during the construction period and the first year or two of operations, we're going to be leasing equipment, and then as greenstone is cash generative and self financing will switch to purchasing it.

Okay.

And then.

One last one for me.

In terms of greenstone.

Where are you thinking you'll have the mill building and close by.

And closed.

I'd have flat again.

I wish that you'll kind of get back to you on that one sure.

Sure, Yes, right and then maybe can pass that on that'd be appreciated. Thanks, very much but I think one of the key things Mike as all the concrete works, we expect to have done the engineering by call. It spring. This year. This summer is a big summer earthworks are almost done.

Concrete pads down there have the steel already ordered and coming prices are fixed which is an important piece to that and the plan is to be erecting a number of these buildings. So working indoors next winter so.

We will get you the exact answer but I would expect most of that to be done by the fall. So that were working indoors next winter, if we need to double shift because it worked in single shifts that will be in the plans and we'll be working on that with the team and we don't mentioned that much but the team in charge of greenstone, our experienced cold weather builders as well so.

Of course factor all that into their overall planning and have experience with it yet.

Okay. That's good news that that's what I was hoping to hear thanks very much.

The next question comes from Lawrence Danny Private Investor. Please go ahead.

Good morning, gentlemen, thanks for all your hard work I know.

As mentioned you are in the capital.

Intensive phase investing in building and developing mines when do you think it's conceivable.

No.

Why is that we might see dividends are we looking at a couple of years.

Yeah. Good question, it's something that certainly we keep on our radar and focus as move forward right now the best use of our capital is expanding these assets as you've sort of acknowledged there and the plan will be to get greenstone up and running and I think on the back of greenstone running in call it a quarter or two and getting confidence obviously in the.

The cash flows coming in that will give us the flexibility then to be considering that dividend type policy and potentially a return of capital to shareholders. As we continue to grow I think at that stage of this business will be.

Really diversified and have a good asset base and potentially a little excess capital to allow us to start returning it so.

Ramping up to 2020.

Cute.

24.

With clarity on that.

What's that.

At some point around the end of 'twenty four as we go through that budget phase for 2025.

Gotcha, Thanks very much.

I've got a number of questions coming talking about production growth and the reduction in all in sustaining costs. So you talked about the incremental growth from your existing assets.

Will we start to see all in sustaining costs come down as those projects come online when do you expect to hit that magic million ounce target.

And what will your all in sustaining costs look like when you get there.

Well, it's a number of questions, let me try and knock those off in order.

So basically I mean, even as we've indicated in our guidance. We do expect all in sustaining cost to come down this year and I think it's a good example of how we think things will progress in a sense that Santa Lucia is coming on and it'll be one of our lower cost assets. It replaces some production of our displaces some production of higher cost assets I think greenstone will be the next phase of lower cost production.

And again, so getting towards that million ounces. The run rate of 1 million ounces might be hit at the end of 2024. It might be 25 is screen stores ramping up there are.

Our cost I don't have an exact number and that's quite a big part in the future but.

Moving towards.

<unk> $1100 Mark maybe as.

As a reasonable estimate for this stage, you don't give or take as.

As we get towards that million ounces than we are.

Diversify the portfolio into those longer life, better quality lower cost assets.

Thank you well go back to the phone lines. Please.

The next question comes from Robert <unk>, a private Investor. Please go ahead.

Thank you. Thank you very much I have a quick question on your portfolio of assets. The Solaris thing Ied and Bear Creek mining is there any thought given to either to start selling these things while keeping them longer time, I know Solaris has been very very successful.

E D gold looks very promising I know very little about the bear Creek.

I know a price that we paid for it seems inexpensive but the stock doesn't seem to be performing is there any thought to either increasing these positions, but decreasing them or keeping them.

Sure I'll try and answer those three questions there.

Starting with Soliris.

<unk> core.

Holding that we basically helped generate and create a few years back it's been a very successful as you mentioned and we still have roughly a $300 million stake there were supported with Richard work of that company I think between the two of US we own it might be up to 50% of the shares.

It's a world class porphyry deposits that we think is of interest to world class Global copper major companies and we'd like to be supportive of that company.

It's likely to be acquired we think in the next 12 to 24 months by a larger company that has the resources to develop it rather than a single asset junior sing a smaller junior company.

So we will be supportive of that and I think so in due course, there probably will be a monetization event, there, but we'd like to be a supporter of us Richard takes it forward and develop those plans.

In terms of I 80, I think slightly different it's the gold it's in Nevada UN has done a wonderful job of pulling those assets together in a very clever deal with Barrick that.

Potentially has the chance to produce give or take 400000 ounce a year in due course, there is some work to be done there in terms of developing that portfolio refurbishing our plant in.

Bringing together the cohesive plan, but we like owning 25% of Nevada based gold portfolio in our backyard Thats only a drive down the road. So that one I see is maybe a little bit longer term and a little more strategic so.

I think that once we will keep an eye on and be supportive oven, maybe want to own more of it later, but.

For now, we'll keep watching it and supporting it and then with Bear Creek, we don't even own. It. So I think it's a little premature to speculate.

Speculate on that but what we do know is it's a massive.

Project Thats actually got high leverage to silver, obviously precious metals, which obviously, we're very keen on.

It's not an asset probably for our portfolio, but we're very keen to be a shareholder of that and we've seen that.

That get higher and higher profile. They continue to move it forward slowly and I think having.

Having a producing asset in our portfolio in a more leveraged an ability to actually finance. It move it forward. So I think that one we just need some time to get to grips with them.

But we're very happy to be a call it a minority shareholder in that one.

Thank you very much.

Thanks Christian so at the moment, it's our last question online.

Good growth to date, obviously has come primarily predominantly through mergers and acquisition.

Got the assets that you need to get to that target are you considering any additional M&A, particularly around the greenstone area was that there are some really great junior miner.

Yes, I mean, M&A is definitely taking a little bit of a back seat for US now we're focused on delivering and executing on these construction projects.

Our heads are down and we're really focused on that at the moment. So we're not really looking hard for M&A were always an opportunistic group if the right opportunity exists there, but something that we always have to weigh up when we're looking at something like that specific type of example is we've got so much.

Potential underground and potentially a long strike and some open pit deposits down the road from that we already have the licenses on that really to add another license. When we've got some exciting stuff that we already own and we paid for.

It's probably more economical to actually go and drill and evolve those deposits that we already own around our sites and Theres a lot of upside around greenstone in particular, but I think actually theres, probably four or five other sites that have a very similar scenario, where the best capital spend is actually on our own sites around our mines, that's how you add value rather than.

Paying more.

Multi millions of dollars for.

Other early stage deposits, where I think our exploration team has identified a.

A really exciting sort of three year plan here to continue to add ounces around our mind, including greenstone.

Perfect. Thank you at the moment there are no further questions. The question do you have any closing remarks.

No.

I want to say thanks again for the support we've had a great 2018 to 2020 of the share price was a little weaker in 2021 and for reasons, we all know and I think hopefully that's behind US now and it's an exciting platform here with I think some of the most highly leveraged gross to the precious metals and gold space that youre going to find out there and.

We've got a strong balance sheet to execute and deliver upon our plans. So I think that's going to be exciting next couple of years and our growth portfolio.

Thank you very much for joining us today, operator, you can now close the conference call.

Thank you. This concludes today's conference call you may disconnect. Your lines. Thank you for participating and have a pleasant day.

Yeah.

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Yes.

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Okay.

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