Q1 2022 SSR Mining Inc Earnings Call
Hello, everyone and welcome to SSR Mining's first quarter 2022 conference call. This call is being recorded.
At this time for opening remarks, and introductions I would like to turn the call over to Alex <unk> from SSR mining.
Thank you operator, and Hello, everyone. Thank you for joining us its our mining's first quarter 2022 conference call during which we'll provide an update on our business and a review of our financial performance.
Our first quarter of 2022 consolidated financial statements had been presented in accordance with U S. GAAP.
These financial statements have been filed on Edgar and SEDAR and are also available on our website.
To accompany our call Theres, an online webcast and youll find the information to access the webcast in our news release relating to this call.
Please note that all figures discussed during the call are in U S dollars unless otherwise indicated.
Today's discussion will include forward looking statements.
Read the disclosures in the relevant documents.
Joining us on the call today are rod Antal, President and CEO , Allison White, CFO and Stewart Beckman C. O O now I will turn the call over to Rod for his opening remarks.
Okay.
Thanks, Alex and Hello, everyone and thank you for joining us Tonight.
First quarter of 2022.
Okay.
You can buy all science.
Wanted to take this opportunity to recognize and thank you everyone.
We'll go next tranches, enabling the transition to become a.
Paula.
Already this year.
We released yarn overall three year production guidance.
As a function of that transition.
We released technical reports.
It's about producing assets, which led to a material increase in mineral reserves.
Yeah.
Nice reports not only supported.
Lee Gardens, but also outlined you. Please pass my Chinese production platform any SaaS.
Any ounces annually.
The remainder of the decade.
Terrific result.
The ongoing exploration efforts across the business and did not make it into.
Refinish.
The solid long term production will support our goals of maintaining excellent free cash flow generation reinvestment in high yielding projects in our business and capital returns going forward.
And just out of the we increased dividend by 40% further reinforcing our capital.
In mens.
In addition during the call.
We released our 2021 ESG.
We reported.
We announced the increase of <unk> project.
Subsequent to the quarter, we have caused a target called acquisition.
And finally, we received board approval to a degree.
60%.
CTG development project shrink to the stage.
Additionally, an impressive list of achievements in a short period of time.
Yes, it's all going into our operating results once again proud Tonight, our continued track record of the outperformance through delivering on our commitments.
The prelim production series.
3000 ounces and all in sustaining cost of a thousand and.
$93 per ounce was in line with our expectations.
These results included a record quarter from CB, which produced 53000 ounces of gold and all in sustaining cost of $596 per ounce.
Ceb's outperformance.
Some of the inflationary impacts being Canada.
Particularly with respect to fuel and consumables coupled.
Coupled with our previous commentary and our full year production second half weighted we remained well positioned to deliver against our full year guidance.
<unk> hundred to 790000 ounces of gold in the OLED science sustaining cost of 928 to 11.
$80 an ounce.
Overall, we're off to a really strong start.
Moving on to slide four in.
And on this slide I want to highlight.
As chief performance and priorities.
<unk> has long been a core value and focus for instance is it certainly on the teens the success of our business.
We released our full annual ESG and sustainability report.
We talked about a number of achievements during 2021, and some new initiatives for our company.
During 2021 amongst other things with regard to services to establish an action plan to support that can be met our net zero greenhouse gas emissions by 20 feet.
In 2022, we will complete the rollout about E S and ask any grants management systems.
With full implementation expected issue. Furthermore, we will sleep third party closet reviews across the operating assets to ensure a positive post monte's future for our stakeholders.
And are also developing once Jewish strategy as we seek to continually reduce our environmental.
Going forward.
So moving on to slide number five.
Second amendment, a whole lot of outperformance across key metrics and the impressive returns shale holders have enjoyed as a result.
What.
We realized a free cash flow, 12%, well exceeding our paper and a strong performance translated at peer leading capital returns.
Sequentially and as I've mentioned, we have increased that by stupid about 40% to 28 since annually.
And continue to evaluate further shape back.
I bet programs angle further dividend increases.
On top of our operating performance, we have delivered material value creation across the portfolio through operational improvement initiatives project development studies and exploration success.
This includes the recently announced reserve price outage and <unk> gap hanging wall.
Consolidated outcome of all the new Technical report provides an impressive increase of tuna give me any options and production against the prior technical reports.
We feel like we're a long way from thing, but Don will satisfy.
We have a number of new growth projects, maybe along through the various stages of development and exploration continues across each operation.
Number of exciting targets.
The operational performance and value creation and translate it directly to ashamed.
As we have outperformed our peers and the gtx by more than 70% over the last 12 months.
A catalyst rich year. It we fully expect this to continue.
I'll speak to some of the catalysts on the next slide as well as some of our key achievements in the year to date.
As noted we had a busy start to 2022, delivering a multitude of positive milestones.
Looking ahead, we continue to focus on our operational excellence, including supply chain management initiatives aimed at limiting the impacts of inflation supply chain weaknesses and global disruptions on our operations.
It is unfortunate that we don't have any large capital projects on the books at the moment as they seem to be most price to material cost increases.
As you are aware our capital projects are relatively modest in terms of capital cost.
Just some of the best returns in the industry.
We continue to progress towards first production in 2023.
And the C D and paid 21 released earlier this year each featured at a $1 2 million ounces of gold production and just 60 not being in development Capex and.
That production number.
With continued exploration success.
We have also approved so you'd see pricing to move into PFS study.
The city empty highlighted another beaten the ounces gold production for approximately $220 million in Capex to this stage vacate in 2020.
And just moving onto the next slide on our first quarter results in more detail.
A few of the highlights that are relevant to consider for the quarter.
Operationally another strong quarter with 174000 ounces of gold.
Production in that at all in sustaining costs of $1093 cramps financially, we delivered adjusted EPS of <unk> sales in the quarter.
As previously thought at our first quarter cash flows were impacted by timing and increased textbook and royalty payments.
Right that we should leave it operating cash flow of $62 million and.
Free cash flow of 28.
<unk>.
We don't see an overall three year production guidance showcasing stable production.
Shanghai is stable production.
100000 ounces and increased our quarterly dividend payments by 40%.
We also have at.
At long term production platform with the outside attending reports demonstrating.
Our ability to maintain a 700000 ounce.
By sponsored a reminder.
We continued with a positive although our rationalization with the site.
Now realizing out of $240 million total consideration.
Non core assets over the last 12 months and farmland subsequent to the quarter.
The acquisition of <unk>, which expands our exploration for Saskatchewan.
31000 hectares.
Moving on to slide eight.
As we continue through 2022 east worth highlighting our impressive track record of growth and execution.
As noted.
Following a solid first quarter.
We remain well on track against our full year guidance.
Thank you our production.
Second half weighted as marigolds performance improves, especially in Florida.
Overall, we stopped to eat with my maintenance on the back of the house the positive views in Iraq, thank position to meet or exceed the commitments.
Commitments.
With that I'll now turn the call over to Allison who's going to discuss our financial.
Financial performance in detail, starting with slide number nine.
Thanks, Scott and Hello, everyone.
You can see 2020.
Absolutely.
Our operating and financial results.
In the first quarter, we produced nearly 174000 gold equivalent ounces in line with our expectation for a back half weighted production profile.
Meeting our guidance.
<unk> equivalent sales of nearly 180000 ounces were supported by higher silver sales.
As sales deferred.
2021.
It's quite right.
Revenue was $335 million supported by strong first quarter commodity.
Net income for the quarter was 69 million or <unk> 31.
Our diluted share and adjusted attributable net income.
66 million or <unk> 30 per diluted share.
First quarter operating cash flow of 62 million and free cash flow of 28 million were both impacted by timing and increased tax and royalty payment during the quarter as previously noted.
Yeah.
We continue to anticipate second half weighted free cash flow profile and are keeping our eye on inflationary pressures.
Trust.
Well, we have that are maintained low cost we acknowledge the headwinds.
We've previously talked about pervasive inflationary pressures and how our continuous improvement program has helped.
Some of the headwinds across the globe.
There was improvement efforts continue in earnest to help offset what we're experiencing and price escalation.
We've also previously communicated that inflation and devaluation tended to offset each other and we are now seeing that inflation is outpacing devaluation.
10% to 12%, that's causing additional cost pressures for us.
Given diesel reagents and consumables categories.
Categories, where we're experiencing the most common question.
We anticipate that this trend of rising cost will be something that will continue in the future.
We acknowledge that this is a headwind for us and we will aggressively and proactively worked to mitigate and will continue to update on any changes in this space as the year progressed.
On the right side of slide nine I'd like to provide some commentary on a reported 30.
And diluted earnings per share that is calculated based on the company's definition of adjusted attributable net income per share.
We start with our attributable net income of 31 cents per share and then make adjustments to exclude the after tax impacts.
Items that are not reflective of the company's ongoing operations.
To arrive at <unk> 30, and adjusted attributable diluted earnings per share.
Each of those items as outlined in the waterfall chart on the right side.
Admittedly the impacts were relatively muted this quarter.
We had minor adjustment for transaction and integration expenses that were associated with our SEC transit transaction that was completed earlier this year.
And stemming from the loss of SSR mining foreign private issuer status.
Additional minor impacts included are for foreign exchange as the Argentinian peso and the Turkish lira devalued against the US dollar in the quarter.
And finally, a minor adjustment for the mark to market of our marketable securities portfolio.
The most notable discussion here involve an item that is no longer included in our adjusted attributable net income for the fair value adjustment.
As we noted in February it's an item that we are no longer adjusting for and is now incorporated into the operating cost profile at share player.
Turning to slide 10, we can talk about <unk> financial position.
At the end of the quarter the company maintained the cash and cash equivalent balance of over 1 billion. While net cash is nearly 700 million.
With that strong cash position in mind, I would like to reiterate our priorities with respect to capital allocation within the business.
First and foremost we will continue to reinvest in growth, including our exceptionally high return our niche in situ project, which will account for approximately $300 million and total growth capital through 2025.
Next we are committed to maintaining a robust balance sheet to weather volatility in the commodity price environment and ensure all of our capital commitment that's servicing requirement and base dividend payments are fully funded even in the event.
Central downturn in the gold price.
Third we remain committed to capital return.
As evidenced by the nearly 200 million, we returned to our CIB and base dividend in 2021.
Already this year, we have increased our base dividend by 40% to 28 annually and we will continue to evaluate supplemental returns to our shareholders in 2022.
Including another share buyback program <unk>, a further dividend increase.
Most importantly, we will continue to be disciplined in our approach to these initiatives.
Ensuring our return appropriately reflect our company's strong free cash flow generation.
And with this I'll pass it over just due for an operational update starting on slide 12.
Thanks, Allison as usual I'll start with a high twos to this.
The last call Rob talked about the fatality that occurred at Q1 <unk>.
As <unk> grown the business and actions arising from these.
From this incident.
<unk> all parts of that business.
After a record low.
Total recordable injury frequency rate in 2021 of $2 47, we had an increase in Q1 2022, which we are addressing.
Our ongoing improvement programs in all elements of ESG continued and Rod has already discussed as it relates to that updated sustainability report safe.
Safety and the care for our teams communities and the environment, our core values and we believe the wholesale fundamental and foundational to business performance.
Before I dive into the detail of the quarterly results for each asset I'd like to comment on our consolidated production probably default from last quarter's technical reports, which you see on slide 12.
The key message in this is the mine plans establish a baseline production platforms, where we see clear opportunity to deliver plus 700000 ounces of gold equivalent production.
Through 2030.
This solid foundation, coupled with the abundant targets being progressed across the portfolio.
This is just a baseline that we expect to billable.
As mentioned before we had a very active start to the year with production from CB and so forth throughput records at Chipotle.
While the results were somewhat softer at Marigold and Puna, we expect that both months will demonstrate much strongest second quarters and second hubs remain on track for full year guidance of 700 to 790000 gold equivalent ounces at an IOC of 1100 'twenty to 1100.
Those could go with good one ounce, which remains weighted to the second half of the year, particularly due to the expectations the big fourth quarter at Marigold.
Yeah.
We manage the things that are right now control and so all the sites are focused on operational excellence, which includes but productivity improvement and cost control.
Some of the improvements we've built into our plans and budgets for 2022, hoping to offset some of the inflationary pressures.
<unk> transformation project, which started in 2021 is gaining momentum and has put us in a better position to be able to deal with the supply chain shifts that are now plaguing the industry as a whole world.
Please jump to slide <unk>, we can talk about chips.
Yes.
The truth of the sulfide plant delivered another record quarterly throughput of 645000 tons and flotation circuit started to ramp up production.
Likewise, all reconciliation is having a negative impact on production, but we expect this to improve.
Scheduled major autoclave shutdown with re bricking sites courses with started subsequent to the quarter on April .
The shutdown was successfully completed within schedule and with no nasty surprises tradeoffs must go to the chip.
<unk>.
As you recall the flotation plant ramp up again following the receipt of final operating tenants very late December .
The flight plan allows us to take advantage of the latent capacity in the sulfide plant and increased overall plant throughput. It will all seinfeld to reduce consumption, which in turn helps offset some of the inflationary pressures, we see with respect to consumables.
We continued development work outage as we progress towards first gold production in 2023 as highlighted in the city and paid the last technical report.
She is expected to contribute more than one 2 million ounces gold production for an initial capital spend of about $69 million. Since 2017, we spent a total of $18 $5 million on exploration fueling outage translating into an impressive discovery cost up to six.
It's an ounce permitting is the critical path on the development of outage and it remains on track with E.
Receipts for the startup area.
The other automotive neither the chip demand is FC two project will continue don't see.
Through the quarter and the board approved the project proceed to pre feasibility study level. This is another heartened low capital intensity brownfield projects that a company with say to expect to deliver approximately 1 million ounces of production for $220 million of capital and unimpressive Wow.
<unk> see.
<unk> continues to progress towards first production targets in 2025.
I'm, sorry for that and also talk about Marigold.
As expected Marigold had a soft start to the year with more unscheduled lead driving quarterly production of 34000 ounces with about 46000 ounces being stepped bleach timing of the hate blades placements, along with Fatone, north pits, which slowed leach kinetics.
Cause the increase to go inventory in the core.
Sure.
Drawdown of the inventory along with higher grade ore later in the year, resulting in a strong finish to 2022 landing production with the guidance. We had guided that Merry go would be back half weighted.
Where to drill and the deepwater Ingo was continued in the water titled rolled out rights.
This will provide us access to high grade ores from the Max in the coming months.
We are taking a more structured approach to building out marigold future, which we frame through the Marigold District Master plan.
Work on the many components this ramped up during the quarter, we expect the ounces to reserves resources and reserves at the end of this year and 2023 will issue an updated technical report to communicate our plans for the next steps and the ongoing development of Marigold our.
Our aggressive exploration and resource definition program continued.
Continued in the quarter with drilling at new Millennium, we are targeting additional full price to the existing pits.
So of course.
As well as concurrently drilling Buffalo Valley in Trenton Canyon to define this resource development pathways for these deposits.
Pricing trained drove more than 20000 meters in the quarter and he's in the process of increasing the number of exploration drills from four six we are seeing some exciting results and we will share them as we consolidate programs.
And they have such as data talk about CB.
<unk> delivered a record quarter production driven by efficiently hold high grades nearly 18 grams a tonne.
I am very pleased that the continuous improvement programs at Seabee are also really starting to call. It reflected an improved operational performance led to record quarterly production rates.
I laid out 150 tons per day.
This reinforces the base assumption side and see these as guy sitting here.
And supports <unk> potential as a plus 120000 ounce producer going forward. We believe that there is further upside to see these operational performance, which are obviously changing with some vigor.
The grades Soho at times, but we had slowed that mill down to ensure optimal gold recoveries. We ended Q1 with a modest stockpile of ore in front of the mill that will be prices in this quarter.
Exploration at CBS also ramping up we currently have two drills.
Drilling shine prospect from surface and for exploration drills underground at Sam's club.
<unk>, it's Jeff.
Mine haulage road between CPE plant site and the Central mine.
We have set.
We expect to see they will return closer to full year budgeted grades for the remainder of 2022.
Yeah.
We have developed an exploration China and are now drilling to try and define and further further extension to the <unk> side.
<unk> is now tracking to the upper end of its 2022 production guidance.
And before I finish just final on Seabee, we've just completed the Australia restocking over the months of 2022, which went extremely well. So we said for the rest the year.
Now, let's jump to slide 16, and I'll talk about sooner.
Turning to produce one 3 million ounces of silver in the first quarter as the operations impacted by heavy rains, which limited access to higher grade ore at the bottom of the pit, forcing us to prices lower grade ore scheduled for later in the year.
Weather has cooperated better in the second quarter and the mine remains well on track to reach its full year guidance.
China is a fantastic continuous improvement culture and their operating metrics continued to improve building on the new guy slot production level for Tom.
Tons per day.
But all of our assets, we are seeing challenges with respect to fly should further exacerbated by challenges with TD tie side.
And all of the sites have been improving discrete increases in consumables and spares inventories to reduce operational risk.
To mitigate the potential impact of slower and potential disruptions to supply chains.
The team from <unk> supply chain transformation program has been supporting this week.
Please jump to 17 slice of it today.
Okay.
And lastly, before we turn it over for questions I wanted to follow up some of the other exploration initiatives in progress during the quarter and Cherokee we continue to drill at outage as we target further resource growth and conversion as well as naeem on drilling around the mine chip repeats drilling at Bob dairy target to the SaaS.
Chip.
Summer months and we are also preparing to start up some a drilling campaign at our Greenfield Copper Hill project in the Black Sea region.
In the Americas NIM on drilling continues at Marigold as I've already noted and we are also progressing some exploration into great. Tyson that included staking about seven to 800 hectares of new clients in Nevada in the quarter.
Also completed some soil geochemistry programs that at toy.
Green leases in Nevada, with some interesting results of the Geos.
And CV resource development continues at the gap hanging wall at the center of Honeywell, while we also.
Our progress to daily drilling programs at centrally Shine all key west and the judges since the start of the year.
Aimed to complete the work to define that.
Mineral resource centre, a hanging wall.
Coal price into an update on our safety Technical report.
In 2023.
The exploration team also completed a winter drilling program at our <unk> exploration project in Saskatchewan.
We'll share the results of the program when the analysis in Q I could say is completed and can pull out.
Tuna.
Preparing great stopped the drill testing of target's after a long hiatus.
The exploration team at pretty excited and we've just added a second drill to the program to accelerate testing at some point prospective targets.
<unk> achieved over the last few months.
Okay.
Finally, I am very proud of the operations and development teams I havent diverse skill set with real depth, we want.
One of the few companies with proven contemporary track record of successfully exploring defining constructing all Friday months. Please.
Same as molded capable of dealing with the operating challenges of 2022 and to concurrently deliver on our ambitious plans. Thank you very much and back to raw data funds.
Alright, Thanks Joon, Thanks, Allison as you've heard there's certainly a lot going on.
We've had a great start to the <unk>.
A lot of the external challenges and are facing the industry.
We remain on track to deliver our full year production and cost covenants have a number of potentially positive catalysts.
Including the advancement of key growth initiatives and updates from our expanded exploration programs across all of it.
So with that I'm going to hand, the call over to the operator for questions and answers. Thank you very much.
Thank you Mr and Paul we will now begin the question and answer session to join the question queue. You May Press Star then one on your telephone keypad.
You were here at Cowen acknowledging your request.
Are you seeing as speakers.
Please pickup your handset before pressing any key.
To withdraw your question. Please press Star then two.
We will pause for a moment color join the queue.
The first question is from Cosmos <unk> with CIBC. Please go ahead.
Thanks, Rod Allison.
Very good presentation and congrats on a very good start to 2022.
Maybe first off on <unk> as you mentioned in Q1 head grade was very high very good.
Appreciate still as we mentioned we would expect it to go back down to closer to nine Gram per tonne.
<unk> 2022.
I'll have to ask the question you hit the high grade zone.
In Q2 2021 last year.
We're drilling it I think I asked a question at that point in time as well in terms of continuation of the high grades.
<unk>.
You weren't sure at that point in time, clearly it's exceeded your expectations now that you've done more drilling.
And I'll have a better understanding of the geological structures, what drove some of these higher grades and ultimately can this continue.
Okay.
Outside of the high level, and then I'll drill down so.
We did talk when we did the <unk> hundred do you see the.
Alps has tile off.
A lot of use.
We placed the material from centrally.
On same store.
On.
We believe continue to extend that and Thats one of the main focus areas that we're drilling at the moment, we do see.
A slight increase as we go with that.
And so we are chasing.
Deepa.
But we don't have drilling at depth.
At this stage we drilled.
What we've drilled out in front of ourselves and we hope that it extends further.
We did fund this from time to time.
Jewelry boxes, and they are very high grades.
The current drilling we've got the joke chime.
Building on a vessel so we've got drill holes in there at the moment, we can say structure, but we don't know what the guidance side.
And the holes that we've got an extended too far in front of vessels, we will extend that drilling Tom. So it is a focus and we do want to get more of this in front of us and we are hopeful.
The grades are Hawaii, there is a chance that we will be able to get another.
Another stoping at the end of this year.
But it depends whether it continues on selling outcomes.
Okay, great. Thanks too.
Maybe bigger picture at Seabee here, you've closed that transaction on.
The Tiger gold land package.
Only recently, but anything you can share with us in terms of your plans for that Big land package on a go forward basis have you formulated any preliminary plans at this point in time.
Yes, so as part of our.
Considerations of heated buying that we developed.
Our strategy for exploration is to package over the next 10 years, which we which we shared with the board as part of the approval process.
Ultimate barring the land.
All of this of course is these tissue, where we're already exploring and then there are some other.
Other areas that we've got highlighted.
To start exploring we're interested.
But as you cycle, it's still pretty early days.
Of course, maybe.
Maybe just two questions.
Kevin on chocolate.
On carefully here.
As you said the flotation ramp up is going as planned.
As you mentioned the sulfide plant.
A record 645000 tonnes in Q1 could you remind us.
Is that what.
What you had targeted or could you go even higher now with the ramp up of the flotation circuit.
Yeah.
Yes.
<unk>.
Our expectation is that we will go to Hollywood.
And we're budgeting to go out.
I think if you're looking for a guideline for numbers use what's in the technical report that we just that we've just completed.
It remains pretty accurately it's pretty early days in the commissioning of the flotation plant and we haven't put a lot of the different ore types through and it's really.
A couple of months.
So.
We're seeing better recovery of gold into a big pull volume.
And we're seeing good performance we also.
The goal is to their credit will manage to the increased performance deal with clients at the underlying performance of the older clients as well. So we're pretty we're pretty positive and optimistic about the performance since the quarter closed.
Mhm.
And then that leads well into my next few months.
Yes.
As you mentioned.
Recovery I noticed that recovery was 87% in the quarter, but it was slightly lower than last year like I think it was plus 90% last year.
As you mentioned was that higher than what you had expected.
I know youre still feeling different ore types into a quotation I'm just wondering if the lower 87% is due to the.
The flotation circuit coming in and does that.
Is that a good number of 37.
Yes.
It is in part due to the flood Tyson plant coming on in our strategy for bringing the bringing the plant up as opposed to bring plant top and get it stable at tonnage to break the tonnage up and then and then to a choice the choice of the recovery. We also had just leading into the shutdown that started off the first of April we did have a couple of these.
She is in the back into the plant that caused us some problems.
Recovery as well that contributed to that.
It'll take us a quarter or two really just settle down and start.
Start to tune up.
Great. Thanks, and then my last question, maybe bigger picture for Rod as you mentioned rod very good free cash flow in Q1.
We will get even better in the second half with higher production.
Return.
Capital back to investors with the increase in dividend.
Normal course, issuer bid and everything else, but your cash keeps going up and you've sold off some of your non core assets.
Could you maybe make a general comment in terms of.
Where are you going to spend all that cash in.
What are your plans in terms of capital allocation.
Yes, I think what you pioneer the causes are really good problem.
Yes.
But I think you'd actually it's one of the one of the Differentiators for US is you should think about.
The business just goes from strength to strength.
So it's pretty it's really been built on performance.
Performance.
And all of our assets are contributing to it so I look I think the.
Yes, the initial step last year that we took and we are now.
Our capital returns and the and the strategy around our capital return plan.
Delivered.
But you said $200 million back to shareholders in some shape or form.
We continue to assess.
<unk> analysis on the J D.
Im coming up with a plan for the remainder of this year that.
Thanks to our board to talk about here in the next months.
Two two.
To address the.
The decrease in cash position, which again.
<unk>.
And Jack.
Part of that part of the out of the efforts around keeping that cash for US is obviously looking into the portfolio and if you think about it.
Merger.
The progress that we've been able to buy not only rationalizing non core assets from the portfolio, but adding more assets to the portfolio Tiger acquisition et cetera, et cetera, as well as the first really good start that we've had with the <unk>.
Take reports coming out for all of the assets which are.
It remains very much work in progress as we think about it.
Having the ability to keep on investing in the businesses is really really important to us.
Particularly if you get conversion rights at $6, an ounce for exploration success.
<unk>.
No we need these discussions.
It's a bit of everything that we're looking at opportunities internally to shrink versus looking at opportunities too.
Distribute excess cash to our shareholders.
And having a balance sheet with some strength.
During a volatile taught me is actually a good position to be in so I.
I think thats sort of where we are.
As a as a position to launch with a position of strength is really what.
The company will be 994%.
Kind of what the physician network.
Yeah, that's great to hear thanks, Roger and team and congrats again, thanks for your time.
Yes.
Hey, Charles.
The next question comes from <unk> Habib.
With Scotia Bank. Please go ahead.
Thanks, Operator, hi.
Hi, Rod and Thats our game again.
With the Cosmos, congrats on a good quarter and a strong start to the year.
Couple of my questions have been answered already but just.
No.
I think at the beginning of the presentation, you did talk a little bit about inflation cost inflation.
Really started on a good note on cost but.
I know you had added in a buffer in terms of inflation in your guidance as well.
In terms of supply in terms of.
The agents.
Explosives.
The cost saves according to your budget currently and where is the point, where we feel or where you feel.
That you have to look at guidance for or basically your cost estimates.
Yes.
I'll, let Allison actually take these went up.
And and discuss it.
Sure.
Okay.
We are seeing youre definitely seeing inflation across.
A lot of our key consumable.
In detail.
Yes.
Range.
The cost increases that we're seeing it's really particular to that region.
And the location of Egypt insight.
And beyond that.
Some of the fluctuation that we're seeking range anywhere from <unk>.
15% to 35% depending on what the actual.
Consumable item.
As well as where we are located in the world.
But typically from a diesel standpoint.
Hi, Pete.
Little bit of an increase.
Our ASD.
We have.
Anywhere from.
They generally have a 10% ish increase in.
T cell price, especially out in locations such as <unk>, where we are and have longer haul, we typically see about $5.
Impact.
And so we certainly are seeing it.
We are managing through thus far as you've noted our costs are down so far for the year. However, we arent keeping a tight watch on it.
And we are going to do our typical re forecasting for the year and if we see that.
The additional increase in price theyre going to go above and beyond what we expected or anticipated, including our original budget and our guidance, we'll certainly come out with that information.
I think it's just the bill.
Onto our general.
General sense is a huge amount of effort going on across the business to tackle.
No.
What seems to be quite interesting.
And hard to see a pathway to the end.
I think well.
Suggesting that the environment is as.
As Alison deadlines.
Were actually pretty good shape, however, it's a little bit of a cautionary statement.
Yes.
And if it get worse.
Now, obviously won't be just us that baidu would be.
The industry and I think you're saying that was precious place group somewhat more rapid than others.
I think we've done a pretty good job managing that.
And I think we see any insight.
Perfect.
But.
That's a great update.
Thanks, Alison and thanks Roger.
That's the question. Thank you so much.
Alright, Thanks, a lot I would say.
The next question comes from Mike Parkin with National Bank. Please go ahead.
Hey, guys. Thanks for taking my questions and congrats on that.
Stellar quarter, especially at Seabee.
First question can you give us a little more color on you mentioned.
Minor ore at.
At Marigold in the North pit.
Is that just.
Just a function of lasting youre getting is it actual like fines that or.
<unk> generated above or is it expected or is it a bit of a surprise just some additional color.
What you are facing.
Yes markets, it's too here.
This was the.
<unk>.
I wanted to.
Hi disputes.
This is Ben.
Slightly.
But.
So.
It's just fallen a grind.
Material in fact, his first couple of benches with free drug.
Yes.
As a result interest.
<unk> and the other material when we stack it on the heap Leach.
Blended with material coming from vacuum gets more durable to ensure that we get good percolation.
Okay.
No.
And so when we guided it holds it holds by fall even it is twice what it costs.
The legislation it slows it down as you guys.
When we build our models, we build the leach publicly to that we've been shooting LH levels and.
What we see coming out of but he stops represent.
What we're seeing in our models, which is a slowing.
Selling them as it comes out.
Okay. So it's not an issue with like blockage in terms of fines generation, it's more just a slowing of the population.
Yes, yes.
Okay.
Sure.
With respect to Cherokee being a little closer to what's going on in Ukraine are you seeing any.
Of.
Global inflationary pressures on consumables, whether it's diesel or other key.
Key consumables for sure.
Just tied to the geological location a bit relative to.
Russia with it being a fairly significant supplier for a number of commodities.
Evident or.
Finding the price pressure there on consumables similar to save with Marigold.
I don't think I don't think there is anything specific that you could.
Yes.
Overlay to what's happening up in Russia.
In Turkey I think.
Generally as is Allison.
As he outlined we're.
We're seeing the cost increases across the world.
One of their operations.
It does vary by region, depending on one or two spot.
I wouldn't suggest that anything specific to do with Russia.
Okay.
Great and then.
Yes.
Last question for me you mentioned, the autoclave maintenance for chirp layers plan for Q2, and Q4 can you just give us a sense of how many days those outages are.
Yes, so we just completed.
Clive.
Two shutdowns, we did too than we guided to on our clients number one in October .
Qualifies to shutdown lose 20 days.
It was a pretty good performance we had.
Had budgeted for a little bit for our company.
It is longer than that.
And then we also took the title plant shutdown during that 20 days that it was down five days to do some work through the through the hold the whole circuit when we take one over to climb down we do increase the throughput through the <unk>. So it's not exactly yet at.
50% of impact when we take it down shutdown in Q4 will be approximately this time.
Okay. So youre doing number one in Q4.
Yes, yes.
And we're just finishing just coming out of this shutdown. We just doing some analysis and then we'll go back to reschedule.
That one at the end of the year with related that we had from this slide. This is the first the reason that I called this out as a pretty impressive outcome as we've been extremely fortunate that chip.
The wear on the bricks in the older clients.
What are clients.
In the old days some of the problems with some of the businesses with them.
At chip that we've had we've had very little where on the brakes and this is the first time that we've actually got a green brick configurable to cloud. So we did a re breakthrough suffice courses.
Okay.
Comps.
What a client.
And it went very well.
So is that about three years since those bricks are originally put in.
Hey, Brandon.
Okay.
Thanks very much.
Alright, Thanks, a lot.
The next question comes from Steven Green.
TD Securities.
Go ahead.
Yes, everybody.
Just another quick one on <unk> I think.
And I answered this question already.
But.
Regarding the shutdowns.
Do you think that will be resolved.
Quarterly basis.
On Q2, and Q4 being being the lowest production quarters.
Yes.
Okay.
And you do have in your in your mine plan some scheduled.
Material to be stacked on the heap leach.
Can you can you.
Tell us when you expect on a quarterly basis when that will come in.
Okay.
We're redoing the schedule at the moment.
But there's very little spec to the heap Leach this year.
Say, if you looked at our forecast reductions smartwater.
Okay.
Mainly residual Leach then.
Yes.
Okay.
And.
Just getting back to Seabee quickly.
Again for the question on grade profile expectations for the rest of the year.
But you did mention that you are still kind of mining in in one of those high grade zones.
And you get a stockpile you do have some stockpile material in front of the mill do you expect some of these high grade to bleed into Q2 as well.
So we finished in Q1 bonding in the hydride side, we do have some of that material almost stopped all blood.
Local with bond as we put the best Scribing.
So the material that we have in the stockpile is not.
I think granted.
We'd like it to be so.
There will be some bleed into this month.
But no.
All of this combined eight gram a tonne.
Oh, sorry.
Into this quarter.
Okay.
So reasonable to expect on that.
Barry I would mostly be in the kind of angry.
Gram range.
It will tie back to where it's supposed to be.
And then.
If were successful with this exploration is a chance that we will be back into it.
At the end of this year or the beginning of next year, we'll be able to give better guidance on that at the next meeting but at the moment nobody can give you that guidance because we.
We ended up the assets back.
I'm not going to speculate if you'd like.
Yeah.
That's fair enough.
Hi.
Okay.
That's all I have thanks a lot.
Thanks, Dave.
Once again, if you have a question. Please press Star then one.
The next question is from Levi Spry with UBS. Please go ahead.
Hi, Robin thing.
Thanks Nicole.
Maybe just on the on my other question was to the Sky.
And then Margo the Master plan can you just tell you that a bit of the detail there that we can expect that spending.
Spilling into the Skype for it.
Over the next 12 months and maybe an update on where they take the drilling <unk> got it.
Thank you okay.
So as we do the chips that we develop.
And all those sorts of rebuilding our master development plan, which is really strategic.
Development plans for the operations, so that we can focus our development efforts.
The key targets.
What we actually get to put into the technical report that we share with the broader community as the lifestyle of a redacted version of that because we cannot see that we've got to work far enough along the way. So we've had a series of workshops with external experts and the rest of it theyre, helping us we've recently just guides.
And engineering EPC company to give us support.
Going back and having a look at the Buffalo Valley.
And what the development pathway would look good it looks likes it and we are getting you drilling budget Buffalo Valley, which we're pretty excited about and also on the canyon that look a little bit different.
Perhaps what we saw before and so we will have to make a decision at some point.
When we start to generate.
The schedules due to the residual system it's normalized.
We're getting a better understanding of what.
David.
And then in there.
More near term the drilling that you saw in the exploration around the existing pits and in the new millennium, we expect that that will that.
At least some of it in this coming technical report will convert into.
We will convert into.
Results in reserves and we are focusing some drilling around there at the moment because.
We do have a bit of a gap in 'twenty six 'twenty seven and the comp plan.
On schedule, which you would say to the <unk> hundred, which we talked about last time.
We are progressing.
Hi.
And that will be completed with all of the permitting in 2024, So we would fill that gap.
And so we need to get at least part of that as much as we can find with the drilling that we've got done you didn't take the group opened next slide Youll see.
And we should be able to give a much better definition of what we think's going to happen.
Buffalo Valley in Trenton Canyon based on this but could be doing.
Yeah last one thanks James.
On that resource update then.
The beginning of next year.
Okay cool.
And the type of drilling and well obviously update that.
Okay.
So we're still pursuing that but it's it's.
Not at all at the top of our agenda.
With regards to exploration.
Exploration.
We've got a ticking along in the background, but we don't really have anything that I missed.
Okay. Thanks, a lot look forward to catching up.
Okay Cheers bye.
This concludes the question and answer session I will turn the call back over to Mr. Paul.
Alright, and thanks, everyone. Appreciate you participating today.
I would be quite risky.
Before Brian if it's later in the year, so with that we'll conclude the call. Thank you.
This concludes today's conference call and you may disconnect your lines.
Okay.
Yes.
Yeah.
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Sure.
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