Q1 2022 Eldorado Gold Corp Earnings Call
Thank you for standing by this is the conference operator, welcome to the Eldorado Gold first quarter 2022 financial and operational results Conference call. As a reminder, all participants are in listen only mode and the conference.
It's being recorded after the presentation, there will be an opportunity to ask questions to join 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.
I would now like to turn the conference over until the cell Wilkinson Vice President Investor Relations. Please go ahead Ms Wilkinson.
Thank you operator, and good morning, everyone I'd.
I'd like to welcome you to our Q1 2022 results conference call.
Before we begin I would like to remind you that we will be making forward looking statements. During the call. Please refer to the cautionary statements included in the presentation as well as the risk factors set out in our annual information form.
Joining me today on the call we have George Burns, President and Chief Executive Officer, Bill <unk> Executive Vice President and Chief Financial Officer, and Jody <unk> Executive Vice President and Chief operating Officer.
Other members of the senior leadership team will also be available for the Q&A session.
Our released yesterday details our 2022 first quarter financial and operating results.
This should be read in conjunction with our first quarter financial statements and management's discussion and analysis, both of which are available on our website.
Also been filed on SEDAR and Edgar.
All dollar figures discussed today are U S dollars unless otherwise stated we will be speaking to the slides that accompany this webcast.
You can download a copy of these slides from our website.
After their prepared remarks, we will open the call for Q&A at this time, we will invite analysts to queue for questions.
I will now turn the call over to George.
Thanks, Lisa and good morning, everyone.
Here's the outline for today's call.
I'll provide a brief overview of Q1 results and highlights before passing it to Phil to go through the financials and Joe to review our operational performance.
Then we will open the call to questions from our analysts.
Over the past two years COVID-19 has been one of the most severe test of our safety systems and emergency response capabilities in memory.
As we entered 2022, the omicron variant of COVID-19 was rapidly spreading across the globe, causing concerns in business and operating environment.
We have continued to prioritize monitoring and adapting our controls to prevent the spread of the virus and keep our people their families and local communities.
As we enter the third year of the pandemic I am continually inspired by the resilience of our global teams, who remain energized and focused on delivering safe operating results.
We faced several challenges at the start of the year that impacted our operating and financial results.
In the first quarter, we produced over 93200 ounces of gold during.
During January and February all operations were impacted by higher than anticipated absenteeism related to the surge of COVID-19 cases.
We were also impacted by a government mandated power outage in Turkey, and severe weather in both Turkey and Greece.
Despite these challenges we are seeing a recovery at our operations as we mentioned on our last conference call. In February we expect first half production to be lower than second half production and we maintain our 2022 production guidance range of $460 to 490000 ounces.
Joe will speak to the operations in more detail later in the call.
As we have noticed in previous as we've noticed noted in previous quarters, we continue to face inflationary pressures similar to the wider market, which has been intensified by the Russian and Ukraine crisis.
Principal cost increases are in electricity fuel and reagents.
We continue to monitor our supply chains to ensure our sites have the necessary equipment and supplies to safely operate.
We have not experienced any significant disruptions related to availability of supplies. We also continue to monitor our concentrate shipments, including redirecting shipments as required.
We have not experienced any disruptions with respect to refining of dore or fulfillment of concentrate shipments.
In the first quarter, we continue to see inflation in Turkey. However cost increase is dominated in local currency primary labor were mostly offset by the continued weakening of the Turkish lira.
In the Abitibi region of Quebec increased activity in the mining sector has impacted the availability of contractors and labor.
This year, we have completed two year collective bargaining agreements with our labor unions in both Turkey and Greece.
In Greece, we strengthen our relationship with our labor partners by incorporating technology and flexibility into our labor agreements, which helps us to move forward with our productivity and efficiency agenda.
These labor agreements are instrumental in allowing us to focus on delivering safe operating results.
During the quarter, we progressed at <unk> with activity focused on finishing steel erection and a closing of the mill building commence.
Basic engineering continued preservation of site facilities and equipment.
Our securities financing discussions continue to advance.
We are evaluating all available options, including joint venture equity partners project and debt financing through EU, and Greek lenders as well as the EU recovery and resilience fun and metal streams or focus on selecting a financing package will continue to be driven by value optimization and <unk>.
Risking for the future.
Following financing and board approval, we expect to restart full construction at securities in the second half of 2022.
Finally, I would like to highlight our sustainability reporting milestone for the quarter.
In March we published our second responsible gold mining principles report, providing independent assurance that a year or two requirements have been achieved with an impressive level of conformance against the premise principles demonstrated ahead of the 2023 deadline with.
We continue to work towards full conformance with the our gmp's across four operating mines to produce our year three report, which will summarize this achievement forthcoming in 2023.
I'll stop there and turn things over to Phil for a review of our financial results.
Thank you George good morning, everyone.
Slide five provides a summary of our Q1 2022 financial results.
As a result of the operational challenges and lower production. This quarter, our Q1 cash operating cost was $835 per ounce sold.
And all of the sustaining costs were $347 per ounce sold free.
Free cash flow in the first quarter was a negative $26 8 million.
In Q2, we expect cash flow to be impacted by the timing of annual royalty payments in Turkey and Greece.
And the timing of capital spend.
Eldorado reported a Q1 2022 net loss attributable to shareholders of $317 million or loss of $1 74 per share.
After adjusting for onetime nonrecurring items, including a 365 million noncash impairment of certain cash or non core asset in Romania.
And a 20 million noncash write down of decommissioned equipment at yesterday among other things the Q1 adjusted net loss was.
It was $19 million or loss of <unk> 10 per share.
Q1, cash operating costs and all in sustaining costs were higher in the quarter due to operational challenges that resulted in lower gold ounces produced and sold.
We are seeing higher prices in the quarter for diesel electricity and reagents.
Yet total direct operating costs, primarily mining processing and related costs on a U S dollar basis.
We're slightly lower in Q1 2022 compared to the previous quarter due in part to the weakening Turkish lira. Despite.
Despite higher tonnes placed on pad.
At <unk> today in Q1, 2022 compared to Q4 2021.
In light of the significant increases in prices for electricity fuel.
The reagents and other consumables required for our operations.
We are closely monitoring the impact on expected full year direct operating costs and will provide an update next quarter.
Yeah.
Capital expenditures were $61 million in Q1 of which 25 million was related to sustaining capital including underground development.
Processing upgrades and equipment replacements and rebuilds and.
$32 million was related to growth capital, including waste stripping and construction of the north Leach pad at yesterday we.
We are actively reviewing our growth and sustaining capital expenditures, given inflationary pressures and volatility.
We are practicing sound capital discipline by focusing on non discretionary capital required to maintain production.
Asset integrity, and our license to operate.
Income tax expense was $5 1 million in Q1 comprised of 16 million current tax expense, partially offset by $10 million deferred tax recovery.
The current tax expense related to 4 million and dividend withholding tax $5 million in investment tax credits received related to the kitchen Dag heap Leach improvements.
Quebec mining duties and corporate tax on operations in Turkey.
In Q1, Turkey announced a reduction in the 2022 corporate tax rate from 23% to 22%.
And reduction in the 2023 corporate tax rate from 20% to 19%.
The deferred tax recovery of $10 million in Q1 was primary related to the deferred tax impact of the impairment on the <unk> project, partially offset by the impact of further weakening of local currencies.
At quarter end, we had unrestricted cash cash equivalents and term deposits of $435 million. Our net leverage ratio is at 0.31 times as of March 31, compared to 0.89 times at the end of Q1 2020. This reflects a much improved credit profile for the company over the last.
Two years with that I will now turn it over to Joe to go through the operational highlights.
Thanks, Phil and good morning, everyone.
I'll start with an important health and safety highlight from our operations.
In the first quarter, we improved our total recordable injury frequency rate year over year from eight one to $4 seven.
Our focus on leading indicators such as leadership engagements and risk assessment is building a sustainable safety culture.
Also I would like to congratulate remark the lamarck team for achieving three and a half years without a lost time injury.
Moving to our operating results, we produced 93209 ounces of gold in the first quarter with cash operating costs of $835 per ounce sold.
Slide eight looks at our operations in more detail starting in Turkey, because without its production in the first quarter was 29779 ounces and cash operating costs were $861 per ounce sold.
Gold production during the quarter was lower than planned as a result of COVID-19 related absenteeism severe weather and the government mandated power outage.
Lower production was also related to the reduction of tonnes placed on the heap Leach pad.
In Q4 during the commissioning of the high pressure grinding roll circuit.
The severe weather and freezing temperatures in Q1 led to lower tonnes stacked on leach pad, which is expected to negatively impact gold production in Q2.
We anticipate production at <unk> to be weighted to the second half of the year and maintained full year production guidance.
We continue to balance agglomeration and throughput with leach kinetics to obtain optimal performance.
So far the performance of the <unk> circuit is meeting our expectations and we are seeing recovery rates as expected.
At <unk> group first quarter Gold production was 21057 ounces at cash operating cost of $648 per ounce sold.
Gold production throughput and average gold grade at <unk> were in line with expectations.
The operations, where minimum minimally impacted by Covid absenteeism during the quarter and FM to group continues to be high performing asset with solid results.
Current exploration at <unk> focused on the Coke carpet <unk> and fatty vein systems.
Resource expansion drilling at Coke Carpenter, our south has indicated a high great footwall splayed to the principal vein and has potential for further resource expansion through step out drilling.
Moving to our Canadian operations first quarter gold production at La Mark was 33377 ounces and cash operating costs were $763 per ounce sold.
At landmark reduce workforce due to COVID-19 early in the quarter delayed the underground development of high grade stopes, which led to lower than planned gold grades.
Mine development progressed and planned gold grade and tonnage were achieved in March.
Full year gold production at <unk> is expected to be in line with guidance.
Yeah.
In late March we released exploration results, which included new step out drilling at the <unk> deposit.
<unk> identified extensions to the known mineralized zones, both laterally and at depth. Dr. Mark deposit has now been extended to a depth of about 800 meters from surface and remains open in multiple directions.
With a triangle Sigma declined completed we are focused on an exploration drift and resource conversion drilling at Norm Act, which is expected to commence this quarter.
Finally, let's move to Greece.
At Olympias first quarter gold production was 8996 ounces and cash operating costs were $449 per ounce sold.
In the early part of the quarter gold production at Olympias was impacted by Covid absenteeism power outages related to severe weather in the region.
Operations resumed mining to plan and achieve planned tonnage and grade from the mine in March.
Plant throughput in the second quarter is expected to be impacted by planned processing tie ins to improve water treatment plant efficiency and capacity.
Recent approval of an extended surface Horus.
Horace stockpile will allow mine improvements to continue as the water treatment plant upgrades are implemented as a result, we expect production at olympias to be weighted to the second half of 2022.
Underground resource expansion drilling at Olympias Olympias has identified a new mineralized lands, representing the western extension of the flat zone, which remains open to both the south and the west.
Further step out drilling is planned for the second half of 2022.
I'll stop there and turn it back to George for closing remarks.
Thanks team despite the.
The challenges we faced in the first quarter, we are already seeing improvements at our operations in the second quarter, we remain focused on delivering safe operating results and executing our strategy to maximize value for our shareholders. Thank.
Thank you for your time I will now turn it over to the operator for questions from our analysts.
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 will hear a tone acknowledging your request. If you are using a speakerphone. Please pick up your handset before pressing any key.
To withdraw your question. Please press Star then two we will pause for a moment that's callers join the queue.
The first question comes from Cosmos <unk> with CIBC.
Please go ahead.
Alright, Thanks, George Phil Joe for the presentation.
It was certainly a tough Q1.
Maybe my first question is on your cost guidance.
I appreciate that you mentioned volatility in prices.
Closely monitoring it and we'll get an update.
In Q2.
But I guess the guidance of 10 75 to $11 75, an ounce all in sustaining costs.
Is that should we no longer rely on it is that now kind of like a let's call. It like a previous guidance is that how we should look at it.
Hi, Cosmos, it's George Hi, George.
Good morning, when you look at Q1 dominantly production impact of this and so you saw an uptick in our cost.
He'll give you some more color around that.
The cost in Q1 relative to our expectations.
The way we're looking at it right now is we don't have any indication from our Q1 results.
That the inflationary pressures are going to have an impact on the year. No. There is no doubt we are paying more for electricity in Europe Theres no doubt our diesel costs are up so although we're a dominantly an underground miner, so it's really <unk>.
That has the volume on diesel consumption and we are seeing some higher reagent costs, but overall when you look at our spend in Q1 relative to Q4 or last year's run rate for mining processing G&A, we're not seeing an impact on our cost to date. So Q1 was all about.
The issues related to lower production.
And no indication yet that our overall costs are being impacted and that's why in our release talks about we'll continue to monitor this.
And I won't give you a further update in Q2 as to.
How well are we combating the higher costs from power diesel and reagents with with other measures. We're taking so so far we didn't update our guidance because we don't have the indicators on the bottom line yet to say, it's here, but we can't hide from the fact that there are cost pressures coming in some parts of the <unk>.
Business in some of the commodities maybe.
Maybe bill you can add some further color there sure thanks, George Hi, Cosmos.
Right.
I think.
Georgia summed it up pretty well.
From a cost perspective, there's a number of.
Theres no doubt that for example, we did have.
Increases in electricity, specifically in Greece, and we had increase in diesel prices in Turkey.
But there's other factors that are that are also moving as well for example in Turkey. The lira continues that weekend and that has offset.
And if you look at the total direct operating costs in Q1, specifically, our mining costs are processing and other related costs.
Even though it yesterday for example in Q1 our tonnes placed on pad was higher than Q4.
Our costs in Q1, 2022 compared to those mining processing and related costs in Q4 were actually lower.
So.
We recognize that there are price increases.
We're trying to get.
Just get more information in terms of the trend and.
We're monitoring it as we say and we continue to look for opportunities as well too to be more efficient and offset those cost increases as well.
Of course, and then to.
Wrap up this part of the question here Bill George could you remind us what kind of year over year cost inflation assumption did you factor in <unk>.
2022 cost guidance is that and is that consistent with.
What youre seeing so far.
Maybe I can answer that Cosmo sell for example, our biggest impact of inflation that we expected in our in our plan for 2022 was in Turkey.
The published inflation rate at the end of 2021 going into 2022 was I think it is between 50 and 60%.
And we factor that all in but at the same time.
The impact of those those of inflation has been offset primarily by the by the impact of the weakening lira. So we haven't seen when we converted to U S dollar operating costs.
In Turkey for both our operations combined.
Throughout 2021 Q1, all the way through to Q4, our U S. Dollar operating costs were pretty flat and that continues to be the case for Q1 2022.
Got it.
Thanks, Phil maybe switching gears a little bit.
And I'll look at kit the dog.
I noticed that you did about.
The little bit less than 30000 ounces in the quarter.
You reiterated 140 565000 ounces for the year, so wanted to get a better understanding.
How are you going to improve on your operations for the rest of the year.
Maybe on two points I guess grade decreased to $1 six one gram per tonne in Q1 of.
Are you seeing that improve now and then the other point is.
As you mentioned cold temperatures in Turkey impacted some of the conveyor systems.
And so you know and but now the <unk> sounds like it's coming up.
Thing up as expected so could you maybe comment on recovery. So of course on grade on how that's going to improve and also comment on our recovery. What are you targeting for the rest of the year.
Cosmos. This is Joe maybe I'll start with Joe.
Maybe I'll start with kind of the production numbers or kind of the trend that we're seeing so.
Youre right as in Q1 as we were.
Using belt agglomeration and the cold temperatures that kept us from.
Stacking the planned number of tons, but we did see.
Good Oklahoma ration, which has resulted in a couple of things one we're seeing higher.
Our solution application rates than pre HPE, Jr. With vehicle operation that we have done.
And that kind of speaks well to potential improvement in leach kinetics, which where we have indications that that's headed in the right direction as well we have.
At the mine plan and and grade and as we have stacked in Q.
At the beginning of Q2 through the month of April were about 10% ahead in ounces the pad. So far this quarter and we see that trend continuing and we are meeting or.
Meeting budget tonnes placed on pad at slightly better than budget rates at present.
So with that all.
All of those things look pretty good and we're we're optimistic as we look at as we look at recovery.
Total we were targeting 56% and we don't see any indication of anything less than that.
And in fact, we are optimistic.
Mhm.
Great. Thanks.
George and Joe those are the questions I have thanks a lot.
Thanks Cosmos Thanks, Paul.
The next question comes from Tanya checks connect with Scotiabank. Please go ahead.
Great. Good morning, everyone. Thank you for taking my questions.
I do have a few and I just wanted to start with just on the quarterly performance.
Just trying to get a handle <unk> got a stronger performance coming out of all of the Olympia.
Please note that for the second half so how should we think about Q2 is it going to be similar to Q1 and then we have this huge bump up.
And the second half or do we have improvement quarter over quarter I'm, just trying to understand whether it'd be 60 40.
Now 50, 545, how should we think about that.
Thank you this is Joe.
We see.
It's a bit stronger performance in Q2, but still a bit challenged as the.
Lower.
Tons placed in Q1 at Kessler that even though we are seeing favorable indicators on on recovery and Leach kinetics, it'll come it will come up in Q2, but.
It is still be weighted to the second half and at Olympias.
We took the opportunity in Q1 to set ourselves up for the second half as I mentioned in the.
We spoke earlier about water treatment plant in efficiency in quantity so.
Given the fact that we knew we were a few local where lower tonnes. In Q1, we decided to make some adjustments to allow us to increase capacity of the water treatment facilities and do some different tie ins with how we're using our thickness.
So we set the mill up to be able to run a bit higher than planned in the second half.
<unk>.
And as mining has progressed reasonably well over the past four quarters and continues into Q into Q1, we also have a stockpile.
Arrangement now where we can continue in Q2 to make a few more adjustments in water treatment and have the capacity to run those tons of stockpile before the end of the year. So we're reasonably comfortable in both of those that there'll be more second half weighted.
Mark.
We got a little bit of a slow start on development and as we were transitioning from.
Longitudinal.
Home methods.
In seat for two <unk>.
Transfers requires a little bit more development.
And a slow start to development in the year cost us a bit of grade. However, we are running ahead of budget.
<unk> rates now and see Lamarck coming back reasonably well in Q2 and continuing for the balance of the year.
Maybe I'll jump in with a little more clarity on kiss at us so.
Does it is a heap leach pad you kind of have to look at two sets of numbers and so as Joe described in his in his earlier comments.
We had that we had a tough Q1 due to weather.
And we were ramping up the.
Agglomeration of the aura on the conveyor belt and we're seeing we expect to see a strong Q2 on recoverable ounces placed on the pad and even a stronger second half. So we're ramping up recoverable ounces placed on the pad and we're comfortable with our guidance.
And then when you look at ounces produced because there's a delay between placing the ounces and pouring the gold Q2 will ramp up over Q1.
But it's going to be a significantly stronger second half just due to the delay between placing the ounces and then the ounces coming out on the pond. So the trend will be up both on placements and production, but weighted to the second half an ounce. This board.
I'm just trying to understand like so Q2 overall for the company will be better than Q1, and then Q3 better than Q2, and then Q4, the best or Q3 and Q4 the same.
Q3, and Q4 will be similar Q4, maybe slightly better.
Okay.
And that's mainly driven by canceling back.
Correct.
Okay. That's helpful. Thank you and then just if I could ask Phil we were kind of really low or not carrying maintenance cost to tick.
Typically extra Connie.
In Q1 that was our biggest next can you give us some guidance on what the care and maintenance costs are going to be.
It was like $9 million or something in the quarter.
Yes, it's George.
Our overall key care and maintenance costs on an annualized run rate or around $2 five 3 million Bucks I believe.
In terms of the quarter, we had a heavy impact as we're transitioning from the <unk>.
Cut down.
The underground and then the transition of the plant so it's.
I'd say, an extra ordinary impact on the quarter, coupled with that we had some early retirements that.
We had to cost in Q1.
As well any other departures that we saw bonus were accumulated in Q1 costs and we think we may see a bit more of that in Q2 before we normalize to the numbers that George mentioned.
I'm, telling you it's Phil so yeah okay.
<unk>.
Tony separately from <unk>.
Curious because we're assuming scouring stocked product.
Construction in the second half that won't have care and maintenance costs.
That's correct.
To summarize I think.
The the future quarters will be lower than we expected to be lower than what we had in Q1.
If we use.
A $10 million a year for Tony is that reasonable.
I think that's a reasonable number.
We had some for example, like Joe mentioned, we had some some labor costs at Tony that May may still have some of that come through in Q2, but I think most of that has come through in Q1.
So we expect future quarters will be less than what we experienced in Q1.
Okay.
And then maybe just on the.
The Capex and Opex review that you're looking at and then I'll get to my final question, which is inflation.
When you are looking at all of your operations are we also to assume that you are doing a review scores again.
Could you repeat that will you also be reviewing the Capex and Opex. That's curious again you just did the feasibility study in December but is that under review also in your review process.
So on the initial capital costs, maybe just reiterate where we are out of the project.
The main body of the plants in place.
We believe that the.
The overall capital cost is largely reduce relative to other projects that are starting from scratch. So all of <unk>.
Grinding and crushing flotation.
Concentrate handling all of the major here is actually set in place and the fact, we're putting the building up around the <unk>.
Exception.
In the processing areas just the filters.
We went out for competitive bids in the first quarter for the filters.
And those bids have come in slightly below what we budgeted in spite of higher inflationary pressures on steel.
I think there is a pretty good indicator and thats essentially the biggest piece of equipment yet to be procured and when you look at what's left to be done there is a lot of civil work.
Theres, a lot of plumbing and piping and wiring to be done in the plant.
But at this stage, we're pretty comfortable with those capital costs, we have civil works to do and construction of the dam.
Obviously diesel prices are up and during the construction phase we're not we're not consuming a lot of electricity. So.
We don't see those issues, having a major impact or a material impact on that capital cost estimate.
Obviously, we will continue to monitor that but <unk> I think we're in a pretty good position still on our capital estimate of December .
Okay.
Just on the inflationary pressures.
I guess.
Would you say, it's you're seeing it at all of your operational or is it more localized to Turkey, and Greece because it's.
It's closer.
Closer to the.
To the Ukraine, Russia situation, where other companies are feeling more exposed areas.
Consumables and other.
Well I would say that the unique thing in our situation is that in our two operations in Europe are seeing higher electric energy costs, and it's being driven by the natural gas prices.
So costs are up materially in both countries now.
In Turkey, we are having some benefit from the currency as Phil noted, but we don't have that sort of counterbalance effect in Greek. So I think I think are our electric power costs are up there are double what we had budgeted in Greece.
And we're not seeing that kind of impact in Turkey due to the FX counter impact.
And maybe just.
Alright go ahead.
Just to comment on it so it just.
To add onto what George says indicated.
I think I would say the <unk>.
Most significant impact of inflation is in Turkey.
As I mentioned in the published rate was quite high.
Between 50, and 60% at the end of 2021.
But we're not seeing that come through to the bottom line because of the because of the lira.
But in Turkey, probably the most significant cost as the as the diesel impact at yesterday, but it's not a it's.
It's not a huge amount it's like.
Probably around less than 5% of our of our consolidated direct costs.
It's really really just.
The use at yesterday, because it is an open pit mine all the other mines are underground in Turkey. The biggest impact as George has outlined has been the electricity.
And.
But at the same time electricity on a consolidated basis is about 10% of our total direct operating costs. So again, it's not a huge huge percentage.
Maybe you can remind us what.
Oil price our diesel price did you use in your guidance for 2022, and what's the sensitivity for $10 a barrel or attacks that change in diesel price.
So in terms of diesel.
The current price is about.
About $1 25, a leader.
In Turkey.
And everywhere else in terms of diesel at <unk> in Greece, and in Quebec, It's really not significant so again diesels about 3% of our total costs.
And the impact on our costs based on our 2022.
Guidance for sales is probably around $13 an ounce.
It's not it's not huge.
They can offline. Thank you ill, let someone else ask.
Thank you Tanya.
Once again, if you have a question. Please press Star then one.
The next question comes from Kerry Smith with Haywood Securities. Please go ahead.
Thanks, operator.
So maybe you can answer this or maybe Joe what is the grade profile like it pushed a day quarter over quarter. This year is expected to be pretty flat and you're getting more ounces on the pad because you're getting more tons to the pad or a C grade profile actually going up as well.
Yeah.
The great profile is relatively flat carry maybe slightly better later in the year I don't have it in front of me, but I think we're right around 66566.
Quarter over quarter.
But it's really about getting.
Comment on the pad at mine grade so what we saw in Q1, a bit though is that.
We had.
Sure.
We picked up some tons above cut off that we were on the lower end of grade that kind of pushed us down so as we look forward.
In managing grade those those marginal tons above above cutoff, we will not bring to pad.
Which will help us with grade for the balance of the year.
Okay.
We are stockpiling that lower grade four later placement.
Okay, Okay, and when do you start putting tons onto our pad. When is when is that actually available to be receiving tonnage because that'll obviously help to leach curve too.
Well I think theres two answers to that question one of them is that.
We did place.
Additional inner lift plastic on the south Leach pad.
For the early placement of <unk> tons as we work through what we expect it to be getting our agglomeration right and we're going to extend that a little bit.
<unk>.
We will be available for replacement probably mid Q3.
One of our concerns is just making certain that we're really confident on agglomeration quality.
Before we go to the North Leach pads since that's the panel the foundation, but we will be on on clean plastic Nonetheless, even on style and again I would say that we will have that.
We'll know that more clearly by mid year as to how we wish to deploy that going forward.
But youre right.
But.
North Leach pad is really attractive.
Right right, Okay, and then just going back to Tom's question on the pitch Arnie standby costs of $9 4 million in Q1. So if it's two to two and a half to $3 million a quarter on a go forward basis in Q2 will still have some residual costs in there.
One time things what what number are you expecting in Q2, there is it going to be 5 million, maybe or 6 million can you give any guidance.
Yeah.
Yes, Kerry its Phil here, So I think.
Based on where what we had in Q1.
I would say probably less than $5 million, but I think it's probably in that ballpark quarter.
And then by Q3, you would be back to serve this two and a half to $3 million run rate than you would have all the onetime things under way is that right.
By Q3, assuming we get we get.
Curious.
Our reconstruction started then the care and maintenance costs related to the Sirius would add.
Yeah, Okay, but I've talked to strict tonio.
Okay.
Terry This is Joe.
By end of year.
Should be normalized fully but.
The start of the start of construction is curious offsets any residual labor that were.
But still on the books.
We choose to maintain that people can and move it over to contract labor at the startup.
Construction.
Okay, and just so I'm clear that two and a half to $3 million run rate is with Sirius.
Not contributing any care and maintenance costs to that number right. That's just for Tony.
Correct.
Got you okay.
Okay, and then Phil just going back to your comment about you're not really seeing any.
In U S dollar terms anyhow any real cost inflation.
In Turkey, but are your are your unit costs per ton all in for mining milling and G&A, let's say on a per ton basis. They seem like they're going up at least they went up a lot or linked to us based on what I calculated it seems like tissue Davis gone up to seniors as well it was like 14 and a half.
Timing.
In Q1 and last year was slightly below last box so.
How should we think about your unit costs per ton.
Yes on a go forward.
So can you just just to be clear your question specifically to olympias.
And I think yesterday, yeah, yeah, so like if I if I look at your total cost.
Mining for mining at Olympias from your Q1.
In U S dollars device the ounces sold it's like 350 Bucks a ton that number last year was like was well below that it was $2 70 or something so I'm just wondering about that.
All in cost per ton going forward at both olympias and tissue today.
Well yesterday kitchen AG tons in Q1, 2022, as I mentioned were lower than Q4.
I was already higher than Q4.
But they were lower than the first three quarters of 2021, so tons were down compared to.
The first few quarters of 2021, and we expect those tons will increase.
Great.
Kerry. This is Joe are you thinking in total tons stripped plus or are you thinking just ore tonnes.
We're giving you the numbers back in.
I don't think I'm just talking.
Yes.
All in costs divided by tons processed tonnes milled tonnes leach.
We can get back on the consolidated number but just just for your information total tonnes moved to Q1.
It was higher.
Higher than Q4 or Q3.
At that yesterday.
Just for that.
Yes, yes, so in my numbers in Q4 of tissue that your cost per ton to the pad was about 19 Bucks a ton in Q1. It was about 14 and a half but last year average was less than 11.
Im just wondering about that number on a go forward basis is it going to get back to around 11 Bucks a ton and then I had the same issue with olympias the cost per ton.
Neil this is quite a bit higher in Q1 than it was in a while it was higher in Q4 as well, but it was certainly higher than last year and last year was kind of a.
A year when every quarter you kind of incrementally we're doing better on the cost side as you got more tons out, but then obviously Q1 was pretty tough for them. So that's what I was trying to get a handle on.
Yes, Kerry it's Phil so.
So tons in Q1, 2022, or just over 2 million tons of <unk>.
In Q4.
Of last year the tons were below 2 million tonnes. So thats why you are at a higher <unk>.
Cost per ton in Q4, but then the previous three quarters were over 3 million tons. So you had a much lower cost per ton. So that's why you see that fluctuation and I think going forward in 2022, we expect to be over 3 million tons probably.
Our protein on a quarterly basis.
Above that above that.
That placement rate in the quarter. So you should see the cost per tonne drop again, alright, okay. Okay. So okay. So 3 million times, a quarter and the cost should come down there and then what about what about olympias just on the on the cost and the total cash cost guidance I was looking at the grade.
In Q1, obviously it was pretty low your guidance was seven four grams. It seems like based on the ore body. It would be pretty tough to average seven four grams. This year, but what will the grade looked like at Olympias. This year end.
And.
It isn't going to probably be more in the seven Gram range, which is kind of what I was thinking.
So so Q2 to date.
Gary we're placing at 744 were mining at seven four.
And.
No.
For the full year.
We're working to maintain the greatest close to that as possible, but it.
It will be.
And forecast were 7374.
<unk>.
Okay. So we're looking to maintain that that grade rate as we habits as we have at the start of Q2.
Hey, Kerry, it's George one of the one or the other.
Issues in Q1.
Because we have significant byproduct credits at Olympias.
You see lumpiness in our cost and it's dependent on the lens zinc con.
Both shipments occur when we've got a full shipment to ship.
And sometimes those.
Costs are also impacted just by timing.
Tough storms at the end of the quarter, we can't get a ship out and it moves to the next quarter. So when you look at Q1.
We had a lot lower byproduct credits against our cost.
Relative to Q4, just due to the Lumpiness and timing and byproduct sales salt.
It's only it's only a part of the story.
The Covid impact we're part of it we also ended Q1.
Our stockpiles on the ground, which is not typical at olympias. So.
<unk> positioning is a bit better to start Q2 so.
So a number of factors that don't show up in the bottom line.
I think hope given indication of why we.
We're confident we're going to improve performance out of olympias.
This quarters unfold.
And George you feel are your <unk> have gone up significantly.
Q1 from what you were paying last year for sort of concentrate because you don't produce a lot of condensate, you're probably not getting great terms, but have the tcr's collapse in differently in Q1 or should we expect them to be much higher going forward.
<unk> talked about it a little bit on the commentary.
Yes, so kerry so.
Last year there was.
Our new <unk>.
Chinese.
That was that was introduced.
For concentrate.
From Olympias that.
That was being shipped to Chinese smelters so.
That was a 13% now we have we had planned to offset a big a big chunk of that.
And.
Part of the plan was to ship that in.
It was up to 50% of the of the production to Russian to a Russian smelter.
And unfortunately with the.
Sanctions that have been imposed recently because of the.
The ongoing conflict with redirecting some of that and where are we.
We've managed to redirect a small portion of it at this point, but we will continue to look for opportunities too.
To redirect it.
Two two different smelters and avoid the 13% the ATM posed by the Chinese market.
Just to be clear, we're no longer shifting anything to Russia.
So some of that now is going to China, but some of it is going elsewhere or avoiding that.
<unk>.
Yes, that's right now that's a negative against what we budgeted no shipments going to Russia.
So part of that we're paying.
And the China and part of it we have found another customer that's testing.
Concentrate hopefully, we'll be able to ramp that up.
And Kerry just.
The impact of the.
I have not been able to ship to Russia is about $5 million.
Okay. Okay. So that was a Q1 myself.
No totally that's total year, okay excellent. Okay gotcha, okay. So youre not really seeing any significant increases in your treatment charges generally its just as tax that that's causing you a bit of a a bit of a problem then okay I got it.
Yeah, Okay. Okay, great. Thanks, very much guys appreciate it.
Thanks, Larry.
Once again, if you have a question. Please press Star then one.
The next question comes from Fahad Tariq with Credit Suisse. Please go ahead.
Hi, Good morning, Thanks for taking my question, it's pretty quick on series can you just remind US you mentioned the snowfall impact on some of the other operations was there any impact on Sirius.
And we did.
We did have snow at Sirius, but it didn't.
Impact us any way and as far as critical path for project, we were able we were able to slow down.
Steel erection and building cladding during that time period, and we've since picked up without any type of penalties.
So really no impact and no and no significant impact on water.
Water systems are green easier collection toward that kind of thing.
Okay, Great just wanted to confirm that thank you.
That is all the time, we have for today and this concludes the question and answer session and today's conference call. You may disconnect your lines.
For participating and have a pleasant day.
Okay.
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