Q2 2022 OceanaGold Corp Earnings Call
Okay.
[music].
Okay.
[music].
Good morning, and afternoon, ladies and gentlemen, welcome to the Oceana Gold 2022 second quarter results webcast and conference call. At this time all participant lines are in a listen only mode, but following the presentation. We will conduct a question and answer session.
If at any time during this call you require needed assistance. Please press star zero for the operator also note that the call is being recorded on Thursday July 28 at 530 P. M. Eastern time, and I would like to turn the conference over to Sabrina Forbidden ski. Please go ahead.
Thank you Sylvie good evening and good morning.
Welcome to Oceana Gold's second quarter 'twenty, two results webcast and conference call I am to be less risky director of Investor Relations for Oceana nickel.
I'm joined today by jurors bond Oceana Nichols, President and CEO , Scott Mcqueen, Chief Financial Officer, Scott Sullivan, Our current Chief operating Officer Asia Pacific It seemed to be Chief Technical <unk> technical and projects Officer, David Londono, Our Chief operating Officer Americas.
Brian Martin, our new senior Vice President business development and Investor Relations.
Taking time to be with his family following the birth of their second child, and we wish them all of that.
Okay.
Before we proceed. Please note that references in this presentation adhere to international financial reporting standards and all financial figures are denominated in U S dollars unless otherwise stated.
Also please note that the presentation contains forward looking statements, which by their very nature are subject to some degree of uncertainty.
There can be no assurances that our forward looking statements will prove to be accurate as future results and events could differ materially.
I refer you to the disclaimers, including those on the forward looking statements in our presentation.
Now I'll turn the call over to Jarrett Bot.
Thank you Savannah. Good evening. Good afternoon. Good morning, everyone. Thanks for taking the time to Darling today.
I've never been president and CEO of Oceania Gold for four months and some of you may recall that on joining the company I stated my goals were to safely and responsibly drive improved operating and financial performance and realize the full potential of the company's growth opportunities and to maximize free cash flow generation value and returns to shareholders.
In recent months I've met with a large number of our shareholders some of whom have been strong supporters of ACO in the Gulf for many years.
It is clear that our shareholders see the growth and value potential in our portfolio of assets and they're relying on management to execute to plan.
So today I'm pleased to report on how we got into second quarter and year to date, which is very much in line with plan.
Also what we expect for the remainder of the year and to take the opportunity to update you on a few other developments.
I'll describe our second quarter results as solid.
One with plan and led to a strong first half performance.
Okay.
As a result, we've been sorry, I just got a backup coal from an operator as a result, we've been able to strengthen our balance sheet from where it was at the start of the year with lower drawn debt and an improved leverage ratio.
Today, we're also updating our 2022 guidance.
Production guidance is unchanged with expected higher gold production from Io in the GPO offsetting low production expected from Hawaii.
Yes.
<unk>.
Production performance both year to date and looking forward has also led us to increase copper production guidance for the full year.
As expected all in sustaining cost has increased by around $100 per ounce or seven.
<unk>, 5%, primarily due to inflationary impacts.
Now expecting lower total capital expenditures for the 2022 year.
Scott Mcqueen, we're walking through our guidance changes shortly.
Earlier this week, we announced some of our new executive leadership appointments and today I am pleased to announce one more new appointment to the team.
A new executive Vice president of sustainability.
Finally later in the presentation will cover off on a delisting from the Asics, which was separately announced this morning and the planned move of our corporate headquarters to Vancouver in coming months.
First let's review the highlights of the second quarter results.
Just before I do I'll project can you just check that.
A lot of calls from the backup line from from you is everyone's able to hear me.
Yes, so youre coming in nice and clear.
Okay.
Everyone can take comfort that the backup line also works.
So I'll just start with the highlights of our second results our second quarter.
The health and safety of our workforce is our top priority and at the end of the second quarter. We had a total recordable injury frequency rate of $2 seven per million hours worked which is an improvement from the previous quarter and a good reflection of the care being taken across our business to keep each other safe.
I Wonder if your rates are currently cost at Mccray's and as part of the focus to reduce injuries that the sard held two safety stock days in the quarter to make clear our commitment to a safer workplace.
In the quarter, we also commend safety maturity assessments at all of our sites, which have now been completed.
What this will do well.
Leading to the development of a new three year safety strategy that we'll look to make all of our workplaces even safer.
COVID-19 had a variable impact across our business during the quarter.
It was a quarter on quarter increase in Covid related absenteeism at Mccray's, where 70% of the workforce experienced COVID-19 related absenteeism during the quarter at Wahid the level of Covid related absenteeism was down quarter on quarter, but still disrupted the tenants of around a third of the workforce in the period.
Title had no COVID-19 related absenteeism and the DPA reported only one case in the quarter.
Going forward, we expect COVID-19 related expertise in to persist in New Zealand. The rest of this year and we will continue to monitor and manage COVID-19 related risks at all of our operations.
Onto production consolidated gold production in the second quarter was 112000 ounces in line with our full year plan.
As we said that started the year, we anticipated that the second and third quarter production of 2022 would be softer than the first quarter, mainly due to grade before strengthening the gain in the fourth quarter.
Yeah.
Second quarter consolidated cash cost was $903 per ounce and our all in sustaining cost was $1430 per ounce.
Reflecting both lower production and also inflationary pressures, mainly higher fuel and energy prices.
Lower copper prices, all sort of impact of that unit costs year to date.
All in sustaining costs at $1243 per ounce.
For the third quarter in a row, we delivered positive free cash flow. This.
This enabled us to repay $50 million of drawn bank debt in the quarter, which further strengthens our balance sheet and we will reduce future financing costs. Our leverage ratio was below 0.4 times at period end.
Free cash flow generation balance sheet deleveraging and a return to paying dividends and vehicles remains an important focus for the company. It just allows us to both invest in high value growth opportunities, whilst also providing a return to shareholders.
Because it's so important I will touch on the delayed receipt of the hydro <unk> and the associated patents.
We've been recently advanced by the regulators of the C. O S is in the very final stage and it's close to being published and I know I've been saying this red two months now well ever since I've been told by the regulators that it was close to being published however, all indications are and our expectation is that the <unk> will be issued imminently.
<unk> will talk about this later in the call first I'll just hand over to Scott Mcqueen to provide an overview of our financial results.
Scott.
Thank you Derek and Hello, everyone.
Starting on slide five which includes an overview of our financial results.
As Jared mentioned and we've previously flagged the second quarter was not expected to be as strong as the first due largely to changes in the great profile at Haile.
Nonetheless, it is pleasing to report that the second quarter results were inline with expectations and as a group reflect continued delivering to plan.
As illustrated on the slide our second quarter revenue came in at 229 million EBITDA was just $175 million.
Our adjusted net profit after tax was $32 5 million.
This equated to <unk> per share fully diluted.
I'd bet when compared to analyst consensus of around <unk> <unk> per share.
It's worth noting that the primary adjustment to earnings for the quarter was a $12 million unrealized noncash.
Ex translation loss on the revaluation of U S dollar debt held by our New Zealand subsidiaries.
This is negative noise in the P&L during the quarter the lower exchange rate does provide real benefits in terms of costs and cash flow through lower New Zealand dollar denominated expenditure in U S dollars.
Operating cash flow for the quarter was just on $80 million.
More or less was lower than the first quarter. It is a significant improvement over the same period last year.
Net operating cash flow before working capital movements.
13 cents per share fully diluted which was in line with analysts' consensus.
The company generated a further 9 million of free cash flow in the second quarter lifting first half free cash flow to a strong $72 million.
Could have been stronger but weather during the final week of the quarter delayed our final 3000 ounce Dore shipment out of the debate.
Our solid financial performance has translated to a strong balance sheet.
As at 30 June the company held immediately available liquidity of just over $230 million, including $150 million in cash and $80 million in Undrawn credit facilities.
This is after a $50 million discretionary debt repayment, which we made in June .
Net debt increased.
Inclusive of equipment leases as at the 30 <unk> stood at 156 million or.
At 34% reduction relative to December 31, 2021.
Moving to slide six.
Which provides an overview of our updated 2022 production and cost guidance.
Our deliberate plan across the first half has provided a foundation from which we were able to reaffirm our 2022 consolidated production guidance as we continue to expect to produce between 445490 5000 ounces of gold over the full year.
However, as Darren mentioned like many other than air sector.
We have seen material inflation related increases in input costs across the business.
The largest single driver being increased diesel costs driven by high oil prices.
However, we have also seen notable increases to varying degrees across our operations and the cost of energy explosive.
Mechanical parts consumables and labor and services.
Well each operation continues to face some slides specific cost inflation challenges many of which we can't directly control our focus remains on what we can control.
Cost optimization through operational productivity and efficiency improvements.
We have a number of programs in progress.
Thanks.
<unk>.
As a result of these inflation impact combined with reduced copper and silver prices.
Impacting expected barcode revenue comp.
Company is increasing full year consolidated all in sustaining cost guidance.
$100 per ounce or around seven 5%.
As illustrated we now expect our full year 2022 consolidated all in sustaining costs to range between 1375 and $1475 per ounce.
This is of course subject to achieving our production guidance and the ongoing direction of cost inputs oil prices and copper prices.
Looking into <unk> asset.
It is pleasing to report that we are increasing the full year production guidance by around 15000 ounces.
165 to 175000 ounces.
This increase reflects the strong production across the first half of 2022, driven by consistent operation and a positive reconciliation on all tons relative to plan.
It's all our production.
The bond with the sustaining capital reductions has allowed us to maintain.
All in sustaining cost guidance unchanged at 500 to six to $800 per ounce, despite inflationary cost pressures experienced in <unk>.
Well. It also represents no changing titled cash spend we have included a $20 million reclassification of waste mining cost, which were previously included as capitalized as part of sustaining capital, which we now expect to expense directly to mining cash call.
Production at Haile is expected to be marginally lower across the third quarter as mining continues in lower grade zones at the <unk>.
<unk> grade and production increases in the fourth quarter.
All in sustaining cost profile is expected to reflect the production profile.
Yes.
Moving to the <unk>, where a strong ramp up in steady progress at full capacity across the second quarter has also allowed us to increase full year production guidance there by 10000 ounces.
110000 to 120000 ounces of gold.
Copper production guidance for 2022 is also increased 1000 tons to 12000 to 14000 ton.
However, the recent sharp declining copper prices combined with cost inflation impacts.
Primarily grid power has led to an increase of <unk> all in sustaining costs to 600 to $700 per ounce up from 500 to $600 previously.
Gold production is expected to taper off slightly in the third quarter based on the grade profile before returning.
Previous quarterly production rate in the fourth.
We are reaffirming the <unk> full year production guidance at 145 to 155000 ounces of gold.
As the operation make steady progress against that plan.
However, due to inflationary cost impacts are there.
Increasing the site all in sustaining cost to $14 50 to $15 50 per ounce up from the 13 under the 1400 previously.
Gold production is expected to be spread evenly throughout the remaining three quarters of the year.
We are revising guidance at and why he.
The reconciliation and productivity challenges experienced in the first half.
We now anticipate 2022 full year production at <unk> to be between 35, and 45000 ounces of gold.
Based on this lower production all in sustaining costs are now expected to range between 2000 and $2100 per ounce.
This is despite some cost reductions and deferrals of sustaining capital. The team has identified and response to the first half challenges.
On a positive note the production in the second half is expected to be significantly stronger than the first half at a lower corresponding all in sustaining cost than what's being reported today.
Moving to slide seven.
Which provides a visual summary of the changes to our all in sustaining cost guidance for 2022.
What we are showing on this slide is indicative tent.
Nicky extends from left to right.
Our estimates at the drivers of change from the midpoint of original all in sustaining cost guidance per ounce to the midpoint of our updated sustaining cost capital.
Cost per ounce.
As mentioned diesel is a largest impact which affects our open pit operations most acutely.
And combined with energy costs, which have been most materially impactful at the DPA grid tariffs have increased given the coal and gas mix included.
However, the inflationary impact has been broadly felt across a range of inputs, including but not limited to explosives mechanical parts on mobile and fixed equipment general consumables.
<unk> services.
As represented by the Middle Greenback.
Costs have benefited from a significant decline in the New Zealand dollar exchange rate, meaning in U S dollar and New Zealand dollar denominated costs are reduced.
As a significant copper and silver producer. We are also forecasting the recent metal price reductions to deliver lower revenue and therefore, lower byproduct credits across the second half.
And finally, we have ignoring the reclassification of mining costs.
Some modest reductions in sustaining capital mainly in Hawaii.
While we cannot control inflation impacts we are focused on productivity and efficiency improvements and procurement excellence to mitigate the impact.
Moving on to slide eight and our capital expenditure.
In addition to revising our production and cost guidance. We are also revising our capital expenditure with several reductions expected across the full year.
Starting with Tayo.
Where we are reducing total capital expenditure by approximately $20 million to between $1 45 and $161 million.
This mainly reflects the previously mentioned reclassification of waste material included as capitalized mining.
Now moving into mining cash costs.
And why.
We have reduced both sustaining and growth capital, which combined represent a $10 billion reduction in guidance to between 50% and $60 million.
Both are deferrals as the team focused on operational delivery.
The largest change being deferral of a planned upgrade not required at current or expected operating levels in 2022.
A smaller reduction in growth capital is also included at Macquarie is mainly the result of less than planned allocation of development cost the Golden point underground to growth capital.
Okay.
It's important to touch on also.
Given the lower year to date expenditure relative to our full year guidance.
This reflects the second half weighting of our capital plans, especially at <unk> and to a lesser extent the DBA.
It reflects the ramp up of capital projects.
At Haile the weighting of Capex to the second half reflects the timing of the EIF and associated permits were approximately $35 million to $40 million in sustaining capital.
And 30% to $35 million gross capital.
We expected in the second half of the year.
But is dependent on the timing of the SaaS.
I will now turn the call over to our Chief operating Officer Americas <unk>.
To talk about the higher operation.
Thank you Scott.
Hello, everyone.
The hiring of cornerstone Hoffmann planning on lowering injury frequency rate over the last four months.
Quick one for Qualcomm organ injuries per million hours.
At the end of the second quarter.
I'm very proud of our team for continuing to place.
Okay.
Eric.
<unk> continues to deliver.
Okay.
Thanks, Brian completed this quarter after a weak mining transition to the lower today.
The second quarter.
As a result second quarter production was fairly firm.
58 ounces.
Okay.
Compared to the first quarter.
Year on year.
<unk> represents a 34% and decreased also due to lower mine.
David.
Second quarter site, all in sustaining cost was.
$1432 per ounce with cash cost.
$5.
Yes.
Quarter on quarter.
A 2% increase in all in sustaining cost.
The lower grade mine, resulting in lower production on and taking place.
Thanks, Renata policy impact.
Thank you.
Total ore mined was putting up offsetting lower quarter on quarter as a result.
Out of Miami.
Which is consistent with the mine plan.
This was partially offset by positive reconciliation on our phones.
We are filing maranatha with Polycom workings.
Easily at home to be voids in the resource model.
Okay.
Excellent.
As a result of the operational improvements.
The increase of fragmentation.
ADP station.
Sure.
One 9 million tons three.
3%.
Prior quarter.
It is important to note that these operational results were achieved.
John Sheehan with a planned shutdown.
It took place in the quarter.
This included some milestones activities.
<unk>.
In the fourth quarter of this year.
<unk> completed in the second quarter going through there.
Packaging memory.
More muted gearbox alignment.
Iron on this chart.
Neil.
Which found no issues as well as a customer works.
Progressive carbon in leach for which have been ongoing over the past two year plus also completed during this shutdown.
These activities resulted in today's margins costs during the second quarter. This will reduce fourth quarter comparison.
Yes.
Jason I'll take that.
Our utilization of the cabinet.
Our next call.
Great of one six times.
Thanks, Tom.
Approximately 34% lower quarter over quarter.
Mainly due to my pediatric <unk> from HSBC.
Being at a lower average rate, which is consistent with your mind.
Mining unit cost decreased 5% quarter over quarter.
As a result of higher silver prices.
Julian diesel and mechanical products.
Landmark and nice work on the mobile fleet also contributed to the variance.
Reducing unplanned maintenance continues to be a primary focus of behavior management team.
Profit for the unit cost per tonne Neil.
<unk>, 5% quarter over quarter.
Due to higher costs related to reagents, and mechanical and electrical products.
In Flushing, Idaho impacts were partially offset.
By lower consumption of reagents with traffic G to a more effective more blending plant.
This plan was implemented to optimize throughput and cost rack racking Costco reagents that we have to see.
We've been able to optimize blending through improved communication between processing.
Mine operations and mine planning using long short term planning to anticipate or characteristics.
Along with last presentation is happy to improve <unk> performance.
Consistent performance on the Marriott communication has also worked to optimize the AGM Niels.
Neil.
Additionally.
Effectively the advanced control system to the Permian reagent needs based.
Based on throughput on our productivity.
We're able to reduce <unk>.
And therefore better control of the volume of reagents.
The timing has been continuously conduct costs actually collect data.
I'm better predict how recovery can be maximized.
Wasting reagents.
Now for an update.
Compared with you okay.
During the second quarter, we received international of attack.
This charge elimination of army.
On the construction permit for the water treatment plant expansion.
Thanks.
This allows us to introduce a lot of this charter rate to three and a half million barrels per day.
Up from <unk>, seven 5 million guidance.
Oxnard, the Waterford plants with Empire.
These to be fully commissioned by the first half of next year.
The company views the auctions.
<unk> development, which will allow the operation to better manage when a member, thereby reducing operational risk and improving operational efficiency.
I will also release today that the publication of the iron out ACI.
Amy.
As we have been led by Dr.
Communities in the iron ore majors.
Format.
Before it is ready to offer loyalty through international operator, Sir.
NGO production qualification.
The final record of decision and oil related Perry.
Required with patterns are.
Our behavior online.
The operating footprint on our core additional potentially after generating way.
On payment facilities.
Laundry facility and expanded storage facilities.
This past year.
B program, we have been reviewing that in my prepared Hercules to reduce any potential impact.
Of course.
As an example, where we're using more accurate calculation technique.
By reducing volume pack materials, extending the life of the current storage sites.
We have also modified with the signing of the Westpac area.
The outbreak we have managed to continue.
Patients in the area around or we can retire.
Hi.
By reducing Papua factor, we have extended the lack of the crude.
Storage area for the third quarter was 23.
The delay in receipt of the final record of decision.
<unk>.
At Napa private credit to production.
Very limited impact on the planet right into the mine plan.
However.
Or first underground ore production sleek beyond credit limit.
I will now turn the call over to Scott.
To discuss our thoughts on the GTO and <unk> Zealand operations.
Thank you Denise.
Hello, everyone.
After an exceptional ramp up the DPA continued its excellent operational performance and operating at its full underground mining rates of $1 6 million tonnes per annum throughout the entire quarter, while continuing to maintain our strong standard of safety.
<unk> reported one recordable injury per million hours worked at the end of the quarter and Pleasingly had only a single case of COVID-19 in the quarter.
<unk> maintained steady production and produced 29269 ounces of gold and 3794 tonnes of copper during the quarter.
<unk> second quarter, I think was $609 per ounce, while cash costs were $519 trials the quarter on quarter increase mainly related to our copper byproduct revenue and higher sustaining capital expenditure.
Despite the increase this operation continues to generate strong margins.
Total material mined in the second quarter with 397000 tons at 29% decrease compared to the prior quarter as during the prior quarter.
Operation mined 177000 tonnes of material from the base of the open pit related to the crown pillar strengthening project.
The second quarter did see an increase in underground tonnes mined as a result of achieving full mining results.
For a full quarter.
Mill feed in the second quarter was $1 6 million tons, an increase of 22% quarter on quarter as the new control expert system came back online in the second quarter after waiting on parts, which.
Late in the first quarter.
Mill feed grade was nine seven grams per tonne gold and 4% slightly lower than in the first quarter as a result of less high grade ore being blended during the period.
Mill feed composition to the second quarter was approximately 34% from underground ore and 66% from low grade surface ore stockpile.
In the second quarter. The company received the amended environmental compliance certificate from the Philippines Department of environment and natural resources.
Raises the regulated throughput limit on the <unk> processing plant from $3 5 million tonnes per annum to $4 3 million tonnes per annum.
Company expects to process approximately $3 nine 4 million tons. This year and we will also pursue several operating efficiencies in order to further increase plant throughput into the future.
It's also important to note that in accordance with the FTAA renewal term signed in July 2021, <unk> made the first delivery of gold Dore to the Central Bank of the Philippines. Following the signing of the purchase agreement between Oceana Philippines.
And the government and in line with the terms of the FTAA renewal <unk>, Philippines shall offer to purchase now less than 25% of its annual gold Dore production at fair market price and mutually agreed upon terms with the central bank of the Philippines.
Let's move on to slide 13.
<unk> continues to work on instilling a stronger safety culture.
During the quarter reported a total injury frequency rate of $6 6 million man hours down from seven eight.
In the first quarter.
Despite impacts from the workforce from COVID-19 related absenteeism as previously mentioned on the call.
<unk> delivered another steady quarter producing 36000.
<unk> thousand 868 ounces of gold.
<unk> decreased slightly quarter on quarter on the lower underground grades mined resulting in lower mill feed grade, which was partially offset by higher recoveries.
Cash costs were $942 per ounce swallow ISC.
$458 per ounce with the primary driver for the quarter on quarter increase being inflationary cost impacts from diesel explosion at <unk>.
Total mining movements increased 3% quarter on quarter and were in line with the mine plan.
Mining activities occurred in detail prices waist Guy Tang and anything you're allowed to pitch and crazy and Golden point underground.
Development rates at Golden point underground during the second quarter continued to be impacted by poor ground conditions and counted.
As development continued to cross the Golden point felt at several clients.
During the quarter. The mine plan was reassessed to reduce the planned number of full crossing which is expected to reduce the impact of the poor ground conditions on development rights moving forward in early July 1st Stope development or at Golden point underground with mind.
New fading create slightly quarter on quarter, despite an increased percentage of pod detail ore being processed during the quarter.
Feed grade was <unk> 96 grams per ton gold in the second quarter, which was marginally lower than the first quarter.
Gino average under that guideline being lower.
<unk> has been in operation for more than 31 years and studies are currently underway to support our resource consent application that would expand brownfield operations and extend the loss of them on beyond 2028 days.
These studies are expected to be completed in the fourth quarter of this year and we anticipate lodging results in St application in the first quarter of 2023.
Moving to slide 14.
And Hawaii.
<unk> total recordable injury frequency rate increased slightly from the three to $4 five per million hours work given that our priority is to safely deliver production slot management and our people are focused on bringing this injury rate down.
While challenges still persistent Martha underground the operation did see improved mining rates and reconciliation is modeling centered on areas better following Bob grade control drilling.
In the second quarter Wahid produced 8201 ounces of gold, representing an increase of 21% quarter on quarter.
This improvement was supported by the accelerated dry controlled drill program increased development and improved styling performance.
During the quarter, the first remnants stopes to successfully mined and delivered slightly higher tonnes and grade in the plan, although it took longer than scheduled to mind why he is looking to optimize the remnant mining areas, which represent approximately 30% of the resource post 2023, and we expect improved productivity moving forward.
During the quarter Wahid mind, 204500 tonnes of material, including 77 600 tonnes of ore.
Mill feed for the second quarter was 78000 tons, 6% higher than the first quarter and gold recoveries increased 2% quarter on quarter as a result of accessing the higher grade areas of the mine and process improvements within the plant, including adjusting mill operating parameters to improve ground performance and throughput.
This quarter's reconciliation of all monitor reserve was 87% on tons, 82% on grade and 71% on metal.
While the initial Martha underground mining areas have been challenging from a reconciliation perspective, the grade control drilling data. We now have has directed mining into areas of high confidence and we expect mining rates will continue to increase over the coming quarters as capital development is reestablished and mining schedules rebalanced.
However, there is a risk that annual production rates may not reach levels previously anticipated in March 2021 feasibility.
Study report.
Longer term production targets will be clarified once the loss of mine plan designs and changing is completed later this year.
Still anticipated Wahid production in 2023 and beyond will be materially higher than the 2022, and we are laser focused on ensuring the redesign process results and positive free cash flow over the mine's operating loss as we continue to advance Hawaii North project.
Turning to this project.
We have lodged a consent application.
With the Iraqi district in more kind of regional cancels. The cancels are undertaking a completeness review of the application, which is to be followed by a phase of public consultation and once completed the cancels will determine the hearing process.
Formerly considering the content application.
Yes.
Alongside the contained application the company continues to advance technical studies and exploration at <unk> to support the delivery of the pre feasibility study is drilling the data strongly supports further growth of the resource analysis is being undertaken to better understand mine design opportunities and the optimal target size for demands resource in <unk>.
Sort of the pre feasibility study on.
I'll now turn the presentation back over to Jared. Thank you Gerry.
Thanks Scott.
All in all a busy and solid quarter and a big Thank you to everyone at Oceania gold for their dedicated hard work to safely and responsibly deliver the outcomes. We shared with you. This morning.
I thought I'd take the opportunity on the call to cover off some recent announcements we announced early this week a chain structure and additions to our technical bench strength at the executive team.
Level. These changes include the addition of pay to shop as Chief Operating Officer Asia Pacific.
It is a very experienced mining executive with over 25 years of industry experience, having previously worked with Newcrest mining Saturday too and BHP is an excellent safety people and this is later and will be based in Brisbane when he commensurate with us in October 2022.
David Londono previously executive General manager of the higher gold mine in the U S has been promoted to be Chief operating officer of Americas <unk>.
<unk> has done a tremendous job at <unk>. So far this is a well earned promotion as he continues his.
Transformation, Ohio.
Scott Sullivan previously our Chief operating officer will take on the new Chief Technical and projects officer role in October .
And we'll lead group wide technical functions and provide strategic direction on studies and execution of major projects across our business. There is an enormous amount of value here and Scott deep technical expertise combined these understanding of their business makes him a clear choice of person for such a role.
February at current EVP exploration and development will return to his previous role of exploration AVP to focus fully on the Companys mineral resources exploration portfolio and future exploration opportunities. This is a critical area for any gold mining company and I am pleased to have someone of craig's experience and capability in this role.
And today I'm pleased to advise that Megan TLC is joining us as executive price exact.
Executive Vice President sustainability towards the end of this year Megan is a highly experienced executive in this area and brings to the role of particular expertise in social performance human rights climate change in <unk>.
<unk> and considerable stakeholder engagement experience on large complex projects.
So a lot of that she's joining the team.
And I'm really pleased to get these critical leadership roles filled by highly experienced and committed leaders I look forward to them, making a strong positive impact.
And to help accelerate the realization of the company's strategy.
Today, you will also likely have seen that we announced we have received in principal approval from a strange stock exchange of our request to delist from the <unk>.
There are a number of drivers of this decision, meaning that the level of shares held in traded by the ASX has reduced at very low levels and there is a cost and operational simplification benefits for us to consolidate our trading on the one larger and more liquid exchange the T. Six.
Those are listing occurs relatively promptly we're taking great care to ensure that share entitles listen only asics can transition to the T. Six as seamless as seamlessly as possible.
All have access to a share style facility to allow a fully reflective share price to be.
Obtained by anyone needing to sell their asics shares.
No cost.
Separately, we also announced today that I expect to be relocating to Vancouver, Canada in coming months, which engie costs, which will become the corporate headquarters for the company.
This change is driven by the fact that most of our equity analyst most of our shareholders. Most about trading is done in North America.
What time zone is also more favorable for coverage for all the sites in our portfolio.
Finally, I'd like to close out a formal presentation by reiterating our focus on delivering value to shareholders.
The strong first half results prove that our business sits on solid operational and financial foundations.
Wherever we have plenty of opportunities for improvement, which is particularly important in the current context of increased input costs and low they are still very attractive middle prices.
Our core focus remains working safely and responsibly.
Managing risks and executing on business plans and operationally disciplined way.
Optimizing production and lowering cost and maximize the generation of free cash flow.
And investing capital and using our exploration capability wisely to deliver profitable growth and attractive returns to shareholders.
Now turn the call back to the operator to take any questions.
Thank you Sir.
Ladies and gentlemen, if you would like to ask a question at this time. Please press star followed by one on your Touchtone phone you will then hear a sweet home prompt acknowledging you request and if you would like to remove yourself from the question queue. Please press star followed by two and if Youre using a speakerphone, we do ask that you. Please lift the handset before pressing any.
Please go ahead and slowly press star one now if you have any questions.
And your first question will be from <unk> Habib.
Habib Scotiabank. Please go ahead.
Hi, Gerard and Oh, I'm kind of old game of course.
First of all please pass my congrats too Brian .
And then going forward just a couple of questions from me.
So just number one drug in regards to the Cif and <unk>.
Consistently pointed out towards the delay in receiving the permit.
<unk> impact in 2022 guidance.
At what point do you think that starts to impact 2023 guidance.
From where we are sitting at right now and second part of the question is if you do receive the permit.
Yes.
How fast can you start the development work at scale.
Yes. Thanks.
Okay.
I'll have to answer your question, David If you can supplement anything that I've missed.
A reminder, that the 2023 contribution from higher on the ground is actually quite small.
And you look at the.
Technical report that we put out you can see that.
It was a very small percentage of all feed.
Impacting 2023, so if there is delay.
The consequence of that is not a loss of feed in total, but a slight loss of.
Great because we know that the underground feed is going to be higher grade than the than the than the open pit material. So there would be a small impact if there was further delay that caused that.
Underground hopefully to slip one year, but all that would happen from a bank perspective is.
As minimal impact because it just means that more of the oil.
It will feed into the later years.
In summary, I'm very small impact on 2023 numbers that we put out today.
How fast can we go we'll look at having been there twice in recent months I can tell you. The team there are absolutely ready and they have not.
Although that taking great care to make sure that the delay has meant that the time has been spent doing everything to enable a very clean.
Run at developing the underground once they do get the nod. So we've been able to this is probably going to be the best prepaid underground mine commencement.
History, because we've had the benefit of readying everything in relation to it and tightened the opportunity.
To optimize other associated projects.
That is going to give us some benefit.
Such that when we do go underground again linear and critical path to getting your <unk> is going to be a very narrow and much more in our control than it might have otherwise been davita is anything you want to add to that Allison.
I guess.
Okay. Thank.
Thank you Patrick.
On the feed in 2023 to replace them back down or because the underground ore is hardware, where we process less tonnes now if we can process on the ground or we will process.
Much more open pit ore and waste.
Cloud would be similar.
Similar ounces output for 2023.
Okay.
Okay. Thanks.
And Joe.
<unk> for that.
And then just.
Question on.
What you produce.
First half plus.
Going into the second half, maybe you covered it and I missed it I apologize for that.
Dan.
But in terms of the second half I mean is there a significant kind of movement in terms of going from Q2, Q3, and Q4 in terms of production and cost guidance.
If youre, referring to the company as a whole advanced or Ohio, specifically.
Our company as a whole on a consolidated basis.
Okay.
Primarily due to grade, we expect third quarter to be.
Yes.
As we said at the start of the year to be not as strong as the first probably in line with the second until there or thereabouts and then finished strongly in the fourth now from a cost perspective.
The.
Scott Mclean mentioned the <unk>.
Capital expenditure works, we expect to be higher in the second half.
So you could expect to see.
Our sustaining capital element of that would have an impact on all in sustaining cost inflation.
Inflationary impacts we've made an estimate using market prices today and our best knowledge.
And thats reflected in the guidance.
Third quarter from a unit cost perspective, you can imagine.
We will be.
Weaker than what we expected.
With much better volumes.
In the fourth and final quarter.
Perfect. That's it for me and and really good to see.
Hey, al <unk> as well as <unk>.
Looking stronger going into the second half and production guidance was increases there.
Thanks <unk>.
Okay.
Thank you as a reminder, ladies and gentlemen, if you would like to ask a question. Please slowly press star followed by one on your Touchtone phone.
Okay.
I've actually got a question from somebody who is on the webcast.
The question is does the relocation of the corporate HQ today Cooper Oceana M&A strategy will be geared towards North American asset.
Okay.
Thanks, Sabrina and web link.
Not necessarily I mean, I think it's fair to say that there are a number of opportunities.
That are in North America, and so certainly to the extent that they present themselves as interesting to us being located there.
Wood.
Would make such activity easier.
But thats not the primary reason the primary reason is as we said is is to be close to our two end markets close to our equity analysts closely to our shareholders and just a reminder to the head company of Osha on gold is actually Canadian so it's it's more of a coming home than anything else.
Okay.
Operator.
Are there any other questions.
Actually we do now have another phone question from Mike Parkin at National Bank.
Hi, guys. Thanks for taking my questions can you just go into.
Thank you called it the crown pillar strengthening project to dip Joe can you just.
Remind me exactly what's involved there.
What's driving that.
Sure Scott Scott Sullivan.
As for you. Thank.
Thank you.
Yes.
The bottom of the open pit was in a fairly.
Weak ground.
Given the way mining underneath it.
To be able to extract.
Safely underneath it to the levels that we wanted a plan.
<unk> was to mine out layers of that.
From the bottom of the pit and replace it with a cemented fill which is actually stronger than the initial ground. So we've got two benefits out of that when we created that I guess artificially strengthened crown pillar for subsequent underground operations and we also got some extra.
Or out of the open pit, which was slightly higher at about the same gold grades and slightly higher copper grades and underground and so we benefited from that displacing the open cut stockpile ore.
So dual benefit data.
Is that I recall, you pulling additional tons out of the pit like or maybe it was like three years ago now is that.
I get that the last time, you extracted ore from the pit and now you're just.
Finishing off the strengthening component of it.
Yes. This is the recent lining has been truly in Las Crown pillar strengthening project nothing Adam.
Residual capex or anything of the outcome.
Fully completed.
Okay Alright.
Alright, Thanks, that's it for me guys.
Okay. Thanks.
Thanks, Mike.
This time, we have no other phone questions.
Okay, well that concludes our webcast and conference call a replay will be available on our website later today on behalf of the management team and everyone at Ocean on adult I. Appreciate you joining us and wish you a very pleasant rest of day.
Button now.
Thank you, Sir ladies and gentlemen, this does indeed conclude your conference call for today. Once again, thank you for attending and at this time.
We ask that you. Please disconnect your lines.
Sure.
[music].