Q3 2022 B2Gold Corp Earnings Call
Ladies and gentlemen, thank you for standing by the conference call will begin momentarily. Please do not disconnect your lines and your patience is appreciated.
[music].
Sure.
Good day My name is Michelle and I will be your conference operator today at.
At this time I would like to welcome everyone to the <unk> Gold's third quarter 2022 financial results Conference call.
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After the Speakers' remarks, there will be a question and answer session.
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Simply press Star then the number one on your telephone keypad.
If you would like to withdraw your question. Please press Star then the number two thank you. Mr. Johnson you may begin your conference.
Thank you Michelle.
Welcome everyone. We're here to talk about is the shelf set we're here to talk about the <unk>.
Actual results from the third quarter of 2022, as we release them.
Thanks.
Well I'm going to hand over to Mike shortly here to talk about <unk>, our CFO to talk about the financial results.
It will give us an update on.
Our operations.
As we previously announced.
Production release for the third quarter.
We were less than budget in terms of our ounces produced and there are reasons, which are detailed in the business and we will discuss some as well primarily it was higher one charter and expectedly pulse.
The difficult market, which will allow us to access some higher grade material that was projected.
And our budgets.
And the other being the other factor was.
But the highest schedule Coca Cola and getting the other graph.
Because we get placed.
Contractor was outperforming the better contract both of those things are.
Quite clearly is that progress the driving force.
Production for both of those are issues that are since Brexit by themselves as we speak in fact it.
If a cola mines.
Sure.
Subject.
Subject to final as 225.
Auditing, we've produced 70, approximately 77000 ounces in October 1st of all so thats getting into this much better grade that we couldnt get into before because of the range and thats the kind of performance.
Our focus we expect.
For each of the bumps in the fourth quarter, which if you do the math with respect to the projections that we have thats why we ended up or at least very importantly.
We are very confident to say that we're still.
Target for our consolidated for the year guidance, both interest production and in terms of operating in all sustaining costs. Similarly positive note. If you look at the first nine months of the year, because we have such a strong first half of the year production. If you look at it.
The third quarter, we were actually very closely.
Budget in terms of.
Operating all sustaining costs. Despite the fact, just in the quarter was less than anticipated as I've said. So the key thing here is we have our some of our fixed costs. Those costs are divided by less ounces in the quarter because of the production shortfalls as we discussed so therefore and youll hear more about wherever some confidence.
Turning to what we did see.
In the fourth quarter, and beating that guidance, we've had over five years, leading our own budgets quarter by quarter for over five years. So obviously, it's disappointing to have a quarter, where we're a little bit behind.
Albeit catching up but we're.
That's what I'm here today with the reasons why we're so confident.
Beating that.
We're also going to hear a little bit today from bill on the call to update the exciting progress, we're making there were some excellent German soldiers.
It needs to call a complex as we now call it at our plants to look very seriously at.
Building on that with no. After initially trucking some saprolite material topic looking at building another build to focus on separate materials to the north which could dramatically increase annual production from so Paulo.
In terms of before I pass the call just a couple of thoughts and grab philosophy would be announced officially that.
Anglogold Ashanti have ourselves have decided to.
Put the asset up for sale.
And we discussed it before I think it has some detailed the reasons for that despite our attempts to improve.
We approved the project through cutting through some cost cutting measures capital cost inflation data with us, but also we had hopes with further drilling to perhaps upgrade the resource that didn't happen. So it's about the economics of the other data did not meet our entry level criteria.
Sure it can be at the same assessment, so we're looking to.
To see where we can go without asking in terms of asset sale and this is consistent with our corporate strategy of recognizing things, where they should be our priority, perhaps that don't meet our criteria such as bending the nicaraguan assets into caliber they've done a great job, we're happy to show US a caliber those projects were getting on swaps in our world and similar to what we did the deal over to Tito vessel.
West Africa binding to <unk> shares.
Sure they want to go into those successful project it will probably be somewhat smaller than what we would've been building there back in the days will be all of it. So it's consistent with our strategy going forward, obviously, our focus will be continue to.
For the first quarter of our production get back to our quarter.
Delivering another good quarter also will be focused issue here on the.
Upside potential and difficult complex and looking at other exploration opportunities, we are entering into more and more relationships junior companies to help them in terms of funding the registration programs and offerings and technical assistance.
I think that seems to be very welcome strategy and the kind of market that we're in today. So if we can help with juniors and ultimately down the road as they look to joint venture project.
Catherine.
That's for sure.
In addition that we are looking at M&A, we don't feel we don't feel a sense of urgency in that regard, but we're always looking at I think we both increased our interest in potentially exciting are the right fit that will require.
<unk> always given our history of finding an accretive deal it would make sense to us into to our shareholders will prosper as we bring our expertise our financial strength of our research expertise to bear.
The issue there with M&A spending on oil and gas parts and I do think today's opportunity to get into it but I think what are the threats to the growth of the gold sector.
Financing alternatives, such as true streams in private equity financings that are very expensive and ultimately my opinion damaging to the show us the small companies down the road.
So we're hoping that we can encourage people to realize that right.
Circumstances for their shareholders and consider opportunities for companies like <unk> and others can cover that.
The merger of opportunity, where everyone wins as these projects get advanced on reasonable financing terms and with teams that are proven to be able to build these.
These projects around the world.
So with that I'll pass it over to Mike to give us a rundown on the.
The.
Oh thanks.
The results of that as I say Bill will talk about operations. We are we have our.
The majority of our executive team here or in fact, all of US here and all of its old.
So we will take questions after that.
Yes.
Spitzer terms.
That's your various questions so Shelly sorry.
Michael.
Thanks, Paul.
I think clients basically set the same there for the Q and I look at it in the quarter year to date, so I'm going to try and focus just putting.
We put in this quarter in context of work.
We were at the half year, where we are at the end of the nine months and where we expect to be for the full year.
As we reported in our results production was lower.
5000 ounces in Q overall on a consolidated basis and that's really it's a great.
It's driven by great. Its a temporary change in mine sequencing that strip on that.
Issue that we think it is recoverable.
Overall in the year.
So we did have heavier than normal seasonal rainfall colon that limited our ability to access the higher grade.
Four in phase III for coal pit, which is what we'd be distributed towards.
Forecast to produce in the second half of the year.
And then we also had delays, though we did identify earlier and youre getting into <unk> and <unk>.
I'll check underground higher grade ore.
Lower development rates earlier in the year and we identified that as a problem. We did replace our mining contractor there and underground development has picked up and is on budget now, but it didn't mean that we will check production got pushed out we thought we may have some of it in Q3, but it's actually got pushed into Q4.
And when we get into the higher grades there.
So really its a sequencing issue when you take into context on the whole year, we expect to see a reverse in Q4.
So call it six.
Forecast the grades so that whole mining phase III takes somewhere between 3435 Gram per tonne will see the benefit of that in Q4 and into next year and through Q4 overall I think we see for cole of mine great Summer somewhere north of three grams per ton and so thats the kind of like pick up the grade that we see will drive.
Ross I'll just hop in.
Higher production, we're running in the higher grade stays at six six times.
And then what's your quota.
We're at the Wassa underground where face now we've got stope Port and we're also in higher grade portions of the hydrocodone.
Developing so all of those things.
Help us pick up that production number.
A reversal overall, we still expect to make our full original production guidance ranges between on a consult full consolidated basis, excluding caliber of 990000 to 1.050 million homes. This will mean, a big Q4 production.
Target for coal and wood you code on basically business as usual as Ms. Patti, but like you say, it's great driven and it's still it wasn't the mine plant is still on the mine plan is just pushed.
Q4, we think it's very doable. So we think overall for coal will be well within the original guidance range of 570 600000 ounces.
I think people will come in lower and if it is we guided uplifted range of $2 50 to 225000 ounces in order to Dakota, we think there'll be at the low end of its.
We guided range of 160, 575, but overall consolidated basis right in that range.
And also just remember where we were at the end of half. One we were overall I had colon or Dakota, we're pretty much on budget and bottomless value was ahead. So when you take that context, where we were at the first half you had on the Q3, where we did we are behind the.
Sequencing, we still a bit behind in Q3, but the shortfall is not as big as the overall shortfall in Q3, and we think we can pick it up in Q4, I think building a bit more detail on that in due course.
On the operating results I think you also have to read those.
Does this also cash costs all in sustaining costs.
In the same context.
Where we weren't the first half what happened Q3, and where we expect to go through.
Full year two for the quarter.
I mean cash cost and all in sustaining costs were higher.
At all sites and expected with the primary driver of the lower Q3 production.
Costs in the quarter did continue to be impacted by higher than budgeted fuel cost something that we'd seen built up over the year at most sites and some other consumables, but by far the main one the main drivers fuel.
But there were some offsets that.
Because we'll shake underground mining is not coming online production base until Q4, some of those costs didn't come in in Q3, as we had expected.
Some lower haulage cost and some lower than budgeted mining constant for Colette you to the sequencing there.
Six production.
And then we also had a weaker Namibian dollar, which benefited our cost of old Chicago.
And then the all in sustaining cost higher cost cash cost did slow into that overall all in sustaining cost number as well, but there were some other offsets and all in sustaining costs that were lower than budgeted sustaining capex.
It's a timing issue and I think we expect us to reverse in Q4. We're also getting the continued benefit of fuel hedges, we realized from the fuel derivatives. We've got we see those as an offset in there.
All in sustaining cost calc.
So again put it all together.
For the full year, we're still expecting to meet our original consolidated guidance ranges for both cash costs and all in sustaining cost.
Because we think it will be at the upper end of the range that in that range 626 60.
<unk> per ounce.
And again, that's a function of we will get back to production number there are slightly higher cost is fuel flow through for the whole year, but overall, we think we will be within the range, but maybe at the upper end and all in sustaining costs, we think will be in the range.
And.
Look at that where we are in the context of the nine month period consolidated cash costs were broadly in line with budget.
Gross constant close to budget and we've got the impact of higher fuel costs flowing through there for the full year, but we've also got the offset some of those offsets that you've mentioned like lower mine tonnes from.
Some of the benefit of lower bullshit underground mining costs and that we can maybe dollar all of those benefiting cash cost for the full year.
Fuel prices have increased over the year, but theyre not uniform at all sites and for coal as we previously explained.
We actually haven't seen is big.
Big fuel increases we might have expected there were delays earlier in the year as the government didn't test on what we've received in the market as fuel prices, but the government set pricing in the year. So that means when you look at for color and context.
Year to date fuel prices are actually basically in line with budget and <unk> was actually slightly under budget.
I've also got we do see higher fuel costs as the other states.
And just for the analysts I guess for the balance of the year, we've assumed that what we saw at the end of Q3 as fuel prices does that influence that may or may not be conservative depending on what's going on in the fuel market right now.
Another power energy point to make a couple of points to make on the old Chicago now.
Connected into the grid.
So now we see that.
And it will significantly reduce if not eliminate the use of a triple for powering the mill at <unk> as we go forward because we can take that lower grade power when we're not using.
We are benefiting from the solar plant, there, which is to significantly reduce our costs and we've also seen the same thing for coal at both of those sites.
So there are solar capabilities are.
Basically reduced our mill power cost from anywhere from 17% onwards.
In terms of overall costs.
Benefits, our overall cost profile.
And when you look at all in sustaining cost for the full first nine months pretty again overall pretty much in line with budget.
This online cash cost pretty much on budget, we've got significantly lower than budgeted sustaining capex for nine months for about $36 million under but this is another temporary thing we think that will reverse in Q4, that's what we've guided in our results.
Production year to date will flow, but overall, we're kind of in that ballpark and the other thing thats benefit at all in costs for the nine months. The fuel derivative program. So we are seeing higher fuel costs at sites colon not so much but the other side, it's a bit more.
But we've also got realized gains in our fuel for example of about $26 million or basically offsetting those fuel price increases. So you put all that together, we think the cost the overall cost profile for the business.
Holiday basis for the nine months of the year is definitely in line or can't be roughly in line with budget and so.
Production will catch up to where that was temporary in Q3 Capex will catch up in Q4 it was temporary.
And in Q3 cash cost will be a little bit higher up the curve because fuel is a little bit higher.
But we also have the benefit of Q4 derivatives all of that means we think will bring all in sustaining cost for the year well within the original guidance range puts it in the context of what's been going on in the world all year to meet that original guidance range, we're pretty happy about.
That's sort of high level picture of.
The operations a few other things going on at sites.
We have continued to consolidate licenses as we've gone through the year and modeling. So we picked up the <unk> license, we picked up that don't go in and close that now and now we're really looking at how do we bring all these new licenses that we have into the production plan.
So we'll talk a bit more.
What we see in adding condo theres, a phase one trucking plant, where we could get some more production through the mill from saprolite trucking in this phase II, where we actually look at building the second maybe an oxide mill.
And that could significantly increase our production for portfolio and the short turbines, especially in the longer term.
We're also working on the various tactical agreements.
Fiscal stability agreements to port all of these things in place.
The medium to near to medium term so that we can sustain this production level in the long term.
On slide mentioned Gram of launches so yes.
Yes.
We have we have.
With our partner there.
We should start a sales process per Gram will actually in Q4, and we'll see where that takes us.
That's high level.
The production and the direct site results fueled that things maybe to comment on in the financial results themselves.
Hi.
Foreign exchange, we did get we did see you had $8 million in the queue.
And that's a function of we've seen.
Currencies weakened significantly in Mali, and maybe it's so in U S dollar terms, but when you translate those local currencies.
It is a foreign exchange loss and we did take a derivative loss of $8 million in the quarter as well most of that's unrealized $17 million unrealized offset by 8 million realized gain in the Q, but like I say year to date, the realized gains of $26 million.
Unrealized losses of eight.
The only thing I'd comment on and the financial results like the tax rate Theres, a significant deferred income tax expense $35 million and most of that is foreign exchange stripping the game.
It's an accounting issue, it's noncash and it's basically related to the translation of tax balance sheets in Namibia.
With the reduced.
As those currencies weakened at least.
Deferred income tax charge.
So overall for the Q factoring in the lower production the lower sales that came through in some of those other items I highlighted we had a loss for the period of just over 20 million $21 million or <unk> <unk> per share on a GAAP basis once you adjust out.
The significant non.
Noncash items are significant nonrecurring items, we had adjusted earnings of 31 million or <unk> <unk> per share.
Yes.
And on the cash flow side few things to highlight so cash flow from operations for the period 93 million, we had guided that we expected to see cash flow significantly uplift in Q3 and Q4, it's a very much a second half of the year weighted thing after this year.
Cash flows operating cash flows for the period went as high as we thought because of that shortfall in production. So again expected to cashless pick up significantly beat EBIT more significantly weighted to Q4, as we see that higher grade come through in Q4, and the ability to sell more of those higher grade ounces.
On the financing side dividends for the periods 40 to just under $43 million.
Still at that <unk> <unk> per share quarter level, and still one of the highest dividend yields.
Mining sector.
And we're happy to sustain that.
And then on the investing side only 55 billion for Capex in the queue. If I can say, we are significantly under both sustaining and non sustaining capex budget for the Q and year to date, but we expect that to pick up in Q4 and overall, we see I think capex for the full year, we're pretty much going to be in our budgeted guidance range.
Maybe one item to highlight.
Happened in the quarter, we had $45 million at FERC consideration that we were waiting to come in from from our sale of quite matched or exceeded the spin out of some assets.
Protein assets to West Africa resources. So we had planned to take that $45 million, maybe in a mixture of cash and shares but ultimately we elected to take all cash net benefited our invested cash flows by about 20.
$2 $5 million this quarter.
All said and done we ended up the queue with $550 million in the bank very solid position.
The line, our revolving credit facility lines fully undrawn $600 million on the line with another $200 million accordion feature and a balance sheet. That's overall virtually debt free there are some equipment loans and leases on there but they.
We're down to like.
Not much more than $30 million right now so basically debt free on the balance sheet and very solid financial shape.
So I think I think that's pretty much all I was going to mentioned in the quarterly results.
Thanks, Mike Okay, well first of all as though there was a lot of the.
Indication of why he with the operations team.
So confident about our.
Ability to meet.
Yeah. Thanks, Thanks, Bob.
As Mike and quiet kind of already.
At a high level talk about really there was two key issues.
It's really boils down to two key issues the underground at <unk>, which I think we really since Q1 kind of been forecasting that we were going to be behind so that shouldn't really be a surprise and then of course the water issue at Kola, starting just just working our way around all three operations Masbate, we see.
In Q4 call issues there.
Steady state as you have seen the other three quarters, we certainly see us we don't see any issues coming in at the lower end of our uplifted guidance.
On Chicago.
It's been discussed we changed out the mining contractor in April .
In April it took them obviously, a couple of months to get themselves all ramped up but as of June they were meeting or exceeding.
The development meters as the production schedule required and as Mike indicated we've already got into some stope ore and so we see in Q4, a very good quarter.
And that's at the lower end of our revised guidance for <unk> and then at the Cola.
I've hinted at or send it actually in October we had an amazing month.
In excess of.
76, almost 77000 ounces.
Of course, it's still early in the month.
But we see we definitely see the grades.
Wanted to see.
We have removed the water from the pit and we don't see any issues where out of the rainy season now so we don't see any issues here in November and December .
Really seeing very similar numbers and production as Mike said, we were seeing better than three grams per tonne coming through the mill now on average and we expect that to happen through the end of the year and actually into Q1 of next year. So.
We think we're set up really to meet our guidance as previously discussed.
Maybe just a little bit on the development projects.
Going forward into the Anaconda area really you have to remember kind of what we what we were trying to do.
As Mike said, we're trying to do a phase one and phase two development for Anaconda, where phase one is a trucking.
Scenario basically we're going to pick up some of the higher grade.
Saprolite areas of the Anaconda area.
Anaconda region and truck those times call. It so what we've done where we're in the process of finalizing all the permitting but in the meantime, all the equipment has been ordered and is actually starting to arrive on site.
All the infrastructure that being the support billings things like warehouses and shops those have all been ordered those are currently our largest.
Team itself.
<unk> construction team is starting to come back together the earthworks team and some of the infrastructure team is back already on site.
Do we take offs for electrical electrical and that type of stuff. So we certainly see that the schedule that we have putting putting anaconda into production next year.
In Q2, we see that is very real.
Additionally, we've talked about development.
Underground Cola, we have we have signed a letter of intent with an underground mine contractor for that development.
We are anticipating that there'll be onsite in January we've already received approval from the government for the interest for the infrastructure that goes along with the underground.
So we will put that in the plan really is to start development of the underground in Q2 next year that remains on schedule.
Regarding kind of longer term projects, we talked about phase one being a trucking study, but we actually have phase III when we're looking at developing a separate mill.
Up in the Anaconda area for initially potentially.
Sides, only but then potentially expanding that into fresh rock and John Rajala.
And Peter My Tani.
Two guys developing that with like a podium that scope has been identified and we're starting on that study right. Now I think we're saying the end of Q2 next year is when we're going to kind of start to see results on that.
So we see that as a very real thing so.
So much so that we've already included some of the.
Front end engineering and design to the initial contract like the podium. So that's what you should look for us to try and fast track and then just talking a little bit about.
We don't get much talk to the solar plant when I heard Mike mentioned and it made me think of something we're actually as part of our just part of our kind of ongoing studies, we've had to look at and we continue to decrease our.
Our reliance on H F. The Cola so John and his team are looking at a study where we basically during the daylight hours take this take the HMO plant down to zero generators basically running off of pure solar.
So that study is getting picked up I think there is time.
First meeting is tomorrow.
We're talking about kind of a Q1 decision on that that also has.
Our fast track, where we could where we could move very quickly and put that into production.
Over the short term and then of course as part of our inner Carton development, we'll be looking at solar out there.
I think thats, maybe maybe it's <unk> and takara.
Oh of course.
And don't go deposit that is that is currently scheduled for.
Really development into the second half of 2023, but we have to remember we did the study with consulting where we've really tried to optimize production from everywhere. So it's not really.
And don't go while it's important to get into our schedule.
Being similar type grades coming out of Anaconda, So I wouldn't focus too much on wind and local comes in just know that that resource is also on the pipeline. So we're basically going to have the optionality of taking from wherever we're going to be able to expose the highest grade.
Thanks Bill.
Just to put it over for questions just to mention.
Exploration.
Had some tremendous results.
We've put out.
Well the Anaconda region.
Both central not only giving us.
Great encouragement about the validity of building a second plant.
As we discussed it could increase production.
These are a thousand houses.
Potentially.
That continues with very good results are expanding oxide.
25 kilometer belt, we have now but also some of the excellent drill results we've seen in mamba at other.
Other areas.
Further south.
The potential for additional for Cola Sofa type deposits.
That's a potential throughout the belt with numerous targets.
But we do have previously said that our new based on some of the acquisitions that we've been doing so we see this very.
As Tom likes to say on the other exploration guys talks about internally is that we see this despite the great successes, starting with Fortunately announces it for call up being somewhere over 10 million ounces of resource now we really see that were still actually in the early stages of exploration of this rather extraordinary gold belt, what we'd call bill likes to call it that.
Difficult complex, but so we'll have more results coming out through the year several drinks churning at our major program.
Looking to further expand the oxide so saprolite material.
Deposits, but also intriguingly following up with some of this really good grade material below through numerous targets up above the belt, so well so we're exploring and it's similar.
There is an exploration has been a big part of the success of each vote.
For feasible for Florida for many years, so that continues but Ralph successor on websites, but also additional opportunities the cheapest ounces will always be the what you'd find so we have.
Actual exploration programs looking favorable.
With that Michelle we will open up for questions.
Thank you.
Ladies and gentlemen, we will now begin the question and answer session.
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Your first question comes from Lawson Winder of Bank of America Securities. Please go ahead.
Hello client, Mike and Bill Thanks for the update today.
I wanted to start off with a question on M&A. So.
He has scour the globe for potential acquisitions or keep your eyes open for potential acquisitions are you seeing any opportunities.
Today, and what are the target geographies and sort of how large.
A an acquisition are you guys thinking you could.
Could make if the opportunity comes along.
Sure.
Well I think the good news as we said.
Open across the entire spectrum, given our success in the past and given our technical strengths that our exploration capabilities along with the rest of it the ability to do so financially strong and also some tech will be strong.
But also construction.
And because of our track record with JMP led me to go into being able to do this.
Just anywhere in the World successfully time and time again, we always talk about that as costs from the corporate culture and the.
Perhaps secret sauce, so just delivering on the promises you make everywhere you go.
So we look at everything from as we set out early stage exploration joint ventures or investments in Juniors, who are projects, we think are exciting.
It helps us financially, but also help them with.
Exploration expertise or perhaps a larger relationship down the road.
We're also looking for.
Potentially development projects, we have are.
Construction team guys Bill mentioned getting busy now.
We'll accomplish some of the other caller region et cetera, but we have the capability to take on another development project. If we find the right fit our history through both be that vehicle has been very disciplined with our tests to diligence, but very disciplined about the acquisitions. We do they have to be accretive based on our reasonable gold price has to make sense to own.
Our stakeholders to why we the two transactions like that with every case, we've done every acquisition we've done we've never paid up for exploration upside.
Should say, but on the other half we've always found tremendous exploration upside to make an accretive acquisition look even better.
So also potential mergers with other producers.
We're interested in the possibility that as or somewhere else, where we can bring our financial strengths our expertise to goodbye with someone else who Scott.
<unk>.
The expertise in other areas of the world to combine to go and build a bigger company that's definitely of interest to us, but once again, that's got the right fit.
Have a history of responsible.
And then we have acquisitions.
To continue that I touched on it earlier and I don't want to blame it on but Jewish today, but I thought I am concerned about.
Single asset companies.
Have a project that we may find attractive.
It could help with or do a friendly takeover <unk> done in the past.
Today is a lot of single asset.
Companies out there.
15 years ago, there would have to be in context of the market today.
In the sense that they would have to consider a merger or a takeover.
A bigger company that ethics financial capabilities. So the type of capabilities to build the mine a lot of these companies cannot get traditional reasonable debt financed project financings. They also have a market to skeptical understandably because of too many failures. Unfortunately, our industry loss stood at 15 years of projects not being what was advertised in terms of construction in terms of the.
Projects or the price paid for the project. So do you have.
Today's over Fortunately I don't think its a good thing for the luxury industry because you have companies that really should be.
Open to a merger for the vessels that have showrooms are a takeover.
But they have this opportunity to finance through.
Streams, which we know can serve a purpose, but they definitely mortgage the future of the company.
Pay me now or.
Maybe later in the day those could be.
The extreme I think could be not good for shareholders and secondly, some of the private equity financings we're seeing.
Our very if you really dig into the terms offered redacted disclosure, which should change but at the end of the day you look at some of the terms of financing. So at the end of the show can lose out, especially the management of the company or the board gets to keep going and saying, it's our baby and understandably that when they try to build it but at the end of the day, it's the cost to shareholders.
Sure there's actually more importantly, there's a bit of a long term can be quite extreme. So I think that's a trend that I don't like to see in the industry. I think we should get back to people that can do financing. So reasonable terms of people that don't have <unk> should be the what's doing it.
It's worked for us in our industry doesn't help anybody in terms of ports.
So thats a disturbing trend in my mind.
I think people need to consider doing what's best for the shareholders.
What they look at the possible.
Fiduciary duty to build shareholder value, so, but we're looking at that number of opportunities. Once again, we'll continue with our disciplined approach, we definitely don't feel there'll be held at our plate and some of the opportunities we're seeing such as Cola complex expansion, we don't feel a desperation to go into a deal and we seem to have based on her last annual general meeting of commencement of support from our shareholders to.
Continue the strategy of this company of course, the idea is to continue to grow after Ted remarks, 11, rebar couple of years of growth from durable production 2 million options appear so far so more to come in that regard.
Okay, a lot of food for thought there if I may I might just ask two more questions I wanted to ask about the.
Mallein mining company audit that I think we've all heard about and just get your thoughts on the nature of that.
And whether or not there is an expectation that there could be potential changes to the mining code coming or if there's some other read through.
To take from that thanks.
The peso with Mike.
Okay.
I think that the audit the audit is pretty wide.
<unk> I think it's basically looking at how mining companies and the government interact as I understand it. So so I think from our point of view it pretty well placed in terms of the audit because its going.
Where do you see changes to the mining code I think we've heard rumors maybe of the new mining code, obviously, whichever mining code, you're under your license or under which they relate.
Could they look forward and change it may be but I think they are also trying to figure out.
Although the government and the company's best interact to the band for the mining overall in Bali. So I would say Theres no no significant ones I want to comment on right now at Bill's probably get closer to it.
So I think.
Materially sent with their what they are.
Looking forward, we've actually been very working very closely with them and what we're hearing is what they're really trying to do there's a lot of talk in Mali amongst the general population as Mali getting the benefit out of what.
Out of their goals right. So this is really the government's attempt to try and quantify what they actually earn from <unk>.
Mining so we see it as a very.
And any on it could as far as any or it could be I suppose we see it as a positive.
<unk> certainly could understand al just how much they do benefit from having foreign investment for sure.
The other thing is as part of this they've actually asked from our side.
Are there any things that we are not that we think the government can do to improve the relationship. So it is a bit of a two way street. So while it is still an audit.
At least it seems.
On the face of it.
They're trying to make it better.
We don't consider it to be predatory audit or say this is something where I think it's really I'm glad you asked the question because it's really important understaff phase III gold mining in Mali in the history of governments.
Good government.
Policies and laws towards for divestment.
Part of the economy, that's not lost on the current government or previous coverage for future governments.
I disagree.
Disagree relationship we haven't actually they ship.
And to the government talk about beautiful.
We're definitely they hold us up as a good example of what they want in terms of responsible and transparent.
For investors.
So we're very comfortable there.
Working very closely and the government has a 20% partner don't forget not only for coal, but also in the HR for Cola complex. So the government when we talked about in the cargo. They said that they say it goes to how fast can you get their production because of the substantial revenues and the other point I'd make is what bill said.
People around the world are trying to figure out what the benefits of local communities and countries are.
To the mining industry as they should do with every industry, but if you look at the Q cyclical once we recoup the original 500 $600 million.
Capital cost to build the volumes from sort of the 100%.
The numbers suggest that the numbers show that the benefit of all.
Operating activities from the profitability of the buy.
Benefit created by the volatile people through their government through <unk>.
40% ownership through.
Through dividends royalties et cetera, actually get more than 50% of the economic benefit of difficult months.
That's something that we.
We're proud to talk about.
This has to be with the situation and the future of this already industry in the other businesses, if you're going to be a quarter westwood's countries. So I think that's a really important point to remember about us not at all lost on the government and all that so we're comfortable with our current government future government.
They're moving back back to Democratic elections are will continue to recognize maybe even more so after COVID-19 and intellectual struggles for many countries of the world is the importance of further Florida investment. So it also goes I think we've really done an excellent job through all of our operations are actually set records for both production J code, which is quite remarkable and more importantly.
Kept our people safe and working in these jurisdictions are critically need.
These jobs final call that.
In terms of mineral concessions, it's really important to point out that many countries. Kevin don't have the protections that you haven't.
Holly.
Which is if you walk into the writing convention you lock in your tax rates.
And if you look back historically in the early nineties with Branco equate to one of the first movers in West Africa, Bobby and others was incredibly successful to their credit to go in there early and explore and discover they had some very low tax rates, 3% royalties five year tax holiday.
And those things by not that many years after it looks like the word perhaps the best thing.
They weren't they were industry standard deals at the time, but they've made locked and the best some of the benefit of hindsight in terms of for the country people. Both of these countries, but the government body never went back ever tried to change those.
<unk>.
Conventions that.
<unk> and other companies have so it's really up to the rule of law, which is subject to international arbitration they'd be Brexit their loss. If they were to go try and suddenly arbitrarily change tax rates et cetera, that's very important and we've seen a history of not doing that so we have higher tax rates of course of the back in the day as I think they are appropriate.
Got it.
Be careful not to kill the Goose for Mexico.
Taxation in any country too high to encourage foreign investment.
But we're very comfortable with our history. There are relationships. So they are the current conventional word under and we don't just see I think there's a lot of misunderstanding in the marketplace. Some types of these countries, where there are always going to wake up one day and decided to rationalize buy ins or to dramatically increase the taxes et cetera. We just do not see that there is true that we have no reason to see that going forward. This was an excellent.
Relationship would be to go to the government.
Bali local communities local governance.
Our relationship.
Really it's the government as you can hear them talk publicly about.
Investors like yourselves feature both.
A good model for responsible for an investment.
Okay Fantastic and then just one final question, which would be on looking into 2023 on cost, but in particular for Cola complex development. So it sounds like you are pretty far advanced if you expect to have a study out in Q2 of next year could you give us an idea of what kind of Capex you would expect that project to be overall, but then more.
I mean also very importantly, how much of that Capex would you expect to show up in 2023, and just if you can provide any sort of sense of Directionally, where you think capex will be going in 2023 versus 2022 and that's it for me thanks very much.
Yes, So I think John would kill me, if I started throwing numbers out since we're just starting the study tomorrow.
Andy yesterday right.
So I don't want to I don't want to comment on it certainly when we did kind of a scoping level study, we were throwing kind of back of the envelope numbers around which I think we actually put out their mill at $300 million something like that but that that was just a kind of a scale up from a study would be 10 earlier, so let us let us take a little bit of time and get some real.
Members in and come back to you, but we do have we've got a major tailings.
Expansion next year were doing a wholesale silly, so thats a big one.
Certainly as you know.
Putting in the road in the underground we've got $50 million in capital already in this year for that so all of those all of those projects will continue but right now I'll just cycle right now so I don't want to say what the final numbers are until we talk about it internally.
Thank you. The next question comes from Anita Soni. Please go ahead.
Good afternoon, everyone and thanks for taking my question I just had.
Most of the questions Boston asked about costs going into next year, but let me just get a little bit more color on <unk> and the types of grades and tonnage that youre expecting to see I will say again.
In Q4 and will that persist.
Onward.
Or should we expect.
A bit of a cold.
In the first half of the year.
So you're talking specifically about the underground.
Yes, Sam this is wolfgang.
The underground now.
Okay. So just so happens and I ask because I thought somebody would ask this today.
E mail from site.
We're really talking about.
In excess of six grams in Q4.
And then coming from underground of course that'll be blended.
Some of the lower grade stuff.
And in particular in particular and huge.
Well, so basically over the next little bit, let's say for the next year, we're six plus cramps.
Okay.
And what kind of tonnage are you guys pulling now Andrew.
Underground.
Well, let's just say for the.
The year.
Going to project about just about 73000 tons.
Yes.
And the full ramp up rate is.
So the underground.
Yes, I don't have that I think Peter Montana's online he probably Peter Brian jump.
Jump in here.
So we're in the range of <unk>.
Tons, a day long term, but that.
You have some variability on that especially because we're just preparing that first stope now so I think in another quarter or two we will be able to give you some much much better information on that.
Okay, and then I guess, a little bit more color on what similar in terms of costs as we're seeing them.
Cost you talked about some of.
The offsets.
The good Q4 that youre going to have but as you go into next year.
How are you looking at cost is it going to be more similar to the unit cost that you've seen in the third and what we'll see in the fourth quarter or is it.
Are you already are you seeing any abatement in.
In some of these inflationary pressures would you have some grades to offset it or others.
And sort of the operational efficiencies that you could talk about.
Yeah, so it's a bit of a mixed bag.
Alright.
We've had a look at what the fuel what we think fuel's going to do.
And then of course look at that and Wifi, but Theres also shipping cost stock, we're starting to see those come down so it's a bit of a mixed bag. Once again, we're right in the middle of the budget process. So it's tough to say.
Where we're going to end up here, but you got to give us another quarter.
Okay.
Thank you.
Thank you once again, ladies and gentlemen, if you do have a question. Please press star one at this time.
The next question comes from Don Demarco of National Bank Financial. Please go ahead.
Well, thank you operator.
Good afternoon. Good morning team first question to Mike.
So my guidance is unchanged, but.
You've got you have that guidance for the cash flow from operations. In Q2, you mentioned, it's $5 $75 million for the year.
How is that tracking is that also still unchanged.
I think well.
A couple of things there that that number had.
<unk> hundred dollar gold price assumed for the balance of the year, obviously seeing a lower number right now.
We did see some cost inflation like I mentioned, although overall would be if we're at the higher the cash customers. We may see some of that ground away in terms of overall operating cash flow and then the other thing just as.
As we get into Q4, it's great base right. So it's great weighted so.
They're beeps.
<unk> will be on at the end of the quarter to see what we can get sold right. There may be slight production or there may be a slight lag between production and sales as we get those higher grade ounces through the mill and the build to sell so I would say yeah 575, we may be talking to all of that right now, but it's a little hard to say until we see all of this.
Great sequencing is going to work and how our production profile is going to work in Q4.
Okay, Okay great.
And then just shifting a couple of questions for Bill and Bill So continuing some of the questioning on Wolf Shack from last caller.
So are you actually producing.
Or from Stopes right now.
Literally right now I think I think like yesterday or the day before it was first time that they've slashed and delivered to the mill.
Okay.
Okay. It sounds great and then moving to another potential underground operation call you mentioned underlying call. It what would be the timing of our release a maiden underground resource.
Yes.
Well that's a good question for probably Brian .
I mean remember that.
Whole intent of developing the underground is to get down to the face and drill it off at the face as opposed to kind of release in a resource so.
I don't know.
Yeah Yeah.
My question really just you know.
It comes from just trying to get an idea of what the grades might be 45678 grams per tonne I'm not sure when.
When we have an idea or do you have any sense right now what the underground grade potential might be.
Brian it's going to be in the 4% to six Gram range right now everything is inferred.
That spacing varies between 60 to 40 meters.
Depending if you're looking at down plunge or down dip.
But the plan is as bill said to get underground and <unk>.
Once the underground that we can start drilling off the underground and updating that inferred material to sort of an underground indicated.
So.
Maybe by the end of Q1 next year.
Yeah.
We might be able to look at.
Releasing what it would look like in that inferred above certain cutoff grades in that four to six grams.
Okay.
Okay. That's all for me thank you very much.
Doug.
Sure.
Thank you there are no further questions at this time I will turn the conference back to you.
Okay. Thanks, John and thanks, everyone for joining us.
A great day.
Ladies and gentlemen, this does conclude the conference call for today, we thank you for your participation and ask that you. Please disconnect your lines.
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Yeah.
Yeah.
Okay.
Okay.
Okay.
Sure.