Q3 2022 Endeavour Mining PLC Earnings Call
Yeah.
Yeah.
Okay.
Good day, Thank you for standing by let's go to the end of Q3 2022 Russell's conference call.
At this time, all participants are in listen only mode.
After management's presentation, there will be a question and answer session.
Due to time constraints, we'll be prioritizing question from Corey.
Today's conference call is being recorded and a transcript of the call will be available on <unk> website tomorrow.
I would not like to turn the call over to the management. Please go ahead.
Hello, everyone I am Martino, Vice President of strategy, and Investor Relations and I'd like to welcome you to our Q3 2022 results webcast.
On the call I am joined by Sebastian Mark Joanna and Patrick.
Today's call will follow our usual format. We will first go through the operating and financial highlights and then walk you through the performance mine by mine, we'll try to be as quick as possible to live questions at yet.
Before we start please note our usual disclaimer.
I will now hand, it over to Sebastian to walk you through the highlights Sebastian.
Okay.
Thank you Martino and Hello, everyone. We are pleased to report that we have continued our strong momentum from the first half of the year into Q3, putting us in a solid position to achieve another strong year for the group as we are delivering against our key objectives.
We've continued to see six recurring theme throughout our business as displayed on slide six which shows where we are focusing our efforts.
In summary, our strong operating performance. This year has resulted in robust cash flow generation and the ability to continue to execute our capital allocation strategy, which is focused on maximum.
Returns strengthening our financial position and investing in our growth.
To that end, we continued our attractive shareholder returns program during the quarter as we paid out $100 million in dividend and completed $37 million of share buybacks.
Regarding the strengthening of our financial position, we are looking forward to reimbursing, our convertible bond due in Q1 'twenty three in cash which will both reduce our gross debt while limiting shareholder dilution.
Given our strong operational performance and financial position. We are very pleased to be pushing ahead with our growth plans as well as the expansion of <unk> and the construction of La <unk> will add lower cost product.
Provide further geographic diversification.
On the exploration front, we are extremely excited with the potential within our portfolio and I've had huge success. This year, which we look forward to publishing in the coming weeks.
As such we are on track to achieve our previously disclosed group target of discovering 15 to 20 million ounces of indicated resources over to 2021.
I've timeframe.
Lastly on the ESG front, we are pleased to see that all of our hard work is being increasingly recognized by rating agencies. As we were awarded top industry ranking scores with both sustaining it takes and MSCI.
Turning to the next slide before moving further into the presentation I'd like to touch up on safety.
While our host while our lost time injury frequency rate has continued to improve over recent quarters.
We were saddened to report a facile accident at our <unk> mine on October 27th.
When one of our contract.
As a result of injuries sustained during investing activity.
This is a reminder, that it doesn't matter how good your LTI rate is compared to peers.
One LTI is already one too many.
It's something I say, a lot internally, but for all the staff listening into this call I will say it again there is no job is so important that it cannot be done safely.
It is important that we may.
<unk> cautious and focused on safety as we increase man hours at our expansion and development projects.
Turning now to slide eight you'll see our quarterly production and costs.
We are happy to report that we have managed the wet season, well with our Q3 performance, which was nearly the same as that of Q2.
It's very important for us to demonstrate consistent performance quarter after quarter as it is a hallmark of our resilience predictable business.
The rainy season comes every year and given the maturity of the business and our portfolio diversification. We are now much better positioned to achieve consistency.
Moving to slide nine.
You see that this strong achievement places us on track to achieve the top end of our full year production guidance and most importantly, within our audience sustaining costs guidance range as well.
This is very important to us as it will be the 10th consecutive year of meeting or beating our guidance is that that we are collectively very proud of.
I like this slide also and it shows that at a group level, we have fully derisked our guidance and now it's just a question of if we will be at the top end or maybe even beat it.
What this slide also shows is the benefit of having a diversified portfolio of assets. We have a strong outperformance on some mines is able to offset lower performance at others.
I will let mark detailed asset by asset performance later in the presentation.
Moving to the next slide we floated the all in sustaining cost guidance and year to date realized cost for our sector using the relevant companies that have published so far as you can see we are currently the lowest cost producer we firmly believe that this low cost positioning is now.
A strong competitive advantage and we are pleased that the hard work to reposition our portfolio over recent years is now paying off.
We have of course, not being totally immune to industry wide inflationary pressures that we've benefited from continuous operational improvements.
From the pricing mechanisms, resulting from a long term supply contracts from favorable exchange rate variations and production and cost optimization initiatives throughout the portfolio.
On Slide 11, you see how our production has increased in recent years, while our all in sustaining costs remained near the $900 per ounce level over the last three years.
We're looking forward to both the <unk> expansion and the last Big project coming on stream in 2024, which will continue to add low cost production to the portfolio.
On slide 12, we note how our revenue protection program is providing the much needed benefit of increasing our cash flow visibility through our growth phase, which allows us to continue to offer strong shareholder returns. Despite the call the coal price coming off a bit.
During the quarter, we made a gain of approximately $20 million, which equates to around $60 per ounce sold.
On the next slide Slide 13, you will see that on a year to date basis, our continuing operations have generated slightly higher operating cash flow before working cap this year compared to last year and as mentioned earlier the strong cash flow generation is alive.
On our capital allocation priorities.
I will now hand, it over to Joanna to walk you through the detail before the quarterly cash flow and net cash variations Joanna.
Thanks Sebastian.
Turning to slide 14, you see that the operating cash flow before working capital for Q3 would have been quite similar to that of Q2 had it not been for the expected withholding tax payments made during the quarter.
As Sebastian mentioned earlier, we intend to redeem our convertible notes in cash in Q1 next year as such during the quarter, we upstream cash from the operating entities to provide us with financial flexibility, which resulted in withholding tax payments of $48 million.
In addition to minority dividend payment.
Turning to slide 15, you see the operating cash flow bridge between Q2 and Q3.
Yes.
<unk> has been nickel lower gold price, followed by the higher working capital outflow and higher taxes paid.
Offset by lower operating expenses.
Of note no working capital outflow was due to an increase in receivables and prepaid and the timing of certain supplier and other payments.
Operating expenses decreased due to favorable favorable exchange rate movements related to a depreciating euro as well as our continued focus on controlling our cost structure in the current volatile cost environment.
And lastly, the income taxes paid increased.
Active paid on dividends declared by mine site.
This was offset by the historically higher taxes paid in the second quarter every year as we finalize our tax filings for our operating entities.
Moving to the net cash position net cash position on slide 16, you see the bridge from Q2 to Q3.
In Q3, we generated $110 million from operations net of reimbursing $50 million on the Rcs.
We then spent $30 million on growth capital and as Sebastian mentioned at the start of the presentation, we paid $137 million in the form of dividends and buybacks.
As mentioned on the previous slide we also had $48 million payment of withholding taxes and $57 million payment linked to minority dividends.
Again, all with the aim of up streaming cash from our operating entities to ensure that we have the ability to redeem our convertible notes in cash to limit dilution to our shareholders.
Lastly, the.
The change in our net cash also includes the $52 million impact of the Remeasurement of our cash held in foreign currencies at the end of the quarter into the U S. Dollar due to the strength of the dollar.
On slide 17, we have provided the year to date evolution of our net cash position and similar.
Slide.
What is nice to see is that the strong cash flow generation. We have achieved during the first nine months of the year by our operations, which represented with the first Green bar on the chart and which supports our growth and shareholder return strategy.
Turning to slide 18, you can see our plans for our upcoming debt reduction and the significant liquidity sources at our disposal.
With $833 million in cash at the end of the quarter and a further $500 million available from our revolving credit facility.
Have access to more than $1 3 billion, if needed and no further significant effort repayments projected until 2026.
Turning to slide 19, as we continue improving our gross debt position is important to note that we are already one of the lowest levered major gold producers producers given our net cash position.
While we believe that our business could and should at times support net debt to optimize our capital structure. Our goal is to maintain a long term net debt to EBITDA ratio well below 0.5 time and quickly deleverage ourselves when we are not in a build phase.
Turning to slide 20, we summarize our net earnings for the quarter.
Earnings from continuing operations of 90% to $91 million.
Kris compared to the previous quarter due to slightly lower gold sales timing and lower realized gold prices as well as slightly higher depletion expense, which is a noncash charge.
On the slide we have in certain specific comments for once before which explain the net earnings guidance.
Given our time constraints I'd be happy to go through further details during the Q&A session.
I will now hand, it back to Sebastian.
Thank you Joanna.
On slide 21, you can see more detail on how we're tracking against our shareholder returns commitment.
As you May recall last year, we outlined a three year dividend policy to pay a progressive fixed minimum dividend, which increases each year with the aim of distributing a cumulative minimum of just over $500 million by the end of full year 'twenty three.
The reason we did this is so that we can provide a strong outlook on shareholder returns while pursuing our growth plans.
And we are tracking well ahead of our targets.
As we will see on the next slide.
For 2021, we exceeded our minimum dividend of 125.
By paying $140 million and this year, we continued along the same trend by increasing our full year dividend commitment from 150 million to $200 million of which 100 million was paid during the quarter for the H one dividend.
At the same time, we are continuing to supplement our shareholder returns with share buybacks, returning $75 million year to date.
As you can see on slide 22 on accumulative basis, our shareholder returns program has paid out over half a billion dollar since the start of 'twenty, one and is expected to return a minimum of $780 million.
By the end of 'twenty three.
To put it into context, we already paid down significantly more than the capital required to build one new mine.
As mentioned earlier in addition to delivering solid shareholder returns given our balance sheet strength and our ongoing strong cash flow generation. We are also well positioned to fund our growth on slide 23 highlights our attractive pipeline of growth projects.
Our priorities are the construction of the <unk> expansion and I figure development project.
But we are also focused on continuing to optimize our existing portfolio to ensure we can maintain our low cost profile.
In addition, our long term growth continues to be underpinned by our successful exploration program, which is focused on both near mine opportunities and greenfield opportunities.
Okay.
Turning to slide 24.
You'll see here that both the <unk> expansion and Lafayette project construction are underway.
Construction at our <unk> expansion is progressing well with approximately 50% of the initial capital now committed.
At <unk>, we launched construction earlier this quarter and we're seeing activities ramp up fairly quickly.
In fact, we were very pleased to welcome aboard to the site earlier this week to see the good progress being made.
Turning to slide 25, you can see the continued focus on exploration.
Given the long mine life visibility on our flagship assets. We are now able to also dedicate significant efforts towards greenfield exploration opportunities.
And our recent discovery at 10 day Gala in Cote d'ivoire, as you will see in a few weeks is an example of our efforts paying dividends.
Later this year, we also expect to publish an exciting resource updates for our <unk> mine in Cote d'ivoire.
Given the success, we are pleased to reiterate that we are on track to achieve our <unk>.
<unk> discovery target of 15 to 20 million ounces of indicated resources at less than $25 per ounce.
Touching upon ESG I'm really pleased that our sustainability efforts are being increasingly recognized by the rating agencies with both sustaining it takes an MSCI recently awarding us sector, leading ESG ratings shown here on slide 26.
Turning to slide 27 here are a few highlights of recent initiatives, we have supported and which are aligned with our sustainability strategy. As you may be aware the gold industry recently took a significant step forward on aligning the rule mine to market value chain with <unk>.
Set a responsible and sustainable business practices known as the gold industry Declaration, our responsibility and sustainability principles.
This was led by the World Gold Council and the L. BMA and we're pleased to be signatories through the council.
On the skill development front, we are working with the <unk> government to support the training of 150 using the communities surrounding our figure project. So they can learn a trade and become employable as the mine construction progresses.
Another example is <unk>.
Towards zero plastic initiative and it was great to see the launch of our partnership with plastic or would you say this is a strong initiative, which uses plastic to fuel technology and well trained around 300 entrepreneurs in the recycling and recovery of plastics to clean up the past into reusable products.
And finally in a great initiative that complements our mindset.
Efforts. He has agreed the great Green Award.
As many of you know this is an ambitious plan that involves the planting of a green all across Africa from the car to GBT to fight visits vacation, which brings environmental and social economic challenges to affected countries populations.
Once complete the great Green all will be the largest living structure on the planet three times the size of the great barrier reef.
And this quarter, we planted the first three years as part of our annual reforestation promise of 130 actors in Senegal.
Moving to slide 28 to touch upon our UK lifting we're happy to see that our liquidity in the U K continues to increase significantly with more than 40% of our shares traded in the U K and over 34% of our shares held in the U K.
This has been helped by our inclusion into the FTSE 100, as we continue to attract U K and European investors. Given we are the largest pure gold producer on the premium segment of the LLC and our attractive investment proposition.
I will now hand over to Mark to talk you through our performance by mine Mark. Thanks.
Thanks Sebastian.
Today, we are speaking to you from Eddie Chang in archery coast, where we have just completed visits to our flagship assets.
We are also very happy to welcome our board members on slide seven.
I am pleased to report that our operations continue to perform well and both of our growth projects remain on track.
On slide 30, we've provided a breakdown of the year to date performance by each asset, including how we are tracking towards our full year guidance.
As you can see a strong group production is driven by App performances at Hyundai <unk> and Minto mines.
Looking at production over the first nine months you can see that we are once again in a strong position, which is close to the top end of our full year guidance.
The same can be seen with our all in sustaining costs, which is hitting well within the full year guidance range.
This is a great achievement, given the industry wide inflationary pressures, which we've been working hard to offset June three various <unk> initiatives.
I will now walk through the performance of HSA, starting with separate dollar Massawa on slide 31.
At $7 Massawa, we are ramping up the mining volumes and delivery of high grade non refractory ore from the Massawa north sign and Central zone pit.
This resulted in improved take rates quarter on quarter driving higher production.
As we move into the fourth quarter mining at both the Massawa Central <unk> and <unk> pits will continue with supplemental or expected to be sourced from the <unk> and <unk> as well as the new band variety.
We expect the mined and processed grades to continue to increase due to higher grades from the Massawa North time period in.
In addition, the end of the rainy season will bring higher mill throughput as well.
Going into a bit more detail on bamber all here on slide 32, we have been working hard to add high grade non refractory ore in the short term mine plan following reclassification of some of the transitional massaro to refractory within our updated PFS.
As a result, we brought forward the mining and processing of <unk> deposit, which was discovered in the last year.
This is an excellent example of our exploration team delivering a deposit in record time, which will add real value to the mine.
We are currently working on other recent discoveries such as the <unk> deposit and the area between the failure and some in the open pit resources.
Advanced grade control is underway.
These are great examples of the exploration team working hand in hand, with the operations team to deliver multiple ounces very quickly.
Regarding the silver dollar Massawa expansion project. We are pleased to report that construction is on track and on budget with approximately 50% of the initial capital now committed and pricing in line with expectations.
As you can see from the photos on slide 33, we have completed most of the bulk fifth works for the bottle processing plant and commence laying the rig vein foundations for the biopsy reactors.
The stainless steel price for these tanks have started to arrive on site, which helps to de risk. This critical activity, which is on the critical path for the construction schedule.
We expect construction activities in the milling circuit and the power plant expansion to ramp up in the coming months.
Our operating team has been involved throughout the studies and detailed design to ensure all minor operational details affected into the final development ahead of the construction, while helping to identify areas, where we can save costs.
Moving to slide 34 at Hyundai production has been very strong year to date.
We're on track to exceed the top end of our full year production guidance as well as to come in below.
All in all in sustaining cost guidance.
I'd like to congratulate the team for achieving a processing record this quarter with over $1 2 million tonnes process. Despite the rainy season, which is largely due to ongoing optimization initiatives.
Due to this great performance, we accelerated state Street, the Kari pump pit with pre stripping commencing during the quarter.
As a result of this activity and the lower proportion of higher grade ore from Kari pump stage, two and the usual seasonal impacts associated with the wet season production was slightly lower quarter on quarter.
For the remainder of the year, we will continue pre stripping at Kari pump side Street, and source or predominantly from Vindaloo mine, and Kari west, which will position us well going into 2023.
Turning now to <unk> on slide 35.
It has exceeded expectations. This year as production continued to increase quarter on quarter. Despite the typical challenges associated with the wet season.
While all in sustaining costs decreased due to less waste stripping activity during the quarter.
The increase in production was driven by higher proportion of higher grade fresh and transitional rules and the mill site to offset the seasonal issues of high moisture content oxide ores.
Given that we are mining from several different pits at anytime we have a high degree of flexibility to manage the oberland. According to the wet season conditions, which is a great strength of the asset.
For the remainder of the year. The main source of mill feed will come from the Le plaque and Walter Pitts.
Supplemented our historical stockpiles and heap Leach material, which will result in a lower grade processed.
The mill throughput however is forecast to increase following the end of the wet season and recovery rates are expected to be stable quarter on quarter.
As outlined earlier soil moving onto slide 36, and that launched earlier. This year. We are working on several optimization initiatives across the group and the <unk> project at <unk> is a good example.
These items to improve costs by reducing leaching and detox reagent consumption.
Proving the quality of the discharge water and increasing recovery rates.
Ill answer it yesterday and it was pleasing to see the progress made the circuit is on track to be commissioned before the end of next year.
Turning to slide 37 at <unk> production increased during the quarter predominantly due to increased access to higher grade ore and phase III of the Westfield.
We expect this trend to in mine grades to continue.
We have a supply chain delays have limited onsite activities during the fourth quarter.
This is being caused by delays in obtaining security escorts for convoys to passing from Canada.
The government has been proactive with improving the situation by providing increased support and improved availability for Alcon voice as.
As such we have had three convoys dispatched over recent weeks with a faster turnaround time.
It is important for us to continue to work in partnership with our host countries and we are very pleased to see the level of support given to us by the government, but also highly supportive of air activities, given the economic and social benefits we provide.
Moving to slide 30 at one known we are starting to realize the benefit of the <unk> pit where.
When we started mining towards the end of quarter three at.
At San Jose The reserve grade is higher than that of not really in Florida, where mining was focused earlier in the year.
As such during quarter, three head grade increased by 16%.
In quarter four we expect this trend to continue as we've had a full quarter of mining from <unk> and continued higher grade feed from nobody knows.
On the cost side <unk> continued to trend above our guided range and we are working on several leaders to improve costs in quarter, four and into next year, which will be supported by the higher ounces produced as well as improved efficiencies following the wet season.
Turning to slide 39 at Mina production is on track to achieve near the top end of full year guidance and it costs within the guided range. This is a significant achievement considering manner is going through a transition from mining the mine open pit to establishing the winder underground.
And the commencement of mining at the <unk> open pit.
We are progressing very well with the development of Koala underground.
We completed 1552 maintenance of advanced in the quarter. In addition, 45 meters was vertical development of installation rises and our skywave.
We are on track to commence mining stopes cited this year once establishment of initial primary infrastructure has been completed.
At the same time, we are pre stripping in the myopia and on track to start feeding ore from Iowa in early quarter four 2022.
In the fourth quarter, we expect to continue feeding high grade ore from the underground with additional ore tons expected from Weiner underground and the <unk> satellite pit.
As such we expect grade and recovery to be higher.
As all historical shortfalls have been depleted we will have short periods, where we stopped processing in order to build stocks, which will enable further preventative maintenance to be undertaken.
Okay.
Before handing back to Sebastian I'll highlight some of the mine optimization initiatives, we are working on.
We're always looking to improve our production and all in sustaining costs to strengthen the resilience of our business, particularly this year as cost inflationary pressures have been impacting the mining sector.
As you can see on slide 40.
Each of the operations are undergoing key optimizations to improve cost.
Which will serve the operations well into the future.
For example, we are looking at the option of implementing solar power at <unk>, <unk> and <unk> mines.
While we seek to reduce our dependency on fossil fuel generators power sources.
So lowering operating cost significantly.
Similarly, we are looking at establishing in Thailand, the physician at several of our mines, including <unk> and <unk>.
And why something at <unk>.
These actions will not only defer or eliminate the requirements to acquire more land rigs several people in constructing facilities.
It can also improve at closure planning for that to play the pits.
We look forward to sharing more details on these initiatives during our upcoming investor and analyst visit later this year.
As you have seen performance across our operations has continued to be strong this quarter, which positions us well against our guidance for this year and as you have heard there are activities going on thoughts now that will set us up well for next year.
That completes my brief overview of our operations and I'll be happy to go into more detail during the Q&A session Sebastian back to you.
Thank you Mark.
As you have seen the resilience of our business is clear from the continued strong performance against our key objectives and underpinned by our disciplined capital allocation.
Overall, we are pleased very pleased with our results this quarter and with the momentum we will carry into the final quarter of 'twenty two.
<unk> into 'twenty three.
As always I'd like to thank my team for the tremendous work and dedication we are fortunate to have fantastic people within the organization that are pushing everyday to make sure we hit or exceed our targets.
With that I would like to thank you all for dialing in and open the lineup two questions.
Operator.
Thank you.
As a reminder, if you wish to ask a question you will need to press star one and one on your telephone.
Wait for your name to be announced.
Alright, thanks coming from <unk>.
Please standby, while we compile the Q&A queue.
We are now taking our first question. So please standby.
The first question for Hamas Gotcha.
Please.
Yes, good afternoon, everyone.
I wanted to ask a question about the supply chain issues, but could you just talk about them a bit and how long do you think it will take for them to normalize.
Okay.
Hi, Sebastian.
Supply chain is not a significant.
Significant problem is from time to time, we can have some delay depending on the security environment for the controls I mean to get to the mine site.
Obviously, you've seen that there was a crew at the end of.
At the end of September .
For this was disrupted by delaying both few days you know some of the convoys.
And goods that were expected to the mine sites, but overall I mean, it's more sometimes some delays which might impact from one quarter and then benefit from the other quarter, so minimal minimal disruptions, but we had to slug. It overall, we are very.
Happy and confident on the way it is.
So currently operating.
Okay.
Great and then I just wanted to follow up on.
The upstream ing of cash obviously that was quite a big driver of the EPS Miss in net cash reduction in the quarter can you, let us know how much cash you have sitting at the plc currently and are there any thin cap constraints on how much you can learn from the subs to the plc.
So just trying to think about whether we should expect these types of withholding tax of minority dividends to be a recurring issue over the longer term as and when you move into sort of higher cash distribution mode.
Sure I mean, so this quarter was a bit.
Unique because.
Overall.
We upstream close to a bit more than $600 million from.
Through dividends from the.
Entities within West Africa, So when you take out the withholding tax on the minority interest.
$500 million plus that we've repatriated.
At the holding level and the main reason for that is to prepare ourselves to be able to pay down the convertible in cash in.
In March next year overall, we have I mean, if you look at the balance I would say two third in country and one third at the plc level in terms of split between where the casino is.
Located.
Okay got it.
And then last question I just wanted to ask was on wine you on what the all in sustaining costs, obviously, well above your typical thresholds mine life fulfilled below target I just wanted to ask what point do you say, okay. This isn't that for asset are there any thresholds or timelines or targets you have to demonstrate that this mine.
Youll filters.
Sure well 22 was a bit of a.
In our transition year.
When you.
So we still see a lot of potential in terms of exploration for when you.
Going forward.
And therefore at this stage I mean, it's still.
Asset within the portfolio.
I mean, clearly in 'twenty four with the increased production at <unk>.
But the the massawa and with <unk> coming online with 200 250000 ounce annual at low all in sustaining costs.
Then by that time, we'll probably review some of those.
Les I would say critical assets, which are currently in the portfolio.
That's more for 'twenty four.
Great. Thank you very much.
Okay.
Thank you for your question.
We are now taking our next question.
The next question from <unk> <unk> from Bank of America.
Hi.
Hi, Thank you for taking my question.
I just wanted to ask about guidance just looking ahead into 2023 can you provide any color on where we are.
Might be cost sort of land I know, we've previously said that.
Okay.
Sustaining cost under $900 an ounce can you just kind of provide any color.
And whether or not that might still hold thank you.
Yeah.
Sure Hi, Aman.
A bit early for us to comment on 'twenty three given that the <unk>.
<unk> sessions.
At the end of this month.
So I don't have yet I would say numbers.
We usually disclose the guidance for the year.
Around the end of January I would only say that.
The objective is to maintain the portfolio with this low cost approach I mean compared to our peers.
You've seen that we had a very good Q1 at 845. The last two quarters were more around 960, and I would say that we would expect into 'twenty three to be in between those two those two range.
So.
900, 950, I mean is the expectations for 'twenty three and then we would expect things to continue.
<unk> continued to improve as we get into 'twenty for the new projects on stream with the sub other MSR expansion and with <unk> that will be operating at 900 or below.
Perfect. Thank you so much.
Yes.
Thank you for your question.
Yeah. Thank you next question.
Daniel major from UBS.
Okay.
Okay.
Yes, we can hear you then.
Alright, sorry, nine listen Atlanta.
Thanks, Thanks for the questions.
Yes, the first question.
Just on the Capex outlook.
It looks this year.
If you're trending a little bit below your guidance for sustaining capex.
And perhaps that Bob for for non sustaining.
Could you just give any steer on what we should be expecting in the fourth quarter.
For Capex items also.
Now you.
Approved.
P J, what specific capex or growth Capex.
Item, we should be seeing in Q4, and then I guess the second part of that.
I appreciate you're still probably doing the budgets, but directionally.
How we should be thinking about those two items into into 2023.
Yes, sustaining and non sustaining and then the level of spend.
Okay. Thanks.
That's one.
Okay.
Sure Thanks them.
I mean on the sustaining and non sustaining obviously there are some phasing sometimes due to depending where the.
The progress on the different assets.
In Q4, I mean, we would expect.
And with the higher sustaining.
Capital number for Q4 compared to the previous quarter.
On the other side are much lower on the non sustaining for Q4.
Overall, I mean, we've got.
And then Philip between sustaining and non sustaining which is in line between the quarters. It's modest split between the two so higher sustaining in Q4 compared to Q2 Q3, but lower non sustaining in Q4 versus Q2 Q3.
Thanks, Ed Thanks, and then just one other financial question is following up on <unk> question sorry.
Slightly when we think about 2023.
Can you give us any guidance range on where we should be thinking about P&L and cash tax rates.
Twenty-three factoring in.
Some of the I guess, the Skype for sort of more upstream ing like you saw last quarter.
Sure again, I think we are.
We still.
<unk> the overall.
Budget process to converge at the end of the demands, but I would say that.
Next year, you'd probably see a slightly lower impact in terms of.
Dividend withholding tax and so on as well.
We have mainly focused in this year for upstream cash for the repayment of the.
Convert in.
In March.
But the rest I mean will be inline in terms of overall tax rate.
Okay. So that.
Would that be kind of group effective tax rate in the high <unk> to.
Hi, <unk> issues that are out there right sort of level.
I would say between 20% to 25 as group.
Okay.
Thanks, and then just last question.
Sounds interesting discovery.
I guess in South West <unk>.
Can you give us any more.
Details on I guess.
Sticks and.
The kind of.
Development.
Trajectory beyond obviously, the charge <unk> results that Youll published in due course.
Steve Good.
Good infrastructure and a bit.
More color on the location of the project.
Sure. So there will be a specific press release that net.
That will be out in the next in the next two weeks.
Kick it around 10.
In terms of infrastructure Thats about 400 kilometers away from Abidjan, but alongside a very good infrastructures.
So pretty easy.
To access.
The environment there in terms of road and so on the environment. There is pretty pretty clear also we are about 30 kilometers away from the <unk> border.
Yes, I mean overall the environment is.
Pretty pretty positive Thats, what we like it's a bit like <unk> you don't go into complex I would say environment completely isolated it's not.
Don't have either in a big big cities or villages, which are close by.
Would require a huge resettlement.
So yes, I mean overall the environment there is very very attractive and that's why.
Beyond some of the drilling results that we will be presenting we're pretty excited by this target.
Great look forward to some more details kind of Phoenix. Thanks Anthony.
Thank you. Thank you Sam.
To your question we are taking our next question.
The next question from Don Demarco from NBC.
Hi.
Okay.
Alright, Thank you operator, and good morning, Sebastian and team. My first question Sebastian has to do with the non sustaining capex.
<unk>.
We released the guidance that you expect it to be above $204 million can you provide a little bit more color here like for example, how much do you expect it will be over.
And does it actually offset some spend in 2023.
Yeah.
John you want to comment.
It would be.
We would expect that to be compensated next year, yes, because we didn't know the timing of some of our non sustaining capex up into this year given the delays in the growth.
Growth projects with solid Massawa.
And that's our bias project as well as <unk>. So we would expect some compensation next year.
Okay, and so do you expect to just sort of a nominal.
<unk>.
Top up above the joule for or is it more like 10 or 15%.
Yeah.
It can be significantly higher it just it really depends on the timing of some of the cash flows in the quarter and where we're at in terms of the timing of some of the commitments, but yes. So we would expect to be just slightly over guidance.
We brought forward some capex using using that we have.
Third for example, the Lafayette project. So we've been deferring some growth Capex that was initially expected for 2022. So we took the opportunity in exchange I mean to bring forward some sustaining non sustaining capex.
Accelerated element also on the waste.
So overall Capex I think is.
In line for 'twenty, two and consistent journals for 'twenty, three we will have probably less non sustaining capex in 'twenty three.
Okay, Great and I guess on a similar topic, then with net cash easing and you've got the growth capex, increasing the fee rate and so on do you plan to put some of your share buybacks on hold temporarily.
No.
Yes.
Q3.
Lower.
Net cash flow is really.
Due to the current quarter I mean, we're expecting a good and strong Q4.
C back again, and a net free cash flow in order to similar levels that we saw in Q1 Q2 for Q4.
And therefore, we don't see given the strong performance.
Of the operations why the buyback program should be should.
It should be reduced we still have a very strong and healthy balance sheet net cash positive.
That's part of the program and again, that's why also we have this hedge in place to allow us to continue to.
Generate strong cash flow during this construction period irrespective of the gold price.
Okay.
Well. Thank you that's helpful. Good luck with the rest of the year.
Thank you Don.
Thank you for your question.
Yeah.
We can now take the.
Next question.
Yes.
The next question is from Sandeep <unk> from Morgan Stanley .
Thank you for taking my questions I have a couple of them I'll take one at a time. So firstly it is a follow up question. So you are now expecting lower sustaining capex for the full year 2022, what's the spread guidance. This has somewhat helped you to maintain all in sustaining capex guidance level can you help us to understand <unk> in spirit.
Apart from the freezing point that you highlighted.
And should we expect some of those to roll forward to 2023 are you implying higher all in sustaining capex going into next year.
Okay.
Well I would just say that.
Due to due to strong production performance year to date, we've been bringing forward some some deposits, including the current pumps stage three.
At <unk>, but also on the bond by yards have annular massawa.
Which resulted in more pre stripping non sustaining activities in Q3.
Overall compared to our <unk>.
Guidance for the full year, we might be.
Slightly lower compared to the initial guidance, but overall I would say in line when you add sustaining and non sustaining.
Okay.
Okay. Thank you.
And the second question is since the oil prices are regulated ingredients with Andrew with mining updates do you think that.
<unk> benefit from lower oil prices really flowed through into it and as such should we be expecting slight cost year on year for 2023 on spot basis.
Well I think that as you probably saw we tend to have.
The fuel price in country is regulated by the government.
Which has provided.
<unk>.
Immune compare to the rally on the oil price in particular in Q1 and up to the end of Q2.
Lower increases in fuel cost in the countries, where we operate compared to the oil price rally.
Usually the fuel price is changing in country on a quarterly basis or semi annual basis. So that's why we've seen the impact more towards the end of Q2 and in Q3.
With oil price dropping.
Should see that reflecting progressively not at the same path and speed as you would see it in.
North America, and Australia for example, but at some point it should again re translate also.
The key points has been you know clearly that we are monitoring has been the FX also.
Between us.
There is a big part of our cost 60% of our cost is euro denominated and therefore has been benefiting from.
A weaker euro and a stronger dollar during the period.
Okay.
Very helpful. Thank you.
Thank you for your question.
Kim.
We are now taking our next question.
From Hawaii, Amit from Scotiabank.
Thanks, Operator, Hi, Sebastian endeavor team.
Congrats on a good quarter, despite the rainy season.
Also congrats on the year over year improvements in the ESG ratings as well.
Couple of questions from me.
I think a lot of these questions probably have been answered I was having some technical difficulty so.
Apologize if you've answered the questions have been already answered, but my first question was in terms of.
It looks like you endeavor would be on the lower end of the all.
In sustaining cost guidance.
And so but all expansion seems to be progressing very well as well.
Sebastian are you seeing some relief on inflationary pressures as you head into 2023.
Thanks <unk>.
I would say, it's probably a bit early I mean too.
To say that.
And first of all as you saw we have been less impacted than.
Than others in West Africa.
Im expecting the budget review I mean to happen at the end of demands. So this will give us.
Better view on it.
We expect for 2023.
Yes, so we didnt I would say that.
If overall inflation.
Elsewhere in the starts to reduce we will see the benefit in West Africa. That's for sure at what speed I would say, probably a bit deferred compared to.
Other regions the same weighed with deferred when you started to pick off to <unk>.
To be clear at the beginning.
Got it thanks for that production and yes.
My.
One question just last time, we spoke you mentioned that there are taking place in Mali.
Can you provide any sort of color on this audit.
And was Kalana audited.
Sure difficult for me to comment beyond what we can read.
In the papers given that we don't have.
<unk> mines in in.
In many.
So calendar has not deterred given that it's not in operation. So there is no particular tax angle.
So we've not been affected I mean on that front, but we.
We've heard that there is effectively big reviews going on by the government of money.
On the tax side for all the existing <unk> operations.
Okay. Thanks for that question and then and that's it for me.
Thank you.
Thank you for your question.
We're now taking our next question.
Kumar, Matt Sydney from.
From CIBC.
Hi, Thanks, most of my questions have been answered on the Opex and Capex ramp into next year. So thank you and congrats on the quarter.
Yes.
Thanks Mohammad speak later.
Thank you.
Now taking the next question.
There are no further question at the moment, Ireland, Mexico influence over to the management.
As there are no more questions, we'll finish the call. We will of course remain available to address any further questions offline. Thank you everyone for dialing in and traction.
That does conclude the conference for today. Thank you for participating you may all disconnect.
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