Q4 2022 Wesdome Gold Mines Ltd Earnings Call

February 23, 2023

Okay.

Good morning, everyone and welcome to the Western Gold mines fourth quarter and full year 2022 financial results Conference call I will hand, the call over to has a laxton to begin today's call.

Great. Thanks, operator, and good morning, everyone. Thanks for joining us today before we begin we'd like to take this opportunity to remind everyone that during this call. We will discuss our business outlook and make forward looking statements. These comments are based on our predictions and expectations as of today actual events or results could cause outcomes to differ materially.

Due to a number of risks and uncertainties, including those mentioned in the detailed cautionary note contained in yesterday's press release and in the company's management discussion and analysis dated February 22023, both documents are available on our website and on SEDAR.

Please note that all figures discussed on this call are in Canadian dollars, unless otherwise stated the slides used for this presentation and a retort courting of this call will be posted on the company's web site now it's over to Lindsay Dunlop Vice President of Investor Relations.

Thanks, Heather if you know on the call today will be board chair and interim CEO Warwick Morley Jepson C O for a launch event CFO , Scott Gilbert and Vice President exploration like Michelle also on the call today, It's Raj Gill Vice President corporate development work to open up our call.

Good morning, everyone. Thank you for joining us today.

I haven't yet not met I have been involved with the company since 2017 and currently board chair in infancy.

<unk> background.

Operator, with over 35 years' experience and deep level underground gold mine.

Excluding several years working in Russia and comparable condition.

Conditions as northern Canada.

Intimately familiar with the operations of Whistler and move my home base future answer and will remain so attendance is highest and settled in.

While 2022 was a challenging year in many ways.

Our accomplishments.

We are very proud of is putting a second mine into production funded almost entirely from internally generated cash flow.

Guidance, we have provided for 2023 is achievable.

Production is weighted more heavily in the second half of the year.

The work we are doing this year is setting up the company for a strong 2024 and beyond.

Greg will now provide a detailed review of our operations over to you Brett.

Hi, everyone and thank you for calling in this morning.

Starting with Eagle in Q4, we achieved excellent production rates from the underground mine with an excess of 60000 tons of horrible.

This quarterly throughput from the underground mine as a result of improved ventilation upgrade the commissioning of the <unk> level Mister car earlier.

Combined with operational efficiency measures before ADHD.

Q4 numbers contributed to achieving our new productivity records for the underground mine with a total of 231000 tonnes of ore in 2022.

Right in Q4 came in slightly above expectations as a result of some very high grade production from the bookings, though starting in November with one particular stock yielding almost 14000 tonnes of 28 grams per tonne material over the two months of November and December .

Unfortunately, a significant part of the hybrid or produced in December will not be sent to the mill before the end of the quarter. It would be processed as the major winter storms that rolled over most of Canada at the end of September caused closures.

With complete interruption of the floor or from the mine to the mill for several days.

This resulted in the operations ending the year with approximately 6000 tonnes of ore at 18 grants we've done on process until later in January .

Athena the theme of court achieved record throughput cleaning the restart of operations in Q4 with 35% more tons.

As best as published in Q4 of 2004.

The lower grade achieved during the quarter were due to the source of ore whereby a limited production capacity at Mckinsey.

The supplement production from the lower grade Martin at 50, and this is us.

Low rates are expected to continue into 2023, as we will continue to supply the mill at lower grade ore from those zones to supplement the keen to be material that will be available to mine, which is now mostly lower grade fringe material and diluted or from previously mined areas.

Despite Q4 being a miss on the production side, our team was able to achieve key milestones instrumental for the successful ramp up of mining activity into 2023 and beyond.

First the Batesville plant was successfully commissioned and delivered to production in November the plant has been operating centers performing in line with expectations.

<unk> has always been identified as a critical component to the successful mining activity.

Now that it is available for the operation It helps reduce the standup start.

Minimizing the risk of instability.

It also helps better controlling dilution and will allow for more rapid overall extraction sequence.

Demonstrating the viability of the peso was the final element for Tina immediate commercial production criteria and commercial production was declared on December one.

As for development of cleanup a lot of very good things that happened in Q4.

Now that the pace of that is online operators and equipment previously allocated the cemented rock fill operation have been freed up and reallocate it to production and more importantly to development activities.

Also the team was very resource for given the very competitive market and successfully sourced rental bolting equipment critical to achieving development groups.

As a result, we now have three rental mcquain voltage underground.

We also took delivery in Q4 of the first of our two long delayed baltics, bringing our total underground fleet of bolting equipment before to more of the PFS.

This redundancy that we now have will guarantee that we have the required capacity whatsapp availability of parts issues as we are still facing supply chain challenges for mobile equipment repair parts.

All of this combined with the ventilation upgrades completed at the end of Q3 resulted in our team is achieving the sites best quarterly development performance to date in Q4.

Likewise developments in the ramp the community itself has exceeded expectations and as a result, we have started 2023 ahead of our project schedule and we have continued to exceed budgeted development rates in the ramp in January .

We are therefore, very well positioned as we enter 2023 and the team at site is laser focused on execution of the ramp.

As the slide it's showing the mining method requires us to develop the ramp going down multiple levels to accept the lower level of new mining blocks to then proceed combined these blocks upwards. So even though development of the ramp is currently tracking ahead of budget.

Benefits of over performing or not immediate and unlikely to change 'twenty three in terms of assets, but we'll provide earlier access to the $1 nine mining blocks to achieve 2020 for production.

Over to you Scott.

Thanks, Greg in Q4, 2022, Western saw 81500 ounces of gold, which generated $75 million to cash margin was $26 5 million cash generated from operations was $10 3 million and a free cash outflow was 31.

We incurred $39 2 million.

And capital spending which includes $26 5 billion next year.

31 <unk>.

With these additions of approximately $130 million.

$33 million of cash and equivalents and 95 million drawn under the credit facility.

We established an ATM.

Equity program on November 2nd franchise tier, which allows the company to issue up to 100 variant.

Common shares from Treasury.

We're using an ATM exiting lower commission and can be used opportunistically in Denver. The ATM was only active for approximately half of the available days and accompany the $13 $1 million gross book by issuing approximately $1 6 million common shares at an average price of $8 21 per.

Sure sure.

Shares cannot be issued through the ATM program, while the company is in a blackout period.

Western internal coffee with typical period extend six weeks post quarter end.

At the end of 2022, the company has drawn $55 million Democrats.

And the variable interest rate of approximately seven 6% over to you Mike.

Thanks, Scott at Cana, we continue to be pleased with the underground exploration drilling results at three main targets.

First at the down plunge extension of the Asia. One recent drilling has extended this element of additional 125 meters down plunge one hole returned 24 grams of gold.

<unk> four meters through thickness.

Second at the Footwall zones infill drilling continues to better define these lenses and increase our confidence in the geologic model based on our announcement of last week. Many holes returned high grade confirming previous results. One halt returned 34 grams per tonne over 22 meters correlate.

Third at our most recently discovered zones, namely <unk>.

South limit the ASR and the two hanging wall for salt zones.

Drilling along the south limb of the Asia returned 16 grams per tonne over five four meters true width.

Meanwhile, drilling up the hanging wall basalt zone returned to high grade up to 850 gas can go over one five meters from a quartz vein and also four one grams per ton gold over $22 eight meters from our solidified basic volcanic.

This discovery is significant in that mineralization occurs in a host rock not expected to host old monetization old amortization in this area and because of the length of the intersection it represents size potential.

The overall drilling results not only confirm liaison keeps going to debt, but also that these results have the potential to increase the number of ounces per vertical meter that will provide additional working faces during mining of the ASR.

Also the Haynesville basalt zones occur within volcanic rocks, where the rock quality is significantly better than in the neighboring optimistic blocks.

On surface based on the positive drilling results at prestige last year. The company is moving ahead with the development of an exploration ramp from surface to explore this zone.

In the future this ramp could deleverage to easily connect stickiness existing underground underground ramp network, providing access to surface for the existing operation that comes with many benefits.

At Eagle River, giving some initial challenges of forecasting in itself and we have completed 95 definition drill holes and several hundred meters of development on various levels to better understand stay on the grade variability, which has been incorporated into the end of year resource and reserve estimates.

A portion of this drilling was completed from the recently established $3 55 meter level, which extends approximately 400 meters west of the existing mine workings.

From this level, we were able to test for continued mineralization, both upfront and in parallel zones. This drilling successfully extended the zone up funds to surface. In addition, a number of drill holes intersected mineralization in sub parallel zones in the hanging wall of the Bell concern zone, possibly the minus 5%.

311 west zones.

We also are continuing to explore further to the west along strike from Lasalle and seven node. So near the historic <unk> zone with felsic volcanic which provide competency contrasts with surrounding basalts that provide a favorable location for gold mineralization similar to that of the mine direct.

Another exciting area, which has the same post rock volcanic host the Falcons zone.

<unk> has been recently tested on the eastern side of the mine diary initial surface drilling intersected altered volcanic rocks with quartz veining and visible gold.

<unk> returned 233 gas per tonne over four meters and follow up will be a priority going forward.

The site teams are currently updating the annual mineral resource and reserve estimates and we expect to release in March which is our typical timeframe.

<unk> work.

Thank you Mike.

I want to underscore that western management, including myself are focused on delivering 2023 guidance through operational execution and all indications at this time, although we remain well on our way.

We will need to execute on four fronts. Most importantly, laying the groundwork for cleaner to reach its full potential.

This will be driven primarily by the ramp development, which is currently tracking ahead of schedule.

Once we reached 129 level at year end. We can then begin developing higher grade reserves, thereby starting to generate production in line with the PFS levels as well as a strong cash flow margins.

Secondly.

We look to accelerate the pay down of the outstanding balance on our credit facility, which does has a long track record of organic funding of projects, including the delivery of a second producing asset with minimal equity dilution.

So while implementing the APM tool was a difficult decision it will allow us to limit equity.

Issuance only to what is absolutely necessary to reach the net cash position.

Another area of focus is upgrading our internal technical bench strength within the business.

Recently, there have been several very welcome hires in key operational planning and procurement personnel, we believe that bolstering our technical strength internally will be a strategic advantage and translate to higher performance at all levels of the business.

We are committed to continuing our ESG initiatives, despite having a relatively low carbon footprint, while the space, we continue to drive focus and attention to defining our climate change targets and initiatives.

This concludes our call today.

Now I'll open up the line for questions and answers.

Thank you.

As a reminder to ask a question. Please press star one one on your telephone and wait for your name to be announced to withdraw your question. Please press star one again.

Please standby, while we compile the Q&A roster.

Okay.

Our first question.

Comes from the line of.

Ryan Walker with Echelon partners. Your line is now open.

Yes.

Alright, good morning, everyone. Thanks for the call.

Glad to hear that you've received one of the one of the new rock filters.

The EPA on the on the second one there and with the plan be to retain the rental unit.

Once you get both units up and running there or will you just go with your your own units at that point.

Thanks, Ron.

I'm going to give it to.

Tried to give you an answer that.

Yes, the EPA for the second bolt or its actually sitting at the supplier's warehouse right now we haven't taken delivery of it right now.

But it is certainly the plan as our equipment comes in you also have.

At tumor cream bolsters, although on the order and as those equipment come in we will definitely.

Remove those rental equipment that we have right now.

Okay great.

And then.

Mentioned the positive grade reconciliation in the Balkans zone.

Can you quantify that at all.

Okay.

Substantial positive reconciliation.

Yes, certainly.

Certainly in Q4, we've seen very good grades coming from the from the Falcon.

I would say, it's in the range of 30% to 50% more than we expected, especially in November and December .

So we're happy with those results it does offset some of the underperformance that we've seen earlier this year.

Great. Okay, and then just finally for me here.

Any update on the on finding a new CEO to replace Duncan.

I can answer that for you Rod we have a steady stay.

Search committee, which is at.

At the board level is cheered by.

<unk> chairman of the comp and HR Committee and he has two directors are working alongside with them they have.

<unk>.

We established an agreement with a well known search company and they are currently.

At work, compiling the mandates.

The search has already started.

Added to the actual search starting.

<unk> had a number of people some of which are well known to the industry that have actually approached us. So.

That's where it is.

Far as timing is concerned.

Our best estimate is in the order of three to six months.

Why the long range to six months it really is dictated by any notice period.

Mark has to be good.

That's the best I can give you right now and we'll just need to be.

Working hard at it.

Okay, great. Thanks, very much I'll pass the baton now thanks.

Thanks, Ron.

Thank you.

Our next question comes from the line of.

Andrew Let me kitchen with BMO capital markets. Your line is now open.

Andrew Your line is open please check your mute button.

Yes.

Thank you for taking my question.

Can we just get a further maybe commentary on availability of spare parts and.

Even maintenance or specialist contractors to be able to.

Yes.

<unk> better than that.

In 2022 at both mines, because I think that to some degree impacted performance.

Okay, and then just wanted to Craig to give you some of the details.

What we are experiencing is I believe a global phenomenon.

Phenomenon.

Supply chain globally has been a challenge, we certainly see things turning around sale.

Not quite as.

As to where we were price dependent.

Obviously, if you could give some more color on that.

Yes.

So basically the situation in 2022 was much different than this year.

Fence that in 2020, due we had difficulty getting the equipment at the site.

Which has been a challenge.

Now that we have sourced those rental bolsters they are sitting at the mine and we are operating and so we now have four of those.

As opposed to what the PFS Gulfport, which is two <unk>.

And so now the remaining I would say constraint here is really the availability of parts and as Mark mentioned this is really a global phenomenon right now.

That being said with the supplier of those Mcquain ins. We have I think things are the bolt tech we have secured contracts with the suppliers to have specialized mechanics.

Coming to the site and teach our mechanics for the best maintenance practices on these equipment.

And also the fact that we basically the sheer number of equipment that we bought the site now.

Secures availability to some extent.

The PFS felt for two equipment that would be available at 85%. We now have four so we can go down to as low as 50% availability before.

We see an impact I guess on our performance and that is the whole rationale for sourcing more equipment really then.

Then what the PFS Gulfport, so we're confident that with the fleet that we have right now we're going to be able to deliver on what we committed.

Okay, but just to confirm that you are broadly still seeing some level of constraint in.

Spare parts maintenance contractors even.

And that you guys are trying to.

Adjust plans too.

So that situation, let's exactly right Andrew.

Yes.

The items that would typically be on the shelves of the Oems.

Prior to the pandemic.

Is that.

As competes as one would see right now and so as a result of that.

Adjusted in a number of ways. One we are in discussions with Oems to ensure that they or ourselves all those off and make sure that they are available to we've got extra complete machines as Fred described that ensure that the collective gives us sufficient.

<unk> access to machinery working at the.

Optimum.

And then thirdly addressing our own inventory is something that we have to consider increasing but certainly it would not be.

A responsibility that we want to take away entirely from the OEM.

And maybe.

Two very quick additional question should or.

Can you provide any commentary on whether we should expect.

Our continued drawdown for at least part of 'twenty three on the debt facility is steel.

We continue to advance P&I and covering expenses involved in that and secondly, what would be the scale of the cost of this ramp on.

Presque Isle.

Okay.

Let me just start with the cost of the rent the skill.

It is included in our budget for 2023 it is not.

Not around specific too.

Into the skill and to monitor, but rather a exploration facility that gives us exit underground too.

Drilling platforms.

So that we can exit at.

The right innovation into that ore body.

$6 million is take your pool.

Current capital program.

As far as the drawdown is concerned you will notice that.

We were able to maintain our position of 55 million from Q3 into Q4.

Going forward it very much depends as you would expect on a cost program.

And maintaining of a cost program.

The answer is that we are able to produce.

Ahead of budget and certainly that is all.

<unk> objective and then thirdly, the gold price at.

At the start of this year you would have seen that we had that 19 $20, an ounce, which certainly that helps us a great deal, but it didn't take long to get down to current levels with nearly 100.

$100, an ounce Aloha and we are seeing a sensitivity.

Almost $20 million.

<unk> hundred dollars an ounce variance.

Keeping those issues in mind, we will continue to maintain our position on that.

Revolver as long as we can but there's a we've got moving inputs and outputs as you would expect.

Does that answer your question.

Yes, thank you very much I'll.

Handle the microphone to somebody else thinks.

Thanks, Andrew.

Thank you.

Our next question comes from the line of Wayne Lam with RBC. Your line is now open.

Yes, thank you very much.

Morning, guys.

I guess just wondering.

Maybe at Eagle River.

Can you give us an idea of the percentage of floor plans from the Falcon zone. This year and then just given the variability and grade has there been anything you've been able to glean in terms of improving the internal block modeling.

And do you feel.

Given the great that you've seen in the early part of this year.

Do you feel there is a level of conservatism baked into the guidance.

Okay.

Multiple.

Directed Christians is going to give it to you.

Too crazy too.

Talk to that one and then Mark you can talk a little bit around what we saw with the significant number of holes that we drilled into the Balkans.

Earlier last year.

Yes.

We are going to be sourcing about 30, 30% of the ounces in 2023 from the Falcon zone. So this is a much lower proportion than.

Then would've been included into our 2020 budget. So Mike if you can talk about their grades.

Great I guess, yes, certainly the.

When we look back at the Falcon when we when we drilled the soft certainly.

Our press release this shows that the.

A number of high grade hits that we had and.

One of the things that going into a new zone I would say that maybe we didn't have as much shield.

None of us when we went into that zone as part of our forecasting and relied a bit more on diamond drilling and that sort of caused us a problem. So forecast incorrect I would say the early part of the years to fix that problem. We certainly have gone back and we've done a lot of skill development.

And we've added another 95 calls for about 20, just over 20000 meters and we have a much better yield or the local variability in grade and.

We've been able to.

To incorporate that into our budget and to our forecasting and now we're incorporating that into our end of year resource and reserve estimate there. So I certainly feel more comfortable with the additional data and our understanding of the deposit now than we were a year ago.

Thanks, Marc I think Duane just to emphasize the fact that.

There is a large nugget. The picture is also a large component of Perrigo, we are seeing strength.

Swings and Roundabouts some.

We are certainly seeing.

The higher grades variability and then months that follow low.

Low grade what the drilling has helped us to do is to understand that variability to a much greater extent and to predict.

Gold production through 2023.

Okay perfect. Thank you it sounds like some good progress being made.

I guess on the.

Balance sheet just wondering.

What's the level of working capital required to fund the ongoing operations.

And then just given the working capital deficit and the spend remain at Cana, how aggressive do you plan to be on the ATM.

Will you look to fully draw down the facility.

Before ramping up on the equity.

Okay, I'm going to hand over.

He used to talk about the balance sheets in our working capital position, but just as far as the ATM was concerned.

We do understand that in the eyes of many.

It is not the preferred route.

I think from a point of where we sit as a company we needed to understand how we can ensure a continued liquidity.

Revolver, whilst we have the.

The ceiling of $150 million it doesn't come cheap and it certainly is.

A large cost component to our operating expenses.

What we would prefer to do is to go down.

The revolver to the point that we can become cash neutral.

And in doing that we said we are in a position to use the ATM.

The.

Prudently to ensure that.

It is done at opportune times.

And at a time.

<unk> are required and that we don't sit in a position where we've grown more than what you acquire.

We need to demonstrate.

Diligence, which I believe to date, we've done exactly that.

And.

It is a tool as I say that.

We find it necessary to have at this point in time, nothing would make me happier than to close it out.

However, I don't see that happening in the immediate short term given that we have got a.

We have to deal with and we need to ensure the flexibility of the company.

And lastly, I would say this issue of the unknowns.

Gold price is playing a significant role in our <unk>.

Liquidity and we need to ensure that we can deal with large fluctuations in the event of them coming.

Scott would you like to comment on the.

The working capital yes. Thank you.

As you mentioned it has diminished.

Last year as well.

<unk> added some.

With bulk billing at keno.

As we got into commercial fashion now we still have them.

Significant spending going forward.

But.

The revolver and the ATM or both.

Both of those tools.

And that we're controlling our working capital.

We feel that well.

Well positioned to execute on our class eight.

Kevin.

Cool.

Okay, great. Thank you and then maybe just last one.

Just on the <unk> reserve update should we expect any impact or perhaps more conservative reserve grade at equal number given what you've learned.

Through mining to date.

Reconciliation.

Mark would like to comment on that.

Certainly.

We certainly are.

Incorporating that into the resource estimate going forward, we want to make sure. We're looking at all of the resources.

Reserves that we want to make sure that we're.

At the same level of comfort everywhere and if anything is widely spaced drill we might back off the call. So this level of that and could see more drilling for 2023, we have a healthy budget to do the infill drilling and expansion drilling.

But really what we're working through that now we're releasing that shortly.

Okay, Great look forward to it good luck in the year ahead. Thanks, Ryan Thank you.

Thank you.

Our next question comes from the line of Michael Fairbairn with Canaccord Genuity. Your line is now open.

Okay.

Great and thank you very much for taking my question.

Two from me I wanted to start at Eagle.

Just taking a look at.

At guidance that was previously released it does seem to imply only a very modest increase in throughput from Eagle in 2023 relative to 'twenty, two and 'twenty. One I know in the past you've talked about ramping up that throughput towards 800 tons. A day I just wanted to see if that's still the longer term goal and if you can provide any color on.

On the longer term ramp up plans there.

Okay I'm going to.

And just wanted to trade, but I think what you also must be very aware of us.

The fact that we are mining in an area which is.

It's the similar to what we did in 2021 and 'twenty two.

2023.

300.

And the 300 zone in comparison to that all the bulk of the <unk>.

Cary has higher grades and so those higher grades as well as at the similar tonnage is does give us the overall output.

Eagle River.

Close to the <unk>.

And then Mark so is that difference but the.

Our objective of putting the modem has always been the and so let me hand over to Craig and I will not be able to.

And I'll give you.

Understandable, Craig will give you some understanding of the other areas that mark has been drilling into which mark.

Contribute to larger production going forward.

Yeah, So Brett speaking.

Our bottleneck at Eagle is really on really ventilation in the total amount of material that we can truck invoice from the mine as the mine is getting deeper and deeper.

So we're currently really working hard on trying to debottleneck that ramp as much as we can.

The congestion in that area.

Area of concern for us and we're actively looking at trying to debottleneck that.

Specifically for that in 2023 were planning on looking at tradeoffs on.

An alternative conveyance system for Eagle.

Lots of potential at the asset.

It still continues to go down and we need to maintain or even increase that throughput.

One thing that is very interesting for us as well is that recent expansion of the Falcon Gulfport surface.

This of course is away from that congested area. It is also a much shallower. So this has the potential for us to add that shallower.

Production away from congested currently congested areas and so we're going to be very keen on looking at the results in the period.

Okay perfect. Thank you.

Just one more for me around keynote.

You've mentioned, how you expect that.

Our costs are going to move closer to those outlined in the PFS in 2024, once we get into the <unk>.

Higher rate areas.

Barring any inflationary pressures wondering if you can quantify the level of inflation.

You've seen a keener from the PFS.

Okay.

Alright.

<unk>.

Inflationary.

Areas that we focus on primarily labor number one.

We've seen certainly the increases in the cost of labor.

The escalators, if we compare that to the.

Period, 2018 to 2021 city, we sold to the <unk>.

In those years.

We now seen closer to four and a half.

The shift.

Point being electrical power and energy systems.

<unk> has been relations on the diesel generator.

The underground mining equipment, so their consumption Sydney.

Been affected we have been very fortunate on the electrical side given that we are.

Based on the national grid.

That cost has been pretty consistent and then into the procurement area, where we see a lot of our consumables.

Explosives.

Yes.

Okay.

On the ground support drilling equipment needs.

Those those items have certainly increased as well and there's been a variation of anything from 5% to 15% on across in.

Different commodity types.

Commodity or podcast.

Consumables and so.

To give you a understanding.

What escalation you could put on to the numbers that we have in the PFS.

Would be challenging right now what I have said.

And many of my discussions.

With investors and analysts is that we said we would be coming in.

<unk> thousand dollars announced a keener that's the ship.

The numbers that we have in the PFS will certainly be worked on during the course of this year and it is a number that we need to come up and supply yourselves.

Second half of.

2023.

And just to confirm is that a $1000 an ounce cash cost or all in sustaining costs.

The all in sustaining costs.

Okay perfect. Thank you that's it for me I'll pass it over to someone else.

Thanks, very much Michael.

Thank you. Our next question comes from the line of John Tumazos with John Tumazos, very independent research LLC. Your line is now open.

Thank you for the webcast and for taking my question.

First.

Looking at the 35000 ounces you just produced.

In the December quarter 25 of it.

Eagle China, China.

How much is the abnormal output from good grades in the Vulcan.

The normal output have been say 18.

Eagle and tenant Shannon.

Thanks for your question John .

Little challenging to answer that with any desk.

Definite accuracy.

If you got any thoughts on that.

Well I would say that.

The run rate at Eagles, I would say the normal run rate at Eagle would be in the range of 20000 ounces per quarter.

And the normal run rate that we expect from Kita is more in the range of 7500 per quarter.

Based on the reserves that we currently have developed this is certainly expected to pick up a keener and as we develop the ramp and get access to the higher grade.

New mining horizon, and one point in time.

Thank you if I can ask a second question.

A business problem.

Is that your share price.

<unk>, Canada, as a liability and not an asset.

Or.

The market seems to think.

The project as far as circle.

I know that might just be a short term Mike market psychology.

Those of us that might on your stock feels the pain.

Why not.

I know this might seem reckless to you, but why not borrow money and buying your stock right now.

Kill the ATM.

Draw down your credit lines.

And have confidence in your bodies in your personnel in your business plan.

Well thanks for the question John .

Let me first of all say that.

In my current position of extreme confidence in.

Personnel the team and the plan that we put together.

It is also.

Within my first week of arriving and listen.

Interim Ceos position with all its going to change guidance.

Heather.

And as standing no.

Emphasizing that as a board member we will own 42, the guidance that management had recommended we provided oversight and we believe that that is achievable and we are setting up to do exactly that.

For us.

How the market might be thinking of.

Dana It is very unfortunate I believe that the explanations that we've given as to why we have lost the problem we have.

Shoot.

Yes.

They certainly can be verified.

At any time.

The issue of going forward.

And buying stock at a time when it is increasingly more important to ensure the liquidity of the company.

Really is one that we are using the tools that we have which are typically used within the industry.

<unk>.

Bringing.

He has led to a position that we know it can achieve in 2024.

I think.

Everyone.

Including ourselves very well.

Excited with the exploration work that has been done on the.

Hey, John .

We progressively moved down with the decline.

We would also be drilling laterally into the ore body to better define but its volume as well as great and.

So.

That period.

We expect that we're going to increase our level of confidence and that when we get down to 129 level, which.

As we've said we'll be at the end of this year develop that level and then start mining up that the position. We're in now will change dramatically.

We want to be in a position in 2024 that were not paying down debt, but we are we have opportunities ahead for us.

To grow the company.

And we have seen where we've been.

And we know that we can make.

<unk> makes up from where we are right now as far as our share prices.

We're not happy where it is.

And certainly I personally and I don't expect any influence our thinking on this call.

I believe personally that its.

Got.

It is a stock that our Nevada, more and that's the confidence that I have and I and the rest of the executives do that as well.

Thank you for your very earnest response.

You would bear with me for a little.

A little more.

Sometimes the concept of having a CEO is a little over rated.

Fortescue metals $40 billion company had the CEO slot vacant for over a year in the past year.

And then Mike.

M&A, one layer and shorten communications.

Save a budget item to have the CEO vacant so from my standpoint as a shareholder.

That's not the biggest problem.

Now during this juncture, where you don't have as CEO . It's also possible to consider other strategic alternatives.

In the context of the situation, where the stock is trading like Canada.

As a liability and not an asset.

Now across the street practically you've got Eldorado.

Which operates in Greece and Turkey.

And I can speak from personal experience about how difficult the discrete sharp.

I was asked to get an archaeological permits to renovate my grandmother's house and I gave up.

In the course of your CEO search.

How are you going to call people across the street and ask them. If they will give you a $150 million for ciena.

Hey, Mike.

Simplify a couple problems.

You wouldn't have to worry so much about that.

And the stock with double instantly.

Maybe I can answer that by saying that.

Kina as that of the two.

To see within wisdom is significantly greater than the value that <unk> got the.

John .

I think the fact that the.

The markets, so great value, taking it to our company to share prices and which it did in 2022.

Menstruate.

And so our job right now is to focus on delivery, we know that there's been a.

And lots of trust will be what happened in 2022, and so it's our job to make sure that we regain that position.

I am very confident that not only will this team.

Be able to achieve that but also we have the assets.

And know how on how to bring the full potential of.

Tina.

To the table and so that is a focus area for us.

With our Ceos, the Mississippi entity within a company.

I think from a legal point of view this.

A few issues to consider and to need from a.

Leadership point of view of driving it any entity forward one needs to add someone at the top is putting all the streams.

So I think that we need to consider that in what you said the well. Thank you very much for your comments John .

I'm a shareholder I'm rooting for you.

You don't need to see if you can sell the company for a good price.

I'm not sure that shareholders would want that.

For us to give it away at least.

Thanks, very much for your comments John .

Thank you.

This concludes the Q&A session. Thank you for your participation. This concludes today's call you may now disconnect.

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Good morning, everyone and welcome to <unk> Gold mines fourth quarter and full year 2022 financial results Conference call I will hand, the call over to it Hasnt laxton to begin today's call.

Please note that all figures discussed on this call are in Canadian dollars unless otherwise stated.

I've used for this presentation and we can talk courting of this call will be posted on the Companys web site now it's over to Lindsay <unk>, Vice President of Investor Relations.

Thanks, Heather good you know on the call today will be forward chair and interim CEO of moly Justin.

I'll follow on to that CFO , Scott Gilbert and Vice President exploration, Mike Michelle also on the call today is Raj Gill Vice President corporate development, well open up our call.

Good morning, everyone. Thank you for joining us today.

I have not met.

I've been involved with the company since 2017, and then currently board chair in infancy.

A way of background I am an operator with over 35 years' experience in deep level underground goldmine, including several years working in Russia, and comparable climate conditions as northern Canada.

Intimately familiar with the operations of Whistler and move my home base to Toronto and will remain until a permanent CEO is hired and settled in.

While 2022 was a challenging year in many ways our accomplishments.

We are very proud of is putting a second mine into production.

It's almost entirely from internally generated cash flow.

The guidance, we have provided for 2023 is achievable.

Production is weighted more heavily in the second half of the year.

The work we are doing this year is setting up the company for a strong 2024 and beyond.

Greg will now provide a detailed review of our operations over to you Chris.

Hi, everyone and thank you for calling in this morning.

Starting with Eagle in Q4, we achieved excellent production rates from the underground mine with an excess of 62000 tons of normal.

This quarterly throughput from the underground mine is the result of improved ventilation. After the commissioning of the pipeline level booster plan earlier this year combined with operational efficiency measures before HD.

Q4 numbers contributed to achieving our new productivity record for the underground mine with a total of 231000 tons of <unk> in 2022.

Right in Q4 came in slightly above expectations as a result of some very high grade production from the bulk Enzo starting in November with one particular stock yielding almost 14000 tonnes, a 28 gram per tonne material over the two months of November and December .

Unfortunately, a significant part of the hybrid or producing December could not be sent to the mill before the end of the quarter can be processed as the major winter storms rolled over most of Canada at the end of September caused both closures.

With complete interruption of the flow of ore from the mine to the mill for several days.

This resulted in the operations ending the year with approximately 6000 tonnes of ore at 18 gradually found unprocessed until later in January .

Athena the theme of court achieved record throughput cleaning the restart of operations in Q4 with 35% more tonnes processed and previous best established in Q4 of 2021.

The lower grade achieved during the quarter were due to the source of ore whereby limited production capacity makena be caused us to supplement production from the lower grade Martin F 50, Nbc's zones.

Low rates are expected to continue into 2023, as we will continue to supply the mill at lower grade ore from those zones to supplement the team to beat the apparel that will be available to mine, which is now mostly lower grade fringe material and diluted or from previously mined areas.

Despite Q4 being a miss on the production side, our team was able to achieve key milestones instrumental to the successful ramp up of mining activities into 2023 and beyond.

First the Batesville plant was successfully commissioned and delivering to production in November the plant has been operating centers performing in line with expectations <unk> has always been identified as a critical component to the successful mining Athena.

Now that it is available for the operation It helps reduce the standup minimized.

Minimizing the risk of instability.

It also helps better controlling dilution and will allow for a more rapid overall extraction sequence.

Demonstrating the viability of the peso was the final element for keynote <unk> commercial production criteria and commercial production was declared on December one.

As more development of Kina, a lot of very good things that happened in Q4.

Now that the pace of that is online operators and equipment previously allocated the cemented rock fill operation has been freed up and reallocate it to production and more importantly to development activities.

Also the team was very resource for given the very competitive market and successfully sourced rental bolting equipment critical to achieving development rates.

As a result, we now have three rental mcquain bolter is underground.

We also took delivery in Q4 of the first of our two long delayed both X, bringing our total underground fleet of bolting equipment before to more of the PFS.

This redundancy that we now have will guarantee that we have the required capacity.

Availability of parts issues as we are still facing supply chain challenges for mobile equipment repair parts.

All of this combined with the ventilation upgrades completed at the end of Q3 resulted in our team at site achieving despite best quarterly development performance to date in Q4.

Likewise developments in the ramp the community itself has exceeded expectation and as a result, we have 33 ahead of our budget and schedule and we have continued to exceed budgeted development rates in the ramp in January .

We are therefore, very well positioned as we enter 2023 and the team at site is laser focused on execution of the way.

As the slide is showing the mining method requires us to develop the ramp going down multiple levels to accept the lower level of new mining blocks is then proceeds might be blocked upwards. So even though development of the ramp is currently tracking ahead of budget.

The benefits are over performing or not immediate and unlikely to change 2023 in terms of assets, but it will provide earlier access to the one nine mining block to achieve 2020 for production.

Over to you Scott.

Thanks, Greg in Q4, 2022, Western saw 31500 out of the Gulf, which generated $75 million.

The cash margin was $26 5 million and cash generated from operations was $10 3 million and a free cash outflow was 31 gigabyte.

We incurred $39 2 million.

And capital spending which includes $26 5 million Ikea at.

31 <unk>.

With these additions with approximately $130 million, which includes $33 million of cash and equivalents and 95 million drawn under the credit facility.

Established an ATM.

Equity program on December 2nd 2012, which allows the company to issue up to $100 million.

Common shares from Treasury.

Using the ATM as an incurred lower commission and can be used opportunistically.

In Denver, the ATM was only active for approximately half of the available date and the company $13 1 million gross book by issuing approximately $1 6 million common shares at an average price of $8 21 per share.

It cannot be issued through the ATM program, while the company is in a blackout period.

<unk> Western container coffee the typical period extend six weeks post quarter end.

At the end of 2022, the company has drawn $55 million Democrat.

And the variable interest rate of approximately seven 6% over to you Mike.

Thanks, Scott at Cana, we continue to be pleased with the underground exploration drilling results at three main targets.

First at the down plunge extension of the Azo recent drilling has extended this element of additional 125 meters down plunge.

<unk> returned 24 grams per ton gold.

Over four meters through thickness.

Second at the Footwall zones infill drilling continues to better define these lenses and increase our confidence in the geologic model based on our announcement of last week. Many holes returned high grade confirming previous results. One hole returned 34 grams per tonne over 22 meters correlate.

Third at our most recently discovered zones, namely south limit the ASR and the two hanging wall for salt zones.

Drilling along the south limb of the Asia returned 16 grams per tonne over five four meters true width. Meanwhile, drilling up the hanging wall basalt zone returned to high grade up to 850 grams per tonne gold over one five meters from a quartz vein and also four one grams per ton gold over $22 eight.

Peters from a solidified basic volcanic.

This discovery is significant in that mineralization occurs in the host rock not expected to host all modernization urbanization in this area and because of the length of the intersection it represents size potential.

The overall drilling results not only confirm liaison keeps growing the debt, but also that these results have the potential to increase the number of ounces per vertical meter that will provide additional working basis during the mining of the ASR.

Also the hanging wall basalt zones occur within volcanic rocks, where the rock quality is significantly better than in the neighboring ultramafic rocks.

On surface based on the positive drilling results at press steel last year. The company is moving ahead with the development of an exploration ramp from surface to explore this zone.

In the future this ramp could deleverage to easily connect stickiness existing underground underground ramp network, providing access to surface from the existing operation that comes with many benefits.

At Eagle River, giving some initial challenges of forecasting in itself and we have completed 95 definition drill holes and several hundred meters of development on various levels to better understand stay on the grade variability, which is being incorporated into the end of year resource and reserve estimates.

A portion of this drilling was completed from the recently established $3 55 meter level, which extends approximately 400 meters west of the existing mine workings.

311 west zones.

We also are continuing to explore further to the west along strike from Lasalle seven Noah So near the historic nine zone, the felsic volcanic which provide competency contrast, with surrounding basalts that provide a favorable location for gold mineralization similar to that of the mind IRA.

Another exciting area, which has the same post rock mechanics, as the Falcons zone.

It has been recently tested on the eastern side of the mine diary initial surface drilling intersected altered volcanic rocks with quartz veining and visible gold.

One hole returned 233 gas per tonne over four meters and follow up will be a priority going forward.

The site teams are currently updating the annual mineral resource and reserve estimates and we expect to release in March which is our typical timeframe.

Over to you Mark.

Thank you Mike in summary, I want to underscore that western management, including myself are focused on delivering 2023 guidance through operational execution and all indications at this time, although we.

We remain well on our way.

We will need to execute on four fronts most.

Most importantly, laying the groundwork for cleaner to reach its full potential.

This will be driven primarily by the ramp development, which is currently tracking ahead of schedule.

Once we reach 129 level at year end. We can then begin developing higher grade reserves, thereby starting to generate production in line with the PFS level as well as a strong cash flow margins.

Secondly.

We look to accelerate the pay down of the outstanding balance on our credit facility, which does has a long track record of organic funding of projects and treating the delivery of a second producing asset with minimal equity dilution.

Implementing the <unk> was a difficult decision it will allow us to limit equity.

Issuance only to what is absolutely necessary to reach the net cash position.

Another area of focus is upgrading our internal technical bench strength within the business.

Recently, there have been several very welcome hires in key operational planning and procurement personnel, we believe that bolstering our technical strength internally will be a strategic advantage and translates to higher performance at all levels of the business.

Finally, we are committed to continuing our ESG initiatives.

Not having a relatively low carbon footprint will this space, we continue to drive focus and attention to defining our climate change targets and initiatives.

This concludes our call today.

Now I'll open up the line for questions and answers.

Thank you.

As a reminder to ask a question. Please press star one one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one again please.

Please standby, while we compile the Q&A roster.

Okay.

Our first question comes from the line of Ryan Walker with Echelon partners. Your line is now open.

Hi, good morning, everyone. Thanks for the call.

Glad to hear that you've received one of the one of the new rock boulders.

What's the EBITDA on the second one there and would the plan be to retain the rental unit. Once you get both units up and running now or will you just go with your your own units at that point.

Thanks, Ron.

I am going to give it to.

Tried to give you an answer that.

Yes, the EPA for the second bolt or its actually sitting at the supplier's warehouse right now we haven't taken delivery of it right now.

But it is certainly the plan as our equipment comes in you also have.

At <unk> on the order and as those equipment come in we will definitely.

Remove those rental equipment that we have right now.

Okay great.

And then.

Mentioned the positive grade reconciliation in the Balkans zone.

Can you quantify that at all.

Okay.

Substantial positive reconciliation.

Yes, certainly Chris speaking.

Certainly in Q4, we've seen very good grades coming from the from the Falcon.

I would say, it's in the range of 30% to 50% more than we expected, especially in November and December .

So we're happy with those results it does offset some of the underperformance that we've seen earlier this year.

Great. Okay, and then just finally for me here.

Any update on the finding a new CEO to replace Duncan.

I could answer that for you Ron we have established a search committee, which is.

At the board level it is cheered by.

Our chairman of the comp and HR Committee and he has two directors are working alongside with them they have.

Yes.

He said reached an agreement with a well known search company and they are currently.

At work, compiling the mandates.

The search has already started.

Added to the actual search.

Starting.

<unk> had a number of people some of which are well known to the industry that have XC approach that so that's where it is.

Far as timing is concerned.

Our best estimate is in the order of three to six months.

Why the long range to six months it really is dictated by any notice period.

Much has to be worked.

That's the best I can give you right now in wheelchairs.

We're working hard at it.

Okay, great. Thanks, very much I'll pass the baton now.

Thanks, Ron.

Thank you.

Our next question comes from the line of.

Andrew Let me kick Kim with BMO capital markets. Your line is now open.

Andrew Your line is open please check your mute button.

Yes.

Thank you for taking my question.

Can we just get a further maybe commentary on availability of spare parts and.

I don't know, even maintenance or specialist contractors to be able to.

Perform better than that.

In 2022 at both mines, because I think that to some degree impacted performance.

Okay, I'm going to hand this one.

Wanted to Craig to give you some of the details.

What we are experiencing is I believe a global.

Phenomenon.

Supply chain globally has been a challenge, we certainly see things turning around sale.

Not quite.

As to where we were price dependent.

If you could give some more color on that yes of course.

So basically the situation in 2022 was much different than this year.

Fence that in 2020, due we had difficulty getting the equipment at the site.

Which has been a challenge.

Now that we have sourced those rental bolsters they are sitting at the mining we are operating and so we now have four of those.

As opposed to what the PFS Gulfport, which is two <unk>.

And so now the remaining I would say constraint here is really the availability of parts and as Mark mentioned this is really a global phenomenon right now.

That being said with the supplier of those Mcquain, we have I think things are the bolt back.

We have secured contracts with the suppliers to have theirs specialized mechanics.

Coming to the site and teach our mechanics for the best maintenance practices on these equipment.

And also the fact that we basically the sheer number of equipment that we bought the site now.

Also secures availability to some extent.

The PFS for two equipment that would be available at 85%. We now have four so we can go down to as low as 50% availability before.

We see an impact on our performance and that is the whole rationale of our sourcing more equipment really then.

And then what the PFS Gulfport, so we're confident that with the fleet that we have right now we're going to be able to deliver on what we committed.

Okay, but just to confirm that you are broadly still seeing some level of constraint in.

Spare parts maintenance contractors even.

You guys are trying to.

Adjust plans to.

To that situation.

That's exactly right Andrew.

Yes.

The items that would typically be on the shelves of the Oems.

Prior to the pandemic.

Got it.

As competes as one would see right now and so as a result of that.

Address it in a number of ways. One we are in discussions with Oems to ensure that they or ourselves all those off and make sure that they are available to be brought XJ complete machines as Fred described that ensure that the collective gives us.

<unk> access to machinery working at the.

Optimum efficiency and then thirdly addressing our own inventory is something that we have to consider increasing but certainly it would not be.

A responsibility that we wanted to take away entirely from the Oems.

And maybe.

Two very quick additional question should or.

Can you provide any commentary on whether we should expect.

Our continued drawdown for at least part of 'twenty three on the debt facility is <unk>.

We continue to advance P&I and covering expenses involved in that and secondly, what would be the scale of the cost of this ramp on.

Chris Gayle.

Okay.

Let me just start with the cost of the rent the skill.

It is included in our budget for 2023, it is a not a rent specific too.

Integral skill and to monitor, but rather a exploration facility that gives us exit underground to drilling platforms.

We can have better exit at the right innovation into that ore body.

That $6 million is take your pool.

Our current capital program.

As far as the drawdown is concerned you will notice that.

We were able to maintain our position of $55 million.

Q3 into Q4.

Going forward it very much depends as you would expect on a cost program.

Maintaining of our plus program.

Answer is that we are able to produce.

Ahead of budget and certainly that is always our objective and then thirdly the gold price.

At the start of this year you would have.

Seeing that we had that 19 $20 an ounce, which.

That helped us a great deal, but it didn't take long to get down to current levels with nearly 100.

$100, an ounce Aloha and we are seeing is sensitivity.

Almost $20 million.

<unk> hundred dollars an ounce.

Variance so keeping those issues in mind, we will continue to maintain our position on that.

Our revolver as long as we can but there's a we've got moving inputs and outputs as you would expect.

Does that answer your question.

Yes, thank you very much.

Handelman, Mike went to somebody else.

Thanks, Andrew.

Thank you.

Our next question comes from the line of Wayne Lam with RBC. Your line is now open.

Yes, thank you very much.

Morning, guys.

I guess just wondering.

Maybe at Eagle River.

And do you feel.

Given the great that you've seen in the early part of this year.

Do you feel there is a level of conservatism baked into the guidance.

Okay.

Multiple.

Directed Christian so I'm going to give it to you.

Too crazy too.

Talk to that one and then Mike you can talk a little bit around what we saw with the significant number of if you drove into the Balkans.

Earlier last year.

Yes.

We are going to be sourcing about 30, 30% of the ounces in 2023 from the Balkan zone. So this is a much lower proportion than.

Then would have been included into our 2022 budget.

Mike If you can talk about there great.

Great I guess, yes, certainly the.

When we look back at the Falcon when we when we drilled the soft certainly.

Our press releases shows.

The number of high grade hits that we had and.

One of the things that going into a new zone I would say that maybe we didn't have as much shield development now in front of us when we went into that zone as part of our forecasting and relied a bit more on diamond drilling and that sort of caused us a problem to forecast incorrectly I would say in the early part of the years to fix that.

Problem, we've certainly gone back and we've done a lot of skill development.

And we've added another 95 calls for about 20, just over 20000 meters and we have a much better yield or the local variability in grade and.

We've been able to.

To incorporate that into our budgeting and to our forecasting and now we're incorporating that into our end of year resource and reserve estimate there. So I certainly feel more comfortable with the additional data and our understanding of the deposit now than we were a year ago.

Thanks, Marc I think Glen just to emphasize the fact that.

There is a large nugget effect here.

A large component of Perrigo, we are seeing strength.

Swings and Roundabouts some.

We are certainly seeing.

The higher grade variability and then months that follow low grade what the drilling has helped us to do is to <unk>.

This then that variability to a much greater extent and to predict.

Gold production through 2023.

Okay perfect. Thank you it sounds like some good progress being made.

I guess on the <unk>.

Balance sheet just wondering.

What's the level of working capital required to fund the ongoing operations.

And then just given the working capital deficit and the spend remain at Cana, how aggressive do you plan to be on the ATM.

Will you look to fully draw down the facility.

Before ramping up on the equity.

Okay, I'm going to hand over to.

We used to talk about the balance sheets in our working capital position, but just as far as the ATM is concerned.

We do understand that in the eyes of many.

Its not the preferred route.

I think from a point of where we sit.

Company, we needed to understand how we can ensure a continued liquidity.

Revolver, while we have the.

The ceiling of $150 million it doesn't come cheap and it certainly.

Is <unk>.

Large cost component to our operating expenses.

What we would prefer to do it to go down.

The revolver to the point that we can become cash neutral.

And in doing that we said we are in a position to use the ATM.

Okay.

Prudently to ensure that.

It is done at opportune times.

And at a time.

Funds are required and that we don't sit in a position where we have drawn down more than what you acquire.

We need to demonstrate.

Diligence, which I believe to date, we've done exactly that.

And.

It is a tool as I say that.

We find this really to have at this point in time, nothing would make me happier than to close it out.

However, I don't see that happening in the immediate short term given that we have got a.

We have to deal with and we need to ensure the flexibility of the company.

And lastly, I would say this issue of the unknowns.

Gold price is playing a significant role in our <unk>.

Liquidity and we need to ensure that we can deal with large fluctuations in the event of them coming.

Scott would you like to comment on the.

The working capital yes. Thank you.

As you mentioned it has diminished.

Since last year.

Why that is.

With bulk billing kina.

As we buy commercial passion now we still have them.

Significant spending going forward.

But.

The revolver and the ATM bulk.

Both of those tools.

And that we're controlling our working capital so we feel that we're well.

Well positioned to execute on our plan at baseline.

Kevin.

Cool.

Okay, great. Thank you and then maybe just last one.

Just on that claim reserve update should we expect any impact or perhaps more conservative reserve grade at equal number given what you've learned.

Through mining to date.

Reconciliation.

Yes, Mark good luck to your comments on that.

Certainly.

We certainly are.

Incorporating that into the resource estimate going forward, we want to make sure. We're looking at all of the resources.

Reserves that we want to make sure that were up.

But really what we're working through that now we'll be releasing that shortly.

Okay, Great look forward to it good luck in the year ahead. Thanks, Ryan Thank you.

Thank you.

Our next question comes from the line of Michael Fairbairn with Canaccord Genuity. Your line is now open.

Okay.

Great and thank you very much for taking my question.

Two from me I wanted to start at Eagle.

Just taking a look at.

At guidance that was previously released it does seem to imply only a very modest increase in throughput from Eagle in 2023 relative to 'twenty to 'twenty, one I know in the past you've talked about ramping up that throughput towards 800 tons. A day I just wanted to see if that's still the longer term goal and if you can provide any color on.

On the longer term ramp up plans there.

Okay I'm going to.

And this one to create but I think what you also must be very aware of us.

The fact that we are mining in an area which is.

It's the similar to what we did in 2021 and 2020.

2020 in.

In the three hundreds.

And as <unk> done in comparison to that are the bulk of them did carry higher grades and so those higher grades as well as at the similar tonnage as did give us the overall output.

Eagle River.

Close to the <unk>.

And then Mark so is that difference that's.

Our objective of putting the modem has always been the.

So let me hand over to Fred and I will not be able to.

And I'll give you some.

Craig will give you some understanding of the other areas that mark has been drilling into which Mike.

Contribute to larger production going forward.

Yes.

So Brett speaking.

The current bottleneck.

<unk> is really on really ventilation in the total amount of material that we can truck endpoint from the mine as the mine is getting deeper and deeper.

So we're currently really working hard on trying to debottleneck that ramp as much as we can.

The congestion in that area.

An area of concern for us and we're actively looking at trying to debottleneck that.

Specifically for that in 2023 were planning on looking at tradeoffs on.

Alternative conveyance system for Eagle to try and unlock the potential of the asset as we know it still continues to go down and we need to maintain or even increase that throughput.

One thing that is very interesting for us as well is that recent expansion of the Bakken Gulfport surface.

This of course is away from that congested area. It is also a much shallower. So this has the potential for us to add that shallower.

Production away from congested currently congested areas and so we're going to be very keen on looking at the results in that area.

Okay perfect. Thank you.

Just one more for me around China.

You've mentioned, how you expect that.

Our costs are going to move closer to those outlined in the PFS in 2024, once we get them.

Higher rate areas.

No.

Barring any inflationary pressures wondering if you can quantify the level of inflation that you.

<unk> seen a keener from the PFS.

Okay.

Alright.

<unk>.

Inflationary.

Areas that we focus on primarily labor number one.

And we've seen that the increases in the cost of labor.

The escalators.

Compare that to be.

The period 2018 to 2021, Sydney, we sold to.

The sales in those years.

We now seen closer to 400 of the ship.

Second point being electrical power and energy.

<unk> has been <unk> on the diesel generators.

Underground mining equipment, so their consumption Sydney.

It has been affected we have been very fortunate on the electrical side.

Given that we are.

Based on the national grid.

Cost has been pretty consistent and then into the procurement area, where we see a lot of our consumables.

Explosives.

<unk>.

Underground support drilling equipment, certainly does those items have certainly increased as well and there's been a variation of anything from 5% to 15% on across it.

In different commodity types.

Commodity of podcast.

Consumables and so.

To give you a understanding of what escalation you could put on to the numbers that we have in the PFS would.

Would be challenging right now what I have said.

And many of them are discussions.

With investors and that is.

Is that we said we would be coming in.

Below the $1000 an ounce a keener to ship the.

Numbers that we have in the PFS will certainly be worked on during the course of this year and it is a number that we need to come up and supply yourselves.

The second half.

2023.

And just to confirm is that a $1000 an ounce cash cost or all in sustaining costs until the all in sustaining costs.

Okay perfect. Thank you that's it for me I'll pass it over to someone else.

Thanks, very much Michael.

Thank you. Our next question comes from the line of John Tumazos with John Tumazos, very independent research LLC. Your line is now open.

Thank you for the webcast and for taking my question.

First.

Looking at the 35000 ounces you just produced.

In the December quarter 2005.

Eagle China, Canada.

How much is the abnormal output from good grades in the Balkans.

The normal output have been say 18.

Eagle and tenant Jana.

Thanks for your question John .

Challenging to answer that with any debt.

Definite accuracy, but.

If you got any thoughts on that.

Well I would say that.

The run rate at Eagle I would say the normal run rate at Eagle would be in the range of 20000 ounces per quarter.

And the normal run rate that we expect from Kita.

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