McEwen Mining Inc. Q1 2023 Earnings Call
Hello, Ladies and gentlemen, and welcome to the Mcewen Mining's Q1, 2023, operating and financial results Conference call prison.
Present from the company today are Rob Mcewen, Chairman and Chief owner, Perry <unk>, Chief Financial Officer, William Schaefer, Chief Operating Officer Michael.
Michael <unk>, Vice President and general manager of Mcewen copper.
Steven Spears, Vice President of corporate development, Jeff Chen Vice President of Finance after.
After the speaker's presentation, there will be a question and answer session.
If you'd like to ask a question. During this time simply press star followed by the number one on your telephone keypad.
He would like to withdraw your question again press the star and one I will now turn the call over to Mr. Rob Mcewen Chief owner. Please go ahead Sir.
Thank you operator.
Welcome and good morning, ladies and gentlemen.
I'll make this quick.
We have gotten their mojo back.
From September one of last year to last Friday may 5th our share pricing has increased by 200%.
That represents an increase four times greater than the Gtx and the Gtx J indices.
11 times greater than the price of gold and 15 times greater than the price of copper.
And isn't it about time.
And we still have much to regain.
This outperformance was driven by a number of factors, which you'll hear in greater detail.
As we go on today.
But the big ones were a $30 billion.
Argentinean peso investment in Mcewen copper price to Atlantis, who is the world's fourth largest automobile manufacturer.
And.
Also an investment by the world's number two mining company Rio Tinto their technology arm.
Increased their investment by 30 million to $55 million.
Also factoring in as our increase in gold production and this increasing cost per ounce at our Fox and gold bar mines.
Okay.
We've also had encouraging drill results from Fox and losses at Atlas.
And we benefited from an improving gold silver and copper price.
Yes.
We're going to be improving our balance sheet deleveraging it by reducing our debt by 38% on Friday of this week.
And I believe the best is yet to come.
I will now ask Bill Schafer, our director and Chief operating officer to speak up our operations and growth projects for next year and just before he starts <unk>.
After a bill there'll be Stefan Spears, our VP corporate development, who will speak about our exploration progress.
Led by Perry Ing, our CFO and Jeff Chan, our VP of finance to address their finances, and will conclude with Michael netting our VP and general manager of Mcewen copper bill. Thank.
Thank you very much Rob good morning shareholders.
We are happy to report, our operational and financial results for Q1, which have improved dramatically over last year.
Are expected to continue to.
A two acre incrementally improve based on changes we are making in our operation.
On the safety front, our safety record.
It continues to be the cornerstone of our plans going forward. Our three mining operations worked without a lost time.
Incident in Q1, we did have a minor medical aid in February when the diamond drilling contracts around play cut his finger on a sharp piece of metal.
But other than that there were no injuries.
Injuries.
People are contractors working for the organization.
On an operational front.
At the Fox complex, we have continued our operational improvement process.
Which has resulted in a higher gold production and lower cost to Q1.
We processed 107.
500 tonnes of ore and produced 12929 ounces of gold in the first quarter versus <unk>.
68000 tonnes of ore processed 70, 246 ounces in Q1 of 2022.
Thus, a very significant improvement of 57% on tonnage and 78% on ounces.
Costs have also improved by approximately 30% over Q1 of 2022.
Now have cash costs of $1088 and all in sustaining cost of approximately <unk> hundred dollars per ounce.
The Fox complex is basically continuing on a path of incremental improvement that began in Q2 of 'twenty two.
<unk> <unk>.
Hey, its steady improvement since they're also continuous improvement over the remainder of the year.
At Gold bar, we completed the transition to a new contractor in January .
As planned and on schedule.
Yes.
We also moved the operation.
The open pit operation that is run by the contractor to the gold bar, South pit, which produced most of the or in Q1.
And part of this transition was done because of the very heavy snowfall.
That we had over the winter and the pick pit, which is at a higher elevation.
In Q1, we placed $578 600 tonnes of ore on the leach pad versus a budget of $459 per ton.
We produced 60 456 ounces of gold versus our budget of 80 952 ounces.
Cash cost per ounce sold was 14 $191.
And as a significant improvement from 2020 to 2200, $84 and Asics was $17 quantify versus $26 33 in Q1 of last year.
The shortfall of 'twenty 496 ounces was due in part to the slower.
Beaching rate of the whole by ourselves or but also due to our record snow over the winter as.
As well as a very wet.
Randy.
<unk>.
The very heavy snowfall over the winter led to.
Very high snow melt.
Along with very heavy.
Spring rains, which resulted.
In a diluted.
Gold grade in our.
Solution that goes back and forth from the Leach pad to the gold recovery plan.
This had some impact on our recovery.
Yes.
So very high spring runoff also interrupted production and site access for approximately three days in the quarter.
During that time, our two access roads were flooded.
Getting to the site bulk bulk and helicopter for a few days.
With the help of.
Our own people and our contractors, who were able to mitigate the impact of these unusual weather events.
We are working diligently to get our production back on track and we have return.
To work in the <unk> pit.
In mid April .
Where they are has much better leaching kinetics, which will allow the goal to be released much quicker.
This will improve our gold production in the remainder of the year.
In Mexico at El <unk>.
At the <unk> Phoenix project.
We have moved the plant that we purchased.
Last years to the site and are planning for production in early 2024.
We are presently working on three important aspects of the project.
Number one the permitting modification.
Acquired by the revised plant configuration that production rate the construction engineering and scheduling for the project and.
The financing for this construction.
As you might remember, we will reprocess, the heap Leach pad, which is a greater <unk> six grams per tonne to.
To accomplish this we acquired a use of 7000 tonnes per day.
Global processing plant, which was recently operating at another mining operations.
We have moved.
This plant to our site.
<unk>.
We will assemble.
The front end of the plan, meaning the grinding cyclone and leaching portion of the plant and use the presence of <unk> gold recovery circuit.
When we start production this.
The acquisition of <unk>.
This equipment reduces the capital cost.
For the projects down to approximately $12 million.
With potential.
To allow us to increase production as we move into as we move to production.
We see this plant operating later this year or early in 2020.
And all of our operations, we are continuing our progress in stabilizing and improving operations. So we can obtain predictable outcomes for gold production.
And costs in 2023 and into the future.
Thank you very much and now I will turn it over to <unk> for an update on our exploration efforts.
Thank you very much bill I'll start by highlighting exploration results from our projects in the Timmins region, we have a large exploration and resource delineation program ongoing at the stock property the site of our mill as well as the past producing stock mine to date in 2023, we've completed 42800 meters or approximately 100.
40000 feet of Diamond drilling yesterday on May eight we published an exploration update which you can reference for complete results and diagrams, we had a positive outcome from our drilling near surface up plunge along the historic stock mine trend. This mineralization occurs just below the bedrock surface very close to the proposed ramp access.
As to stock West and our mill.
With strong gold grades and widths and eight holes two highlights our 18 nine grams per ton gold over $9 four meters, including a 103 grams per tonne over $1 nine meters and in the second hole $18 seven grams per ton gold over three meters, including 53 grams per tonne over one meter results are true with <unk>.
Cut drill.
Drilling also returned positive results from the stock mine trend down plunge below the historic mine workings as well as step out drilling at stock West where additional intersections carrying visible gold at currently in the lab.
We also encountered a potential new hanging wall zone above stock West, which returned an intersection of five seven grams per ton gold over $5 nine meters true width.
Yes.
Exploration drilling in Timmins will continue throughout the year at stock with drilling also allocated to grey Fox to follow up on positive results received last year.
Moving to Nevada exploration is just getting ramped up after the winter and a very wet spring period, we look forward to reporting on progress at several near mine exploration targets during our next call.
In Argentina.
The Mcewen mining management team visited the San Jose Joint venture mine in April to tour the site and receive presentations on the production plan for 2023 and exploration progress drilling to define new veins is ongoing with a focus in 2022 and 2023 on two veins to the north of the mine the first called Maura northwest.
Located approximately 750 meters north of the nearest underground infrastructure had initial resource defined in 2022 with additional potential along strike.
Morris southwest located approximately 250 meters from the nearest infrastructure returned encouraging drill results such as 390 grams per tonne silver and one eight grams per ton gold over one eight meters true width and the local geological team believes this vein has good potential for additional resource growth.
In the second half of this year drilling is planned at the telco north target, which is adjacent to the Cerro <expletive> mine.
We're getting the extension of the northwest trending vein system that exists on newmont's property.
We intend to highlight exploration opportunities and results from San Jose more actively in our disclosure going forward.
Finally, moving to Los Angeles.
We have published for drilling update so far in 2023, most of the drilling has been devoted to delineating the deposit and improving our knowledge of the geologic controls metallurgy rock quality hydrology et cetera, which is essential as we move to more advanced engineering studies.
The area around losses deposit remains under explored with numerous geophysical targets never tested by drilling one deep exploration hole testing of geophysical anomaly to the north and below the deposit was published on March 6th It was highly successful returning an intersection of 1052 meters of two 9% copper including for <unk>.
Third 80 meters grading two 4% copper copper grade in this whole increased below 500 meters with grades up to 146% copper over 26 meters in early mineral porphyry with courts painless, which is typical of the high grade core of the resource.
Thank you and I'll now turn the call over to <unk> CFO .
Thanks Stephan.
Sure.
I'll provide a brief overview of our <unk>.
First quarter results for 2023 following on from Bill's overview of our operating results Jeff.
Jeff and I will then discuss our liquidity and the impact of the <unk>.
Atlanta, Newton, Rio Tinto transactions, which closed late in the first quarter.
So starting with Mcewen Mining's consolidated results, we reported a GAAP net loss of 43 million or <unk> 91, a share which compares to a GAAP net loss of $27 million or <unk> 45 versus <unk> 45 per share for the same period in 2022.
Given that the reported loss is primarily a function of the losses, though less exploration expenditures that mcewen copper we have introduced a new metric this quarter of adjusted net earnings loss, which is a non-GAAP measure of focusing on the results of our 100% owned gold operations and excludes the results of both <unk> and copper and the San Jose mine.
Accordingly, our adjusted net loss on this basis was $6 4 million or <unk> 14 per share for the quarter compared to $13 1 million or 28% 20.
<unk> 28 per share in the first quarter of 2022.
Our adjusted net loss improved significantly despite excellent exploration spending on our 100% owned properties nearly doubling from 3 million to $6 million this quarter.
This demonstrates a significant improvement in our operations, particularly at that last held flat during the quarter.
This is reflected also in the improvement in our reported gross profit and cash gross profit factors on a quarter over quarter basis.
So looking at our operations and characterizing our results are bill did a thorough job reviewing our operational successes and challenges at our properties.
I'll also add.
Continuing on from Stephens discussion biotech San Jose that's at the San Jose Mine.
First quarter production was generally disappointing and came in at 23000 gold equivalent ounces, which while slightly ahead of the first quarter of 2022 was significantly below budget expectations, but the resulting.
All in sustaining costs coming in over $200 above.
Realized.
Gold equivalent sales prices.
This was primarily a result of lower grades process I'll say first a high level of mining dilution and also process lower grade stockpiles because of or shortfalls from underground mining.
The average gold and silver grades process for approximately one third lower than the comparative period in 2022.
Tonnage to the plant was 108000 tonnes, which was slightly ahead of the 103000 tonnes processed.
In the comparative period.
We will work with the team at San Jose and our partner <unk> to monitor the execution of the drilling in a recovery plan.
Outlined to better define the mining resources and access new areas of or not in the original mine plan as Stefan outlined.
This should have a positive impact for San Jose both in 2023 and 2024.
Yes.
I think the result of the three operations together leaves us consolidated production of roughly 30000 gold equivalent ounces for the quarter compared to 25000 ounces for the first quarter of 2022 again, while slightly ahead of where we were last year. We still have a fair amount of work ahead of us to meet guidance for the year, but based on the plans outline.
Bill We believe we can do sell and can also deliver.
These results profitably, especially at current gold prices.
From a liquidity standpoint, the transactions, which Rob outlined we as a company in much better shape in terms of cash and working capital as evidenced by our balance sheet.
Currently in the process of retiring $25 million with our of our debt with sprott lending, which should close in the coming days as Rob mentioned and this will further deleverage our balance sheet.
Now I'll turn it over to.
Jeff <unk>, our VP of finance to go over a couple of additional highlights.
Thank you Patrick.
During Q1, we raised a total of $185 million consisting of private placements and secondary common share sales. These transactions brought on 30 billion Argentine pesos from FCA, Argentina, a subsidiary of Atlantis and $30 million U S dollars from Newton are Rio Tinto venture Mcewen.
Mcewen mining as a Standalone company received $47 $5 million in consideration of its eight 7% interest in Mcewen copper.
The balance of the funds will be used by mcewen copper to advance the losses at <unk> copper project.
The pricing of the recent transaction implies a market value for our copper business of $550 million.
From an accounting perspective, the cash rate is fully reflected on our balance sheet, hence the reported cash balance of $190 million.
As we described in note four to our financial statements as of March 31, the Q1 copper held $29 5 billion pesos at an official exchange rate of 200 and mine to one we are prudently managing our Argentine peso balances to mitigate inflation and devaluation risks investing in low risk liquid securities has it.
Result, our investments in Argentina yielded $9 million in interest income during Q1 against $7 million in devaluation impacts on our peso balances.
I'll now hand things over to Michael <unk> to discuss our losses <unk> copper project. Thank you, Jeff and Mckeon copper, we had a remarkable quarter this year.
In a challenging market and as mentioned by Ralph we have been able to win the support and investment of Atlantis. The Westport biggest comic up by an equity investment of 30 billion Argentine pesos, obtaining a stake of 14, 2% and make your own Copa.
This is remarkable because to my knowledge. It is the first time Mccormick us invested in a Copa developer.
This is testimony to a trend shift in the mining sector and validates the value that <unk> represents.
<unk> make us realize the eye watering amount of natural resources required to shift towards a greener energy metrics and electromobility and the need to secure supply.
<unk> presented a unique opportunity a future mine that is aimed to be a paradigm shift in the mining roads and mine entirely built towards minimized environmental and carbon footprint with low water consumption aiming to produce copper cathodes that have direct industrial application auto in Argentina, and a very attractive from an ESG perspective.
It is remarkable because of the strategic beyond essential, but EMEA financing cylinders produce about 160000 cost in Argentina half of which I reported has approximately 24000 employees in Argentina direct and indirect 24000 families. The dependency lantus, which would Houston bonus Avis in Cordova urban centers that do not have the same.
Appreciation of mining as the more distant mining provinces in Argentina, now would have a significant amount of exposure to our corporate development not only through the sharing of future tax income, but also directly through cylinders participation in <unk> and Copa.
We still anticipate we now bring mining to those urban centers and essential component of our ESG strategy.
Rio Tinto, the world's second biggest mining company to their corporate technology. Newton also took the opportunity to invest another $30 million declining a percentage with snow makes them equal shareholders took the lantus owning 42% of Mcewen Copa.
As highlighted by Jeff. This together means that the implied <unk> market value of Mcewen Copa increased from approximately $260 million to Python at $50 million.
Well the share ownership of Mcewen mining decrease of 68.
1% to 51, 9%. This represents an overall value occasional 80% for mcewen mining shareholders from 160 million to $290 million.
Thus ratified the value of Mcewen Copeland are important of the Suez project.
So far we have an environment, where there was a scarcity of drill rigs secured 15 drill rigs.
<unk>, including four new board long years Elephant 60, as we all know ourselves and part of which we dedicated to local supply development.
We have drilled $34 four kilometers and 127 holds or 111500 feet. So far and has delivered come indicated strong installed results and this year's press releases with more to come.
Stefan I have mentioned in that exploration update our promising results regarding the step out exploration showing the potential to increase to further.
Our already vast deficits laterally and at depth.
We have improved our existing routes our exploration goat milk and support 18 weakness, which we have successfully tested with commercial load to the site for the first time since the project inception.
This is important because it makes future logistics, so much more cost efficient.
Argentina has become relatively more attractive compared to jurisdictions, such as Chile. Okay.
Thousands of kilometers of border and the <unk> were significant copper deposits allocators.
<unk> testimony to this increase of interest in Argentina, especially self one what's the attendance of our vendor piddock, where we invited the vice governor of self one the mining minister of San Juan and the Ambassador Argentina, Canada, and representatives of the financial sector, which was very well attended.
As well as the recent visit of the Canadian Embassy to Argentina at which together with the minister of mines of South one we traveled to our projects.
We demonstrated our progress at the local solar project in the analyst. The first project Ambassador visited in this province.
Both are indications that Canada, and Argentina interested in working together to bring mining projects forward that play an essential role in the future energy transition.
We have made remarkable strides also in the permitting sites and filed for an environmental permit application for exploitation with sub one authorities.
And events, including the Governor the Minister of mines, and Representatives of initial secretary of mines and legislators on the 14th of April and which is the primary a permit application to furthering our project.
Another milestone was the recent memorandum of understanding we signed with Wyclef loose wipe yes, it's one of the biggest companies in Argentina at the majority state owned natural oil gas and energy company.
This memorandum signed between Mcewen Copa and why Pf loose sets out the framework to deliver appropriate solutions to provide 100% renewable energy for the operation of Los Angeles and South one.
Aimed to prevail of solus for carbon neutrality, but by 2038.
Our competent management team in Argentina with powerful local experience is prepared to drive the project forward to build our vision.
Green sustainable mine with an accelerated timeline.
Kennecott exploration on the other end of year Tinder company is expected to start drilling at <unk> Creek property is doing this month canaccord slated to invest $80 million over seven years to be able to earn 60% of our cake.
You for your attendance I will turn the conversation back to Ralph.
Thank you Michael.
Okay, operator, we're going to go to question and answer period.
And we have two questions that came in online.
The first one from Glen with Siri.
Shareholder.
He asked what measures.
We're taking to minimize the potential losses from declining Argentinian peso I'll ask Michael to reply to this question, Joe So we invest in low risk.
And highly liquid.
Investments in Argentina.
In Q1, we gained about $9 million of interest income versus the relation of 7 million. So we made about $2 million vessels. The devaluation of the peso, which is a good outcome. We also invest a lower amount in CDI is about.
While billion Argentine pesos to further our.
Potential upside valves.
<unk> is the devaluation of the peso.
Thank you Michael.
Glen I also asked another question about contractors.
We read in the 10-Q that leaves us drilling contractors and the reason for that is they have the expertise that we lack.
Do the exploration drilling.
We also I also wondered about the contractor at gold bar and that has always been part of the gold bar plan. It was a way to reduce the upfront capital development costs.
We have.
A new contractor there that is working very well for us.
Yes.
The next question came in from Valkyrie.
Dayton Court of Ft wealth managements in London, England.
On behalf of her.
Managing director Grant Fitzgerald III.
Two parts one is there a price target available via research Slash Analyst report there are four currently out there.
And they range from $9 50, a share to $11.
211, one at $10 15, and 190 <unk>.
And they are alliance partners FCA Wainwright.
Ross and Cantor Fitzgerald.
Yes.
The second question will we be looking to raise additional capital by the issuance of new shares this year.
The answer is no assuming current gold and silver prices.
Stay where they are.
We haven't.
Look David.
Going outside and could be M&A activity or other projects at the moment all of the projects that Bill mentioned will be financed by internally generated funds.
The third question had to do with our share structure.
Asking are there any restricted shares due to mature and there are none.
Warren.
All of the warrants that are outstanding of which there is one 9 million warrants there out of the money at the moment and there is options.
$4 million, we have no convertible debt or convertible financing proposed.
And.
Last number for the short position was $1 7 million shares.
And I don't believe there are any other online questions.
At this point operator are there any do you have any questions in the queue.
Yes, we do and as a reminder, if you would like to ask a question. Your press star followed by the number one on your telephone and to withdraw your question again press the star and one. The first question comes from the line of Jake Zukowski from Alliance Global Partners. Your line is open.
Hey, Robyn Kim Thanks for taking my questions.
Okay.
So you've had some exploration success at Fox recently.
Can you just remind us the size of the exploration program. There for this year and maybe just what's left as far as flow through dollar stuff that you have left to spend in pipeline correct.
Bill probably have to handle a exact number but the flow through.
<unk> is around $14 million U S.
Of which we've spent we've spent about.
Four.
At the end of April of about $5 million.
So we still have.
10 million.
Approximately $10 million just been through.
The remainder of the year and.
At the present time, we have seven drill rigs operating and basically.
Drilling approximately 10000.
Meters per month.
Okay. That's helpful.
And then just switching gears to losses.
You mentioned in the release that the environmental impact report was was submitted.
Just provide any high level color on sort of what that process looks like.
The timeline of events.
Sure.
Nicole.
Sure Jacob So first on the 14th of April what is going to happen now is the following the minister of mines is heading a commission of.
An additional 14.
This will in entities.
<unk> the different aspects of the report and then hopefully within a relatively short period of time, you should get approval for us to be able to.
Basically start with construction.
And future operation of this mine.
To give you a comparison.
Yeah.
Luna.
Lundin Mining's evaluation took about a year and is a little bit more of a complex project analysis. So to give you a frame of reference in terms of timing.
Okay very good that's all on my end, Thanks, again, and congrats on a strong quarter. Thanks.
Thanks Jake.
Next our next question comes from the line of Heiko Ihle with H C. Wainwright. Your line is open.
Hey, guys. Thanks for those market, Hey, it's actually markets, calling in for Eric Thanks for taking my questions.
Yeah.
So.
In terms of nuclear in copper.
Implied value, you mentioned of $550 million and euro.
52% ownership this yields.
$6 million value that the original Mcewen still has switches well over half your market cap.
The idea of Mcewen copper was to surface value and you can easily argue that that's exactly what's happened thus far.
So I guess just looking ahead is there a price for which you'd sell the remaining 52% and again.
Decent chunk of your market cap. So while you lose an important asset you would also be able to return a significant amount of cash to shareholders.
That's an interesting question.
<unk>.
Heaven pondered the sale of it but we have wondered about that.
The value.
There are two public values out there for copper projects within the same province, where in.
Argentina, the Jose Maria property that Lundin bought for $485 million.
And there is the Cielo project and it has a market cap in excess of $2 billion.
We are larger than both of those projects.
Our copper grade is higher than both of those projects were located at lower altitude than those projects and we are closer to infrastructure.
Power and highways.
So.
I look at it the value is somewhere between what we've just come up too.
And the $2 billion.
So that'll give you a range.
Okay Fair enough, yes, those are fair comps for sure.
And then just changing gears here a bit.
Subscriber gross profit in cash gross profit you talked about improvements at Fox and gold bar. We're now essentially halfway through Q2 can you give some color on what exactly led to these savings.
What improvements were undertaken what continues to bear fruit in Q2, and what are your expectations for the remainder of the year is there anything else you're working on implementing.
So this is bill shaver, yes.
At Fox were actually.
Working on a process that will increase the tons through the mill.
By two something in the order of 1400 tonnes per day.
And we're doing that in a very organized fashion.
<unk>.
And in <unk>.
Last quarter of last year.
We did a bunch of test work on.
Crushing at the mine and delivering to the mill are material.
Already crushed that experiment was successful and we have now.
I guess engaged a contractor to crush.
All of the ore that we're producing room.
Down to you.
Given us slightly smaller size than we did the test work on.
And we'll so we'll be able to feed into the mill.
Sure.
A slightly higher tonnage.
Sure.
Only this month at a point, where we're starting to put that process in deflation.
Yes.
Sure.
Results will be what the results.
Turned out to be but we anticipate that that's going to increase the throughput in the mill by mill by approximately 10%.
And we have some.
More optimistic views of what that might be but I will.
10% is a pretty conservative number so that would increase.
The gold production by.
Say, a little over 1000 ounces per quarter. So.
That doesn't sound like a great.
A great amount of money.
In a year it resulted in $10 million.
So that's kind of the plan going forward in the case of <unk>.
Gold bar.
We're finding the leaching time on the gold bar South.
Or to be a little bit longer than we anticipated go though it's still early days.
Yeah.
The first ore from globe ourselves was put on the leach pad in the middle of the winter so.
The leaching is always better once the weather gets warmer and of course, we've had a lot of rainfall and snowfall.
Which resulted in.
Dilution of our leaching.
Abilities, So we anticipate that.
Getting those back into the pit will allow us to put.
For onto the pads as features more quickly.
And hopefully bring start backing into line. So so optimistically I would say we are.
We're going to improve in both of those.
But both of those sites.
We're going through the process of getting Phoenix.
Constructed in.
And that will.
We will be able to produce.
Something in the order of the cash flow out of that.
Process.
Which we wont see until next year is estimated at something in the order of $10 million per year.
So I think there is lots of.
No.
Potential upside.
Operations.
That were incrementally changing.
In a manner that has very low risk and very low capital.
Impact.
Two effect, so so that's kind of where the where the planning is going.
Okay perfect that was it.
Credibly comprehensive answer I appreciate all the color that's it for me. Thank you.
Thanks, Michael.
And the next question comes from the line of Joseph Reagor with Roth Capital Partners. Your line is open.
Thank you Rob and team.
Thanks for taking the questions.
Yes.
Some of the things I wanted to touch on we're already hit on but.
A few left first.
<unk> okay.
The total budget for this year.
It's $132 million.
And will that all be expensed through the income statement.
Yes, yes.
Okay.
Then shifting over to gold bar the.
The processing rate in the first quarter is about 580000 tons to shy of that.
Do you guys feel that that's sustainable with the new contractor, obviously, it's quite a bit better than the old contractor.
On a quarterly basis, but is it sustainable was there any factors that led to a higher processing rate in Q1 can we do better than that just any color there would be great.
Okay.
So.
I would say that.
Because.
Well.
To be perfectly honest I haven't looked at that particular issue. However.
In the first quarter, there was a significant amount of snow.
And of course operating in the winter is a little more challenging.
Rest of the year or so so I would say we did a really nice job in the bin.
The first quarter.
So far this quarter were.
Basically pretty much on schedule to continue.
You know.
At something over.
100, <unk> thousand 220000.
<unk> tons per month, so I don't see that.
And a lot of jeopardy, there is.
Slightly more.
Stripping to do as we move forward, let's call by ourselves.
Just because it's kind of the.
Your body there is.
Partly.
Our trend of a pretty high hill and solve the stripping in the early part of the mine life is very low and as you get lower the stripping increases but on the other hand the strip the wasted we're stripping is basically moving.
Something like between like about a quarter of a mile. So it's not moving very far.
Sure.
Or is it.
In fact from both of ourselves to the mill is about five miles so that.
Scott.
It is a long way, but the road as well.
Relatively level for the most part so the truck speeds are very good.
The road is about <unk>.
50 meters wide sold there is no issue with traffic control or or anything else in there is no except for trucks and utility vehicles and so on there is no other traffic on that road show.
I think you can expect that the performance going forward.
Be the same.
Okay. Thanks.
Thanks on that and then last thing.
Hi for Rob on MSC I mean.
It seems like an annual thing lately that there's like a quarter that's rough.
Happy to give you the first quarter last year as well.
It seems that that's preventing any cash dividends from coming out.
Do you have any kind of long term thoughts about that asset or how you can start actually getting some cash out of it.
Good question Jeff.
Traditionally in the first quarter is our toughest quarter.
Since the mine started.
Holidays in starting up.
We were down there are a number of us were down there in the last month and looking at their operations. They have a large land package there.
They are still finding new veins.
And.
We're optimistic.
With the silver price, where it is today he should be able to generate attractive earnings and we're hopeful we will see a dividend coming out of it.
We have.
<unk> made some observations.
Lead to providing them some comments, how they might be able to.
Helped that.
The operations.
Just having a different set of eyes looking at it.
So I think it still has a it has an interesting life ahead of it.
We have asked them if they wanted to sell it.
And they have said not at a price that we were ready to jump out and we.
We asked them if they wanted to buy our shares.
And offer a price that was attractive that we lend to jump out.
So at the moment.
As it stands.
There is newmont just below it.
Pat.
As a processing facility and a larger mine and some other veins appear.
To come right up to the boundary of the higher property.
And they are in.
I think that there might be an operation they should add to there.
Package.
At the moment nothing nothing in the works.
Okay. Thanks for the color I'll turn it over to Paul.
And as a reminder to ask a question. Please press star followed by the number one on your telephone keypad to withdraw your question again Press Star and one our next question comes from the line of Bill powers, a private Investor Your line is open.
Hi, Bill, Yes, hi, Rob Thanks for taking my call and congrats to all of you guys on a quad.
Quite a good quarter was very impressed.
But my question today really revolves around.
The stock development the ramp that was put in the most recent presentation.
And that was put out in the in the news release and I guess my question would be is if.
If you could just give us a little.
The timing of the ramp cost as well as what.
This might bring production at.
At the total Fox complex up too.
Should.
<unk> continue to produce.
Once again.
It goes into production in the stock market.
Yes. So thank you very much for the question Okay.
Okay.
And I guess, the answer's, a little bit complex, but let me just take a stab at it here. So first of all we have the fruit mine, which eventually will run out of ore.
And we are doing an extensive review of the Frome operation at this point to absolutely put a pin in.
When will run out of ore at the front of mind.
And so based on the.
No.
Oil prices, we have today the number of tons that will come out of room will will be more than we have in our.
<unk> resources and reserves at this point so.
What we're trying to do was kind of thread the needle between the transition.
Our improved to the transition.
<unk> stock.
And at the same time, we're making improvements on.
The milling process that we have in place.
Staff too.
Without spending.
Significant amounts of money and with the help of a contractor.
Crushing the material to.
<unk> pushed that tonnage up as high as we can.
Get it so.
Then.
It's a question of managing cash flow.
Spend insurers, but we're in the midst now of putting study together in terms of the capital and operating costs.
Offline.
And we hope to start that ramp that stock.
In.
As early as late in the in.
In the third quarter, so that we.
Perhaps get.
Underground before winter sets in.
And.
And then we've been fortunate enough to find some or pretty close to surface and there is also some or.
And the old parts of the stock mine, where there is potential ore and of course, we're finding or all the way down to four and 600 meters below surface.
That's kind of the <unk>.
Transition that we're seeing so it's.
Improve the stock mill, Yeah, Theres many tons out of.
While improvements we can.
Mining at <unk>.
Sure.
It stopped us.
As soon as reasonable.
And Keith.
Our cash flow.
Positive.
Physician.
Through all of that and I think we see a way to do that which.
There are no checks all the boxes.
Get us transitioned.
Without.
Without any.
Or.
Production in other words, we're not going to have a miss between the end improvement startup stock. So there is there is lots of balls in the air.
I think we're at a position where we're in the midst of making that.
Into a more concrete plan that we can.
Get back to the shareholders' list.
Sometime.
Probably.
Late in the second quarter.
That sounds great. Thanks, so much bill.
Yes.
Okay.
Operator next question.
Your next question comes from the line of John Tumazos with very independent Research. Your line is open.
Hello, John Thank you just following up on the previous Gentlemen's question to Bill.
And I'm thinking of.
The Odyssey rap Nicos moving into this year.
Or they have 98000 ounces of reserve spirit, they say theyre going to produce about 50000 ounces.
And as you move into this ramp.
Without.
A lot of documentation that you expect to hit or given the drill results you've had.
Yeah.
Which months Mike.
Might there be gold ounces.
And.
How many tons per months do you think is going to be taken.
From the ramp to the mill I'm, not asking you bill to predict gold output or the gold grade.
Can you just tell us how many tons youre going to take the wraps it might be your.
And then we can make some guesses on our own.
Yes, so we don't have a definitive number on what.
That's going to look like and it's in part because we're we're still in the midst of taking the diamond drill results and converting those into resources and reserves and putting mine plans to them. So.
I guess, what what we're hoping is that we will be able to at least continue without interruption.
Money that we're putting through the mill at the present time, which is something like.
A little over 100000 tons a quarter.
And we are doing.
As I said, a little bit earlier significant work to try and understand what the upside is in the processing plant.
We do the crushing down to a fine.
Smaller size, so that we optimize the.
The work that can be done by the crushing plant and at the same time.
Relieve some of the work that's being done and the ball mills. So that we can put more tonnes through the through the mill.
Other aspect of this which is not obvious and anything we've said so far is that the ore stock is a little bit softer than improve so the work index.
<unk> is somewhere between 'twenty, one and 'twenty three and we expect to work index.
Stock to be something.
And around 16 or 17 range, so that will allow us to have a mill that.
What are the tonnage is a little higher than that and.
We're thinking about now so that's the process that we're going through in order to try and figure out what the optimum looks like eventually.
So Phil is the ramp in stock three meters by three meters or five meters by five metres or tell us all the way.
How big the ramp as well.
I mean, there is no ramp that stock at the present time.
So the planning for the rent now is probably a ramp that's somewhere in the order of four eight meters by four eight meters and the reason that it can be a little bit smaller than a traditional ramp.
Is the fact that we have the old stock mine, there, which will allow us to connect to the old parts of the mine.
To give us ventilation as we drive the ramp down.
So that basically means that the vent tubes that we have to carry with.
With the development of the ramp doesn't have to be two four foot diameter.
Went to <unk>.
There'll be there will be smaller and therefore, the hedging can be a little bit smaller.
So.
How many stopes, you think youre going to try to develop.
And how many.
<unk> per day might come out of the ramp 200 tonnes, a day 400 tons a day.
No.
Yes, I think we're looking for the same kind of tonnage that's coming out of.
The room today.
Basically from has probably three stopes involved in operations.
On a continuous basis at different.
At different <unk>.
<unk>.
The mining process being drilling blasting marketing so on and so I think youre going to look at something like 200 tonnes, a day coming out of the soft brands.
Super Super Thats, very exciting and I apologize for asking you. These detailed questions a couple of months before youre going to have all the answers.
Well, we don't have all the answers we've got all the questions and so all of those things numbers I gave you put a little question Mark Besides government.
But thats part of what you have to do at this phase is to try and understand what.
What does an optimization look like.
And Alex.
Again, it depend on the resources that we find and how fast we can drive the ramp.
All of those wonderful things.
Thank you.
Thanks, Sean.
And there are no further questions at this time, Mr. Rob Mcewen I turn the call back over to you.
Thank you operator, thank you everyone for attending and.
The vessel is yet to come.
Thank you.
And this concludes today's conference call you may now disconnect.
Please wait the conference will begin shortly.
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