Q2 2023 Agnico Eagle Mines Limited Earnings Call
We are operating team Melia Dean record monthly mill throughput in May and Meadowbank record production for the first six months of the year again with one of the safest quarters in the company's history.
Now I'll address that question now because we will get it later I'm sure with the very strong start of the year. We are already being asked are we going to update and improve guidance. What I would say is it's very early.
We've only had the first two quarters.
But I will say we are clearly.
Off to a very strong start and we are clearly tracking production.
<unk>.
So that would be above the midpoint of our guidance and we are clearly tracking cost very well relative to our guidance. So an excellent started the year, we're very confident.
And we're confident going forward next slide actually keep it on this slide here. So if we do the update on the key drivers again, Natasha dominant going to talk about it I'll just hit a few points.
As I mentioned Canadian melodic we updated the internal study in June we talked about the additional allowances the additional years the potential there, but really what's exciting more than anything is the significant geologic upside that we continue to see there that is a fantastic asset at detour Lake Natasha is going to talk about it.
It.
The great progress we've made but also <unk> is going to talk about some of the exploration results.
To bring in potentially underground ore remember our objective at detour our vision is.
Is to try to get that to 1 million ounces. A year. This is this is a mine that is already out to 2052.
That is still going to be increasing and to get it to a million ounces a year, it's going to be a combination of increasing the mill throughput and bringing in higher grade ore from the underground and we're working on that and we'll be looking to give some updates in the first half of next year.
On optimizing some of the other assets good progress and looking at the potential of <unk>.
<unk> zones and amalgamated Kirkland, we're doing our work on upper Beaver, we're doing our work at Wassa Mark.
I remind everyone. The opportunities there are not just the base case standalone for those projects, but really what we're excited about and what we're working hard on is can we develop those assets without having to build additional mill capacity and utilize existing.
Existing infrastructure mill infrastructure and tailings infrastructure it either.
Melodic Laurent.
<unk>.
As a reminder, the upper Beaver and Wassa Mac each have a potential.
For between 150 to 200000 ounces a year.
Amalgamated Kirkland and the upper zones at Macassar $20 to 40000 ounces, a year and that's progressing well.
So just between those projects that.
We have the potential for an additional 350 to 450000 ounces a year using existing infrastructure.
Which reduces our.
Permitting risk, which reduces our environmental footprint and materially.
Creases our return on capital that's something we're very focused on and that doesn't include other projects. For example, it can flow for example, potentially a second shaft at some point that.
At melodic now before I turn it over.
We're also getting questions on how are these how are these studies going frankly, they're going well.
There are no delays whatsoever, we expect to start to come out with some guidance.
Guidance in the first or second quarter of next year, but understand something as simple as.
The underground at melodic it just takes a lot of drilling these things just take a little bit of time, and frankly I'm very impressed with the way the team is working and the progress made.
And again, we expect to be able to start giving some guidance.
In the first or second quarter next year.
Not everything is probably going to work, but but things are looking.
Pretty well so far so with that introduction I will turn it over to Dominic to talk first about Odyssey.
Thank you Omar with DC project, if we put it in perspective, the first hole, where we discovered <unk> zone in 2018 in 'twenty 'twenty. One we released our first study and we just.
Did that one last June .
Very good improvement, where we production profile increased by three years. So we have now in front of US at 20 years life of mine with $8 5 million ounces on the production plan and this is just the beginning as a more.
Ted.
This is there is still full of potential to just increase those zones and eventually <unk> also on the original aspect to the maybe one important point about that updated study and where we are today as we de risking the project with now in.
In 2020, we had 5% of the quality of the ounces, which were under indicated resources now we're up to 53, which is a good news and the greatest still there there is no discrepancy.
More happy about that and also we have now 60% of the surface construction completed in the last two year and a half which was not the easiest year to do that but I need to say the fact that we were in <unk>.
The fact that also we had.
Good guys good leaders with experience to deliver that this has been done very well done.
In those years and I have in the room here sales play and then you have <unk>, which are two leaders key guys, which have worked on that.
We are now going to reduce the pace of their construction.
The workers that type of a decrease from foreign read through for 150, So it's going to be easier pace and now we're getting into the next phase, which is sinking the shaft, but overall at the current gold price the value of the project is $2 5 billion with a 33% a return on their investment.
An update on the ramp.
Going.
D C south ramp up.
Going on track so the team did over one kilometer drilling last month.
It was a record. So we are now at 600 meter dilutive surfaces and we started production from the Odyssey South.
<unk> <unk> zone, which is the first one we are going to mine. Therefore, the deferred the next 345 years at approximately 80000 ounces per year. We are on track with that maybe a good news on the reconciliation so far.
We talked to you about the internal zone, which with which was something difficult to to see from the surfaces are to understand from the surfaces now we're touching it and we see that there is there is upside through those zone and that could potentially add more ounces from 28, 4% in 2027, but it is celerity, we are defining the <unk>.
Infield drilling program right now to better understand those zones. The first stope was supposed to be 30 times at two six it ends up to be 45 times at two nine. So this is a great bonus that we that we had the next important phase also has all the shaft thinking so to excess the east <unk> zone, which you could see on the bottom.
But left of the figure there is two things we need to bring to ramp and to build all the infrastructure and to start to develop the first periods. We also need to sink the shaft. So its a one eight kilometers shaft.
Today, we are at the 76 meter done and who I need.
We are also in the step that is now back to the or we're just initiating the full cycle.
Seeing the shafts. So we took the first four meter bench last week and the next one is coming in the coming weeks and we start to install in starting their sales. So that's a good news that was an important step and all the construction done behind in the past year west to achieve that so everything is on track on that site.
We added up to 16 drills on the property in the in the second quarter. So as you could see we're still drilling intensively in the past year, we've put emphasis on to doing conversion again to de risk that study, but now we are turning back to do more exploration and potentially add resources and on top of that we need to reach.
<unk> that the meal at a 40000 ton per day capacity is still available and one of the best places in the world. So we have homework to do to bring some answers to that Neil so on that I would pass.
Microphone two Natasha.
Thank you Dom and good morning, everyone I'm on slide nine.
This slide highlights the evolution of detour and the journey that it has been on to make operational improvements on all France actually from the mine to the mill on the maintenance front as well the culture of detour has always been one that's focused on safety and on minimizing our footprint, but also one that focuses on cost control and value.
Innovation.
Bye bye just going back to basics on highly obsolete by assessing innovative approaches by constantly pursuing efficiencies.
And most importantly of all by empowering our people.
As you see yes, there are some initiatives at the site.
<unk> has successfully achieved and what we've shown here just scratches the surface.
The bottom line is that you can see that we have a track record of delivering improvements and these improvement initiatives is an ongoing process and so we continue the transformation of <unk> into one of the worlds largest and most profitable gold mines by assessing the potential lack of mindset to achieve the 1 million ounces.
Lee.
As you know this comes in the form of two main projects, increasing the milling capacity and assessing the underground potential.
As <unk> mentioned, both are currently ongoing but from <unk> perspective as shown on the graph, we have steadily been delivering year over year and growing our capacity by 5% on an annual basis. This past year, we have completed the installation of the screens on the secondary crusher and we.
Believes that we can add an additional $1 4 million tonnes does that throughput from 2022 to get us to an annual throughput of about 27 million tonnes.
And as mentioned before we are also advancing several projects to improve the run time and sustained throughput of 28 million tons.
By 2025 or even sooner.
And as a result of our ongoing efforts.
This quarter the tons per operating hour improved significantly and combined with the high mill availability. The mill recorded its best quarterly mill throughput and close to what we need to achieve the 28 million tons a year.
Now, we're looking at sustaining it and so we're looking at small small modifications in different areas. We're looking to improve the efficiencies of this size discharge screen. We're looking at small changes to an extended line of life, we're tweaking that we feed system.
<unk> operates better and more efficiently in the winter, we're relocating some of the pipelines and the mill.
To maximize efficiency of pipe replacement doing shutdowns.
And in parallel.
Also assessing a few projects to potentially exceed the mill throughput.
Beyond 28 million tons a year.
And we're going to be trialing, the ore sorting and we're going to be working on an expert system like we have at some of our other mills.
And then in terms of the underground study, we're continuing to advance this based on a revised mineral resource that factors in additional drilling that was completed earlier this year.
And as <unk> mentioned, we expect to report.
And the results of this study to be shared with you sometime in the first half of 2024.
But in parallel the exploration team is continuing to carry out an aggressive drilling program at detour and key will be expanding on this and some other exploration program next but before I end I just.
I want to commend the sites.
An incredible quarter than a year, so far so on behalf of Dom and myself. Thank you for all your hard work passion to continually look at ways of improving and optimizing our business not just a detail about all of our sites and for making our job a little bit easier.
So with that I will turn the call over to Keith. Thank you Natasha and good morning, everybody. So to continue at detour on page download the slide deck.
We continue to see excellent resolve below the west <unk> extension. So now the focus is really.
To get to an underground resources model redo the drill spacing over that large area.
Look at the scale, where we continue to get good result up to two kilometer away from the Pip.
So based on those good result was been getting year to date and I'm not going to go through the long list. We've seen in the press release, but those are the kind of grade and with that mix.
It makes it that first site for an underground scenario. So the focus is really to continue to advance. We're currently ahead of schedule with the drilling we see unit cost that are better than expected with good productivity from the on our drill over the air on our drilling program. So we are planning to add as part of what I want to mention one overall addition.
$32 million a portion of that $5 million is to carry on drilling at the same pace with dose tendril rig and in order to be in a better position by year end to provide sort of a first overview of what could be underground resources, 40% or around which we are going to be building our business case for the underground.
Jay.
Sure.
<unk>.
At a larger scale I would say if we go to next slide 12, when the overall the rest of the portfolio.
We see an overall very good results on several asset for you to have for example at <unk> during Q1 and Q2.
We've seen resolve and to regain yak at depth in <unk>.
Some of the deepest drill hole ever drill at <unk>.
That support what.
What we what we believed it had done with the deposit remains open as significant upside. It's one of those that we see a very good potential for reserve replacement. So we want to be EBIT more aggressive so with that again that stage gate approach, we want to add to the budget that was approved adding <unk> 25 kilometer of drilling and also.
Extending that drove platform too.
To the east so that we have a better understanding of how much we can continue to grow.
Moving to kits allow we've seen again some very good results close to the ramp you run infrastructure or those are very near term opportunity, where we can quickly bring additional resources to bring them to reserves very close from existing infrastructure and in parallel while conducting some georgia Gulf geotechnical drilling tools.
Or just your face we've encountered some of that parallel CSR zoning in area that were previously.
Maybe not.
Not understood property.
We started to understand disease, our zone about six or seven years ago with a certain depth and now we realize that some of those real hold closer to surface, where potentially stop a bit short. So we are where we are gonna assisting when LLS.
If we left any of those potential parallel structure in the upper part of the mine, which could be very appealing because we already have all of those infrastructure over there, which could provide additional flexibility for the for the team over there at Kittila.
Moving to Microsoft.
Continue to get the good result in the extension both of the main break and the Softbank complex, but more importantly, now that we have an old shaft number four in place and a much much better capacity bolt with the.
Ventilation access and everything so now we are starting to put some long term thinking and establishing long term exploration platform like we did back in <unk>. So we're establishing long term exploration drift to the east to the west of shaft for because we know that the deposit remains open at depth and.
All of those homes, so it open ups.
Our <unk> number for infrastructure, a very good playground to think long term at Mckesson.
And maybe to wrap up on a little bit on monarch take that Dominik.
<unk> India.
They get into the presentation again, another site, where we want to continue to.
To add additional drilling in the second half based on the good results that have been delivered we see again the opportunity to.
<unk> continued to grow we just took about 9 million ounces out of the total 16 million ounces. So we see the opportunity to continue to convert the remaining resources that are currently not in our plan and bring them into future update of the project. While we continue to grow the footprint of the deposit that continue to be open.
In early <unk>.
Moving to next page quickly hopefully this is another one where we took sort of a stage gate approach.
We were basically starting with.
Budget for the first six months, but based on the very good result, we've seen both at the risks and more recently at Madrid and I think this is why we see maybe.
The change in the dynamic we always knew that Madrid was open at depth and laterally now we are seeing you know excellent grade with good thicknesses that Deb that shows that the.
The structure it seems to be maybe better better define higher grade with visible gold and with large step out that we've conducted that drill hole 105, which is 500 meter step out below so we see.
Excellent.
The potential to significantly grow so it is going to continue to take time to bring it to resources, but now we see you know what what what we believe when we did the acquisition that we can significantly grow the deposit and identify a higher grade source of ore. So those things are unraveling as and we're pleased with it.
Results, so far which convince us to add another $14 5 million for the second half of the year.
And on that we'll be ending over to <unk>.
Jamie I think.
Great. Thank you.
Yes, just some <unk>.
<unk> comments on the financial results for the quarter overall Mark.
Mark summarized upfront just a phenomenal performance from an operating and a safety perspective, leading to phenomenal financial results.
<unk> had a number of new records from a gold production perspective, we hit a new record of 873000 ounces and that reflected a 100% of Canadian <unk> for the second quarter in terms of operating margin again close to $1 billion of operating margin with very strong contributions from our two biggest lines, which happen to be the two biggest mines in Canada.
Detour and Canadian melodic can also a strong contribution from fosterville.
From a cash costs and all in sustaining cost performance. We're in great shape relative to guidance. We came in at $840 per ounce total cash cost, which is $25 below the midpoint of our guidance.
And $11 50 in terms of all in sustaining costs $15 below the midpoint of our guidance. So our cost did benefit from Canadian dollar weakness in the quarter relative to what we what we've guided but also the strong operating performance really really help too.
To ensure that we had a strong cost performance you can see in the table at the bottom right that we've been successful in managing our costs keeping a lid on our costs over the past three quarters, where they've actually been fairly fairly stable or in decline.
We move over to the next slide just some financial highlights here on slide 14.
We'll walk through our.
Overall, the records that I mentioned, we had record revenues for the quarter. We sold 859000 ounces, we're benefiting from the strong gold price environment at a realized price of $1975 per ounce. So again record revenues very strong earnings our adjusted earnings per share were <unk> 65 in the quarter again.
The strong operating performance, if we look at our capital spending for the second quarter. We came in if we include capitalized exploration at $416 million, which is in line with with our guidance. So great results overall.
Q2.
My last slide just talks.
Summarizes our balance sheet position current strength and financial flexibility that we have.
We were active in terms of debt repayment in the quarter Youll recall that at the end of the first quarter, we drew a $1 billion on our credit facility as part of the acquisition of the other 50% of Canadian melodic.
We repaid $900 million of that in the second quarter $600 million via the term credit facility and 300 million from cash on hand, So we ended the quarter with $433 million in cash.
Down about $300 million from where we were at the at the end of the first quarter, but.
But overall very strong financial position to be in we actually improved our net debt position to $1 5 billion in the quarter and increased our overall liquidity to $2 1 billion. So we're in great financial shape and with that I'll turn it back to Mark.
Thank you Jamie.
I would like to on this first Gulf for Jamie formerly welcome him.
To the company.
We.
We have a great leadership team and we're also.
Very protective of our culture, and I think with Jamie We got a super Smart Guy with a lot of experience, but also a nice guy who fits in very well so welcome Jamie and congratulations for already delivering the highest cash flow record ever for the company.
It was mostly U.
So just finishing off before we jump into questions.
Look this is the same strategy we've had for 66 years.
Which is we want to provide we want to build a high quality.
Reliable consistent.
Gold company with superior leverage to gold, but not only superior leverage to gold, but importantly superior leverage to gold on a per share basis.
And on a risk adjusted basis, and we're going to do that by building profitable high quality.
Low risk business.
Based on two key factors or several a few key factors one.
Leading position in what we strongly believe are the best mining jurisdictions in the world based on two criteria.
One obviously the geologic potential but it has to have the geologic potential for multiple mines over multiple decades.
And two associated with the political stability to actually operate multiple lines and multiple decades.
When you look at melodic around since 1923, when you look at detour originally as an underground mine going to Canada's largest open pit mine going back potentially to an underground mine. When you look at all of the things that <unk> talked about all of those exploration results theyre tremendous but they are in.
<unk> camps, where we've been for a long time. This strategy works. It's worked for years and we think it's even more important given the geopolitical issues going on in the world today.
We have built this business.
Largely on demonstrated technical skills.
All of these projects were working on.
<unk>.
Are tough, but we're going to make them happen or we're confident we're going to make them happen. We've had John <unk> and his team talk about some of the things that we're working on.
We have an excellent technical team we delivered these results let me step back the team delivered these results.
Not an easy quarter, we had the fires in Ontario and Quebec.
Had the earliest and longest caribou migration season.
We've experienced and none of it that's a good thing it shows the health of the herds up there.
But the team delivered record results.
With those challenges we're going to continue our emphasis on per share metrics, we're going to continue to understand that if you want to be in a region for 50 years or 60 years or 100 years, you can't just be good at ESG you can't just be.
Accepted in the community you have to be part of the community and that's what we've always done we're going to continue to do we're going to continue to focus on creating value through the drill bit we are going to continue disciplined capital.
Investments based on knowledge and diligence.
And we're going to continue to return capital to shareholders building on our 39 years of consecutive.
Dividends.
We sometimes people at meetings.
<unk> that agnico Eagle is the sleep well at night, Goldstock and I would say that I hope that even with the challenges what we've been able to deliver in this quarter.
Demonstrates that we are in fact, the sleep well at night Goldstock and so with that.
Operator, I'd like to turn it over to questions.
Thank you, ladies and gentlemen, we will now conduct a question and answer session.
You have a question. Please press the star key followed by the number one on your Touchtone phone you will hear a onetime prompt acknowledging your request if you would like to withdraw your question. Please press the pound key.
Also ensure you lift the handset if you're using a speaker phone before pricing any keys.
One moment, while we standby for questions.
First question in the queue comes from Ralph <unk> with eight capital. Your line is open. Please proceed.
Great. Thanks, operator, good morning, everyone. Two questions from me Firstly, there was some discussion about the challenges in defining some of the internal zones at Odyssey and when we think about potentially adding production 2024 to 2027 is that dependent on sort of a successful surface exploration.
Rolling program or will we need to move more towards an underground drilling strategy to better define those resources.
Now I'm going to take that wanted to know the internal zone that were originally weakened.
Recognize from surface drilling, but the.
We are a bit different in nature than the Odyssey, south and other ignore that sits at the contact of the porphyry now as we're getting closer we're adding a lot more access a lot more drilling as we are in filling and bringing the odyssey south into into production and how we get to better understand the shape of those so we took a conservative.
Roche will foray not putting any of that into the mine plan and now they're showing up as the incremental done and we see more of that that will show up as production will take place and we're going to get a better understanding because they are not as well defined and the south zone. So it takes more drilling.
<unk> takes more development and youre going to see damage showing up progressively along with the life of mine and one thing and maybe Dominic you can mention on the team.
And it's a good question and the team has already changed.
The ramp positioning so that when we're down there we're much better able to exploit.
The additional ounces to the extent that they are there, but Dominic I don't know if you want to.
I guess I've explained it well enough.
No.
That's fine okay.
Okay, great great, Yes, that's quite helpful. Maybe.
Maybe a question for for Detour Natasha.
On first awesome answer does the nature of the mineralization show favorability to ore sorting and is this simply sort of a low density on mineralized versus high density and wood ore sorting sort of be more amenable in the underground scenario versus the open pit or both.
Hi, Ralph I'll start and I'll, let John .
Add to this.
With respect to the ortho, meaning we haven't started the phase III trial, but we are looking at about one 5 million tons of material that we plan on Trialing this year.
Majority of which is all of it is that.
John do you want to add.
Yeah, I will step in less than the <unk>.
Proposes to use marginal.
Ore stockpile, mainly and just do an upgrade with Dr. Sorting. So it's ongoing one 5 million tons. We anticipate complete the study in the next let's say 12 months and we'll see from there.
Okay. Thanks very much.
You.
Your next question comes from Anita Soni with CIBC. Please proceed.
Hi, good morning, everyone and congratulations on a strong results. My question is with respect to the trial results at Hope Bay could you just give us some context and in what that.
That means to the mine plan and when you expect to restart hope and.
The timeframe on that.
That project.
And I'm going to put some color maybe on that.
We were obviously.
For Ob to work, we see the need for demand to be much larger like we are doing at Meadowbank <unk> something that will be between 300000 ounces to 400 <unk> will go by year. Therefore, we were needing eager to find additional mining area to be able to ramp up.
Tonnage or find better grade and I think what we are demonstrating and would that do drilling at Madrid is that we have potentially identify and other mining area with good grade better grade. So it shows that we can not only potentially grow.
The critical mass of resources, but get better grade and that will eventually be incorporated as we going to get more drilling into updated study. So it just means that we were right that there are a lot more gold over there locally it seems that it's even better great and we're going to continue to need more time for drilling but we.
We now recognize that it's.
Net just wishful thinking it's there and those drill holes are demonstrating that it works to carry on drilling on it.
Okay. Thank you and secondly on Fosterville.
So you received your permits to resume mining at your end processing at your prior rate.
I think you didn't upgrade the guidance because youre catching up on development work, but would that have an impact to 2024 I think my understanding was it was <unk> 30 in the order of 40000 ounces give or take 10 Donaldson for next year yet.
That could have a potential positive impact.
Hi, Anita.
Now we are currently working on updating the mining sequence based.
Based on the midyear models and getting ready for the budget season, and looking at the production profile for the remainder of.
Yes.
2023, and going into 2024 onwards.
<unk>.
So I would say for now.
Wanted to focus in on the capital development in an effort to get ahead of the critical areas of the mine and.
We'll have an update on the rest of <unk>.
The life of mine towards the end of this year.
Thank you I'll leave it there.
Thank you and ladies and gentlemen, as a reminder, should you have a question. Please press star followed by the one.
The next question in the queue comes from Mike Parkin with National Bank. Please proceed.
Hey, guys congrats on a great quarter.
Welcome aboard officially.
Just kind of.
Keeping items with Canadian mill, Arctic the depreciation per ounce.
For Q2 is that fair to kind of assume a similar rate going forward.
Or is the.
The book value still.
Not quite set in stone and therefore depreciation grounds could.
Be a little bit volatile as that asset.
Yes, Thanks, Mike.
Yes.
The ladder the way the accounting works for that as you have.
12 months from the time of acquisition to do the.
The purchase price allocation, but I'd say, we've recorded in the second quarter is a good.
Is the best estimate for Q3, Q4, and if Theres an update it would be towards the end of the year.
Okay, sorry about that.
Second.
Where are you in terms of being cash taxable in detour Lake are you paying.
Are you still consuming.
Tax pools.
Yes, so I think our forecasts have us actually paying cash taxes, I mean, obviously, we're paying Ontario mining taxes.
But cash taxes, starting next year, but thats all dependent of course on the plans with respect to underground development, which would defer the payment of cash taxes to subsequent years.
Right, Okay. Good point.
And then also on detour I remember in the past.
From past owner negotiated discounted power cost something are behind you now and you're changing kind of average grade prices or do you still have those rolling contracts with discounted rates applied.
Hi, Mike.
We still have the.
A contract in place until the end of this year and we're working on a new program.
Starting next year.
And as the discount I remember it was pretty significant.
Kind of a similar scale, where its meaning.
Meaningful savings for you guys.
Correct until the end of this year.
Okay.
That's it for me thanks, so much.
Thank you and the next question in the queue comes from Kenya.
Scott Your line is open. Please proceed.
Hey, great. Good morning, everyone and that congrats on a good quarter and thank you so much for taking my questions.
Well I think I'm going to start with <unk> first just on the exploration results.
I know I asked this question on the Q1 call as well and <unk> had more drilling done to date.
And I know, we talked about reserve replacement with.
With what Youre seeing today is that still on track to replace reserves this year.
Overall with the what we foresee with the addition of <unk> on the top of the ongoing replacement at each of the sites. We expect the overall reserves to be at least replace if not growing by yearend.
One asset that you didn't talk about.
Exploration results or maybe and I apologize press releases long and maybe I missed that.
You didn't talk about Fosterville.
Yes.
Has anything changed with respect to what do you think.
You see on the exploration side with exploration upside.
No we continue to drill in specifically two area. We continue to infill the into Robbinsdale area, where we are getting kind of a mixed bag of results, but I think it is kind of in line with the known part of robbinsdale above the decline so far.
And at the bottom of the Phoenix and what we call. The Cardinals play we continue to see some interesting results. Some time wide average grade with within it with some smaller scale vein with Vg, obviously nothing like this one is on that yet, but we see again good potential in the down plunge extension of the Phoenix.
Okay. Okay.
Okay. Thank you for that my second question is just a little bit to talk about the inflationary pressures on maybe that over to Amar.
You had mentioned.
The press release that you are seeing some relief.
Asking and what areas are you seeing the release I'm, just trying to understand because different companies with different assets different. Thanks.
Interesting well yours.
Seeing relief right.
Guidance that included the 2022 pricing.
Thanks Tanya.
So one we had some tailwind with the currency.
Helped which continues to but certainly we have seen relief on.
Some of the consumables energy is a big one as I think you can see on the.
On the press release.
We've been able to hedge a good portion of our diesel I think it's at 60 65, if I recall versus 93.
In our budget. So the team did a pretty spectacular job in my view of waiting out the peak and coming in when the markets, where we're more advantageous we're seeing relief on steel grinding material.
Number of consumables.
We're also starting to see and often exploration as a leading indicator we're starting to see.
Better drillers available higher quality.
More numbers of better performance.
Our biggest challenge probably remains with respect to cost pressure.
People.
We are still working very hard to make sure we get the people in the highest quality people now I'll repeat what I've said before as difficult as it is for US. When you are the number one employer and you've been there for 60 years and you have the best projects you always get the best teams available so.
While it's difficult to I would say our strategy leaves us in a competitive advantage even in that area.
And just on the fee.
At the same thing with explosives and cyanide youre seeing some relief there as well yes.
Okay, that's good and I know that most of it and maybe just for myself you would have very low inventories on site given your location exactly isolated mindset, rather mind would have very low inventory on site. So it would be pretty much.
Buying on the spot markets now would that be a fair statement, but thats right I mean as you correctly.
Correctly stated, it's a different story up and none of it because you have the barge season, but yes.
Where we operate in the Abitibi in particular.
It's a very substantial mining district, and we can operate with lower inventory so much.
Much more.
<unk> pricing.
And if I could ask just one final question and then I know you talked about.
On the guidance.
And not changing the guidance does not plan on production, maybe you can just guidance because the whole sector I would say majority of the sector.
Second half weighted with a strong Q4.
Can we just review with you how your second half looks like.
Evenly distributed and are any mines, taking inc.
Production profile in the second half that we should be aware of.
I think what I would suggest is the third quarter at least by my forecasts and a caveat with have been in this business for 25 years and you never know what's going to happen but.
The third quarter should be very similar to the second quarter.
The fourth quarter.
The variability tenure is as you know is going to be key to the whether we get the.
Approval or not but what I would what I would say is our guidance.
That is assuming we don't get it.
And if we do.
Get the approval.
Continue to operate at 2 million tonnes, a year and then I would.
That's 30000 roughly extra ounces so.
Without changing the guidance I would expect the third quarter to be similar to the second and the fourth quarter.
To be less if we don't get the SAP.
But that's in our guidance and if we do then it would be similar again.
To the second quarter.
Okay. That's perfect and then just a clarification I think I need to ask Tom net fosterville.
Normally I had about 30000 ounces may be attached.
Natasha can confirm that if we can get.
Back to the additional throughput.
The permit allows you it would be an additional 30000 is that fair.
Okay.
I think I mean, we're still working on our budget for next year, what I would say is it allows us to operate those six hours at night that we werent able to operate so thats going to have an impact on ounces, we are catching up a little bit on development.
The guys.
Frankly did a stellar job in the first half of the year dealing with.
With that restriction, but also and this is important.
Very important.
In the scheme of things.
Not a huge number but it also makes the work environment a lot better for our employees that was a tough work environment. It was hot.
We don't like to do that to anybody and so.
I just wanted to make sure we emphasize that it's not just the ounces. It's also importantly, the work environment for our employees.
No no for sure Okay. Thank you I'll, let someone else ask questions.
Yes.
And your next question in the queue comes from John Tumazos from John Tumazos, very independent research.
Thank you.
With $28 million drop in first half exploration expense from a year ago.
Did you.
Explain how much of that.
As more being capitalized due to success.
Versus any streamlining.
Versus more or less meters being drilled.
Hi, John .
It's mostly I would see a re prioritization of the asset. So we are doing less on other project, let's see in Mexico. For example, sometimes go through this we seek Lee.
Stopped drilling of idea reassessing the potential we've also reduced activity for example, in Colombia, but I would say.
The budget on key value driver or the number of meter as in change. So it was me CCC, we in lower gold price environment like we were facing during the budget period, we thought you know that.
It's money should be allocated to grasp with project and we should focus on operating asset in key value driver.
When you drill.
But to be sort of in your backyard or the costs lower than when you're operating in Sonora or Colombia or other grassroots places.
It's very variable depending on the location to be honest, John if you have no water or if you have to.
If it's more labor intensive, but I think all in all we are drilling at similar costs in Mexico. When you have.
It also depends on the size of the projects. So when we have a similar scope of work similar to kind of drill program. We can achieve good costs. The costs are just not dispatched <unk> transport water or if youre in the Abitibi, where you can find the water a little bit everywhere.
Thank you.
Thank you and the next question in the queue comes from Anita Soni from CIBC. Please proceed.
Hello.
It was just a follow up to <unk> question about the cadence of Q3 and Q4 so.
The.
The downtrend, if all else being equal on Kittila not getting its permit is because you would have to throttle back Keith solar in the fourth quarter and and I think the second half of the year La Ronde, we will be we will have sort of.
Periodic shutdowns.
To deal with that I guess.
Tie in of the of the new system there is that correct.
Yes broadly correct Anita.
Okay, Alright, thank you very much.
Hugh.
There are no further questions at this time speakers do you have any closing remarks.
While we just want to thank everyone. We know it's a busy day.
And then finally I hope all of you got a little bit of time off in the next couple of weeks with your families.
In Canada, our short so thank you everyone for joining us and have a good day.
Thank you ladies and gentlemen, this will conclude your conference. Please disconnect your lines.