Q3 2023 Galiano Gold Inc Earnings Call
Good morning, My name is Mark.
This conference today at this time I would like to welcome everyone to the coming on a go.
Third quarter 2000, <unk> financial results conference call all lines have been placed on mute to prevent any background noise.
The Speakers' remarks, there will be a question answer session.
I'd like to ask a question. During this time simply press Star then the number one on your telephone keypad.
For sure. Your question. Please press Star and then the moment.
Thank you.
Mr Dunlap, President and CEO Kelly Honor code you May begin your conference. Thank you Albert and good morning, everyone. We appreciate you taking the time to join US on this call Tonight.
Third quarter 2023, Kellion hotel results that we released last night.
We will be making forward looking statements.
Alright measures during the call.
I'll say to the cautionary notes in risk disclosures, you've got loss rates in Indiana as well as on the slide the webcast presentation.
Our release yesterday details of third quarter, 2020 financial and operating results.
That should be read in conjunction with our third quarter financial statements and MD&A available on our website and filed on SEDAR and.
And Ed.
Please also bear in mind that all dollar amounts mentioned on the conference call today.
Unless otherwise noted.
With me on the call today don't have Matthew Freedman, our Chief Financial Officer. Our initially you guys see the highlights and then take you through the operations that will be decided on the financials and I'll then wrap it up the call up for a Q&A session.
Slide five please note that I'll be discussing these results on a 100% basis.
On the <unk> front during the quarter, we had one lost time injury and trade recordable injuries.
For the 12 months Rolling LCI and Cri frequency right, obviously, you had quite thoughtful and one one.
1 million man hours with respectively.
Health and safety continues to remain a top priority throughout the organization, particularly as activity ramps up tooling that rates may have spent a morning.
We can see spending start to reinforce our commitment to <unk>.
The implementation of best safety practices at the IGN.
Our gold production from stockpile price reached the high end of expectations. We produced 36000 ounces of gold jewelry and expect to reach the high rated clients for the closer to 130000 ounces.
On the cost side, we recorded all in sustaining cost of $1445 per ounce.
We continue to seek ways to optimize our costs and have revised cost audits downwards. So between six to 860 $800 per ounce for the full year.
This is down considerably from when you started the marks the sixth consecutive quarter, where the team has outperformed our cost and production guidance our liquidity at the J&J has continued to grow right now sitting at $145 million in total liquidity.
The guidance and based on that technical report, we relate to earlier this year, we also recommenced mining operations.
Yeah.
On slide six it is important to point out that the origination of multi marks a critical point in the future.
Comes on the back of adding lots of work we are seeing a site in southern advancing our technical understanding of about nine deposits and defining a realistic future for this asset.
Also on site last week and was pleased to see the progress attained in the mining contract out of Nike on the mining sites.
Latest policy might largely Q3, and the tenants have sufficient equipment on site to achieve our expected new material movement for the remainder of the year.
Additional slate continues to arrive on site and we anticipate full mobilized I should speak will place our Q1 2024.
As you can see from the image didn't want to discredit we're currently trading except a lot next year and expect to commence drilling blast activities towards the latter part of Q4.
Although we don't expect to see material delivered to the mill product Q2, 2024, we are pleased that grade control drilling is already update what small profitable across larger areas than expected.
<unk> cautions that this material is not large in volume that is not expected to significantly impact gold production over the next two quarters.
A lot of the elevated gold price environment and conversion drilling program is underway it up all right to define the limits of that potential launch.
So this $800 per ounce reserve pit.
Initial results from this program are also better than expected well reported now ratio exploration news release.
We estimate that successful conversion of inferred ounces in this size could you at least 100000 ounces of additional reserves.
We are pleased that we say Tommy we can instead of mining we remain on track to deliver our stated plan.
On slide seven I'd like to highlight some key points about lots of mindset.
You can see on this slide the step change in gold production that we anticipate over the next 24 months as we can may speaking hi, Greg material to the mill.
The processing facility will continue to operate existing three fourths of five 8 million tons per annum throughout this period.
Lots of months and it's self funded with existing cash at the joint venture and future cash generated from the asset and sees US producing one 8 million ounces of gold alright guided the hockey appeared at an all in sustaining cash costs of $1150 per ounce.
The operation is also highly leveraged to gold price and you can see that our NPV at a 5% discount almost doubled to $530 million at a golf course of $9100 to outs on slide eight I'll briefly touch on some high level corporate haul lost people heading the Tom Madden.
Galliano ended the quarter with a total liquidity of $56 million and remains debt free.
During the quarter the company reported a net income of $11 $4 million or thoughts to share.
We remain in an enviable position amongst our peers of having a clean balance sheets and access to catch the decent lawn our team continues to seek accretive value, adding opportunities for the company to grow and to lead our long term performance to our shareholders.
That I'll tell you Tom Freeman, our CFO to review the financials.
Good morning, everyone I'd like to remind everyone. The caveat in all crisis Pankaj coal mine Entre JV with <unk> is somewhat complicates our financial statements.
Alright.
For the interest.
Galliano itself.
Yeah. Thanks, Heiko mine had another strong quarter operationally and financially in Q3 as you know we continued to price as stockpiles, which continue to perform in line or slightly better than planned resulting in production of over 75000 ounces.
Which means we expect to come in at the top end of our production guidance.
For the year.
Processing stockpile material commodity costs as a result, we've been able to generate significant cash, which bolsters our balance sheet.
And ensures our ability to execute on the next phase of the life of mine plan that we disclosed earlier in the year.
<unk> ended the quarter with $137 million.
An increase of more than $45 million started the year with free cash flow of $24 million in the quarter.
Gold prices remained positive realizing just over $9800 per ounce in the quarter.
Total revenues of $68 million.
We focused hard on trying to keep costs down within the context of the claims inflation environment.
Pricing and G&A costs remained broadly consistent across the year.
The whole culminated in net earnings for the quarter $21 million.
One level.
With the mine ramping up towards the restarted mining activities on October one we.
We've seen an increase in capital expenditures to $15 million for the quarter.
Notably this is spent on raising the tightening storage facility and therefore, I Sox establishment, which includes getting the Fox itself ready and clear building a whole rate diversion continued public right.
This all resulted in tenant.
Expected increase our all in sustaining cost compared to Q2 to 14 $845 per ounce.
We're expecting the fourth quarter on a sustaining cost to be elevated as well largely due to the pre stripping.
However, because of the outperformance of the stockpile this year and our continued focus on cost we were able to reduce our 2023, all in sustaining cost guidance to between $500 per ounce and $600 pilots.
That's a $16 60 to $17 50 that we had guided to Q2.
Pardon me.
As Matt touched upon we continue to invest heavily in exploration forecasting to spend approximately $15 million to ship.
On slide 10, we can see the increase in liquidity at the Santa Goldmine.
By September 30th we.
We have $143 million in types of liquidity.
I mentioned previously our team remains focused on operational and financial performance you can see the continuous cash accumulation within the JV have increased $60 million in the past five quarters.
Speaking on our cash balances largely offsets the G&A pan from running the corporate office.
Got it.
Also remains debt free.
Provides us with a healthy treasury to be used for future value enhancing opportunities.
As I mentioned before the income statement is a bit challenging because recognizing interest.
But with the 9 million recognized from the JV.
The service fee for managing the mind and interest earned on our cash balance after deducting our G&A costs. We ended up with net income for the quarter of $11 million or <unk> <unk> per share.
So in summary, we ended the quarter with very healthy furniture position not the corporate entity, nor the joint venture have any debt galliano has more than $65 million at its disposal and the JV is more of a $135 million in cash available to restart mining at a floor rate invest through the next phase of the life of mine plan and execute on our <unk>.
The exploration strategy.
Gold prices remain very supportive, which helps to ensure we have the financial capacity to execute on our corporate strategy.
With that I'll turn it back over to Matt.
Okay. Thanks, Pat leading up to slide 12, I just want to point out that our new management team is heavily focused on continuously delivering to our stated guidance and building integrity without existing and future stakeholders.
We understand that these can only be done pretty consistently meeting our targets quarter over quarter.
Our parcel outperforming cost and production guidance and increasing the joint venture's cash balance by the idea that a lot.
$88 million over the last 18 months the slide highlights some of the other key mall signs the team has delivered on schedule.
These include the timely delivery of the updated technical report in lots of mine plan and the lead up to and the Recommencement of mourning.
We are on track to double our production by 2025, and making significant strides on the exploration side of the business. While we expect additional positive news flows as we continue to aggressively drill both near mine and regional targets.
On slide 10, our final slide I would like to recap the investment case for gallium arsenide.
The asset is located in the top tier African mining jurisdiction, which is governed by the rule of law with a strong transparent Martin regulation and highly skilled workforce.
We have an enviable resource endowment at Hollister hold a large highly prospective and under explored land package.
Yes, it is highly de risked being cash flow producing and post construction with all plant infrastructure and permits in place to allow us to execute our stated loss of mine plan.
We have a clear line of sight with significant value, adding a bit which sees us doubling production by the year 2024.
Yes, it remains highly leveraged the gold price with MPV, increasing significantly at current metal prices.
Having a fully funded mine plan.
And a strong balance sheet further strengthens the investment thesis for Galliano with.
With these points in mind the company is uniquely positioned to deliver superior value to investors through the execution of the life of mine plan and the ramp up of production.
Next 24 months.
With that I'd like to turn the call back over to the operator and open the lines up for questions.
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That'll be a brief pause now wall Street Richardson.
Thank you.
And our first question comes from the line of Hawker ill of H C. Wainwright. Please go ahead your minus item.
Good morning, gentlemen.
Well good morning, Hi, Todd.
Excellent.
You bet Hey.
Is that saprolite rock waste removal any idea of how long that would take and how much the whole thing should costs I don't know how far is it raw there you assume you don't really need to put anything under underneath the waste material to you because.
Cause it's mostly clarity.
Yeah, So hi, guys.
The strip that we're talking about here is obviously.
Partially satellite material, which is <unk> and doesn't require.
Drilling blast activities and we call it is stuck into that environment. So that's the opposite is off the street.
As I mentioned on the call probably about towards the end of this year, we will be getting into the drill and blast activities out there.
And that will continue into Q1 next year, we expect net.
Material, all Mexico for delivery to be delivered to that to the mill in Q2 next year. So thats when youll see an increase in grade.
The mill.
In Q2.
Got it.
And I hope for is a transporter.
Sorry.
I'll have Paul.
Yes.
The actual whitesmith to euros, obviously stored knee the mining facility, but the the deposit itself.
Is about.
10 to 12 kilometers away from the processing facility. So that's the whole each for the oil.
But obviously the wife's is just gonna be stalled in livestock calls neither.
Got it.
You have a little chart on page 12 of your presentation for this call that Youre working on.
Several operational optimizations, what exactly are you still doing what it's already hot and can you maybe quantify some of the results you've gotten so far maybe even what you expect to see it.
Quantified terms by the end of the year.
Yes, I think at the end of the year will still be progressing some of these optimization works, obviously like I mean, I think we mentioned or I mentioned in the past that we have already.
<unk> utilized.
Larger trucks to the mining in for Brian and we're expecting to do that for the other pits as well so in the short term that's the wide optimization.
Amortization, that's going to yield better productivity and we expect.
A bit of costs.
Moved as well.
So on that front, we're using triple seven whole trucks at a Orion.
Feasibility study that we released earlier this year.
Described 40 tonne IDT trucks, so that same deposit so thats one optimization. The other things that we're looking more longer term is is the ability to potentially.
Apply all Saudi at the Sochi deposit, which will help us to take the increase.
The amount of lower grade material that is profitable.
At that deposit and on the other side of that it will increase.
The grade of the higher grade material that with that we will be mining at Src as well as some other smaller optimizations, we do have an.
Ability to add two additional CIL tanks, and the CIL circuit, which we're looking at.
In terms of.
Increasing residents time, there and there is also a secondary crusher.
We're looking to install by the end of next year, which would.
<unk> reducing costs.
Crushing circuit as well site, so those things will work.
Working on advancing at the moment.
Yeah.
Perfect No. That's helpful. I appreciate it and I'll get back in queue.
Thank you chase.
Thank you once again that already further questions. Please style star one on your telephone keypads now.
Once again any further questions. Please don't stall warm.
Okay that seems to be no further questions from the phones at this time, so I'll hand, the floor back small speakers for closing comments.
Okay. Thanks for that operator will listen we're certainly.
At a stage of inflection at the asset level at the moment and we're certainly looking forward to see you are ramping up production over the next 24 months as stated in the conference calls so I'm very pleased with where that takes that and certainly looking forward to getting stuck into the high grade material as of Q2 next year and.
Appreciate everybody dialing in to the call today and have a good day. Thank you.
Thank you. This now concludes the conference. Thank you very much for attending you may now disconnect your lines.