Q3 2023 Caledonia Mining Corp PLC Earnings Call
London stock.
Start sharing that screen.
And if for whatever reason I guess sorry.
Oh look the colleagues too.
Pick this up I'm always could you just answer to the presentation team.
Morris.
Right cachet unpublished about levels Caledonia, CEO joined by Victor Pori, and executive director He's in Harare today.
Have a good burn the CFO is in Johannesburg.
Merchandise I'm, the vice President corporate development and commitment of both based in London and trauma centers apologize he is traveling in.
Zimbabwe today, Okay. So as usual, we'll go through the slides.
Plenty of time left at the end of the presentation of stroke for questions.
And so that's that's gotten just say so let's get going.
A summary of the production.
We'd already previously announced.
It was 22900 ounces for the quarter of which Bill days was about 1000, so production for.
So blanket was just under 21800, which was a production record for Black cannot library welcome return.
Two production for one after a very difficult quarter.
Quarter, one and quarter two we have some help from the gold price, which supported that revenue.
Gross profit was a big improvement what he has been in the previous quarters, but as we go through this presentation you will see that we do need to pay some attention to two specific areas in the cost line being a road use of electricity.
Labor costs, both of which we need to pay some attention to.
And again, the only thing I would take away from this is chi to ISP is the very strong.
Net cash inflow from operating activities of $14 4 million $45 million for the quarter, which had pretty much neely.
The record that clearly that is before capex and in the quarter, we were continuing to spend a lot of money primarily on the new tailings facility about which I'll talk to that environment. So that's a summary of the results can we commingle marks.
Yes, so by way of an ever got mentioned, let's say quarterly production.
Quarterly production record of blanket.
Consolidated all mine costs better.
So we can do work to improve them further.
During the quarter, we announced some very encouraging drilling results from blanket.
<unk>.
That work continues but pretty much two thirds of every hole, we drill camera better in terms of width and grade and in due course that will then be I didn't see you had revised.
All statements and energy costs that will flow into a revised life of mine plan, but we would expect that as.
Positive trading results flow through into an incremental resource.
An extended life of mine for reasons, perhaps we can discuss later I really don't think blanket, it's probably more like a blanket will extend its production rather than increasing production, perhaps we can come back to that environment.
Nobody's was returned to kind of make sense as we previously indicated with effect from the first of October when the when.
On the mining contract is something that is period run outs, we expect that to result.
A significant reduction in the cost of the device from the $1 million amongst $200000 alone.
So next quarter Q4.
We're hopeful actually are a bit the builders will be.
Our cash neutral as they continue to collect.
Gold from the heap Leach.
I know you had some top has been approved.
So we'll be able to mobilize on the ground at the top.
Early in the new year.
On the drilling season starts.
And then we've also received an offer to purchase the solar plant again.
Absolutely we can discuss that.
That's a little bit lighter on terms not disclosed yet.
We were confident but we're confident we can sell it for more than we paid for it.
But we don't need we don't need to own silicon Tony Stewart benefit from the.
From the cheaper electricity producers, we don't need to have our capital capital tied up in that.
And then the tailings facility returning facility.
And we draw, which we're spending about $25 million this year and next year.
We started pouring on that a couple of weeks ago, which now takes the pressure off the existing tailings facility, which was reaching end of it.
Its useful life.
Increased tonnage throughput from 1900 tonnes, a day to 2400 tons a day when completed by the end of next year.
Tailings facility will have a life of about 14 years since a long life asset.
Okay. Just in operational terms is not huge amounts talk about you can see quite clearly towards the right hand side of the top graph.
The Gray line not sneak the tons and you can see from quarter fourth quarter won tons took a fairly sharp dip.
Now recovered in Q3 to where we expect them to be the increase in grade as planned study the increase that's not something we.
We weren't looking forward as it was.
In accordance with the mine plan and so as I mentioned, the return to Tom's metals and.
And talk a grade is behind the.
The return in production to where we expected to see which is good.
That's really almost.
Okay now we move onto the financial section, so I'll handover to Chester the CFO to take us through these these in the following pages deal would finance the Chester and the tier.
All in all.
Our revenues.
<unk> or <unk>.
In Q2, Q3 and obtained access to increase that.
Lack of line by line this quarter and the basis for that.
Our April quarter for us.
So that's overall phone while landscape that is resolved.
Overall, we have seen off St more ounces, we sold gaining data and we had to increase the cross sell.
Unfortunately, our production costs increase as Mark said the production cost at <unk> <unk> thousand dollars.
Along with this channel.
On the quarter.
We are pleased to see that that key <unk> stance.
Our stance on both of those <unk> come down to about 600.
<unk> thousand dollars in the.
Blanket language side, we increased our costs, although nonperforming loans.
That was due to interest and usage as well as overtime standby labor at borgwarner onto that a little bit low vol.
Go down South acts expense looking at Opex for the quarter and see an effective tax rate.
Do you see the.
Predominantly ECG global's oxides that are essentially south and deducted against South tax expense account Backfall volvo's.
All growth involves youll see that the opex expenses normalized so we expect that to normalize.
The effective tax rates that we've seen in prior quarters.
Adjusted EBITDA that's Lola.
On a consolidated basis predominantly due to the volume costs, we'll get onto the production cost for next fall.
Morris.
Looking at our salaries and wages, a blanket that very much increase <unk> over time.
We should be able to look at that over to Tom <unk>.
Laws.
Labor force more effectively like we've done producing the same amount of balances some tonnages.
<unk> growth to reduce that and we will get back to supermarkets alone for me about initiatives that we will implement for at the time at last count.
Hello <unk>.
<unk> increasing over the year.
That's predominantly due to the niche offset.
The new central source of information and we're running these sorts of demand, but also looking at introducing a few awards.
It's been about these tuc's volumes is that it should be more within our control.
Before that enables the outgrowth of lower costs and we.
Should be able to find initiatives team and leasing costs.
On a boatload of oxide side as I've said, let plus <unk>, but should be reduced to about $600000 per quarter.
Yeah.
<unk> significantly reducing our cost to what we've seen on a life of mine exports.
Bringing in a bad space.
From administrative expenses point of view.
The big increases.
There was some good expenditures on advisory services, each step down the P&L and balance all of those.
Yes.
The spaces are advising <unk> vision.
All of that that deal listing fees increase.
And that is due to the successful margin erosion as we add ons, we want them to achieve.
Wages and salaries increase due to the additional soft numbers.
Taking all of these we took over the <unk> and <unk>.
Okay, helping us with things like the feasibility study.
What do you see that from the language some progress on that.
Further we've added some additional governance sectors and increasing our internal audit department and also bolstering up our ITV sources.
Now if you look at the total there if you exclude the ones or buy into a bond with diesel.
<unk>.
<unk>, we should be able to to reduce.
Administrative expenses to very close to our business plan.
Previous quarters on yields.
Okay.
<unk>.
This is a specific example.
Sure.
Online bus received the contribution of our <unk> oxides in the block on the online question left.
Lastly, we believe should come down to about $600000 afford us that we do have a plan for that reducing our online costs and we hope to find solutions to reduce ocular watt hours towards used to be some of the labor thats coming up.
Those costs.
Increases come out we shouldnt be able team.
<unk> costs down to what <unk> seen in block mining between about 815 to 815.
The balance of some cost was mostly influenced by online costs are fixed online costs will be seen that similar to what we.
Might be on life of mine.
We assume a biopsy.
Income tax we've had a higher effective tax rate predominantly due to the <unk> oxides operation losses in Marine Samsung being lost deductible against our backs charges overlap Opex is all.
Of Caltech granule formulation of <unk>.
The transaction is denominated in dollars and that's the sort of puts it a little bit.
Awesome, what do you expect.
Due to the author genius devaluations.
Take out the bulldoze, all sorts of processes with all of the profit before tax from Tcl.
In fact, it's normalizing to what you've seen in prior quarters.
Throughout all of this the Zimbabwean debt enacted tax amount of 24 2017.
Uh huh.
Nothing beyond the balance sheet.
They are long term assets.
<unk> and <unk> acquisition, our current assets increased due to the solar sale.
Vaccines and cell of a solar plant and absolutely the solar farm about 14 containment around balance of oil and what kind of asset category from frontline efforts.
Mike.
It's also down almost all of our bonds.
All the power from the solar plant above on that.
We should be able to use the proceeds from sale of Boston based on lateral in the future both businesses.
<unk> on its own.
I will now preparing for both of these entities have been fairly.
Fairly flat amongst bank liabilities increased because of the issuance of.
There's other bonds early orders yet.
General bias.
So our cash our cash is in all the places.
We expect these cash balances to the.
Currently we are changing all of our <unk> balances and we are making Netherlands achieved <unk> balances are holding up any cash balances and Zimbabwe doesn't count from those outside.
But we do have a base.
Yeah can I check my interject here.
I just wanted to.
When we got too much but I would just.
Reiterate more clearly something that we said for a long time, we're moving moving too we've always had great capital allocation decision, but as we move forward.
With the evaluation of the Dubai opportunity, we have to be very clear on how we go through this capital allocation process as I mentioned before our primary objective is to is.
Is to come up with a commercialization approach fulfilled by us and indeed, all of our investments, which which optimizes.
The net present value.
Caledonia shafts or the net present value of future cash flows cash flows attributable to a comment that you share and that takes into account.
Any.
Dilution that will be needed to fund the project.
So previously we were not interested really in doubling production of tripling production and <unk>.
Blake tripling the number of shares in issue because that just effectively it means that we stood still.
Talk a little bit later about some.
Where we are in terms of the.
<unk> feasibility study.
Chest as mentioned we are.
Tony I promised in discussions to some kind of project, which will release capital from a noncore asset.
At a premium to pay for it to recycle into our core business, which is developing.
Running.
Gold mines.
In respect to build those transaction, we all we are considering.
The phased approach so refreshing will be the initial feasibility studies relative relatively straightforward exercise to preparing a new feasibility study for smaller phased approach is a brand new piece of work, which requires new pit designs are all sorts of other stuff, which will take slightly longer.
And it's also fair to say that whilst we have an appetite some gary.
Railroad capital structure, we suspect will be relatively conservative.
Comes to that so I just thought it's worthwhile just explicitly saying a few words in respect of our capital allocation policy.
Could you move onto the next page.
Well as I mentioned to build both the old updates.
This this quarter could you just finished quarter three will be the last one.
<unk> be affected by the negative contribution for the large negative contribution from <unk>.
I expect the monthly cost to reduce familiar to about 200000.
For the for this quarter Q4, we would expect that to be broadly cash neutral as we continue to.
Some of the goals, but as some of the heap Leach.
It's disappointing, but disappointing production from the oxides is has no bearing on the quality of the underlying sulfide resource.
We entered into a global transactional too too.
Acquire or develop the sulfide resource about two 5 million ounces of two three grams a tonne.
The oxides was just purely incidental.
From one of the things could hope to avoid doing was having to re.
Retrench, a considerable number of employees, we had hoped to avoid that but im afraid we couldnt avoid that and so we have had two to that quite a lot of people go which zim contacts, especially in the context of the recent elections was.
Well, if something were to hard to avoid doing that.
We couldn't sustain our cash rate.
Hong Kong.
Work continues on the on the revised feasibility study as well as I just outlined.
Work in terms of updating and refreshing the existing large scale project is relatively straightforward.
Work on a phased approach, we're probably going to get completed in the first quarter of next year, and we need both bits of information to be able to make the appropriate.
Capital allocation decisions, so we'd expect to be able to give some further guidance.
<unk>.
The next quarter next quarter.
Could we move on.
Okay. So in terms of outlook are hoping it's going to continue.
Producing a blanket in the targeted range of 75 to 80000 ounces.
Pretty much similar going forward as I mentioned, the encouraging drilling results.
Blanket will almost certainly <unk>.
And increased resource space, which will probably result in an extended life of mine for all because of increased production to increase production of Blankenbuehler required probably disproportionate investment.
<unk> minerals.
While tanks nonproductive.
Non productive social infrastructure, which means but it is becoming it will become more expensive just to have an extra so behind all 10000 ounces and we could use that money to better health.
Elsewhere.
As I mentioned, the the feasibility study.
Dubose and having having got the EIA approved top as we can.
Through the rainy season in Zimbabwe and that would be the appropriate time to understate commit people commit resources to the ground on the top.
Hey, Michael.
Finished.
Yeah. So I think that that's the end of the formal presentation, we're very happy to wait two.
Two questions.
Okay.
Okay.
Any questions.
Awesome questions hold on a second we've got it right.
Okay.
Yeah.
Yes.
Okay.
Oh Hello. This is Ernie Moniz, how're, you doing well thanks Lenny.
I've got a question concerning the electricity supply how much.
Is the electricity actually costing you is it.
You said $2 6 million per quarter, and then could you breakdown how much of that is.
Is.
Really.
Fuel costs in South African Rand, maybe and then how much is coming off the.
<unk> solar plant.
Well, 2025% of the.
How we use comes from the solar plant.
So as I explained before there's a little bit complex, but I'll do it again, the solar plant designed by Caledonia don't buy blankets, which like kind of a dining room coming down into 100% of the solar plant Caledonia arm 60.
64% of blanket, we TV, we get from the solar plant.
The benefit arising from the start of the plant has crystallized with the Caledonian Hollywood 90 level. So the solar plant it sounds its power to blend kits upset correct me if I'm wrong, just something that's about 13 cents per kilowatt hour.
It only costs about one or $2 76 up to produce at study.
The profits arising on the benefit of rising of our solar Crystallizing Caledonia and that's reflected in the all in sustaining cost per share not the online cost, but it's a.
A bit of a wrinkle, but I think I think you'll understand why we're doing it.
And she has to the cost of the the <unk>.
A grid power.
What about 10.8 cents is that correct.
Yes at some 0.86, so now that that is the we import the grid power OEM ports through a facility called the intensive energy user group.
Which was a.
Sort of industry, the budget et cetera sort of reset.
The startup of aegis of the president actually not imports power directly from Mozambique.
Zambia, now, which means that we benefit from a cheaper rate.
The imported power than we would if we were buying grid power in Zimbabwe I think the great power in Zimbabwe just goes up because it is about 16 times, Manchester gestural victim kidney, our grandparents and minimal expense isn't it.
13 celebrating.
Okay.
Yeah.
I thought I read something yesterday, we've said he was gonna help even further so we do get we do get the benefits of.
So the grid power, but we're getting at a cheaper rate, but we still suffer.
Very unstable grid power supply because the Zimbabwe grid is very good.
You may not be related, particularly insofar as it serves blanket, which means that we continue to experience.
Power interruptions voltage spikes and troughs, which that means we have to pull back onto the pumps. The diesel generators of the diesel to the diesel generators I think will cost about 45 cents a kilowatt hour.
Chestnuts are having do you have to handle to memory. The approximate split of the power usage just between solar grid and diesel how about hundreds, Pennsylvania, although other where it isn't just cover them what it is.
If you'd like.
If you're talking we can provided we can provide it later, but do you have a ton of it.
Okay, alright, well good must be talking.
There are some very technical things that we could try and do with.
The solar farm.
To improve fee to improve the quality of the power we received through the grid.
And that's called power factor correction.
And that's something we're exploring with the with the proposed buyer of the grid, which would mean that on the one hand, we would get less direct.
From solar project, but on the other hand, it would mean that we could use a higher proportion of the grid power do we get into the <unk>.
Displace.
This place the <unk>.
Use of the <unk>.
Diesel so we'd be leasing some some use of some soma, but instead of bidding for.
Going forward long term.
Sure.
Displacing diesel which would be a very powerful benefit for us. So we're exploring we're exploring that with the purchaser of the solar project. So sorry that was a very complex long answer to quite a simple question did I answer everything you asked.
Yes that answers most of it just out of curiosity.
The solar farm already paid for or not how much profit do you expect to get off the sale of that no.
As painful as paid for an equity.
We've not disclosed the price because thats an ongoing negotiation.
It's a very reasonable question, but.
Can be very reasonable.
But we all expect well, but we are expecting to sell its more than we paid for it. Okay. Let me let me turn it around is there a prospect of doing another solar farm. If you get another 25% [laughter], yes, yes, there is a need the buyout the buyer for the solar projects is as interested in.
Developing its footprint further into Bob very much. There is there is the option to do more so.
I'm going to say it may be it may be we have a smaller top ups planned blank.
Blanket.
Maybe but I wouldnt be very big.
Bill buyers bill, but if we can get.
There's no reason to believe it wouldn't be able to see if we can get power through the intensive energy use the Greek for Bilboes become builder is in a much better position geographically vis vis the Zimbabwe grid.
<unk> could probably manage very effectively with imported power relative to electric power interruptions and so the the benefit of.
Solar power for Bill buyers may be much smaller than the benefit as a blanket.
It's not altogether clear towards whether we would actually need to put a.
So the projects that are built by us, but because of that that will come out of the evaluations. The very much. The buyer is the sort of buy or is that too to get bigger are they using this.
The purchase of the plaintiffs on the project.
I know you startup a starter in Zimbabwe.
Okay that answers my questions on that.
I've got another question on.
<unk> Sulphide project.
On the are you contemplating using other approaches other than by acts for processing that I know there is a quite a few projects coming online in Africa, where there are having different sulfide projects being exploited.
And a lot of the technologies that are not using biotics.
They're using some kind of oxidation.
Method, that's cheaper and more effective than buy apps, yes, Victor do you want to be able to address that Victor.
Thank you very much yet you are not doing the feasibility study, which we did.
We did look at the various options and the option, which seems to give us.
<unk> Capital Corp.
And also in terms of treating the material itself seems to be buyer.
My mother options, which are our consolidated.
Adjusted net.
When we do the feasibility study going forward, maybe we may look at and review, but pretty much a lot of work was done during the usability study and <unk> seem to be the most logical one from a capex point of view, but also from a probability of other operations, which are using buyouts in South Africa.
Is that fair to say that any of that would be very very limited prospects for us to export concentrate from his involvement there's probably government.
The Red line of policy Red line in country beneficiary Asian so.
Our ability to export concentrate I suspect would be it.
I doubt very much would guess it took place so we've got to have something in country, which you can like I didn't see it.
Monday night at 100%.
Does that answer your question journey, yes. It does thank you okay.
Any further questions come out.
There are a few I'm going to deal with the right time Saturday.
Okay.
Yeah.
To start Christian.
Hello, Nick.
The bulk of it everybody.
Can you maybe take us through any changes in legislation and regulations that might have affected <unk> I think over the last six months and obviously we've been through you guys have into Zimbabwe has been through an election.
Has that had any reflections.
No I'm aware of I mean, the election don't seem to see.
We break break holiday actually we compared to what we were expecting I think or do you want to.
Anything that you're aware of Victor.
No there isn't anything really from a policy perspective, which has not changed.
Okay.
Thank you Craig and thank you David.
In terms of continuing to leases, we expect the policies to continue and maybe even the one in which we've made pointed out is the fact that there are the diesel legislation save the U S dollar.
I would assume.
Or the multi currency regime currently in place would end in 2025, they've actually extended that by another policy instrument, which saves you to ending 2030.
But yes, the way we look at it. It also in terms of multiple beneficial they look at it is probably a point of view that the day.
Maybe the multi colored <unk> disappears.
Wayne said that economic conditions have been met for instance, the inflation or the <unk>.
<unk> comprehensive product those are the critical thing for the multi carrier regime.
And obviously the quality Dvds bump with carriage.
So I mean net net.
Clearly you have spoken about it because you wouldn't know that now that you've asked that question because ultimately you must have something in mind.
[laughter].
Well, what what do you should've been selling market is that are you.
You might be the first company to get go through the fidelity.
And exploratory absolutely, yes that that wasn't the reason we didn't we didn't sorry, when just to reinforce the point, we sell we've been exporting gold.
Directly from Zimbabwe since I think April so that's not that's not needed.
One of the and actually I think I think really.
I'll turn it round I would say that we've seen.
Quite a welcome theories of policy stability seems appropriate and recently in recent months or perhaps I shouldn't say I want to jinx it but some.
Pretty pretty much with the same things to be relatively good.
Relatively stable a long long may that continue because frankly, that's not the biggest.
Hardest thing for us to deal with US is it rapid rapid changes in policy, which which in the past of course quite a lot of dislocation and caused us.
Some some headaches, but some will.
Things relatively stable mix.
Okay.
It is.
This overtime Youll go to solution for shortfalls in production so it doesn't it doesn't.
Advertising seems to be the go to physicians pizza hut looking at production benefits.
We gotta be mobile room.
We got to have a much much closer attention to the scheduling of labor. So that we get people down the shops into that place of work more effectively and more efficiently, but minimize the time they spend.
Waiting to turn down the shaft would not that snapshot drilling.
Again, it's not difficult.
Like I say no.
We shouldnt be using advanced overtime.
Thank you.
Hi, I'm not sure I know you had a written question I'm not sure if you've got an additional question that you want to find out can you hear me Hello Howie.
RMR Morris.
Hi, Mark.
I'm going to add your daughter to earnings per share on our regular earnings per share.
If I take $4 million to $6 million of profit divided by a $19 million, that's 24 million.
24 cents a share do we have more than 90 million shares no doubt 1919 per 1 million shares.
On an earnings test and once the doors.
This calculation the Chester.
<unk>.
That's the movement between quarters.
No.
Mike's look at if you look at the diluted effect of.
A lot of months Luxor.
So I'd say, its a sort of quarter on quarter presentation, I'll say I'm sure I'm sure would trust, we will be delighted to take you through it in more detail.
But I think it's hilarious you asking that question in this forum during the quarter on quarter, you still only have 19 million shares no matter what quarter you Jay.
Yes.
I'll have to get back 51, just.
I don't believe it is.
I don't believe has narrowed I'm confident Chester can take you through it.
Almost all of the detailed calculation basis, I think <unk> is able to do it sort of quite quite off the customer.
No.
I just sent me a note.
The second.
No I understand correctly that by putting in billboards on care and maintenance youre going to save 800000 hours a month.
$9 6 million a year pretax.
That is correct yes.
That's 45 cents a share after tax that's a lot that's why we're doing it well build put it the other way around.
Gosh I'm with you.
Unsustainable and we have to stop.
That's alright.
As far as the proposed sale of the solar plan.
Okay, more and rate to the buyer then your cost out now.
No okay.
It's just purely that that cost of funding is collect is lower than ours and spinnaker.
It's purely that's only there Tony.
That expires and finally.
And because the billable hours.
Or that you thought was there.
Right there.
Is there a way for you to claw back some of the Seo trends right and I'm proud of the price of the transplant.
Victor Victoria vendor.
And I think that will be convinced that can we call somebody about probiotics to the oxide.
Someday most of it is naturally traditional what we bought was that.
Oxide transitional and then there is no plan, we're always going to mine the ore, but the issue is when we do that.
Calpine project that when we were going to Miami.
Basically it will come almost like a free all this is.
That's the mining cost with keeping down already borne by the sulfide project. That's how it was going to contribute so that's why I feel that we've mined some some areas. Okay. Some areas, we didn't quite get the all but most of the traditional AUM or what we footwear.
Is that really transitional authority there.
And the.
The other or is there oxide sulphide I forget questions rich.
Obviously between the oxide and sulfide do you normally give you a transitional one sorry that transitional transitional ore from the traditional you can't really project did not upside down.
You are the companies will be bought back.
Where do we actually do the sulfide project, we were able to process that.
By blending it could give that would be sulfides. The second proportion. So that you get maximum recovery out of it okay and.
The main ore body I was kind of the main ore body does that have what do you think is four or 5 million analysis.
So two and a half two and a half MNI.
Another half a million dollars of inferred, but decided to say its fair to say there is exploration potential.
We don't see them at this stage.
<unk> for us at this time.
Yes.
Yeah, Yeah yeah.
Yes.
Okay.
Thank you all.
Thank you Tony Thanks, a lot.
Thank you.
We've got a few written questions. So the first one is how do you expect to go back in the positive side to.
To add to type of revenue and profit for the next five years.
Well it depends very much is impossible on the top up I think it's I'm not going to talk to restart production in the next five years.
Sure.
But it's not depends on whether we go for a big Bang approach or a phased approach to helping I'm sorry. It is just premature to Francesco to answer that question two ways.
<unk>.
On commercialization.
But I mean, it's hard to say when we bought <unk>.
We worked on the basis of a big Bang approach.
<unk>.
We could still do that.
But we're looking for we're looking to optimize.
The functions from those which we used when we bought so we're looking at.
Further improvement.
Going forward with the project as it currently as it currently stands with a big project approach, we're trying to find something that's better.
That will do that.
Yes, I say account account translate.
I asked that question in terms of.
$1 revenue.
Just wanted to go back to that comment about earlier on about our approach to capital allocations, we are trying to find.
A smarter way to commercialize this asset which balances growth of many months of dilution to the benefit of shareholders not chasing revenue.
Okay.
Next question is can you tell us what the rough expanded chat on Intel based areas intelligence studies.
And could you guide to any planned exploration programs at the parasite.
So just read them again Couldnt just try that again can you talk to the rough expanded chat unbilled by various feasibility studies.
I think towards the cost of the feasibility study.
Hey.
What we are doing now.
Probably to get to them.
His ability start do probably spend something I think just as the bulk of you put something different that $5 million.
Right.
Yeah.
Okay. So that is that is.
It's a very broad.
It includes an awful lot of them.
It covers many areas.
Quite a complex project so it does come in many areas.
Okay.
Couple of many areas in the sense that.
The way, we're looking ATT in terms of the approach it will be purely a new project at the end of the day you have to do you have designs and things like that so unlike where we looked at the bigger project. We still look at the bigger project to see whether we can patterning. So they've been up digital because it also you'd be locked a few months as we've been looking at it there are a lot of.
Area of which we've already identified areas for optimization. So that's the kind of where we could re optimization in terms of our various work streams that also in terms of.
May be managing the capital expenditure.
John I'll go into a bit more detail on all of those various work streams.
Okay.
I'll just pick a few but I understand the big one where we expecting too.
<unk> made quite a big <unk> capital will be Nevada, the tailings facility.
In terms of how can we how are we.
<unk> constructed and also taking a phased approach, which then reduces our peak capital funding when we start the project. So that's the big one we expect it to be quite a bit what plus also if we go with the smaller project. Obviously, we go with the smaller tailings facility.
Also in <unk>, we saw that will reduce the capex and then from a mining point of view the way. The pizza has been designed obviously by managing the way you do your with shipping when you start we do expect to reduce side, maybe the capital expenditure at the beginning these are the major work streams, which are frequent.
Also the issue of the electricity if we're doing the Big project for instance, we will have to build a new a.
The new power line, which is about <unk> 70.
75 kilometers.
But we are going to look at that if we do the smaller projects.
We're doing some work to see whether the existing line.
Can naturally be upgraded or cannot really tick.
Paul would you need we're working very closely with the power utility.
And Barbara prior utility to invert.
Ah I think most of the well obviously, they're like issues that maybe the contractor will be drilling the binding.
We are looking at optimizing that in the sense that.
That's protector is also mobilized to do the tailings facility for instance.
We only pay one mobilization fee and things like that which ops lift Luca is which'll. So there are many areas, which we're working on at the moment, we are quite optimistic in terms of Ah <unk>.
It may be coming up with a bit our capital estimates for this project and also beat our operating cost for the project.
Okay.
So thanks.
Camilla and elsewhere.
What are your thoughts on near term piece of Capex. In 2019, 2020, we don't see product was kind of a guide down on Capex is roughly double the amount of operating cash flow do you expect that to decline our free cash flow to increase in the larger dividend.
We do expect Capex to go down, but I think to increase the dividend in the context of <unk>.
A very substantial.
Investment program would be.
I can't see how it could possibly justify that.
Although we would expect capex to come down and therefore free cash flow to go up.
But at this stage and ambitious the dividend guidance given the fact, we drove up Sheldon.
But as yet quantified capex program coming towards us.
And then there's one law, which says venmo the parent recovery fueled by its oxide completed.
Victor with respect to the end of this quarter I mean, that's where it is at the end of this quarter that it doesn't trickle over into <unk>.
First of all let's be clear, we're not broken material amounts of gold here okay.
Let's just put it in context.
From my understanding was that we thought would be.
The continuing heap leach.
So for quarter, four and then into next year, but is that correct.
It should really get to the end of the year.
If we if the.
The recovery vessel eating.
Still <unk> been showing that we can recover any more but I think that has to be balanced with the cost of the deposits, yes, yes, but I really would encourage you not to stop focusing only on the heap leaching from the from the oxides that really is going to be de minimis.
No.
Any other question, yes, that's one of those have come in how is the South African Rand affecting your supply costs, especially with you on our materials.
Not.
The Manchester can probably talk about this peso vis vis China, South Africa suppliers.
Typically charge offs and ramps, but at a <unk> price.
So we will not.
It makes us actually.
And the cost per analysis.
The chest to put up with.
I would not see any increase in our AUM.
Consumable input costs, which is.
Very pleased to see so the simple answer is that we are not the delta is not helping us.
Hello.
He has one more do you plan to increase spend on exploration at Lancaster.
B.
Glenn can I not not substantially I mean that the cost to be the cost of the exploration program applying kinase isn't particularly significant itch.
More constrained by by logistical just kept drilling excavating the drill companies working to there so it's not particularly.
Expensive.
Program.
And we're very comfortable with the results we've seen so far from the results, but we're expecting to see through the ongoing exercise will give a very substantial uplift in <unk>.
The resource base and life of mine.
For us to go the other exploration area that we could but we do plan to do in due course, a blanket will be.
Amongst ROIC.
It's not all from the south.
Also to the east of about 800 meters to the east on the.
<unk> formation, but again, we've got many competing needs for capital.
Again.
The limit to how much cash we can spend disposal limited amounts of on expense of amendments are comfortable with the exploration activity a blanket.
Is more of a fit for purpose and I think the other area worth up to spend more money at blanket.
Director of exploration related it is it is upgrading with the.
The it systems and the software and the software packages that we're using in the MRM Department, which is actually pay dividends is very expensive.
It has paid dividends in terms of improving the Nike much more real time.
Mine planning system, which means that we can adapt to changing circumstances as we see them and actually got that we are expecting will will probably crystallizing.
A modest reduction in some of the capital programs that we have planned for 2020 full which now using the but that's up.
And mine planning software, we've got maybe you actually don't need to do some of the stuff that we would do.
That is paying for itself. So again, it's quite a long outage into quarter two.
A very short question I'm afraid.
Is it properly.
Dynamic asset.
Okay.
Just give a pause to see if anybody else wants to.
The minute answer and see if anyone else wants to ask any further questions.
The Victorian room.
Ooh Chester with any final final observations you'd want to make thanks, Tony a question.
Received them by attempted answers.
Not for me Mark Thank you Chester limestone.
Okay, no more questions Camilla.
I think that's right okay, well. Thank you all for attending.
Materials again, when we publish our next quarterly results, which will be towards the end of March peak Q4 numbers, taking the market the customer because the audience is getting involved.
Thank you for thank you all for attending thank you very much.
Okay.